Wednesday, February 24, 2010

A general background for international political economy

I. What is IPE: interaction of economics and politics – how political forces influence economic decision-making and how political decisions can affect the economy.

a. Substantially

i. Reciprocal influence of politics and economics

ii. Economist: purpose of economy is to maximize wealth

iii. Gilpin: political economy studies how the wealth is redistributed

iv. Trade, production, finance, and international development is the substance of IPE

1. If we were interested in the politics of finance, how would we use Frieden and Martin to set up a research question:

a. Interest, institutions and information

b. 1999-2008

i. 1999: Repeal of Glass-Stiegel

1. so we look at House and Senate: motivations, interests that have mobilized around the institutions

c. By using this format, you can break down the domestic/international barrier and even use institutions that are multi-national

b. Analytically

i. Level of analysis is international and domestic and then the interaction between the two

ii. How are the differences between international and domestic expressed? (Lake notes)

1. International political view

2. International economic

3. domestic institutional

4. domestic societal

iii. Waltz (levels of analysis)

1. International: this is what waltz wants to argue for (neorealism)

2. State

3. Individual


c. Theoretically

i. Realism

1. state-centric

2. system-centric realism

ii. Liberal

iii. Marxist (neomarxist)

iv. Constructivist/critical – tends to apply to IR, and is limited in its approach to IPE

1. agents influence structures which come back to reconstitute the agents

2. Ideas influence structures; structures can influence ideas

II. Differences between Economics and IPE

a. Gilpin: economists study the market and ho resources can best be used efficiently (rational actors), you can explain all behavior in market terms. But IPE looks at how the resources are divided

b. Economists treat economics as a hard science rather than IPE which is treated as a social science: always one answer in the model for economics, whereas in IPE there is theory and some less of the “right” answer.

c. Economists look at abstractions of markets; IPE starts with the assumption that markets are created by societies and so they are influenced by society

d. Exogenous: Outside the variables included in the models

e. Endogenous: Variables that are important and included in the model

f. Market: Economists – an entity; IPE – created and embedded in a societal and historical context

g. Purpose of Market: Economists – develop wealth and efficient use of resources; IPE – distribute resources

III. Evolution as a Subfield

a. 19th century

i. Ricardo

ii. Adam Smith: Wealth of Nations and A Theory of Moral Sentiment

iii. John Stuart Mill

iv. Marx

v. They were political economists because they looked at the interaction of politics and economics

b. 20th century

i. Professionalization of economics

1. Marshall (1890)

2. Robbins (Early 1930s)

3. Emphasize methodological individualism – all actors can be treated as individuals. They individuals always pursue their own self-interest through a cost-benefit analysis.

4. All resources are scarce (neoclassical economists)

5. All markets are natural – emerge naturally and can be self-regulating

ii. Professionalization of IR

1. First department of IR – University of Aberswyth in 1919 after WWI: Purpose – how to prevent another world war.

2. After WWII – the US became the leader

3. Leaders in IPE:

a. Koehane and Nye

iii. When did the convergence of economics and politics occur in US?

1. 1970s and on because of a series of events…..

2. US hegemony declines

3. 1971 – Bretton-Woods, US taken off gold standard

4. 1973 – oil crisis

5. 1974- recession

6. 1976 – increasing unemployment, Britain goes to IMF for loan

7. 1979 – oil shock number 2

8. 1982 – debt crisis

a. In order to understand you need the integration of economics and politics

9. End of Cold War (late 1980s) – need more economics and politics to combine

iv. Developments within economics

1. Public choice: Rather than market failures there is only government failure (failed policy) but not because people misunderstand economic policy it is because there are distortions in government.

a. Keynsians were emphasizing market failure and how to prevent market failure

b. Public choice people think humans are rational actors – but to the extent the government is a rational actor which pursues its own interest – it can intervene in the market to cause corruption

i. Causes rent seeking behavior

c. No such thing as public good – only can pursue self-interest and individual goods

d. This approach gets public acceptance in 1962 when “Calculus of Consent” is published

