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
o Economic Liberalism
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
Alexander Hamilton strong proponent
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
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
o Law of Comparative Advantage (specialization through free