1. IPE Classical Theories Shunji Cui Department of Political Science School of Public Affairs Zhejiang University Email: ssjcui@zju.edu.cn IPT 夏， L6:

2. Introduction I: What is IPE IPE Politics Power Economics Wealth Issues: War, Peace conflict, cooperation between states High Politics Issues: Wealth, poverty Who gets what in the Int. system Low Politics

3. IPE: If economics is about the pursuit of wealth and politics about the pursuit of power, the two interact in complicated and puzzling ways. It is this complex interplay in the international context between politics and economics, between states and markets, which is the core of IPE. Eg:  The ‘free market’ ≠ freedom from politics.  In order let free market function well,  we need many political regulations and arrangements: such as contracts, consumer producer protections, taxation, working conditions,,,,.

4. Why and how it emerged as an academic discipline? In the 1950s-60s: the politics and economics were separated and mutually neglected But from the beginning of 1970s: began to questioning the separation between eco & Pol. The main Reasons for this shift 1. The Bretton Woods system: show sings of crisis; the oil crisis from 1973 2. Decolonization  a ‘New International Economic Order’ 3. The end of the Cold War: reintegration of Eastern Europe and former Soviet Union into Western political organizations & economic intedependence

5. IPE: Three Approaches 1. Mercantilism 2. Economic Liberalism 3. Marxism

6. 1. Mercantilism Emerged in 16-17c: during the period of establishing modern state system Goal: Attempted to use economic activities to serve the primary goal of building strong state Views: Economics is a tool of politics, a basis for political power. == a defining feature of mercantilist thinking.

7. Mercantilism and Neorealism Mercantilists: see the international economy as an arena of conflict between opposing national interests, rather than an area of cooperation and mutual gain. Economic competition between states == zero-sum game == where one state’s gain is another state’s loss.  states have to be worried about relative economic gain, because the material wealth accumulated by one state == serve as a basis for military political power  which can be used against other states. == resemble with neorealism in the Neo-neo debates on states cooperation

8. Economic rivalry: different forms (Gilpin 1987) 1. Defensive or 'benign' mercantilism: states look after their national economic interests because that is an important ingredient in their national security Implications: such policies no big negative effects on other states 2. Aggressive or 'malevolent' mercantilism. Here states attempt to exploit the international economy through expansionary policies – the imperialism of the European colonial powers in Asia and Africa.

9. Mercantilism and Liberalism 1 ) Mercantilists see: economic strength and military-political power   as complementary; not competing goals,   in a positive feedback loop.  The pursuit of economic strength supports the development of the state’s military political power  Military political power enhances and strengthens the state’s economic power.

10. Mercantilism and Liberalism 2) Liberals: separation between politics and economic The pursuit of economic prosperity through free trade and opening economic exchange v. the pursuit of power by the means military force & territorial expansion  Implications: States can choose the road of eco development & trade == to become ‘trading states’, like Germany & Japan after WWII. Or they can choose the road of military force and territorial expansion == and thus base their prominence on military power (imperialism).

11. Mercantilism: Assessments Mercantilists reject the liberal view More national wealth & more military-political power  are complimentary stratagems – that serve the same fundamental goal: a stronger, more powerful state. Normally, wealth and power can be pursued simultaneously, in support of each other. But ultimately, politics must have primacy over economics == the economy should be subordinated to the primary goal of increasing state power.

12. Mercantilism: Assessments But the content of the concrete policies recommended to serve that goal has changed over time == different means to the end (strong & powerful state)  16c Spain:  Netherland:  Britain:  Hamilton (US)  Lis (Germany)  In Recent year: the ‘developmental’ state model

13. 2. Economic Liberalism Liberal economics has been called ‘a doctrine and a set of principles for organizing and managing economic growth, and individual welfare’. It is based on the notion that if left to itself the market economy will operate spontaneously according to its own mechanisms or 'laws'.

14. David Ricardo David Ricardo argued that free trade,  i.e. commercial activities that are carried on independently of national borders, will bring benefits to all participants because free trade makes specialization possible and specialization increases efficiency and thus productivity.

15. Paul Samuelson summarized the argument as follows: ‘Whether or not one of two regions is absolutely more efficient in the production of every good than is the other, if each specializes in the product in which it has a comparative advantage (greatest relative efficiency), trade will be mutually profitable to both regions’ (Samuelson 1967: 651)

16. Economic liberals thus reject the mercantilist view that the state is the central actor and focus when it comes to economic affairs. The central actor  is the individual as a consumer and a producer. The marketplace -- is the open arena where individuals come together to exchange goods and services. Individuals are rational in pursuing their own economic interests, and when they apply that rationality in the marketplace, all participants gain == positive sum game.

17. Economic liberals argue that The market economy is an autonomous sphere of society which operates according to its own economic laws. Economic exchange is a positive-sum game and the market will tend to maximize benefits for the rational, self-seeking individuals, the households, and the companies that participate in market exchange. The economy is a sphere of cooperation for mutual benefit among states; as well as among individuals.

18. According to Keynes: the market economy is a great benefit to man, but it also entails potential evils of ‘risk, uncertainty and ignorance’. That situation could be remedied through improved political management of the market. Keynes thus argued in favor of a market which was ‘wisely managed’ by the state (Keynes 1963: 321). John Maynard Keynes, 1883 － 1946

19. 3. Marxism For Marxists, the capitalist economy is based on two antagonistic social classes: 1. The bourgeoisie, owns the means of production; 2. The proletariat, owns only its labor power which it must sell to the bourgeoisie. But labor puts in more work than it gets back in pay; there is a surplus value appropriated by the bourgeoisie. That is capitalist profit and it is derived from labor exploitation.

20. For Marx, capitalism means progress in two ways: 1. First, capitalism destroys previous relations of production, 2. Second, and most important for Marx, capitalism paves the way for a socialist revolution.

21. Economic production is the basis for all other-human activities, including politics. The economic basis consists: 1. of the forces of production == i.e. the technical level of economic activity, 2. of the relations of production == i.e. the system of or social ownership which determines the actual control over the productive forces.

22. Main Views on IPE: 1. States are not autonomous; they are driven by ruling class interests and capitalist states are primarily driven by the interests of their respective bourgeoisies == (rather than state’s interests, it is class interests) 2. As an economic system, capitalism is expansive: there is a never-ending search for new markets and more profit. The process of capitalist expansion must always be unequal or uneven, between countries, industries, and firms. Such disparities and conflicts will always develop under capitalist conditions, argued Lenin. That is the ‘law of uneven development.’

23. Marxism and Realism Both views agree on the perennial competition and conflict between states. Realists explain this by pointing to the existence of independent states in a condition of anarchy. Marxists reject that view as abstract and unhistorical. It is abstract because there is no concrete specification of the social forces that actually sustain the conflict between states. Marxists argue that conflict between states varies substantially across history. Conflict between capitalist states--and ultimately between capitalist ruling classes-- is of course connected to the capitalist historical era.

24. Thank You !!!