Liberalism Flashcards
The most popular approach in IPE is
Liberal Political Economy
Two important groups that support Liberal Political economy theory
MNC and Most Academics
The opposing view to Liberal Political economy would be
Realism
The “Liberal Paradigm” (5 HEADINGS)
1) individualism , 2) Political Pluralism , 3) Markets preferred to states, 4) Optimism about Internat. cooperation, 5) International Politics ‘separate’ from internat. economics.
Two kinds of Liberal approaches
1) Normative AND 2) Analytical
Free markets are more efficient - linked production to consumption through “voluntary exchange”
Smiths Invisible Hand
3 Key Principles of _____________:
1) Accumulation of profit leads to overall economic growth. // 2) Labor theory of value // 3) Comparative advantage
Orthodox Liberalism
3 Key Principals of _________________:
1) Marginalism and Neo- Classical economics // 2) Imbedded Liberalism and Keynesianism // 3) Neoliberalism
Normative Liberal Approach
price of goods should be equal to value of labor
Labor theory of value
if each country produced what the were best at, total production would be higher, “Absolute gains”
Comparative advantage
Value of goods determined by price not value of labor
Marginalism
little role of state in managing economy
Neo- Classical economics
Saw benefits of free markets, beliefs markets need to be embedded realities
Imbedded Liberalism
Argued need for macroeconomic state intervention in the economy - states should manipulate demand during recession and decrease demand during overheated economic growth.
Keynesianism
Can be called counter-cyclical demand management or macroeconmonic stabilization
Keynesianism :)
