Schema to understand the post-WW2 IPE

Schema to understand the post-WW2 IPE

INTERNATIONAL POLITICAL ECONOMY (IPE) Prof. Amado Mendoza, Jr. Department of Political Science University of the Philippines Outline of presentation What is ipe? What is IPE? Post-World War II ipe IPE theories 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 2

International Political Economy Material reality; object of study (ipe) and theory (IPE) A field of study bridging economics and political science (and several other social sciences such as sociology, geography, among others) Concerned with interaction between states, markets, and societies Mendoza--International 5/3/2012 Political Economy--Pol Sc 180 3

The state and the market: key categories in old IPE The state (political component of IPE)a sovereign territorial unit with a government and a population; involved in the pursuit of POWER The market (economic component of IPE)coordinating mechanism where supply and demand determine prices, output and methods of Mendoza--International production; involved in 5/3/2012 Political Economy--Pol Sc 180 4 the pursuit of WEALTH State-market relations I

Opposing institutional logics State logic--exclusion, national sovereignty, territorial boundedness Market logic--inclusion, expansion, economic openness, breaking down of state barriers 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 5 State-market relations II Complementary and symbiotic relations States protect property rights, provide infrastructure to facilitate market transactions

Internationally, states conclude agreements/form organizations to promote economic openness 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 6 State-market relations III State power is largely defined by level of economic development State-market interactionscore issue in the study of old IPE (late 1960s-early 1990s) 5/3/2012

Mendoza--International Political Economy--Pol Sc 180 7 Society and social groups in the new IPE State and society interactions Market-society interactions 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 8 State-society interactions Individuals and social groups may

make demands on the state for protection against the vagaries of international economy States enter into treaties for the same purpose Individuals employed abroad increase states foreign exchange reserves 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 9 Market-society interactions Market-society relations are based on supplier-consumer relations

Consumer demand (generated by a number of variables) stimulates supplier activity and even product innovation and vice versa Market crisis induces social backlash 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 10 Key relations for consideration in IPE Between state and market and society Between economic and political and social

Between domestic and international 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 11 Fundamental premises of modern IPE Political and economic and social domains cannot be separated in any meaningful sense States and markets and societies not necessarily contrasting principles of social organization; co-existence of opposing and complementary logics

Intimate connection between Mendoza--International domestic and international 5/3/2012 Political Economy--Pol Sc 180 12 Rough schema to understand the post-WW2 ipe Dimensions Period I Period II Strategic environment Cold War

Post Cold War --pre 9/11 --post 9/11 Strategic concern High politics High & Low politics Secular economic trends Kondratieff expansion Kondratieff

contraction; greater fluctuations in business cycle Institutional architecture Bretton Woods institutions Post Bretton Woods institutions Theory 5/3/2012 IRMendoza--International theory esp.

IPE theory Political Economy--Pol Sc 180 realism 14 The inter-war years The Great Depression led governments to adopt protectionist measures; deepened crisis and ultimately led to international war After WWII, the challenge is to set up a system that would prevent the repeat of these occurrences 5/3/2012 Mendoza--International Political Economy--Pol Sc 180

15 Necessary features of post-war order Stable exchange rate system Control of international capital flows Availability of short-term loans for countries with BOP problems Rules to keep economies open to international trade A reserve asset or unit of account (such as the gold standard) 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 16

The Bretton Woods system: anchored on fixed exchange rates IMF: to provide BOP support World Bank: to provide longer term financial support for development GATT: to help negotiate lower tariffs and encourage international trade Negligible LDC participation or voice in BW institutions; nonparticipation of Soviet bloc 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 17

Breakdown of the BW system Increased US spending under LBJ for domestic programs and Vietnam war financed without tax increases Competitiveness of US products and confidence in the US dollar dropped Nixon shock of 1971: suspension of the dollarsMendoza--International convertibility to gold at 5/3/2012 Political Economy--Pol Sc 180 18

Ups and downs of US hegemony Creation of liberal world economy coincided with Cold War Long post-war boom Marshall Plan and similar efforts aimed towards Soviet containment The eventual resurgence of Europe and Japan undermine US economic predominance End of Cold War does not result in US economic hegemony 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 19

Key features of the Kondratieff downturn and beyond Rise of OPEC and crude oil prices; the petro-dollar phenomenon Stagflation and new protectionism among industrial states Assertion of developing country interests through NIEO and UNCTAD Rise in interest rates and Third World debt crisis Washington consensus as policy prescription Emergence of anti-globalization movements Mendoza--International 5/3/2012 Political Economy--Pol Sc 180 20

