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Readings Summary for Global Political Economy Final Exam 2022
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Political Science 222
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Political Science 222:
Week 1: Global Political Economy (GPE) as a discipline:
Introduction:
• International Political Economy (IPE) emerged as a discipline in the mid-1970s while
the cold war was taking place. By the very name we can say that the discipline
focused quite heavily on the state as the most important unit of analysis that IPE
scholars studied.
• Global Political Economy (GPE) 1980s (obsession with globalisation) → especially of
the fall of the Berlin wall in 1989 (end of cold war) the world became more
interconnected and new actors came to the rise that is some instances became more
important to look at than mere states. We know today that transnational companies
in terms of their wealth exceed the wealth of small nation states, therefore we
shouldn’t only look at states when we study the GPE but also other market actors
like transnational corporations and NGOs.
• GPE = the discipline (relatively new 1970s), the authors that write about it, the
courses that are offered, texts, the actual study of global political economy.
• g.p.e. = existed for thousands of years. What the global political economy means
that there is an economic and political interaction between various regions around
the world from thousands of years ago. Eg the ingredients for pizza don’t come from
Italy so in order for it to be created Italians had to be in contact with the rest of the
world.
• the reason we call it global political economy is because we want to imply that the
state is not the only factor that we study and that other actors have become as
important. We live in a globalised world, many of the problems we face are
transnational in nature and require the corporation of governments as well as non-
governmental actors
• IPE was a distinct subfield of International Relations when the discipline emerged.
The discipline has grown to be increasingly important because we do know that
many issues cannot be studied purely from a political or economic perspective.
Therefore we see in many large universities around the world that they have
separate IPE departments.
Why?:
• Two important events that led to the creation of the discipline of GPE
• Arab Oil Embargo (1973-1974) → in the early 1970s the war in the middle east.
There is a large divide between Israel and other middle eastern countries (like
today). At the tie, the US and Netherlands supported Israel in the war. Middle
eastern states (specifically ones how have large oil reserves) did is put a large oil
embargo on the US and the Netherlands because they were supporting Israel. What
an oil embargo is = middle east refused to supply oil to the US and Netherlands. At
the time western Europe and US was heavily industrialised, thus reliant on oil. The
Netherlands is the largest ort where oil can be imported to the rest of Europe.
Essentially what it meant was that there was a great shortage of oil in the US and
western Europe. Scarce resource = prices soar. Whenever the price of oil is high, all
prices go up = inflation. Huge inflation rates in US and Europe and Richard Nixon
, (president at the time) instituted a number of economic measures in order to fight
the inflation and rising unemployment rate. Nixon immediately ceased the direct
convertibility of the US dollar to gold = dollar was no longer pegged to the value of
gold = Nixon shock
• ‘Nixon Shock (1971) → other currencies were no longer pegged to the US dollar,
which led to a breakdown of the Bretton wood system that was created post WW2
in order to control and order the international financial system.
• When these events happened political science scholars as well as economists
realized they could not simply rely on their theoretical frameworks and their
disciplines in order to explain these two events. We needed to have a discipline that
put economics and politics together in order to be able to understand these issues.
• Interdependence (globalization) became a growing concern → states were
increasingly dependent on each other in terms of trade, production, finance etc.
therefore focusing on the domestic level was also not sufficient to explain major
issues
• Wide variety of actors (esp. non-state actors ) became relevant → all types of
organizations that transcend boarders and cannot be controlled by policies of one
state, but on an international level eg covid-19 therefore cannot rely only on states
• Efforts to include ‘economics’ alongside traditional security concerns of i.r.
Studying GPE:
• Just politics or just economics insufficient
• GPE demands an interdisciplinary approach → work within a framework where we
combine economics (focus on the market), politics (focus on power) and perhaps
also sociology (looking at how values, societies and norms influence certain events)
• Allows for greater complexity – therefore greater explanatory power? → cannot just
explain war (two militaries going to war with each other) but can explain the trade
war between US and China or Covid-19 effects on markets globally. More disciplines
you combine, the more issues you can explain . can predict what happens in the
future, analyze more issues, and perhaps solve certain problems that we are facing.
