International Political Economy (IPE)

1. International Political Economy (IPE) International College KhonKaen University Week 3 – Theoretical Approaches to IPE

2. Theoretical Approaches in IPE • International Political Economy (IPE) became a separate field of study only in the last 35-40 years • IPE draws on a number of academic theories from political science and economics and attempts to merge these • How states, organizations and people see IPE as affecting them is determined by their theoretical perspective

3. Theoretical Approaches in IPE • Theoretical approaches to understanding IPE have generally focused on the three main “schools”, or ways of explaining international politics – then adding an economic dimension • The three main theoretical approaches and their IPE variations: • Realism: nationalism, mercantilism, statism • Liberalism: economic liberalism • Marxism: radicalism, structuralism, dependency theory

4. Theoretical Approaches in IPE • These three main approaches sometimes conflict, sometimes complement each other and have been endlessly modified in an effort to explain IPE • Other modern variations combine elements taken from at least two of the main theoretical schools: • Constructivism • Complex interdependence

5. Theoretical Approaches in IPE • These different approaches shape major debates on economic distribution and redistribution in IPE • Like their theoretical political counterparts, IPE approaches differ in: • Views on basic human nature • The relationship between individuals, society, the state and markets • The relationship between domestic and international society

6. Theoretical Approaches in IPE • To understand theories of international relations and IPE, we need to consider how these are driven at three levels: • at the individual level (the motivation of leaders, according to their personality) • at the state level (national domestic considerations, such as type of government and/or economic system) • at the international level (openness to international dialogue and cooperation)

8. Theories in IPE – Realism (Statism) • Realists have a dark view of human nature • Individuals are selfish, power-seeking and competitive • States act only in national self-interest (economically as well as for power and prestige), are aggressive and security-conscious • The international system is anarchic (there is no higher authority than the state) and stability is achievable only through a balance of power

9. Theories in IPE – Realism (Statism) • The realist interpretation of IPE is basically “might makes right” • If your’s is a big and powerful country, you can set the terms of any (ie.) trade agreement based on the needs and interests of your economy alone • If your’s is a small and vulnerable country, you had best form alliances with others to protect yourself

10. Theories in IPE – Realism (Statism) • Some tenets of realist theory: • sovereign nation states are the main actors in international affairs • intergovernmental organisations, NGOs and multinational corporations are of secondary importance, and are dispensable • states are in competition with each other • relations between states are determined by their relative levels of power • power is determined by military and economic capability

11. Theories in IPE - Liberalism • Liberals believe that human nature is basically good • Individuals are moral, want to improve the world and will cooperate with others • States are not independent (economically or in terms of international obligations) • The international system is a good and viable mechanism for states to cooperate and to develop interdependence

12. Theories in IPE - Liberalism • The liberal interpretation of IPE is basically idealist and optimistic – “let’s work together to make this a better world” • Injustice, poverty, inequality, war and aggression are not inevitable, but can be moderated or eliminated through collective action or institutional reform • Liberals believe in justice, fairness and equality – internally and internationally – and believe that we all have a responsibility to create a more just world

13. Theories in IPE - Liberalism • Some tenets of liberalist theory: • trade wars are preventable • intergovernmental organizations and NGOs are necessary and valuable means of collective problem solving and action • free markets, free trade and multinational corporations increase interdependence and reduce the risk of war • have faith in international law • states fare better, both individually and collectively, if they cooperate with each other • power is determined not just by military and economic strength, but also by morality and “good standing”

14. Theories in IPE - Marxism • Marxists see every relationship in terms of social and economic class • The actions of individuals are determined by their class • States are independent but not free: their actions are determined by the established world economic order • The international system is dominated by wealthy capitalist states and cannot be trusted

15. Theories in IPE - Marxism • The Marxist world view of IPE is a struggle between the “haves” and the “have nots” • The capitalist countries which control the bulk of world trade, world finance and are home to most multinational corporations will continue to exploit poorer countries • The hierarchical world system of economic imperialism, exploitation and struggle for resources dictates how states interrelate

16. Theories in IPE - Marxism • Some tenets of Marxist theory: • Clashes between developed capitalist countries and subordinate countries is inevitable • Economic factors are of primary importance in determining the relationship between states • The global system is hierarchical: only states on the same socioeconomic level can be trusted • International law, international organizations, NGOs and multinational corporations are all suspect as they are controlled by the capitalist “elite”

17. Modern Theories in IPE • The three main traditional theoretical approaches to IPE may often not be able to explain all the changes that have taken place in the global political economy • As a result each of the three theories has one or more modern variations: • Realism is now more often neorealism or nationalism • Liberalism has split into idealism, neoliberalism and neoliberal institutionalism • Marxism also has two modern versions – dependency theory and world-systems theory

18. Modern Theories in IPE • In addition to variations on the main theoretical approaches, there have been some efforts to merge, or mix and match elements of two or more of these theories • Foremost amongst these are Complex Interdependence and Constructivism • Both share the view that since the world is so complicated no over-arching theory in IPE is going to be convincing all the time

19. Theories in IPE - Constructivism • Constructivists place most emphasis on the character of individuals – as it is individuals (singly or collectively) who make decisions on international relations • Often like-minded individuals will work together - a notion supported by the structure of political parties in most countries • On the international scene too, the concept of like-minded individuals working together better explains why things happen as they do than realism, liberalism or Marxism can explain them

20. Modern Theories in IPE • Each school of theorists develops more sophisticated and complicated models of their favorite theory in an effort to explain the multitude of political and economic relationships between countries • But in reality, these relationships are determined by a diverse range of factors – personalities, political parties, different types of government each having a different culture, history, sense of security and view of the world • Neat and tidy categorization is never going to be wholly satisfactory