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Readings Summary for Global Political Economy Final Exam 2022
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ECS1601 EXAM PACK 2024
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Lecture notes for Political Science 222
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lecture 7O’Brien — Chapter 1: Theories of Global Political Economy
understanding the global political economy
the same event can be analysed in di erent ways
e.g. interpretations of the 1997 Asian nancial crisis
1. liberal
• causes: crony capitalism, lack of transparency
• key issues: corruption, lack of implementation of liberal economic practices
• lessons: need for increased transparency and good practice in developing countries
2. state power
• causes: over-rapid liberalisation, reduced state capacity to regulate
• key issues: clash of Anglo-American vs. Asian models
• lessons: need to limit nancial speculation through state policy
3. critical
• causes: predatory liberalism, power of nancial interests, systemic aws
• key issues: human su ering caused by nancial collapse
• lessons: need for a reform of the international nancial system and to defend national
system
theories
- developed to help determinate which facts are most important and what signi cant
relationships are there between di erent events
- used for di erent purposes
• prioritise information and allow individuals to turn their attention to the most important
issues
• make predictions about the future so that action can be taken to prepare for upcoming
events
• plan action or mobilise support for particular action
- in IPE there are main perspectives/schools of thought that explain developments in global
political economy
• there is a wide variety between and within these approaches
• there are further approaches that also contribute (environmentalism, feminism,
poststructuralism)
- [see table page 20]
1. economic nationalism
- focus on the role of the state and the importance of power
- variously termed: ‘mercantilist’, ‘neo-mercantilist’, ‘statist’, ‘state-based theory’,‘power
politics’ or ‘economic nationalist’
- equivalent IR theory is realism
- protection of the national unity at the centre of the analysis
- originated with the expansion of the nation-state in 15th century Europe -> mercantilism’s
zero-sum-game
- key actor = the state
• primacy of the political over other aspect of social life
• focus on group rather than individual
- assumptions
1
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, 1. the inter-state system is anarchical and it is therefore the duty of each state to
protect its own interests
2. economic policy should be used to build a more powerful state
- economic nationalist though is both
• descriptive: economy is governed by political power; markets are not natural but
exist within a social context
• predictive: policy advice aims at maintaining state power
- the global economy is subordinated to the international political system
• IPE is a struggle for power and wealth -> state has to ensure that citizens reap
advantage from international production and exchange
• economic activity is subordinated to political goals / economic actors (e.g. rms) to
political authority
- as a result, the nature of the global economy re ects the interests of the most powerful
states
- two perspective on globalisation
1. defensive: fear that globalisation may prevent state actors from ful lling their goals
2. sceptical: globalisation is largely a myth and the power of the state remains
undiminished
- international economic relations are perceived as a zero-sum-game -> con ictual
system: state control or assistance is needed in production, consumption, trade and
investment
- today, countries continue to protect their markets from foreign competition even if they
committed themselves to free trade
2. liberalism
- emerged in 18th-19th century Britain as a critique of economic nationalism, arguing that
protectionism and restriction of economic activity were impoverishing states -> Ricardo
- key actor = individuals and their behaviour
• individuals’ pursuit of state interest will maximise the bene ts of economic exchange
for society
- rms as a source for economic wealth
- state viewed with hostility
• individuals need to engage in production, consumption, and exchange freely
• state control distorts bene ts and adds costs to participants in the market
- transnational corporations (TNCs) are a positive force, as they bring advantage to:
• the home country through technology, managerial skills, capital
• the host country through transfer of capital, technology, access to market
- the market is at the centre of economic life -> economic progress results from the
interaction of diverse individuals pursuing their own interest
- focus: search for wealth
• the open market enhances growth and wealth, rms disseminate material across the
globe
• state intervention leads to economic failure
- support for globalisation, but emphasis on the need for attention to market reform
- IR and IPE are essentially cooperative
• economic relations are a positive sum -> trade always bene ts both countries
• economic nationalist policies are to be avoided because they lead to con ict ->
increased international interaction creates prosperity and peace
2
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, - liberal neoclassical economics (= rational decision makers in free markets) dominates in
the eld of economics
