Chapter 7 Reading.docx

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International Affairs
INTA 1110
Tarun Chaudhary

Chapter 7 Reading IPE 10/11/2012 9:27:00 AM What is IPE?  Modern market based on political rules  Economic strength basis for political power  Attention is on issues of wealth and poverty  Economic liberalism claims that the economic system works best when free from political interference.  Idea that you can’t separate politics and economics because: o Bretton Woods system failing  Abandoned gold standard o Decolonization had created new group of politically weak and economically poor states in the int'l system. o End of the Cold War  Three theories o Mercantilism o Economic Liberalism o Marxism Mercantilism  Economic activity is and should be subordinated to the primary goal of building a strong state.  Economics is a tool of politics  Economic competition is a zero sum game  Two forms of economic rivalry o Defensive mercantilism  States look after their national economic interests to ensure national security. o Aggressive mercantilism  States attempt to exploit the int'l economy through expansionary policies. Ex. Imperialism  Economic strength and military-political power are complementary  Economy should be subordinated to the goal of increasing state power.  Alexander Hamilton strong proponent  Friedrich List o Theory of productive power: the ability to produce is more important than the result of producing.  Economic activity is a result of increasing state power.  Zero sum game Economic Liberalism  Adam Smith is the father of economic liberalism o Markets tend to expand for the satisfaction of human needs o Core ideas: rational individual actor, belief in progress, assumption of mutual gain from free exchange o Economic marketplace is main source of progress, cooperation, and prosperity  David Ricardo o Law of Comparative Advantage (specialization through free trade)  Paul Samuelson  Fo
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