POLITICAL ECONOMY PERSPECTIVE

9 POLITICAL ECONOMY PERSPECTIVE

1 A recognition of the intertwined nature of politics and economics

2 gave rise, in the 1970s, to a new approach in IR known as international

3 political economy. IPE has its roots in what in the eighteenth and

4 nineteenth centuries was called ‘political economy’ – essentially the

5 study of economic activity within political and legal contexts. The

6 best known political economists include Adam Smith, author of the

7 eighteenth century liberal treatise on political economy The Wealth

of Nations, and Karl Marx, the radical nineteenth century philoso-

9 pher and revolutionary. In the twentieth century, political economy

20 was carved up into the separate disciplines of political science and 1222 economics, so in a sense, IPE represents a return to a more holistic

2 approach to understanding the social world – albeit one in which

3 understanding the relationship between politics and economics

4 requires that we place such an analysis within an international (or

5 perhaps more appropriately a global) context.

6 While scholars such as Jacob Viner writing in the 1940s paid

7 attention to the study of ‘power and wealth’ in international politics

8 (Viner 1948), it is the British academic, Susan Strange, who is often

9 credited with the promotion of IPE as a key area of international

30 studies (Brown 1999). Clearly echoing the roots of the discipline

1 within political economy, Strange presented the discipline as

2 concerning the study of the relationship between ‘the state and the

3 market’ (Strange 1994a). Many early scholars of IPE tended to

4 emphasize how economic bargaining between states was just as

5 important a form of diplomacy as bargaining between states over

6 issues such as territorial possessions or peace agreements (Spero

7 1990). Some writers within IPE still basically adhere to the view that

economic diplomacy is just one of the many tools that states utilize

134 R ECONFIGURING WORLD POLITICS to ensure their relative gains vis-à-vis other states. So things like

economic sanctions, bargaining over trade at the World Trade Organization, creating agreements over illegal immigration or deciding to join a single European currency are all decisions that states take in their own national interest with an eye on how such agreements might impact on the power status of other states. In this more ‘realist’ view of IPE, states remain the central and most important actors using economic tools such as tariffs and economic sanctions to secure the most power.

However, most IPE scholars do not adhere to this realist (or ‘economic nationalist’) perspective. In fact, early writings in an IPE tradition have tended to emphasize the limitations of thinking about inter-state relations solely in terms of power relations. Authors such as Keohane and Nye (1977), for example (the neo-liberal institutionalists that we came across in earlier chapters) were keen to stress the role of international economic interdependency in building and supporting what they called ‘complex interdependency’. In this liberal view, the growing levels of interdependence in the international economy are more important than states’ desires to constantly outdo each other. A liberal IPE tradition has therefore placed emphasis on the way in which growing levels of economic interdependency and the spread of free trade has undermined the self-interested (i.e. realist) behaviours of states; in this view then, the economic sphere is always going to be much more important than the political imperatives of states. The emphasis on economic interdependency found in these writings has been expanded and developed in recent years as IPE scholars began to incorporate analysis of a phenomenon known as globalization into their studies of the international system.

What should become clear from this chapter is that while liberalism is one of the dominant IPE perspectives in analyses of globalization, it is only one of many perspectives on globalization. Remember back to Chapter 1 in which we argued that realism was the dominant perspective in IR and that this perspective has been challenged by a number of alternative, and critical perspectives. Well within IPE, realism has taken much more of a back seat – here it is liberalism that has come to be recognised as the ‘mainstream’ of IPE

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1 scholarship. On the one hand, we can point to an overtly positivist

2 liberal political economy that draws upon liberal economic theory,

3 presenting understandings of globalization that view it largely as an

4 inevitable economic process. Often this scholarship can be associated

5 with a neo-liberal turn in economic theory – the view that the state

6 should not play a significant role in the economy and that policies

of privatization and deregulation are the best means through which

8 economies can remain competitive. Importantly, when we discuss

9 neo-liberalism in the context of this chapter we are discussing neo-

10 liberalism as an economic theory (indeed perhaps the most influential

1 economic theory). Make sure that you keep this point in mind because

2 often within IR the term neo-liberalism is employed when referring

3 to the work of neo-liberal institutionalists (such as Keohane and

4 Nye). On the other hand, we can identify liberal thinkers who take

5 a less economically neo-liberal line – arguing that global capitalism,

6 if properly regulated, can bring about positive social change and

prosperity for all (Cerny 2000; Giddens 2000). However, it is the

economically neo-liberal understanding of political economy that is

by far the most influential of the two; it has influenced the economic

20 1222 policies of states around the world and is widely regarded as the

2 economic philosophy that underpins powerful international financial

3 institutions such as the IMF and the World Bank.

4 Outside of the liberal mainstream we can identify some important

5 alternative perspectives. Most notable of these alternative perspectives

6 is the work of scholars associated with Marxist political economy.

7 Indeed, Robert Gilpin (1987) has argued that alongside liberalism

8 and economic nationalism (realism), Marxism is one of the major

9 ideologies of political economy. That being said, it has also been

30 argued that Marxist perspectives in IPE have remained largely at

1 the margins – and that Marxist and Marxian approaches are especially

2 marginalized when one looks at the discipline of IR as a whole (Bieler

3 and Morton 2003).

4 There are a wide range of competing Marxist and Marxian

5 understandings of globalization. If you pursue an interest in IPE

6 during your course of studies you will no doubt come across some

7 of these different Marxian literatures; most notably you are likely

to come across the work of Robert Cox and a group of Marxist

136 R ECONFIGURING WORLD POLITICS inspired scholars called the neo-Gramscians. What these perspectives

have in common is that they share a concern with the way in which relations of class domination (and therefore inequality) are a fundamental feature of the expansion of capitalist production that is taking place in an era of globalization. In this view, therefore, globalization is capitalism and the analytical tools and ideas that Marx developed in the nineteenth century in relation to the study of the development of a capitalist mode of production are just as relevant for analysing globalizing capitalism today. Take this quotation from the Communist Manifesto, which was first published in 1848 for example:

The bourgeoisie has through its exploitation of the world market given a cosmopolitan character to production and consumption in every country. . . . All old-fashioned national industries have been destroyed or are daily being destroyed. . . . In place of the old local and national seclusion and self-sufficiency, we have intercourse in every direction, universal independence of nations.

(Marx and Engels 1992: 6) The above quotation shows clearly that Marx (and his collaborator

Friedrich Engels) observed, even back in the nineteenth century, the way in which capitalism was taking on a global character. However, this is not a straightforward analysis of the emergence of a global market economy akin to that put forward by many economic liberals. The emphasis on ‘exploitation’ of workers by a dominant capitalist class (the ‘bourgeoisie’) identifies Marxism as a critical approach to the study of globalization – one in which normative concerns about the oppression of marginalized peoples are central to developing a critique of globalization as capitalism. We find similar concerns about exploitation and marginalization in the feminist literature on globalization where the claim is made that the emergence of a global economy has entrenched systems of inequality – particularly gender inequality – creating a feminization of global poverty (Joekes 1987; Razavi 1999; Rai 2002). How these criticisms of globalization have resulted in attempts to develop alternative, emancipatory, perspectives on globalization is a theme that we develop in the final section of this chapter where we look at resistances to globalization.

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