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International Political Economy

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    International Political Economy (IPE) also known as Global Political Economy is an academic discipline within the social sciences that analyses international relations in combination with political economy. For example, changes in world oil prices, the global reach of transnational corporations, the impact of volatile currency movements are all demonstrate the interconnectedness of polities and economics in what is now an increasingly internationalised world system.

    In addiction, international political economy is based on a notion that the focus of politic conflict, at both the domestic and international levels, is the concern over who get what, when and how. There have traditionally been three broad categories of theoretical approach to the study of international political economy: Liberalism, Realism and Marxism. Liberal approach In IPE terms, Liberalism is an approach associated with classical economic or neoclassical economics. Liberal view believes in freedom, for private powers at the expense of public power (government).

    Neoclassical economists, who are generally Liberals, believe firmly in the superiority of the market as a mechanism for allocation scarce resources. Liberals believe the economic role of government should be quite limited. Many forms of government intervention in the economy intentionally or unintentionally restrict the market and thereby prevent potentially rewarding trades from occurring. Liberals generally support the provision by government of certain public goods or services that benefit society and that would not be provided by private markets.

    For example, the government plays an important role in supplying the conditions necessary for the maintenance of a free and competitive market. Governments must provide the defence of the country, protect property rights, and prevent any unfair collusion or concentration of power within the market. The government should also educate its citizens, build infrastructure, and provide and regulate a common currency. The proper role of government in other words, is to provide the necessary foundation or the market. At the level of the international economy, Liberal emphasizes that both the market and politics are environments in which all parties can benefit by entering into voluntary exchanges with others. In other words, all countries are best off when goods and services move freely across national borders in mutually rewarding exchanges. Liberals also believe that governments should manage the international economy in much the same way as they manage their domestic economics.

    They should establish rules and regulations, often referred to as international regimes to govern exchanges between different national currencies and ensure that no country or domestic group is damaged by unfair international competition. Realist view Within IPE the Realist approach earliest called mercantilism then commonly labelled nationalism until the first decade of the 21st century. The Realist believes that nation states pursue power and shape the economy to this end. They are the dominant actors within the international political economy.

    According to Realists, the international system is anarchical, a condition under which nation states are sovereign, the sol judges of their own behaviour and subject to no higher authority. If no authority is higher than the nation state, then all actors must be subordinate to it, while private citizens can interact with their counterparts in other countries, Realist asset that the basis for this interaction is legislated by the nation state. Realists argue that nation states are fundamentally concerned about international power relations.

    Because the international system is based on anarchy, the use of force or coercion by other nation states is always a possibility and no higher authority is obligated to come to the aid of a nation state under attack. Nation states are ultimately dependent on their own resources for protection. Each nation must always be prepared to defend itself to the best of its ability. For Realists, politics is largely a zero sum game in which if one nation state is to win another must lose. Such assumptions stemmed from the Realist perception that wealth is based around he amount of gold and silver that a nation possesses. Because such metal exist in only very limited amounts, the possession of gold and silver by one nation therefore directly decreased the wealth of others. Realists also believe that nation-states can be thought of as rational actors in the same sense that other theorists assume individuals to be rational. Nation-states are assumed to operate according to cost-benefit analyses and choose the option that yields the greatest value, especially regarding the nation’s international geopolitical and power positions.

    It is the emphasis on power that gives Realism its distinctive approach to international political economy. Realists allow for circumstances in which nation-states sacrifice economic gain to weaken their opponents or strengthen themselves in military or diplomatic terms. Thus, trade protection, which might reduce a country’s overall income by restricting the market, may nonetheless be adopted for reasons of national political power.

    Realist political economy is primarily concerned with how changes in the distribution of international power affect the form and type of international economy. For Realists, then, the pursuit of power by nation-states shapes the international economy. Marxism view Marxism is a mixture of a theory of history (known as economic determinism), economic and sociological science, political ideology, a theory and strategy of revolution and a moral theology that looks towards some form of secular salvation: the advent of a classless social order of perfect justice in which conflict is at an end.

    Marxism originated with the writings of Karl Marx, a 19th political economist. Marxists believe that classes are the dominant actors in the political economy. Specifically, they identify as central two economically determined aggregations of individuals, or classes: capital, or the owners of the means of production, and labor, or the workers. Marxists assume that classes act in their economic interests, that is, to maximize the economic well-being of the class as a whole.

    Accordingly, the basis of the capitalist economy is the exploitation of labor by capital: capitalism, by its very nature, denies labor the full return for its efforts. Marxists believe that capitalism is inherently prone to periodic economic crises which will ultimately lead to the overthrow of capitalism by labor and the erection of a socialist society in which the means of production will be owned jointly by all members of society and exploitation will cease.

    There are two primarily concerns with the study of the international political economy in Marxism. Firstly, the fate of labour in a world of increasingly internationalized capital, the growth of multination corporations and the rise of globally integrated financial markets appear to have weakened labour’s economic and political power. For example, if workers in a particular country demand higher wages or improved health and safety measures, the multinational capitalist can simply shift production to another country where labour is more compliant.

    As a result, many Marxists fear the labour’s ability to negotiate with capital for a more equitable division of wealth has been significantly undermined. Second, Marxists are concerned with the poverty and continued underdevelopment of the Third World. Some Marxists argue that development is blocked by domestic ruling classes, which pursue their own, narrow interests at the expense of national economic progress. Each of these three perspectives features different assumptions and assertions.

    Liberals assume that individuals are the proper unit of analysis, while Marxists and Realists make similar assumptions for classes and nation-states, respectively. The three perspectives also differ on the inevitability of conflict within the political economy. Liberals believe economics and politics are largely autonomous spheres, Marxists maintain that economics determines politics, and Realists argue that politics determines economics. This tripartite division of international political economy is useful in many ways, especially as it highlights differing evaluations of the importance of conomic efficiency, class conflict, and geostrategic considerations. However, the lines between the three views are easily blurred. Some Marxists agree with the Realist focus on interstate conflict while Liberal emphasis on economic interests. Likewise, there are many Liberals who use neoclassical tools to analyse interstate strategic interaction in much the same way Realists do or to investigate the clash of classes as do the Marxists.

    SOURCE:http://www. bignerds. com/papers/26466/Introduction-To-International-Political-Economy/

    International Political Economy. (2017, Feb 17). Retrieved from https://graduateway.com/international-political-economy-2/

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