Current state of BW agencies World Bank: development agency making loans to developing countries IMF: gained greater role in defining economic policy of developing countries with the 1980s debt crisis GATT: transformed into WTO which could better enforce trade rules and settle disputes Mendoza--International 5/3/2012 Political Economy--Pol Sc 180

21 Overall economic trends in the post war period I International trade has grown more than global economic output; increased competition; drop in trade barriers Significant increase in trade in services More goods become trade-able with decreasing costs of transport (container van and RORO technology) and miniaturization 5/3/2012 Mendoza--International Political Economy--Pol Sc 180

22 Overall trends II Increased integration of global financial markets due to financial deregulation, new financial goods and advances in ICTs; greater chances for contagion during crises; financial flows dwarf real economy 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 23 Overall trends III

Rise of new industrial economies Greater frequency of crises Increased inequality within and between nations 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 24 Forms of capitalism Enterprise (Anglo-Saxon) capitalism Social (market) capitalism (Germany) State capitalism (China) 5/3/2012

Mendoza--International Political Economy--Pol Sc 180 25 Rise of IPE theory: big changes in world economy Decline of US economic preponderance and challenge to traditional notions of power and security posed by US failure in Vietnam New economic challenges : OPEC, demands for NIEO, NICs, EU, emerging economies End of the Cold War and globalization further underline the centrality of IPE in the study of international

relations Mendoza--International 5/3/2012 Political Economy--Pol Sc 180 26 Major theoretical clusters in IPE theory Realist/statist theories Varieties of liberalism Marxist/critical theories Other IPE perspectives 5/3/2012 Mendoza--International Political Economy--Pol Sc 180

27 Mercantilism Praxis that accounts for need to create wealth and sustain national power Context: Nation-state building, international war & colonial rivalry in Europe (15th-18th centuries); caveat: Euro-centrism Zero-sum nature of international Mendoza--International trade 5/3/2012 Political Economy--Pol Sc 180 28

Mercantilism, 1st version Accumulation of wealth (preferably precious metals) Wealth buys weapons and finances armies & navies Wealth is a proxy measure of national power (understood as military might) 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 29 Mercantilism, 2nd version Promotion of exports Suppression of imports & other

forms of protectionism (e.g. Corn Laws & Navigation Act in England) Colonialism: monopolization of markets for raw materials, cheap labor, and consumer goods 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 30 Economic nationalism American version: Alexander Hamilton (1755-1804) German version: Friedrich List (1789-1846)

5/3/2012 Mendoza--International Political Economy--Pol Sc 180 31 Mercantilism vs. economic nationalism Mercantilism seeks power & wealth through unequal trade Economic nationalism focused on internal development of national economy 5/3/2012 Mendoza--International Political Economy--Pol Sc 180

32 Common belief Unregulated participation in international markets leads to dependency and weakens national power 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 33 Alexander Hamilton Prescribed that for the US to have a strong manufacturing &

industrial base, the state must provide trade protection for the countrys infant industries Proposed measures: subsidies for US products and tariffs to limit imports This is now Mendoza--International known as strategic 5/3/2012 Political Economy--Pol Sc 180 34 Friedrich List Exalted the power to produce than wealth itself Agreed with Hamilton that the

state was needed to boost productive power (education, technology, industry) 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 35 Short history of contemporary IPE Early intervention and abdication of economists Enter political scientists and IR scholars The economists return 5/3/2012

Mendoza--International Political Economy--Pol Sc 180 36 Early efforts of economists Jacob Viner (1948). Power and plenty Richard Cooper (1968). The Economics of Interdependence. Charles Kindleberger (1970). Power and Money. Raymond Vernon (1971). Sovereignty at Bay. 5/3/2012 Mendoza--International Political Economy--Pol Sc 180

37 IR and political scientists Robert Gilpin. The Political Economy of International Relations Robert Keohane and Joseph Nye. Power and Interdependence. Susan Strange. International Economics and International Relations: A Case of Mutual Neglect. 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 38 Building blocks of realist

IPE The state The environment of international anarchy The national interest 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 39 Realism vs. other IPE theories The state & its interest is autonomous

Not sum of individual interests ala liberals Not executive committee of capitalist class In the world of anarchy, tension exists between national and economic interest Mendoza--International 5/3/2012 Economy--Pol Sc 180 The statePolitical may decide, at times, to

