Contemporary Perspectives
on IPE
Jerry Cohen
Larry Summers
Barry Eichengreen
Class 3 – Tuesday, 20 September 2011
J A Morrison
1
Contemporary Perspectives on
IPE
I. Defining Our Terms
II. IPE as a Social Science
III.IR “Schools”/“Theories”
IV.Some Differentiating Questions
V. Reference to Empirics
VI.Conclusion: How should we
study IPE?
2
Contemporary Perspectives on
IPE
I. Defining Our Terms
II. IPE as a Social Science
III.IR “Schools”/“Theories”
IV.Some Differentiating Questions
V. Reference to Empirics
VI.Conclusion: How should we
study IPE?
3
Socialism
Autocracy
Democracy
Authoritarianism
There are lots of “-isms” in the political
economy literature…
Capitalism
Aristocracy
Liberalism
Communism
4
Since these terms are
frequently used in different
ways, it will be valuable for
us to be sure we use the
terms in the same ways in
this class.
5
I like to think about them as
describing points along
various continua, as
representing values for
particular variables.
6
I understand these terms in
the context of the following
big questions…
7
Regime Type: Who holds the
reigns of power?
Democracy
Many
Aristocracy
Few
Autocracy
One
Negative Liberty: What restrictions are
placed on government authority?
Liberal
Many
Authoritarian
None
Political-Economic System: What is the
level of government intervention in the
economy?
Capitalist/FreeMarket
Low
Socialist/Mana
ged
High
“Communism,” for me,
denotes the politicaleconomic system that Marx
predicted would follow
inevitably from capitalism.
11
Remember, these questions
relate to variables.
Over time, we have observed
various combinations of
these different values.
12
Observed Combinations
Country
Regime-Type
Liberality
PE System
USSR (1945)
Autocracy
Authoritarian
Socialist
China (Today)
Aristocracy
Authoritarian
Mixed/Middle
US (Today)
Democracy
Liberal
Capitalist
Venezuela
Democracy
Authoritarian
Socialist
Sweden
Democracy
Liberal
Socialist
Iraq (2000)
Autocracy
Authoritarian
Capitalist
GB (1815)
Aristocracy
Liberal
Managed
Of course, we might disagree about specific
characterizations; but the point remains: different regime
types, levels of liberality, and PE systems have been
combined.
13
Theory versus Policy
•
Foreign Economic Policy (“FEP”)
–
–
–
•
The policies designed to influence the relationship
between the domestic economy and foreign markets
and/or the global economy
These are the policies that exist, not necessarily the
theories
Broad category: everything from tariffs to fertility
policy
Political Economic System (e.g. Mercantilist
System)
–
–
The proposed bundle of related theories concerning
a state’s FEP
Note: the proposed system may not always be fully
adopted or implemented in practice; the PE systems14
Contemporary Perspectives on
IPE
I. Defining Our Terms
II. IPE as a Social Science
III.IR “Schools”/“Theories”
IV.Some Differentiating Questions
V. Reference to Empirics
VI.Conclusion: How should we
study IPE?
15
There’s a real question
about the extent to
which we do and
should study IPE as a
science.
16
We’ll consider that
question.
But, first, let’s discuss
what it means to study
something
“scientifically.”
17
Scientific study has
several defining
features.
18
Scientific study is
positive.
 Concerned with what is (positive), not
what ought to be (normative).
19
And scientific study
relies on the empirical
testing of models to
explain the relationship
between variables.
20
Let’s unpack that.
21
Variables
• Variables: factors of interest that may vary
in value
• May be continuous, discrete, or a
“dummy”
• Examples
– Volume of trade (continuous)
– Type of Exchange Rate Regime (discrete)
– Status of membership in Int’l Organization
(dummy)
22
Theories and Models
• Specify relationship between variables
– Value of independent (or “explanatory”)
variable explains dependent variable
– E.g. Type of exchange rate regime (IV)
explains the volume of trade (DV)
• May be correct or incorrect (i.e. may or
may not align with reality)
• Endogenous: determined within the model
• Exogenous: determined outside of the
model
23
Facts
• Descriptions of reality
• For our purposes, statements about the
value of variables
• May be correct or incorrect
• Examples:
– Hong Kong has a fixed exchange rate
(correct)
– The volume of world trade has increased
since 1945 (correct)
– The United States has a fixed exchange rate
regime (incorrect)
24
Empirical Tests
• Theories/Models lead to testable
hypotheses
– E.g. Fixed exchange rate regimes lead to
greater volumes of trade.
