European Governance, Global Governance Introduction to International Political Economy

1. European Governance, Global GovernanceIntroduction to International Political Economy Kalypso Nicolaidis Vincent Wright Chair, Sciences Po (2005) Oxford University

2. European Governance => Global governanceOur EU-topia? • The EU as an actor in its own right : economic giant? Political actor? What kind of power • The EU as a possible model of integration • between states in the rest of the world • At the global level • Discourse/reality • neo-colonial vs post-colonial?

3. International Political Economy Questions: • How to govern a world which is multipolar economically and unipolar militarily? (eg can we live with the US?) • Can an international system which is a product of US hegemony, and more broadly of western hegemony, be made to serve the interests of developing countries? (eg whose interests?!) • Are regionalism and multilateralism contradictory or complementary? (eg. Is the EU hypocritical?)

4. Questions (cd)… • Should trade be used as an instrument to change domestic governance arrangements, including for instance human and labor rights? (eg is this not economic imperialism?) • What is the score-sheet of global governance through public-private partnerships? (should we like Bill Gates Global fund?) • Has globalisation gone too far? (eg. A nos pavés!)

5. Questions (cd) • Check out the website: “making poverty history”! • In what ways is the year 2005 - “the year of development”- likely to make a difference ? • How can trade be used to combat global poverty?

6. Questions (cd)… • Yahoo 1, 2, 3: Can state sovereignty survive the era of the internet? • Can the WTO, IMF and World Bank really be made more democratic? ! • “alter-globalization” : good questions…good solutions?

7. International Political Economy Definitions: Yesterday: • John Stuart Mill “Political Economy teaches a nation how to become rich” : The Wealth of Nations Today: David Lake: “IPE is the study of the interplay of economics and politics in the world arena” Economy: system of producing, distributing and using wealth Politics: set of institutions/rules governing social and economic interactions

8. IPE - definitions • • Robert Gilpin: “IPE is the study of the Problems and Questions arising from the Parallel Existence and Dynamic Interaction of State and Market.” • • Both: Separation politics (states) and economics (markets) and mutual influence -> IS THIS ASSUMPTION FRUITFUL? • The IPE as fundamental tension between state power, competing ideas and transnational economic exchange.

9. • Liberalism : IPE cooperative Limits : markets as political institutions• Marxism: IPE conflictual Limits: modes of accomodation• Realism: IPE conflictual Limits: Prism of the state • Institutionalism: IPE cooperative Limits: socio-economic order of the CW IPE theories and their limits

10. International Political EconomySome History: • • The legacy: Adam Smith, John Stuart Mill, Karl Marx • • The Interwar divergence: • Professionalisation; micro-economics vs politics of war and peace • • ThePost-War II incipient debate: • Cold War: Security at the Core -- Economics at the margin; International Economic Rules as given • Understanding the collapse of interwar (ec) order • Politics of IOs: Analysis of the UN and desillusion • - post WWII trend towards policy analysis and methodological emphasis; behavioralism

11. Some History (cd) • The 1970s: The emergence of IPE as a distinct field of study The Study of the EC and other regions: Integration theory, ne-functionalism (Mitrany, Haas) -> how to account for such high levels of cooperation , voluntary agreements and role of non-state actors -> transnational communities, identity formation, communication (Deutsch) -> The fallacy of pessimistic induction 2) The end of US led global growth: economy is political -> collapse of BW; OPEC: the politics of economic choices -> The NIEO: the politics of the global economic order -> GATT, Japan and the new protectionism: the political economy of trade -> Détente and the political function of ‘low politics’

12. Some History • • The 1970s (cd) • 3) Economic Interdependence and transnational relations : • Disaggregating “the state” (not a unified rational actors): -> Pluralism and bureaucratic politics (Dahl) • Ties across borders not controlled by the state • MNEs (Vernon; Cooper) • Cost and benefit of interdepence for state autonomy (Keohane and Nye) • 4) Realists address the challenge • Defense of state-centred paradigm (Gilpin and Krasner) • Hegemonic Stability: Power and liberalism • English school of IPE (Susan Strange) • SUM: IPE through the lenses of liberalism vs realism

13. Some History (cd) • • The 1980s: IPE takes central stage • -> The coming of age of Multinational Corporations • –FDI- Enters globalisation • -> Explosion of financial sphere; the rise of trade in services • -> The Reagan revolution on the neo-liberal ideology • -> The advent of structural conditionality; WTO round • -> The deepening of economic integration: state policies and regulations in question • 2) The new liberal challenge: Regime theory and neo-liberal institutionalism • -> role of ideas and shared understandings, expectations • - > analogies from economic theory (transaction costs; market failure); game theory as a euristic (Axelrod; Oye) • -> Anarchy yes/absence of rules no: commitments and reciprocity • -> Rationalist explanations of institutions (Keohane)

14. Some History (cd) • • The 1990s: PCW meets WWW • The end of the CW: Economics trumps security; • change in the character of American leadership (contested); - the use of sanctions as a political tool; The rise of regionalism • 2) Globalization and its critics • - NGOs and two level games • Technological change and IPE (communication studies) • from state-dominated to market dominated world economy? • Growing linkages between issue areas (trade and aid; environment; trade and health; labor; human rights) • IPE and international law • 3) IPE meets political theory • a) The Global Justice agenda • b) the Global democracy and legitimacy agenda • c) From politics of interests to the politics of identity

15. IPE themes • conflict/cooperation replaces war and peace • International institutions are norms not places • domestic politics/comparative politics matter

16. IPE: Framing horizontal questions • • WHY? What is the driving force in the global economy? • In this case? • Market competition - Collective search for efficiency • national ambitions and interstate rivalries • technology …OR Ideas and values • WHO? Who adjusts? • Importer/ exporters • My constituency / your constituency • Low skill labor in the North/in the South • EU / candidate countries • FOR WHOM? In Whose Interest? Great power; Collective; those in need

17. International Political EconomyCaveat emptor (Ce que je crois)-> An actor-centred “good story”-> liberal assumptions: opportunity to cut deals; positive sum game; shared stake in a stable international economic order; governance issues-> realist assumptions: state centric but not always relative gains-> outside liberal framework: issues of global justice, issues of identity and norms-> Structure and agency-> Role of narratives: “Europe as a model”