40 Economism and other objectives Liberalism and Marxism share an economistic perspective: individuals are motivated by desire to maximize wealth Realists arent in it for the money! 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 41 Re-assertion of realism

after Cold War Failure to predict end of Cold War weakened realism (even if this criticism was quite unreasonable as all systemic theories cannot and will not account for agency) Did not lead to its demise as theory; stronger assertions of relevance in PCW period In short, the real world remains a realist world." (John Mearsheimer, The Mendoza--International 5/3/2012 Economy--Pol Sc 180 Tragedy ofPolitical Great Power Politics, 42

Summary of realist IPE Skepticism that interdependence will reduce possibility of war International politics will crucially shape pattern of international economic relations States will monitor the engagement with international economy with an eye towards mediating dangers arising from anarchy Mendoza--International 5/3/2012 Political Economy--Pol Sc 180 43

Keohanes neoliberal institutionalism Characteristics of complex interdependence Multiple channels connect societies (multi-level relationships) Multiple issues of concern; security issues no longer dominate international agenda; no high politics States do not use military force against others; limited potency of Mendoza--International 5/3/2012 Political Economy--Pol Sc 180 military power 44

Outcomes of complex interdependence States pursue different goals simultaneously; transnational actors have own goals free from state control Power resources specific to issue area; influence in one not transferable to another International institutions gain greater importance 5/3/2012 Arenas for political action by weak states Animate coalition formation

Oversee the setting of international agenda Mendoza--International Political Economy--Pol Sc 180 45 Interdependence & institutions High degree of interdependence move states to set up institutions to deal with common problems States create institutions to better achieve gains through policy coordination and cooperation States create institutions and delegate power to them 5/3/2012 Mendoza--International

Political Economy--Pol Sc 180 46 Role of international institutions Permit states to define interests in a more cooperative way Foster compliance with mutually agreed upon rules and standards; discourage or punish cheating Foster negotiations and info exchange among states Open up new reasons to cooperate 5/3/2012 Mendoza--International Political Economy--Pol Sc 180

47 Factors influencing cooperation among states Payoff structure: the greater the conflict of interests between states, the greater the likelihood of non-cooperation Number of players: smaller number of participants facilitates verification of compliance and punishment of cheaters Shadow of the future: if relationships will continue over a long period, the greater the possibility of cooperation (since punishment for cheating is always possible in repeated transactions)Mendoza--International 5/3/2012 Political Economy--Pol Sc 180

48 Critique of liberalism Economism Improper downgrading of state and power Unacceptable separation of markets and politics More ideology rather than positive theory? 5/3/2012

Too much faith on markets? Export of democracy leads to international war (policy of Bush administrations neoconservatives) Mendoza--International Political Economy--Pol Sc 180 49 Realist critique of international institutions Institutions always reflect the interests of dominant states Institutions only accommodate interests of weaker states if position of dominant states is not threatened States that cooperate through IIs do so because of self-interest; IIs

are not important in their own right 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 50 Historical structuralism Focus on structural means of exploitation (property relations, class domination, inequality between states) Historical approach to the study of IPE; time- and space-boundedness; history of class struggle and exploitationMendoza--International 5/3/2012

Political Economy--Pol Sc 180 51 Historical structuralism Classical Marxism Dependency theory World-system theory 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 52 Key theorists Marxism (Marx, Lenin)

Dependency (Frank, dos Santos, Cardoso) World-system theory (Wallerstein, Chase-Dunn) 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 53 Classical Marxism: key ideas Class is key concept, not the individual or the state Class struggle main factor affecting economic and political order & change The state is an agent of the

dominant class Capitalism is progressive (to some extent) and its logic is expansion Mendoza--International 5/3/2012 on a world Politicalscale Economy--Pol Sc 180 54 Imperialism Means of capitalist expansion World is hierarchically organized; some societies control and conquer others Under consumption and overproduction are the economic impulses behind imperialism 5/3/2012

Mendoza--International Political Economy--Pol Sc 180 55 Differing opinions re imperialism I Marx predicted that growing misery will lead to proletarian revolution in advanced capitalist countries Lenin argued that imperialism allowed capitalists to earn super profits and bribe workers in their home countries Competition among capitalist countries leads to interimperialist wars and revolutionary advance (Lenin) 5/3/2012 Mendoza--International