• Hypotheses are predictions about the
value of variables
• We test hypotheses by comparing
predictions to observed reality
– Do we observe that countries with fixed
exchange rate regimes have greater volumes
of trade than countries with flexible exchange 25
Correlation ≠ Causation
• Correlation: the values of two variables
vary together
– E.g. When many students arrive to class
carrying umbrellas, overall attendance is poor
• Spurious correlation: correlation without
causality
– E.g. students do not avoid class because they
fear umbrellas!
• Or causality may be reversed
– E.g. Perhaps high trade volumes lead to fixed
exchange rate regimes (rather than vice
26
Scientific study relies
on an epistemology.
 An understanding of what can be
known and how to acquire knowledge.
27
Contemporary Perspectives on
IPE
I. Defining Our Terms
II. IPE as a Social Science
III.IR “Schools”/“Theories”
IV.Some Differentiating Questions
V. Reference to Empirics
VI.Conclusion: How should we
study IPE?
28
You hear a lot about
the “schools” of IR
thought.
Realism, Constructivism,
Idealism, Liberalism,
Institutionalism, &c.
29
These terms, used tout
court, mean almost
nothing to me.
30
There is simply too
much variation within
these “schools” for
these monikers to
convey much useful
information.
31
Many of the “founders”
of these schools
(Wendt, Mearsheimer)
don’t even agree on
who belongs where, let
alone what defines
each school!
32
So, think in terms of
either specific theorists
and/or specific
theories—meaning,
responses to precise
questions.
33
And think in terms of
multiple dimensions—
not just a simple, onedimensional
continuum.
(Don’t think the way my mother does: “liberals” versus
“conservatives.”)
34
Contemporary Perspectives on
IPE
I. Defining Our Terms
II. IPE as a Social Science
III.IR “Schools”/“Theories”
IV.Some Differentiating Questions
V. Reference to Empirics
VI.Conclusion: How should we
study IPE?
35
Here are some of the essential
questions we might ask.
Each question constitutes a
dimension along which we
might organize different
theorists & theories.
36
IV. DIFFERENTIATING
QUESTIONS
1.
2.
3.
4.
Where’s all the action?
Does process matter?
What makes us tick?
What is the nature of our world?
37
The Levels (Images) of IP
• At what level should we look for the key
variables?
• The Levels (Images)
– Individual (1st): Hitler liked war
– Unit/State (2nd): Germany was Autocratic;
Autocracies are bellicose
– System (3rd): There wasn’t a hegemon (single
dominant power) to check Germany’s rise
38
The Primary Actors in IP
• Who are the primary actors in IP? What
ought to be our “units of analysis”?
• Potential Units of Analysis
– States
– Individuals
– International Institutions & Organizations
– Interest Groups and NGOs
– Socio-Economic Classes
– Transnational Social Movements (e.g.
Feminism, Environmentalism, &c)
39
The Types of Variables
• What types of variables matter?
• Material Factors
– Power
– Wealth
– Geography
– Material interests (income, &c)
• Ideational Factors
– Values
– Perceptions & Understandings
– Assumptions, Expectations, & Identities
40
IV. DIFFERENTIATING
QUESTIONS
1.
2.
–
–
Where’s all the action?
Does process matter?
What makes us tick?
What is the nature of our world?
41
Static versus Dynamic Models
• Static Models
– “Snapshot” of current situation
– History, momentum, &c., do not matter
– Many variables treated as exogenous
• Dynamic Models
– Process matters
– Virtually all variables could be endogenous
– E.g. The economic situation Obama faces
must be understood in the context of previous
administrations
42
Why use static models at all?
 parsimony—dynamic models are quite
unwieldy.