• “The whole point of studying IPE rather than IR is to extend more widely the
conventional limits of the study of politics...” - Susan Strange
Wealth vs Power:
• IR / Politics: Power as the ability to produce intended effects (tends to ignore
wealth/economics as power) → if you look at the major international for a (UN, G20,
WTO) organizations that have the intention of providing some order to the
international system, wealth matters quite substantially. It’s not just about
demographics (how many million people live within a state, or how big a state’s
military is, but also how wealthy the state is. The wealthiest states in the world
control international organizations because they have more decision making power
and more soft power to get other states to align with them on certain issues
• Economics: scarcity, distribution, consumption (tends to ignore power as
determining economic decisions) → focuses on the market. Eg the US v China trade
war that Trump instituted, power played a very significant role in terms of putting up
, tariffs against Chinese/US goods and what that implied for the respective
economies. It’s not just about the market regulating itself, power and states can
interfere and have grave consequences
• GPE: Wealth as power (disparities in wealth between nations) → combines
economics and politics. Marxism is ultimately and economic and political theory
• Political structures ⟺ economic interactions (arrows mean lead to/determine). The
one is not exclusive to the other. The US has the ability to regulate certain trade
regulations for example. Why is it after WW2 we created the Bretton wood system
that was supposed to regulate things like trade, finance. Why did we have to have
certain rules after the depression that would curb financial mechanism that can lead
to the destruction of lives.
• “[IPE is] the set of international and global problems that cannot usefully be
understood or analysed as just international politics or just international economics.”
– Michael Veseth
• “Since most economic questions are notoriously political, and almost all political
questions involve some economic considerations, one cannot describe issues any
more as ‘purely economic’ or as ‘purely political’. Both are both.” – Susan Strange
• Interplay between the state, market and society
• The State: IPE challenges IR notions of states and power by suggesting that states
can lose power to, for example, market actors → the state was the main unit of
analysis for international relations before globalization became an issue.
Transnational corporations have a huge influence on states because. They constitute
foreign direct investment so states want to lure transnational corporations because
that would mean their economies, through tax etc, could grow but then the
transnational corporation has a lot of power around policies, tax evasion etc.
• The Market: efficiency vs. power → the market is not purely about efficiency, it is
not the market that is efficient and will regulate itself, but the state can also
interfere in the market in order to achieve certain aims. Power becomes important.
• Society: what role does society and its values and beliefs play? → what is the
difference between a communist society vs other governments and the beliefs in
what role the state has in the market.
What do we study?:
• Impact of transnational corporations (production, global division of labour, gender,
the environment) → products designed in one country but made in another
• International finance (Global Financial Crisis 2007-2009)
• International trade (trade wars between the U.S. and China)
• Development & North-South relations
• Interdependence & globalisation?? (Brexit, election of Donald Trump, xenophobic
violence in SA)
• COVID-19
• The same subject can be examined in different disciplines from a variety of
perspectives → you can look at an event in international relations or an event in the
global political economy and depending on which lens/theory we use to look at that
event we will find different explanations, descriptions and analyses of what we are
seeing
• Theories explain, describe and predict (glasses with different lenses that can
completely alter the perspective you have of the world)
• Different theories have different basic assumptions about
- a) the units of analysis,
- b) the nature of the system, and
- c) the motivations of the actors (they are thus incompatible)
• essentially, why we use theories, primarily speaking, is in order to explain certain
events, why they are happening, why they take the shape the do; to describe them
by looking at them through a specific lens and also by predicting what is going to
happen in the future. All good theory in essence should be able to predict how states
and various actors will behave and therefore also predict what is going to be
happening in the future. → utility of theory = make sense, describe, explain, analyse
and change the world (critical theory)
• Theories are incompatible because they have such different views of the world. You
can combined theories, but in essence all theories are so different that there is not
really an overlap between them.
• Never allow a theory to own you → see theories for their specific utility, some
theories are more useful when looking at events than others. If theory uses you it
becomes an ideology which can become quite dangerous.
• We choose theories for their specific utility – “Theory is always for someone and
some purpose.” – Robert Cox
• Social location of observer is important → for someone. Depending on where you
find yourself in a rich suberb in the US compared to a township in SA, your
perception of the world and how you describe it will be very different. Critical
theories might be more useful for the global south whereas global north positivist
theories (realism and liberalism) might be more useful.
• → for some purpose. We use theory in order to make sense of the world but also to
call for change.
1. Economic nationalism / mercantilism (role of the state and the importance of
power in shaping outcomes in i.p.e.) → closely resembles realism in international
relations which essentially looks at the role of the state (main actor/unit of analysis)
and the importance of power in shaping the outcomes of the international political
economy. Motivations of the actors = to acquire power and to maximise power
within an anarchic system (not meaning there is chaos, but meaning there is no
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