Political Economy--Pol Sc 180 56 Differing opinions re imperialism II Marx saw imperialism as necessary evil so backward societies can move to dynamic capitalist mode Lenin noted capitalist states will oppose industrialization in colonies (source of raw materials and market for finished goods); capitalist expansion leads to unintended problems; imperialism as moribund stage of capitalism 5/3/2012 Mendoza--International Political Economy--Pol Sc 180

57 Dependency theory Latin American in origin First IPE theory from the Third World (TW) Became dominant approach to development among Latin American intellectuals Will gain adherents all over Third World Stress on relations between countries rather than classes 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 58

Theoretical bases of dependency theory Latin American structuralism (Raul Prebisch) Marxism (esp. Paul Baran of Monthly Review) 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 59 Latin American structuralism Declining terms of trade between core and peripheral states

Relatively constant demand for TW exports Capacity of core states to develop substitutes for TW raw materials Prescribed import-substitution policies for TW countries 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 60 Dependency and Marxism

Similar focus on capitalist development Adoption of Marxist concepts and language Common commitment to political action; replacement of capitalism with socialism 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 61 Differences between dependency and Marxism Class relations are key to Marxists; relations between North and South countries are key to dependency

theorists Dependency writers stressed that capitalist development in the core states occurred at the expense of autonomous development in the peripheral states; industrialization Mendoza--International was impossible in backward states 5/3/2012 Political Economy--Pol Sc 180 62 Basic tenets of dependency Unequal exchange between core and peripheral states

Capitalist states ally with peripheral elites to prevent TW industrialization or to allow only dependent development Delinking/socialist revolution as real solutions to dependence 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 63 Critique of dependency Vague key concept (dependence) and prescriptions for change Too much emphasis on external constraints Failure to account for NICs (Bill

Warrens critique of Lenin and support for Marx; imperialism as pioneer of capitalism, not its last stage) 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 64 World-system theory Unit of analysis is the world system instead of national economies or states World system: a unit with a single division of labor and multiple cultural systems

5/3/2012 World empire: world system with common political system World economy: world system without common political system Mendoza--International Political Economy--Pol Sc 180 65 The modern world system Emerged in Europe during long 16th century (1450-1640) Essential feature: production for

sale in a market for profit Capitalism also involves appropriation of surplus of the world economy by core areas 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 66 The semi-periphery Semi-peripheral areas have more capital-intensive industries than peripheral areas but less than core states Areas can ascend/descend across the three zones of the world system

5/3/2012 Mendoza--International Political Economy--Pol Sc 180 67 Effects of semi-peripheral existence Has dual role as exploiter and exploited Contributes to greater political stability of capitalist worldeconomy; lessens political polarization Weakens periphery and strengthens dominance of core Mendoza--International areas

5/3/2012 Political Economy--Pol Sc 180 68 Future of capitalist world system Contradictions will threaten its long-term survival Crisis indicates inability of system to reproduce itself Wallerstein believes system is now in crisis which could lead to its demise and replacement 5/3/2012 Mendoza--International Political Economy--Pol Sc 180

69 Critique of world system theory Marxist critique: too much emphasis on relations of exchange Vagueness of future prospects Eurocentric view of the emergence of world system; European world system is offshoot of an older world system based on the Middle East 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 70

Imperialism Open Marxism Dependency and World Systems Theory Marxism Objectives understand the meaning of critical theory when applied to the study of IPE Gramsci understand how critical approaches to IPE relate the

other traditions we have studied so far outline and evaluate the main ideas of Robert W. Cox as they apply and to assess their influence and usefulness consider the emergence ofMendoza--International Much more prominent in British/nonAmerican transnational historical Political Economy--Pol 5/3/2012 Sc 180rather than American IPE 71

Critical theory / Frankfurt School Critical / Gramscian / Coxian / transnational historical materialist IPE What is critical about these critical approaches? Theory is always for someone and for some purpose. All theories have a perspective. Perspectives derive from a position in time and space. The world is seen from a standpoint definable in terms of nation or social class, of dominance or subordination, of rising or declining power, of a sense of immobility or of present crisis of past experience, and of hopes and expectations for the future The more sophisticated a theory is, the more it reflects upon and transcends its own perspective; but the initial perspective is

always contained within a theory and is relevant to its own explication. There is accordingly, no such thing as a theory in itself, divorced from a standpoint in time and space. Robert W. Cox Social forces, states and world orders: beyond international relations theory, Millennium 10(2), 1981. 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 Do you agree? Is value-free, objective theory impossible? If we accept Coxs dictum, how should we

think about important conventional theories of IPE such as liberalism and 72 realism? Theory Problemsolving Puzzle solving within the terms set by a particular perspective; non-historical or a-historical; assumption of

fixity; conservative 5/3/2012 Critical Reflective on process of theorising and does not take for granted existing institutions / ideas; historical change; possibilities for change Mendoza--International Political Economy--Pol Sc 180

