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Lecture summary GPE academic year 2021/2022
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Lecture summary Global Political Economy. All lectures, 1-12.
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Lecture 1What is global political economy?
08/11/2021
There are 2 ways to interpret IPE:
* Object of study
・International political economy (IPE): focus on states and interstate relations
・Global political economy (GPE): not only state actors
→ e.g., multinational organizations, NGO’s, world health organization, world bank,
international monetary fund, terrorist groups, social movements
* Field of study/method of research
・Often seen as a sub-field of international relations (IR)
・Also, an aspiration of multi-disciplinarity
Defining the substance of the field:
* Political economy
・Classical political economy: philosophers & economic thinkers (e.g., Adam Smith)
・The study of the relationship (mutual constitution) between production & power
→ who gets what, when & how?
→ politics is also about the distribution of things
・Interaction and interrelations between states & markets
* International political economy:
・Interaction of the economic and the political within the international/global system
States & markets in capitalism:
* Capitalism
・An economic system based on private ownership of the means of production, wage
labour and market competition
* Market
・Concrete place or social institution in which goods & services (‘commodities’) are
bought and sold (exchanged via money)
* State
・A system of political rule (set of institutions) in which exclusive authority
(including the monopoly over the legitimate use of violence) is exercised over a
defined territory
→ Markets need states
→ Markets are created by states
States versus markets:
→ The interdependence of states and markets in capitalism
* Markets can’t function without states (institutional preconditions):
・Property rights; rule of law
・Money
・Competition (law)
* States in capitalism need market economy (capital) to produce economic prosperity citizens
(political legitimacy) and tax revenue
Cui Bono? = Who benefits?
Next time: rival perspectives in IPE:
1
,* (Economic) liberalism
・Efficient markets
・Competition firms; co-operation states
* Mercantilism (Realism)
・State power
・National wealth and security
・State competition
* Structuralism (Marxism)
・Dynamics of capitalist system
・Class (conflict), inequality
4 levels of analysis & 4 structures:
* 4 inter-related levels:
・Global
・Interstate
・State-Societal
・Individual
* 4 inter-related structures:
・Production & trade
・Money & finance
・Knowledge & technology
・Security
Lecture 2
Approaches I: Liberalism
10/11/2021
1. The evolution of the liberal perspective
2. Core ideas of economic liberalism
3. Neoliberalism (political ideology)
4. The Keynesian critique (heterodox liberalism)
Trial question: What does NOT relate to a key difference between the perspectives of
orthodox and heterodox liberals?
a) The assumption that capitalist market economies are better at producing
economic growth and prosperity than non-market systems.
b) The assumption that governments should adopt a laissez-faire role with respect to the
market.
c) The assumption that almost everyone benefits from globalization.
d) The assumption that the best way to fight a recession is through the adjustment of
prices in free markets.
1. The evolution of the liberal perspective
2
, Orthodox and heterodox liberalism, different phases (historical context):
* Orthodox I: classical liberalism in the context of the British industrial revolution.
* Orthodox II: neoclassical economics developing in late 19th century/early 20th century.
* Heterodox I: Keynesianism after the Great Depression and in the post-war era.
* Orthodox III: neoliberalism from the 1980s onwards in context of contemporary
globalization.
* Heterodox II: new critiques (within broad liberal paradigm) of ultra-free market economics
and neoliberal globalization after 2008.
2. Core ideas of (orthodox) economic liberalism
Core ideas of (orthodox/classical) economic liberalism:
* Reason and progress driven
* Liberty from the state (but property rights): laissez-faire
* (Rational) individual choice
* Self-interest serves society’s interest, promotes the collective good and maximizes welfare.
→ Liberalism focusses on the side of human nature that is competitive in a constructive
way. According to liberalists, humans are guided by reason and self-interest, not by
emotions. This is not a disadvantage but an advantage.
* Market efficiency: efficiency emerges when the market is free to determine the price of
things (= price mechanism)
→ Critique Ha-Joon Chang: “There is no such thing as a free market”. All markets have
(often unacknowledged) boundaries that are politically defined (not everything is for sale).
E.g., child labour, organs.
* Adam Smith (1723 – 1790):
・The Wealth of Nations
・The ‘Invisible Hand’ and the cooperative, constructive side of human nature.
* David Ricardo (1772 – 1823):
・The ‘Law of Comparative Advantage’
→ Idea that each nation or state should specialize in producing those goods that it
can produce most efficiently.
・Followed Smith in his understanding of the economy and how the economy worked,
but he related this to international relations (international trade).
・Free trade will make nations more efficient.
・Very utopian/liberal idea.
* John Stuart Mill (1806 – 1873):
・Rewrote some of Smith’s ideas: acknowledged that the market could create
particular problems and that it could lead to unequal outcomes. So sometimes the
state should intervene → need for market-correcting (selective) role of the state.
Neoclassical economics (20th century)
* ‘The market is always right’ → dominance liberal perspective in modern economics.
* With the aid of mathematics and new ideas about ‘micro-economics’ classical laissez-faire
3
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