1. World Views – Part 1 The Filters By Which We View the World Linda Young POLS 400 International Political Economy Wilson Hall – Room 1122 Fall 2005

2. Linda Young, POLS 400, International Political Economy Liberal, Realist, and Historical Structuralist Perspectives Each have analytical and normative components – Analytical component (how it helps us understand the world) – Normative component (commitment to a value) Economic Liberalism: based on a commitment to a market economy Cannot be disproved or proved by empirical research Realism: commitment to the nation state and the use of the nation state as a unit of analysis – Gilpin is a state-centric realist, using its analytical capability to understand the world, but his normative commitment is liberal in nature Structuralist: structure determines outcome – Includes Marxism, dependency theory and world systems theory

3. Linda Young, POLS 400, International Political Economy State-Centric Realism Recognizes the central role of the state, security and power in international affairs Anarchic nature of the international system – Does not mean constant warfare – means that there is no higher authority that the state can appeal to in times of trouble Primacy of the state in international affairs – Principal actor – No body sovereign over it Central concerns of the state are military security and political independence – power and power relations are important – but power can be military power, economic power, or political power

4. Linda Young, POLS 400, International Political Economy Other Actors Firms and multilateral organizations But, “the economic and foreign policies of a society reflect the nation’s interest as determined by the dominant elite of that society”

5. Linda Young, POLS 400, International Political Economy How Did This Perspective Develop?  Contributed to the development of the state by emphasizing central state authority vis-a-vis external forces –Power and wealth legitimate goals of the state –Power achieved through the accumulation of gold and silver –Unification of territory through emphasis on the state  Promotion of exports – restriction of imports – Trade as a zero-sum game  Mercantilist Period: Europe 15-18th centuries

6. Linda Young, POLS 400, International Political Economy Economic Policies Following Mercantilism Ideas and Consequences about Gold But not all countries can run trade surpluses Trying to can lead to “beggar thy neighbor” policies (critique by Adam Smith)  Example is the interwar period  Declined in post-WWII (liberalism strong then) Much evidence in trade negotiations today – free trade theoretically best unilaterally, but counties won’t Zero-sum world with states concerned with absolute gains and losses

7. Linda Young, POLS 400, International Political Economy Economic Nationalism as a Form of Mercantilism  Focused on the development of the domestic economy – key concern the relationship between economic power and political power –State must assist in development –Give subsidies to domestic industries to help them compete  Examples? Newly industrializing countries (NIEs)?  From Alexander Hamilton to Ross Perot and the “giant sucking sound” Alexander Hamilton Ross Perot

8. Linda Young, POLS 400, International Political Economy Neo Mercantilism  Government promotion of their industries  The same idea – just new clothing – less visible forms of promoting domestic industry  Lessen dependence on oil imports  Realism had a resurgence in the late 1970s-80s –Disarray due to ending of the cold war and also the uncertainty in the world economy

9. Linda Young, POLS 400, International Political Economy Assumptions of Realism 1.States are the major actors in international affairs 2.States behave as unitary rational agents that act to protect their vital interests 3.International anarchy is the principal force shaping the actions of states 4.States in anarchy are preoccupied with power and security, are predisposed toward conflict, and often fail to cooperate even in the face of common interests 5.International institutions affect the prospect for cooperation only marginally

10. Linda Young, POLS 400, International Political Economy Gilpin Realism is an analytical perspective not a moral commitment to the nation state  Realist some regret lack of restraint on the state and lack of moral commitment  Difference between realism and nationalism: Realists paint a picture of what they see without endorsing it Robert Gilpin

11. Linda Young, POLS 400, International Political Economy USA Great Britain Hegemonic Stability Theory  Two hegemons in Western history: Britain (19 century) and United States (post WWII)  Hegemon when there is an extremely unequal division of power  International system most stable when a dominant power is willing to pursue policies to create and maintain a liberal economic order and when it is powerful enough (controls enough resources) to do so  Without a hegemon, more difficult to maintain an open trading regime  Other factors can account for an open trading regime

12. Linda Young, POLS 400, International Political Economy Consequences of Hegemony Necessary, sufficient, for an open and stable world order? Creates international regimes: sets of implicit or explicit principles, norms, rules and decision making procedures for a particular area – US endorsed an open trading system (but not an open financial system, not agriculture nor textiles) Debate over the importance of declining hegemons to the decline of regimes Perhaps a world with states of equal power could negotiate better regimes

13. Linda Young, POLS 400, International Political Economy Liberalism (liberal/liberty- same Latin root) Immanuel Wallerstein US Declaration of Independence  Reaction to abuses by the state and the church  US Declaration of Independence NOT a political perspective as commonly thought with an active role for the state in helping the poor Liberalism defined by belief in freedom under the law, individual rights and free markets Wallerstein: liberalism began with the French Revolution with the idea of political change and need for the state to be legitimated by the people – conservatives resisted that – so for minimal state and individual liberty Long history of condemning the role of the government in the market

14. Linda Young, POLS 400, International Political Economy Liberal View of Society  Society and economies constructed so that individual initiative is critical  Positive-sum game – the free market  Free market as an essential part of the liberal society – invisible hand  Liberals believe in the importance of the freedom of the individual – right to be treated as ethical subjects not means or objects

15. Linda Young, POLS 400, International Political Economy Liberal View of the Market Liberals see the outcome of the market as being restrained by competition – so that while an individual acts with self-interest, the outcome is positive – But market power is restrained in this case Mercantilists see competition as cut throat with losers – you need power to get what you want

16. Linda Young, POLS 400, International Political Economy Liberal View of Politics  John Locke in England  Thomas Jefferson in the US  Citizens have certain positive rights (freedom of speech and freedom of the press)  And negative rights (freedom from state authority- unlawful arrest)  With a conflict, diffused power and the guarantee of certain rights will result in resolution of conflict peacefully Thomas Jefferson John Locke Freedom of the Press of Speech Freedom of

17. Liberal View of Foreign Relations  Cooperation and harmony –Free trade – free commerce makes a nations industry efficient and maximizes welfare –Economic ties between countries diminish the need for security  Britain’s corn laws – relationship between economic policy and political representation  John Stuart Mill (1806-1873) –Liberalism as an important destructive force due to role in revolutions, etc. – weakened central authority –Wanted more than the accumulation of wealth –Wanted social progress and intervention by the state – provision of education, etc. John Stuart Mill

18. Linda Young, POLS 400, International Political Economy John Keynes and Keysianism More active role for the economy Beliefs shaped by the failure of market economies in the great depression Because of risk and uncertainty, individuals could act rationally and the result could be destructive John Keynes Consequences of thrift – less goods consumed, and thus fewer workers needed – can create an unwanted outcome State must act in these circumstances – should spend

19. Linda Young, POLS 400, International Political Economy Keynes influenced the development of our multilateral institutions – embedded liberalism IMF to correct lack of demand – state to step into correct failures of the market State with an important role in the macro economy Embedded liberalism has a broader meaning

20. Linda Young, POLS 400, International Political Economy New Meaning of Liberalism  In the 1960s and 1970s the state had a bigger role  Liberal meant an emphasis on the market and it came to mean an emphasis on state action in many realms –Space exploration, the Vietnam war, civil rights and regulation of business and the environment –Reaction by Friedrich Hayek and Milton Friedman

21. Linda Young, POLS 400, International Political Economy Critiques of Realism  Tend to ignore North-South issues  Emphasis on relative gains undermines international institutions Too much emphasis on politics – early postwar stress on security a drawback