73 Gramsci and the reconceptualisation of hegemony Gramscis problem: or how is class rule maintained Why has there not been an overthrow of capitalism in the most advanced capitalist states? in capitalist society? coercion Hegemony - Not brute domination Implications for

IPE? Strategic implications counter-hegemony 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 - Intellectual and moral leadership - Cognitive dominance via the dispersion of capitalist ideas - which come to be regarded as commonsensical/normal - Class rule via consent 74

The neo-Gramscians: Cox and Gill The Canadian scholar, Robert Cox, is particularly responsible for introducing Gramsci to the study of world politics through the essays 5/3/2012 Social forces, states and world orders: Beyond international relations theory (1981) Gramsci, hegemony and international relations (1983) Mendoza--International Political Economy--Pol Sc 180

75 Theoretical approach The state is ontologically central in mainstream approaches Neo-Gramscian theory uses an approach which identifies state formation and interstate politics as moments of the transnational dynamics of capitals accumulation and class formation 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 76

Robert Coxs research programme in IPE Historical structures persistent social practices, made by collective human activity, and transformed through collective human activity Robert W. Cox Production, Power and World Order, Columbia University Press, 1987, p. 4 Intersubjective meanings 5/3/2012 Interaction of Ideas

Material capabilities Collective images of Mendoza--International social order Political Economy--Pol Sc 180 Institutions 77 Implications of Cox claims There can be no simple separation between facts and values All theorists inevitably bring their values

to bear on their analysis, consciously or not Cox argued that existing IR theory (esp. realism) are for those who prosper under the prevailing order; it reinforces and legitimates status quo by making the current configuration of IR appear natural and unchangeable Mendoza--International 5/3/2012 Political Economy--Pol Sc 180 78 Problem-solving vs. critical theory Problem-solving theory accepts the parameters of the present order

and helps legitimate an unjust system Critical theory attempts to challenge the prevailing order by seeking out, analyzing and, where possible, assisting social processes that can lead to emancipatory Mendoza--International 5/3/2012 Political Economy--Pol Sc 180 79 change Nature of critical theory Critical theory contributes to emancipatory goals by developing a theoretical understanding of world orders that grasps

5/3/2012 the sources of stability in a given system the dynamics of processes of change Mendoza--International Political Economy--Pol Sc 180 80 Coxs use of hegemony Cox transposes Gramscis notion of hegemony to the international realm arguing that hegemony is as important

for maintaining international order Successive dominant powers have shaped a world order that suits their interests Dominance was result both of coercive capabilities and broad consent for the world order even among those who are disadvantaged by it Mendoza--International 5/3/2012 Political Economy--Pol Sc 180 81 Free trade as hegemonic idea

For the two hegemons that Cox analyzed (UK & US), the ruling hegemonic idea has been free trade The claim that free trade benefits everybody has been so widely accepted that it has attained common sense status 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 82 World hegemony accdg. to Cox Not merely an order among states An order within the world economy with dominant mode of production

which penetrate all countries and links into subordinate modes of production Also a complex of international social relationships which connect social classes of different countries 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 83 World hegemony & Cox II World hegemony can be described as social, economic and political structure World hegemony is expressed further in universal norms, institutions and mechanisms which lay down the

general rules of behavior for states and civil society forces that act across national boundaries; rules which support the dominant mode of production (capitalism) 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 84 Prospects for counter-hegemony To Cox, a significant structural change in world order is most likely to come from changes in social relations and political orders in states The task of changing the world

order begins with the long and laborious process of building new historic blocs within national Mendoza--International 5/3/2012 Political Economy--Pol Sc 180 85 boundaries Transnational historic bloc and neoliberalism Cox and Gill see the development of a transnational historic bloc in the age of globalization Mobility of international finance threatens national labor and business groups and diminishes state sovereignty

5/3/2012 Mendoza--International Political Economy--Pol Sc 180 86 Key notions of Gill The notion of disciplinary neoliberalism: the market imposing discipline on economic and political actors The power of mobile international capital forces national states and classes to accept an international order that accepts free markets as the hegemonic idea The marketization and commodification of human lifeMendoza--International