2. Neoclassical Institutionalism: Motivated by the economy and ignoring social factors – institutions are formed to promote the efficient use of resources

3. New Political Economy

a. Economists who will apply basic assumptions of economics to the study of poliy/politics

v. Within IR and IPE (Koehane articles)

1. 1920 -1930s: Idealist is the predominant paradigm – institutions can be created to manage conflict

a. Kellog-Brian Pact (Pact of Paris): All signatories to the league of nations will renounce violence as a foreign policy instrument – all conflicts would be resolved peacefully

b. 1931 – Italy invades Ethiopia and Japan invades Manchuria: there are no punishments, and so this approach is lost.

2. 1960’s – 1970’s Realism (IR is about the unending struggle for power – just like all politics; politics is supreme over economics; states are the supreme actors)

a. Transnationalism emerges as the challenge to realism

i. States are sometimes important, but sometimes international organizations can help

ii. There are other areas that security issues

iii. Not a zero-sum game

iv. The use of force is becoming less useful in international politics – not that it is unimportant or irrelevant, it’s just that force isn’t always the answer

3. 1970s

a. Hegemonic stability theory: The presence of a hegemon makes the IR system more likely to maintain stability

b. Realist interpretation: the hegemon will pursue the national interest (malevolent hegemon)

c. Liberal interpretation: the hegemon can help create the conditions to purse the global or international interests – national interests can overlap with other interests – and create other motivations for the hegemon

4. 1980’s

a. NLI

i. Even when the hegemon declines, the regimes will remain because the states realize it is in their national/rational self-interests to follow the rules and regulations of the regimes

b. Neorealists

i. Once the US begins to lose its status as the hegemon, it is unlikely that the international regimes will stay in place b/c the regime and the states cannot be self-governing…skepticism of international oranizations

c. Constructivists:

i. The regimes continue regardless of hegemony because the rules of the regime have become ingrained in the people

d. A continuation of the old debate between realism and liberalism

5. 1990’s: Constructivism vs. Rationalism (realism and liberalism are both rationalism)

a. For the rational:

i. Agents (domestic focus) or structure (systemic focus)

1. But don’t look at the interactions

ii. Material power

iii. interests

b. For the reflective/constructivists:

i. Identities

ii. Ideologies

iii. Agents and structures are integrated with each other and influence each other

vi. British school

1. Argue that the American approach was wrong

2. focuses on historical and institutional approaches

3. more willing to look at critical approaches that combine traditional approaches

4. Willing to include sociologists

5. Tend to study more international development that the US

6. Susan Strange: Critiqued regime theory

a. Most prominent British IPE

b. Regime theory is a device to legitimize US imperialism

c. The debate – realism/liberalism – is just legitimizing US and never considered the redistributional aspects of the regimes they were studying

IV. Overview and evolution of IPE – Historical Junctures

a. Post WWI 19th century liberalism

i. Repeal of corn laws (1846)

1. Tarrifs on grain applied by the British against anyone who tried to import grain to Britain (Germans and French really)

2. This means that taxes applied to agricultural imports are reduced and eliminated

ii. Coben-Chevaliar in 1860’s

1. Uk and France

2. Agreed to lower tarrif’s to allow trade between the two countries

3. Signifies that European countries are going to subscribe to liberalization of trade, finance and immigration

b. WWI - Return to Protectionism

i. US

ii. 1921 safeguarding of industries act

iii. 1922 Ford act

iv. 1930 Smoot-Hawlie Act

v. 1932 @ Ottowa conference

1. British go off the Gold Standard, and return to an Imperial Preference System (rely on colonies) signal protectionalism that has become institutionalized

c. Post WWII

i. Bretton-Woods Institutions

1. IMF (1944)

2. World Bank (1945)

3. GATT (1947)

a. Becomes subsumed within WTO in 1995

ii. G8, G7, G5, G3, G1: informal meetings of world’s largest economies

d. 1973 – liberalization of finance

e. 1995 – formation of

f. 1990s – repeal of Glass-Stiegel

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