Summary- International Political Economy
• Is an emerging interdisciplinary approach to dealing with global problems.
• In particular, it addresses the nexus between international politics and
• The political actions of nation-states clearly affect international trade and
monetary flows and that in turn affect political choices.
• The Breakdown of the Breton Wood monetary system in 1971 and the oil
embargoes in the 1970s marked a significant break for the study of IPE
• Economic Nationalism: Also referred to as mercantilism; associated with
realism. The view that wealth is a source of power, that international politics
amounts to a competition for primacy, and that the economy’s primary
purpose is to contribute to state power. More concerned with relative than
absolute gains. Interdependence leads to vulnerability.
• All Nationalist subscribe to:
• 1. The primacy of the state, of national interest, and of military power in the
organization and functioning of the international system.
• 2. Economic activities should be subordinated to the idea of state building and
the interest of the state.
• 3. There is a relationship between wealth and power.
• “Benign” mercantilism: The safeguard of national economic interest as the
minimum essential to the security and survival of the state.
• Malevolent” mercantilism: View the international economy as an arena for
imperialistic expansion and national aggrandizement.
• Economic Liberalism: An approach to international political economy premised
on the belief that efficiency creates growth and welfare. Committed to the
standard case for international trade (Smith); concerned with absolute rather
than relative gains. A limited role for governments: a laissez faire approach.
• Marxism: Sees the world economy as dominated by capitalists who seek to
maximize profit. Profit-seeking leads to overproduction, ultimately resulting in
instability and systemic crisis. Lenin modified original Marxist theory to allow
for imperialism as a means of delaying the ultimate crisis of capitalism.
• Marxism- A critique to Capitalism (private ownership of means of production
and the existence of wage labor).
• Lenin: Capitalism would resort to oversees imperialism to survive;
• Expansion of capitalism (for finite world resources) would bring tension among
the mercantilist nation-states
• Thus, though economic liberal/international capitalism is successful it is
politically unstable and would lead to war.
Summary- Global Trade
• Global trade regime is Rules-based international agreements: States seek to
promote and stabilize economic exchanges. It is against regulations that
restrict economic exchanges.
• Components of global trade r