(education, health care, etc) is the consequence 5/3/2012 Political Economy--Pol Sc 180 87 Sources of change Threatened classes and groups (including states) will resist the discipline of globalized capital Neo-Gramscians look favorably at the anti-globalization movements spawned by so-called global civil society as the core of counter-hegemonic struggles An important neo-Gramscian concern is trasformismo, or the process of cooptation of radical opposition by bourgeois forces Mendoza--International

5/3/2012 Political Economy--Pol Sc 180 88 Debates in IR theory since 1980s The neo-(realist)-neo-(liberal) debate Between critical theory and rationalist IR After Cold War: 5/3/2012

Between rationalists and constructivists Between constructivists and critical theorists Mendoza--International Political Economy--Pol Sc 180 89 The constructivist challenge after the Cold War Questioned the rationalism and positivism of the two neos Pushed critical theory away from grand or meta-critiques to the empirical analysis of world politics 5/3/2012 Mendoza--International

Political Economy--Pol Sc 180 93 Assumptions shared by (almost) all constructivists Actors and structures are mutually constituted or made Identities are necessary in world politics since they are the basis of interests Power and material forces acquire importance in world politics only due to ideas, beliefs Change in the international system is difficult but not impossible 5/3/2012 Mendoza--International Political Economy--Pol Sc 180

96 Constructivist approach to IPE Materialist/rationalist theory is insufficient If international politics is a social construct, so is the international economy Economies might vary for nonmaterial reasons 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 97

Consider GNP Is GNP (simply) a material fact? Cant it be also considered a shared norm? The GNP idea did not exist before the 20th century It is now an international norm to measure economic growth 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 98 SO WHAT if the economy is a social construct? 5/3/2012

Mendoza--International Political Economy--Pol Sc 180 99 SO WHAT? Changes in commonly-held norms, beliefs and institutions 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 100 Lead to

changes in economic practices and changes in the international political economy 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 101 Abdelals caveat Constructivist approaches to IPE cannot replace materialist/rationalist approaches At best, they are complementary Therefore, changes in norms cannot account for all economic

changes 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 102 How do norms relate to the economy? Economic activity is futureoriented Future outcomes are uncertain and non-computable The adoption of commonly held beliefs and conventions reduces Mendoza--International uncertainty 5/3/2012 Political Economy--Pol Sc 180

103 Changing norms and changing economic practices From mercantilism & economic nationalism to laissez faire capitalism to Embedded liberalism to Neoliberal globalization to?????? 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 104

Laissez faire capitalism Free markets and free trade Non-intervention of the state in the economy State limited to provision of public goods 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 105 Embedded liberalism (1940s-1970s) Governmental autonomy from market forces

5/3/2012 Fixed exchanged rates Capital controls Independent monetary policy (for full employment and control of inflation) Domestic welfare states (insurance against risks of participation in international economy) Mendoza--International Political Economy--Pol Sc 180 106

Neoliberal globalization State intervention is anathema Markets are not simply seen as mechanisms for economic coordination; they are considered intrinsically superior to any other institution 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 107 Summary of economic practice Pendulum movement from state intervention & activism to free

markets & liberalization and back Is neoliberal globalization a permanent human condition? 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 108 Benjamin Cohens trans-Atlantic divide (2007) American IPE: hard science, positivist, empiricist, formal modeling and quantification, problem solving orientation British IPE: philosophical, normative, eclectic, big picture orientation

5/3/2012 Mendoza--International Political Economy--Pol Sc 180 109 The return of economics to American IPE New paradigm in American IPE: open economy politics (OEP) Coined by Robert Bates and promoted by David Lake 5/3/2012 Mendoza--International Political Economy--Pol Sc 180

110 The OEP paradigm The analysis starts with individuals with defined interests It then proceeds to how political institutions aggregate these individual interests The last step is to study how the aggregated interests are translated into government policy (say tariff policy) 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 111

Caveats re IPE theories Traditional presentation is stale and disregards diversity and cross-fertilization Availability of newer IPE perspectives such as constructivism, feminism, etc. Focus on competing ideological paradigms severs connection between material interests of actors and ideas they espouse or support (e.g. firms with strong market position advocate for free trade while weaker ones dont) IPE theories must be assessed not only on how they deal with central theoretical issues but also on key IPE problems 5/3/2012 Mendoza--International Political Economy--Pol Sc 180

112 Parting words Thanks for your patience All the best! 5/3/2012 Mendoza--International Political Economy--Pol Sc 180 113

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