Readings 1

Question 1

What are the 3 traditional schools of IPE ?

Answer 1

1. mercantilism
2. liberalism
3. marxism

Question 2

What are the 3 central points of classical mercantilism ?

Answer 2

1. national power and wealth are connected > wealth accumulate power
2. trade is a way to acquire wealth from abroad
3. manufacturing activities should be promoted and all other non-manufacturing (ex. agriculture) activities should be discouraged

Question 3

What are the 3 points by modern mercantilists ?

Answer 3

1. economic strength is a critical component of national power
2. trade is good for exports but imports should be discouraged
3. some forms of economic activities are more valuable than others (hightech VS mature manufacturing)

Question 4

What are the critics of mercantilists by liberalism ?

Answer 4

1. economic activity aims to enrich individuals and not enhance the state’s power
2. trade balance is not a crucial point to assure wealth (ex. US and UK)
3. cost of production of the good (comparative advantage) is better than producting (non-)manufacturing goods

Question 5

What do the liberalist think about the allocation of resources by the state ?

Answer 5

Governement’s efforts to allocate resources will only reduce national welfare.

Question 6

When does the social welfare is at the highest point for the liberalist ?

Answer 6

social welfare gets to its highest point when individuals are free to make their own decisions about hos to use the resources they possess

Question 7

What are the tasks of the governement according to the liberalist ?

Answer 7

1. clear rights concerning ownership of property and resources
2. judicial system must enforce these rights
3. a governement that resolves market failure

Question 8

How do politics shape allocation of society’s resources according to

• mercantilist
• liberal
• marxists ?

Answer 8

• mercantilist = state guides resources allocation with the aim to reach national power
• liberal = small role for politics big role for individuals
• marxists =large capitalist enterprises have the biggest influence and they are supported by a political system and this is again controlled by capitalist class

Question 9

What are the consequences of resource allocation according to

• mercantilist
• liberal
• marxists ?

Answer 9

• mercantilist =consequence for national power > is there some alternative allocation of resources that would enhance (améliorer) the nation’s power in the international system ?
• liberal = they rely upon economic theory to focus principally upon the welfare consequences of resource allocation > is there some alternative allocation of resources that would enable the society to improve its standard of living ?
• marxists > is there an alternative political and economic system that will promote a more equitable distribution of power ?

Question 10

To what is due the first wave of globalization in the 19th century ?

Answer 10

1. technological innovation = steam engine made it profitable to trade heavy commodities across long distances
2. as technologies made long-distance trade possible, political structures made it a reality: agreement and stable international monetary system that facilitated gobal exchange
3. shift to free trade with the Cobdem-Chevalier Treaty
   ==> interaction between technological change and politics

Question 11

What happened after the WW1 for the global economy ?

Answer 11

european governements tried to reconstruct the global economy but were not successful due to dramatic changes in the political structure that supported the global economy:
- GB with a heavy foreign debt
- increasing power of Germany and US
- US increased tariffs in 1922 > difficult for Europe to sell products in the american market in order to earn dollars needed to repay the debt
==> failure to resolve these financial issues meant that fovernments never placed the intrnational economy on a firm foundation