International Political Economy - An Introduction to ...

1 Saylor URL: Attributed to: Timothy C Lim, Saylor URL: Attributed to: Timothy C Lim, International Political Economy An Introduction to Approaches, Regimes, and Issues Timothy C. Lim, Saylor URL: Attributed to: Timothy C Lim, International Political Economy An Introduction to Approaches, Regimes, and Issues 2014 Timothy C. Lim, is licensed under a Creative Commons Attribution (CC BY) license made possible by funding from The Saylor Foundation's Open Textbook Challenge in order to be incorporated into 's collection of open courses available at Full license terms may be viewed at.

2 Saylor URL: Attributed to: Timothy C Lim, Table of Contents Chapter 1: Demystifying the Complex World of International Political Economy Introduction What Is Globalization (and Why Is It Important)? Why Do Scholars Disagree? The Social World as an Open System Defining International Political Economy : The First Step Putting the Global in International Political Economy Globalization: A Reprise Political Economy and the State-Market Dichotomy International /Global Political Economy Defined (Finally!) The Significance of Power Conclusion Chapter 2: Foundational Theories of IPE: An Unconventional Introduction to Mercantilism, Liberalism, and Marxism The Three Major Perspectives of IPE: Still Going Strong? Chapter 3: Contemporary Theories of International Political Economy Introduction Hegemonic Stability Theory Post-Hegemonic Theories Two-Level Games and IPE Constructivist Approaches to IPE Conclusion Chapter 4: Politics, Economics, and Cross-Border Trade The Long History of Cross-Border Trade Basic Concepts and Data on Cross-Border Trade Cross-Border Trade: A Still Contentious Debate The Rise of Free Trade in the 20th Century, Part I The Rise of Free Trade in the 20th Century, Part II Regional Trade Agreements A Quick Conclusion Saylor URL: Attributed to: Timothy C Lim, Chapter 5: The Global Financial System Introduction The Global Financial System.

3 The Basics Constructing the Postwar Global Financial System Crises and the Global Financial System Conclusion Chapter 6: Transnational Production, Foreign Direct Investment, and Economic Development Introduction Transnational Production: Definitions, Concepts, and Basic Data Explaining the Transnational Production Structure Transnational Production, FDI, and Economic Development Transnational Production and State-Firm Interactions Conclusion Chapter 7: Inequality, Poverty, and Exploitation in the Global Economy Inequality, Poverty, and Exploitation: An Overview Basic Concepts and Data on Inequality, Poverty, and Exploitation Why Does Poverty Exist? How Can Poverty Be Defeated? Beyond Conditionality Poverty and Capitalism: An Unbreakable Bond?

4 Hyper-Exploitation: The Resurgence of Slavery in Africa Summing Up: Marxist and Liberal Views of Capitalism, Exploitation, and Poverty Capitalism Is What People Make It Conclusion Chapter 8: Governance in the Global Economy The Need for Governance What Is Global Governance? The Significance and Relevance of Global Governance Transnational Organizations and Global Governance The Main Points of Contention in the Global Political Economy A Very Brief Conclusion Bibliography Saylor URL: Attributed to: Timothy C Lim, Glossary Chapter Answers: Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Saylor URL: Attributed to: Timothy C Lim, Chapter 1 Demystifying the Complex World of International Political Economy Introduction There are many books on International Political Economy , or IPE for short.

5 Not surprisingly, each contains its own assumptions and views about the key concepts, issues, and concerns of IPE. Sometimes the authors of these various books hold the same assumptions and share the same, or at least very similar, views about how the world works. Sometimes they don t. In fact, as we will see in a few of the chapters that follow, the perspectives of the people who write and think about IPE are often dramatically, if not fundamentally, different. You may already have an inkling that mainstream economists and radical economists ( , Marxists) do not agree on many central issues and concepts. But even among those who seem to share basic ideas, there can be sharp disagreements. Within the broad school of neoclassical economics, for Figure On the left is Friedrich Hayek and on the right, John Maynard Keynes.

6 The debate between these two influential economists is still unresolved. Image sources: The photo of Keynes is in the public domain, and is free to use for publication purposes. The photo of F. Hayek is licensed under the Creative Commons-Share Alike unported license, and was released by the Mises Institute. The mash-up of the two photos was done by the author. Saylor URL: Attributed to: Timothy C Lim, example, there is an intense and still-unresolved debate between those who believe that markets must be left alone and those who believe that government intervention in markets is sometimes necessary. This debate is encapsulated in the ideas of, and debates between, two famous economists John Maynard Keynes and Friedrich Hayek.

7 Keynes, who died in 1946, is best known for his ideas about the importance of pump priming, which refers to deficit spending by governments in times of recession or depression. The goal is to increase demand and create a virtuous circle: higher demand means more need for workers, more workers keeps demand strong, and strong demand keeps the Economy going. Keynes s ideas, it is important to note, are far from dead: the global recession that began around 2008 spurred the United States government to engage in stimulus spending a type of pump priming and other policies (including maintaining historically low interest rates and quantitative easing). These are all Keynesian policy prescriptions. Hayek, by contrast, expressed profound confidence in the ability of markets to take care of themselves, and saw only a very limited role for governments at the national level, one based on ensuring a relatively stable supply of money.

8 Hayek is most famous for his classic book, The Road to Serfdom, first published in 1944. In The Road to Serfdom which has become one of the bibles of libertarianism, along with Ayn Rand s Atlas Shrugged (1957) Hayek argued strongly that government control of economic planning inevitably leads to the loss of individual freedom. While his ideas were marginalized in the 1940s and 1950s, they found a much more receptive audience beginning in the 1970s; since then, Hayek s writings have developed a very strong and even fervent following, especially among policymakers in the United States and Great Britain. Saylor URL: Attributed to: Timothy C Lim, Significantly, the debate between followers of Keynes and followers of Hayek has been going on since the late 1930s.

9 Think about this for a moment: in seventy-odd years, mainstream economists have yet to reach consensus on a fairly basic issue ( , Does stimulus spending work or doesn t it?). Indeed, in an important respect, the disagreement today is even stronger than in the past, when there were long periods in which one or the other view held sway. While neoclassical economists continue to debate a range of issues, it is important to emphasize from the outset that neoclassical economics is not the same as International Political Economy . As I will discuss in detail below, IPE is a distinct field of inquiry. There is, to be sure, some overlap between the two fields neoclassical economics and IPE but there are also areas of very strong divergence. One of the most salient differences is embedded in the terminology itself.

10 International Political Economy considers politics and economics to be inextricably intertwined, while neoclassical economics asserts that economics and politics are and should be two essentially separate areas or processes. We will consider this issue in much more detail below. For now, it is also important to emphasize that, as a field of study, IPE is much more strongly connected to the discipline of Political science than it is to economics. The reason for this is clear: IPE is an outgrowth of International relations, or IR for short. IR, a major subfield within Political science, has traditionally focused on the struggle for power between and among states. Although a diverse and heterogeneous field in its own right, IR has long been dominated by a particular theoretical perspective known as realism.