IPE and Globalisation

Question 1

What is IPE?

Answer 1

• International Political Economy
  
  • The economic dimension of IR
  • The relationship between states
    and markets, power and money,
    poltics and economics
  • Subdivision of IR that most
    directly addresses globalisation

Question 2

From where do the liberal intellectual origins of IPE stem?

Answer 2

• Adam Smith

* David Ricardo

Question 3

Who was Adam Smith?

Answer 3

- (Wealth of Nations 1776):
  Founder of Liberal Political Economy
- The market as a spontaneous
  institutions to satisfy selfish needs
- The market is self-regulating and
  brings innovation and prosperity
- Market also beings stability: the
  ‘invisible hand’ synthesises the
  pursuit of self-interest into the
  common good
- ‘Nightwatchman’ (minimal) state
- Politics and economics separate and
  economics superior

Question 4

Who was David Ricardo?

Answer 4

• ‘Free Trade’
• Division of labour
• State unit of analysis
• Countries should focus on exporting
  goods in which they have comparative
  advantage not self-sufficiency
• Free trade leads to gains in
  efficiency
• Trade and interdependence leads to
  peace and cooperation
• Economics trumps politics

Question 5

What are the mercantilistic intellectual origins of IPE?

Answer 5

• Conservative variant of IPE
• Largely the view of the landed
  aristocracy
• Skeptical about the invisible hand
• Order comes from the Leviathan (Hobbes, realist)
• Politics and national interest trumps
  economics
• Need for self-sufficiency
• Problem: no Leviathan to regulate
  economic interaction between states
• Reject free trade and interdependence
• Free trade serves the interest of
  global hegemon: UK
• States dominate markets and use them
  to further their interests

Question 6

What are the marxist intellectual origins of IPE?

Answer 6

• Market just one part of economy
• Inequality and exploitation because
  the bourgeoise control means of
  production
• The economy as a power regime
• State exercises power for ruling class
• The economic is political and vice
  versa
• International economy a site of
  conflict and competition
• Goal: emancipation of the working
  class
• Possible because human nature is a
  social construct - determined by the
  historically-specific nature of
  capitalist society
• Change society and humans change too
• How to do this controversial

Question 7

What are the historical origins of IPE?

Answer 7

- Political Economy splits into
  ‘politics’ and ‘economics’ in 20th
  century
- IR focuses on ‘high politics’ - ‘low
  politics’ left to economists
- ‘Golden Age’ of Capitalism
- Bretton Woods international system -
  IMF, World Bank, gold standard

Question 8

What happened in the 1970s of importance in IPE?

Answer 8

• 1971: US abandons gold standard
• Tensions in the global economy
• 1974: Global Recession undermined the
  power of the US
• Two consequences:
  
  • Indicates that economic issues
    need to be taken seriously
  • Highlights growing
    interdependence between nations
• Birth of IPE as a discipline

Question 9

Describe the Realist IPE approach

Answer 9

• Influence of Mercantilism
• The world economy as an area of
  conflict between states
• Dangers of the 1930s
• Big question: systemic management
• Breakdown of the post-WWII hegemonic
  system
• Rober Gilpin’s hegemonic stability
  theory
  
  • World needs a hegemony to manage
    the world economy for good of all
  • Stability and order hard to attain

Question 10

Describe the Liberal IPE approach

Answer 10

• A much more cautious liberalism
• States remain the main actors
• Lack of international state leads to
  ‘market failure’: rational individual
  actions by states lead to irrational
  outcomes
• Liberalism as ‘half-sibling’ of
  realism
• Robert Keohane
• Growing interdependence means states
  need to work together
• Cooperation possible ‘after hegemony’
• The crucial role of international
  institutions
• Selfish desires of states can be
  tempered
• Economics can influence state logic

Question 11

Describe the Neo-Neo debate in regards to anarchy

Answer 11

• Neorealism
  - Anarchy is systemic and
  determines the behaviour of states
• Neoliberal
  - Anarchy is systemic but
  co-operation is also in state interest

Question 12

Describe the Neo-Neo debate in regards to focus

Answer 12

• Neorealism
  - Focus on security, survival and self help
• Neoliberal
  - Focus on economy, human rights, global
  issues

Question 13

Describe the Neo-Neo debate in regards to problem solving

Answer 13

• Neorealism
  - How to create stability in the system
• Neoliberal
  - How can institutions promote and
  support co-operation in an anarchical
  system?

Question 14

Describe the Neo-Neo debate in regards to outlook

Answer 14

• Neorealism
  - Pessimistic
• Neoliberal
  - Optimistic

Question 15

Describe the Neo-Neo debate in regards to level of analysis

Answer 15

• Neorealism
  - State centric
• Neoliberal
  - State centric

Question 16

What is globalisation?

Answer 16

“The widening, deepening and spreading of world-wide interconnectedness”

Question 17

What is economic globalisation?

Answer 17

- The growing intensity, volume and
  speed of global interactions in
  trade, production and finance
- Leads to growing integration of
  national economics into single,
  global economy
- Across this economy trade, production
  and money move seamlessly and
  instantaneously

Question 18

What effect does economic globalisation have on trade?

Answer 18

• New global division of labour
  
  • Manufacutring in advances and
    middle income countries
  • Services emerge as new global
    sector
  • Raw materials still mostly
    produced in Global South

Question 19

What effect does economic globalisation have on production?

Answer 19

• No longer territorially bounded
• Process broken up and stretched
  across border in search of efficiency
• Rise of TNCs
• Leverage over governments (TPP)
• States serve their private sectors?

Question 20

What effect does economic globalisation have on finance?

Answer 20

- Integration of financial markets
  leads to a global financial market -
  across which money moves seamlessly
  and instantaneously
- Thomas Friedman ‘Electronic Herd’ -
  quick movements of money incentivises
  states to conform to norms of
  international system
- Great leverage for investors
- ‘Borderless World’

Question 21

Who are hyperglobalists?

Answer 21

• Generally economic liberals
• Globalisation the result of natural
  human desires to seek self-interest -
  Adam Smith
• Greater mobility will lead to
  efficiency - cheaper goods for
  consumers and jobs in the Third World
• Extending the benefits of capitalism
• Global Village - democracy, human
  rights and peace
• Final triumph of politics over
  economics

Question 22

What is the POLICY of Neoliberalism in regard to economic globalisation?

Answer 22

- Neoliberal reorganisation of society:
  unleashing the market and shrinking
  the state
- A return to classic liberalism of
  Smith and Ricardo
- Globalisation means economic truth
  and logics can no longer be ignored
- Future belongs to individuals
- Let the market mediate everything:
  need to diminish role of state
- Privatisaion, deregulation, liberalisation
- Shrinking of the welfare state
- Wealth would ‘trickle down'