• international institutions (WTO, IMF, World Bank etc.) are founded on principles of
liberal trade and preach liberal prescriptions to those interacting with them
• TNCs urge states to open their markets to the free ow of investments
=> the market continues to expand by bringing in more members and by
encompassing a wider range of activities (such as services)
- challenge: 2008 nancial crisis t back the debate about the role of the state in economic
crises
3. critical theories
- born in reaction to liberal thought, they question the way the world is organised and seek
to change it, challenging established forms of organisation with a critical attitude
- most common variants:
• Marxist theory: class and interests of workers rather than state interests
• feminism: exploiting relationship between men and women
• environmentalism: examination of how people shape and are shaped by the
environment
• neo-Gramscian theories: role of transnational classes and ideology in understanding
global economy
- stress on the nature of oppression within and across societies and the struggle for justice
(waged by or on behalf of workers, women, and the environment)
Marxist theory
- key actor = class
• collectivist approach of economic nationalist perspectives, but rejecting statism
• relation of exploitation between two classes: those who own the means of
production (bourgeoisie) and those who sell their labour power to them (workers)
- rms are instruments of exploitation
• the concentration of capital in the form of TNCs is imperialistic, as it expresses
economic dominance
- the state represents class interests rather than the harmony of communal interests
- market relations are exploitative, economic relations are inherently unstable and
con ictual because of three tendencies of capitalism:
1. tendency for the rate of pro t to fall sees capitalists engaged in erce competition
with each other, which tends to drive down workers’ wages
2. capitalism leads to uneven development as some centres increase their wealth
and growth at the expense of others -> uneven development sows the seeds of
con ict between countries
3. capitalism leads to overproduction or underconsumption, giving rise to uctuations
in the business cycle and undermining social stability
- dependency theory = revision of this thought that explains persisting poverty in many
states
- globalisation as
• a set of prescriptions that support free markets
• an instrument to increase the power of capital over labour, of the West over other
states
• an instrument designed to further the interests of the leading capitalist power, the
US
=> it is merely the contemporary version of imperialism
3
fi flfi fi fi fl fi fl
, - international economic relations are a zero-sum game, fundamentally con ictual -> two
forms of con ict
1. within states: capitalists vs. workers’s competing interests
2. internationally: dominant states suppress weaker ones
- international con ict is inevitable because of the drive for pro t
O’Brien — Chapter 3: Forging a World Economy 1400-1800
a full understanding of today’s global economy requires familiarity with patterns that were initiated
hundreds of years ago
- Croce: “however remote in time events there recounted may seem to be, the history in reality
refers to present needs and present situations wherein those events vibrate” -> history is
constantly rewritten in light of existing debates and sensibilities
e.g. debate between cultural and global historical explanations of the Rise of the West:
concerned present, future, and past -> understandings of its roots can be used in other societies
to obtain the same success
- culturalists
• poverty is caused by the behaviour of the poor
• the poor are responsible for improving their position
- historicists
• poverty is a result of the relationship between the poor and the rich
• the system of political and economic relations must be changed to create equality
how far back in time should we go to gain a better understanding of today’s patterns of inequality
and wealth generation?
- Diamond’s Guns, Germs, and Steel: the Fate of Human Societies (1997): we need to go back
11,000 years and consider environmental and geographical factors
- this book: investigation begins in the late 1400s, when the major regional economies in Asia,
Africa, Europe, and the Americas were linked together through European expansionism =
beginning of the rst truly worldwide economy
arguments of this chapter
1. the regional political economies that were connecting during this period varied greatly in
terms of social, political, and economic organisation
2. the heterogeneity created a variety of interactions from free exchange to open welfare
and slavery
regions of the world economy
snapshot of several areas of the world prior to European contact with the Americas, which is what
created the rst worldwide political economy
- economic activity was on the local level, mainly agricultural production
- intercontinental trade routes moving luxury goods had existed for thousands of years
- at the heart of these trade routes lay di erent civilisations with distinct political economies
Abu-Lughod’s argument (1989): there was a system of trade between China and Europe,
composed of 8 overlapping regions where economic activity was concentrated, but they were
linked to neighbouring regions allowing products to move from eastern Asia to Western Europe
- she omits African trading regions, added here
4
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