Class 13: International Political Economy

Question 1

What are the 3 Classifications of International Political Economy by Robert Gilpin?

Answer 1

Liberalism, Mercantilism, and Marxism.

Question 2

What is international political economy?

Answer 2

International relations/organizations interactions with economics through inter-state trade and investment.

Question 3

What are the origins of liberalism and what people influenced it?

Answer 3

In the enlightenment, thinkers were Adam Smith, Montesquieu, and the Manchester Liberals.

Question 4

What were the two Classical Liberalism arguments for IPE?

Answer 4

1: trade obtains wealth easier than war.

2: trade converts militarists to middle class. Wealth is transferred to the masses.

Question 5

What is the definition of liberalism in the international political economy?

Answer 5

Managing a market economy to achieve maximum efficiency, economic growth, and individual welfare.

Question 6

What are the assumptions of liberalism in relation to trade and peace?

Answer 6

1: separate pursuit of territory from wealth

2: market forces replace government and depoliticize trade

3: free trade creates interdependence and disincentivizes war.

Question 7

What is the liberal market logic?

Answer 7

-the market arises spontaneously in response to needs

-price mechanism is the law of supply and demand

-equilibrium reached by maximizing gains

-Unit: consumer + household Seek: to maximize returns

• market sees productive growth through competition

Question 8

What is the liberal logic of politics?

Answer 8

-free market/minimal state intervention

-individual equality + liberty

-market exchanges are free

Question 9

What is the liberal logic of peace?

Answer 9

-trade leads to peace because long-term harmony will supercede any temporary/local conflict

-Richard Cobden + John Stuart Mill: harmony is obtained through separate pursuit of wealth and territory.

-specialization allows comparative advantage and pushes price down

Question 10

What is the Theory of Comparative Advantage?

Answer 10

inter-state trade brings benefits because it permits states to specialize in predisposed activities, increasing overall efficiency.

Question 11

Why is the presence of a middle class (created through trade) important for Liberalism?

Answer 11

Creates better resistance to war.

Question 11

What are the critiques of Liberalism?

Answer 11

1) liberals separate economics from institutional and political bases.

2) international free trade has never existed without a naval hegemon.

3) economic interdependence is not symmetrical.

4) state is non-interventionalist, except when public goods are involved.

5) state non-intervention is at the cost of public.

6) assume complete information.

7) assume technological growth

Question 12

What are the two cases of market failure in which intervention is required in liberalism?

Answer 12

1). depression - a constant cycle

2). monopolization - companies undersell competitors, bankrupt them, then raise their prices to maximize profits

Question 13

What is argued by polyani?

Answer 13

Markets are sustained by a consensus of values, without this, the market is not free, just anarchy.

Question 14

What is Mercantilism?

Answer 14

The economy is a subordinate actor to the state.

Question 15

What is economic nationalism?

Answer 15

A process of statebuilding in which economics is subordinate to the imperatives of the state.

Question 16

What is classical/financial mercantilism?

Answer 16

A focus on trade/investment.

Question 17

What is industrial mercantilism?

Answer 17

Explosion in machine manufacturing

Question 18

What is the position of mercantlilism?

Answer 18

Economic activity is subordinate to state interest.

Question 19

What is autarky?

Answer 19

Economic self suffiency.

Question 20

What is the logic of Mercantilism?

Answer 20

1). state is the most important org in the intl system, with national security as its principal
activity.

2). a current tendency to concentrate wealth in some states can lead to dependency and hierarchy internationally.

3). Adam smith said everyone wants to be a monopolist

4). mercantilism can be defensive or offensive

5). prefer a positive balance of trade

6). industry as base fo power

7). industry effects the rest of the economy, increasing the state’s power

Question 21

What is protectionism?

Answer 21

High tariffs to block imports. - mercantilism

Question 22

What is welfare mercantilism?

Answer 22

protects citizens from external competition

Question 23

What is strategic use of trade?

Answer 23

“free trade” within the context of mercantilism. A middle ground between free trade and autarky.

Question 24

What is Import Substitution Industrialization?

Answer 24

Infant industries protected by high tariffs and restrictions against exporting raw materials.

Question 25

Who was Friedrich List?

Answer 25

Sought free trade in Germany but resisted due to fear that Germany would be dominated by neighbors.

Question 26

What are the Critiques of Mercantilism?

Answer 26

1). little analysis of foregone gains

2). protectionism may decrease power if it decreases efficiency

Question 27

How does Marxism define capitalism?

Answer 27

The private ownership of the means of production and the existence of wage labor.

Question 28

What does Marxism say about the market?

Answer 28

Individuals are rational, the market is irrational and prone to failure.

Question 29

What are the four Marxist dysfunctions of capitalism?

Answer 29

1). The law of disproportionality

2). law of concentration of capital

3). law of the failing rate of profit

4). the law of uneven growth

Question 30

What are the critiques of Marxism?

Answer 30

1). economic interdependence is not the most important factor in international relations (strategic/nationalist issues matter more)

Question 31

What is the law of disproportionality?

Answer 31

Says that market overproduction is in fact possible and the cyclical depression cycle will lead the proletariat into revolution. Rejects Say’s Law.

Question 32

What is the law of concentration of capital?

Answer 32

Ever- increasing concentration of capital due to competition in the market that forces investors to increase efficiency to survive.

Question 33

What is the law of the falling rate of profit?

Answer 33

As capital accumulates, the rate of return declines and decreases the incentive to invest.

Question 34

What is the law of uneven growth?

Answer 34

By Lenin, not Marx. As capitalist economies grow, they seek colonies, their share of colonies depends on power and great powers seek redivision.