– E.g. Did Andrew Jackson’s administration
help to generate the current financial crisis?
- The question: which variables can we
assume to be exogenously determined?
- Disagreement arises over answers
43
IV. DIFFERENTIATING
QUESTIONS
1.
2.
3.
–
Where’s all the action?
Does process matter?
What makes us tick?
What is the nature of our world?
44
Logics of Human Behavior
• Consequentialist (Functionalist)
– Actions chosen based on expected
consequences
• Appropriateness (Normative)
– Actions chosen based on normative
standards of right & wrong
 Which mode did Locke, Smith, & Marx use?
45
Narrowness of Our Interests
• Egoism
– Almost total emphasis on one’s own welfare
• Altruism
– Considerable weight given to the welfare of
others
 Which view did Locke, Smith, & Marx hold?
46
Source of Our Interests
• Rationalism
– Preferences are exogenously determined
• Constructivism
– Preferences are endogenous to interaction
 Are we social or unitary/atomistic actors?
47
IV. DIFFERENTIATING
QUESTIONS
1.
2.
3.
4.
Where’s all the action?
Does process matter?
What makes us tick?
What is the nature of our world?
48
Do Markets Work?
• Market Failure
– Without active management, markets often
produce suboptimal outcomes
• Invisible Hand
– Markets produce best outcomes when
intervention is minimized (laissez-faire)
49
Compatibility of Interests
• Mutual Benefit
– Pursuit of private interest serves public good
– “Private vices are public benefits” (Mandeville)
– E.g. Competition between producers  better
products at lower prices
• Zero-Sum
– Benefits can only come at others’ expense
– E.g. Allocation of rival goods; pursuit of status
 What areas of the market face which circumstance?
50
So…
There are a lot of different
questions to consider; and there
are a lot of different ways to
group scholars and approaches
to IPE.
51
Contemporary Perspectives on
IPE
I. Defining Our Terms
II. IPE as a Social Science
III.IR “Schools”/“Theories”
IV.Some Differentiating Questions
V. Reference to Empirics
VI.Conclusion: How should we
study IPE?
52
Remember that our theories
specify the relationship between
variables.
We test our theories using
empirical evidence.
53
Throughout the term, we’ll
rigorously examine a range of
empirical cases.
This will help you to build a
universe of cases upon which
you can draw as you attempt to
develop and test theories about
IPE.
54
I’m going to talk a lot about the
“Anglosphere”—the Englishspeaking part of the world.
Here’s why…
55
Why focus on the
Anglosphere?
1. Important
– Historical influence of British state and
empire
– Influence of British thinkers
– Familiar case in the literature
• Accessible
– Writing is in English
– Rich array of sources, perspectives on
context, &c.
– This is the case I know best!
56
Some of this you will have to
know because that history was
influential.
But in this class—and every
other—you should evaluate
theory using the cases you know
best.
Combine what we study here with
57
what you already know.
Contemporary Perspectives on
IPE
I. Defining Our Terms
II. IPE as a Social Science
III.IR “Schools”/“Theories”
IV.Some Differentiating Questions
V. Reference to Empirics
VI.Conclusion: How should we
study IPE?
58
Today, I’ve tried to briefly
introduce some of the major
issues and perspectives in the
study of IPE today.
I want to emphasize, though,
that there continues to be
disagreement about how (and
what!) we should study in this
field.
59
(Think: Cohen on the British &
American Schools; Eichengreen
on Economics versus IR)
60
What should the study of IPE
look like?
61
Should we consider normative
questions? Or just positive
ones?
62
How scientific should our inquiry
be?
How rigorous should our
empirical standards be?
Should we only formulate
refutable hypotheses?
63
Whom should we study?
How much emphasis should we
place on the state (versus
individuals, NGOs, MNCs, &c)?
64
We’ll continue to engage these
questions throughout the term…
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