Aaron Dodson PL SC 083t First Examination, Prompt #1 9/27/09 Paradigms of IPE Money talks. Economics is the language in which everyone understands. It is the determining factor in many, if not all, political decisions, the connection between domestic and international relations, the backbone of strong alliances, the determining factor in quality of life, and the striking force of a strong military. If you take economics, the language of the world, add politics, what I would call the culture of the world, you get the magic mirror that can look into the inner workings of how the world functions. International political economy (IPE) offers three basic paradigms on how the world works. The first is neo-Mercantilism. Neo-Mercantilism is the international and economic based theory of Realism. To understand the ideals of neo-Mercantilism, we must first understand Realism. Realists believe that the state is principle and economic actors are agents of the state. By this I am saying the government controls, and should control, the actions of the market. Realism has the goal of increasing the relative capabilities of the state in order to protect itself from the anarchic world of self-interested states. (Frieden and Lake, 2000: 11) It was found during the early 1900’s that industrialized nations were the strongest and most economically sound countries in the world. With security being of utmost importance, neo-Mercantilism, developed off of its domestic partner, Mercantilism, focuses on growing and strengthening the economy of a country through national industries (Balaam and Veseth, 2001: 32). Going back to the idea of the state controlling economic actors, Realists and, in turn, neo-Mercantilists believe in temporary protectionist tariffs on foreign goods to develop domestic infant industries until they are strong enough to support their countries’ economies in a competitive international level. The developing of economy is so important because a strong economy means a strong military force and higher levels of security, the goal of Realism. The political theory of Realism could not exist in this world without the foundation of its economic sister-theory of neo-Mercantilism. 1 Liberalism is the next IPE paradigm. As Realists believe the state controls the economic actors, Liberals believe that the state and economic actors should have no interactions with each other whatsoever. Liberals believe that through completely free trade and free markets, people will naturally engage in trade between each other that will result in larger benefits for both trading partners (Frieden and Lake, 2000: 10). One main argument in Liberalism is that specialization and comparative advantage will result in higher rates of production and more goods for both countries engaged in trade. In, The Economist, on trade, a perfect description of comparative advantage is described under the, “Gains from Trade,” section (The Economist, 1997: 85). This idea of supporting and encouraging free trade is much different than what Realists say. Whereas Realists would argue these liberal interdependences make states more vulnerable in the world, Liberals say it creates more security. If countries are dependent upon each other for trade and economic stability, they are much less likely to defect from trade agreements because there is no economic advantage to being autarkic and not engaged in trade. Also, Francis Fukuyama argues that the world is Liberal and that all competing theories to Liberalism have died out. He believes that if the world isn’t already, it is trending towards a purely Liberal world system. (Fukuyama, 1989: 5-18) Now, whether you believe in this or not, he predicts a world of growing interdependences. With growing interdependencies, countries become less and less likely to engage in military conflict and more likely to engage in trade due to the fact that military conflicts are so expensive and trade offers economic prosperity. Liberalism lately has evolved slightly out of this Laissez Faire Liberalism that I have just been talking about. It now supports small regulations on the market because of Liberalist support for human rights and equality standards throughout the world. This evolution is, in my opinion, what creates this wide spread support for Liberalism across the world because it makes citizens happy with high quality of life while pleasing world leaders with strong interdependencies for heightened world security. The final paradigm is neo-Marxism. Neo-Marxism is under the belief that the economic actors are principle and the state is the agent of the economic actors. This is an interesting perspective because it directly backs up a statement that I made earlier in this paper when I said that economics is the determining factor in many, if not all, political decisions. Traditional Marxism said that capitalism is leading the world into a race to the bottom and that capitalism at its strongest would fail. However, when capitalism wasn’t failing in the world, Lenin came up 2 with the reason why. He found that capitalism was surviving due to imperialism which brought a sense of patriotism to the citizens of the capitalistic states and distracted from the fact that they had poor quality of life. He called for workers of the world, who were being oppressed by the capitalistic economic powers, to rise up and overturn the Liberal/capitalistic government. (Frieden and Lake, 2000: 12) In today’s world, transnational corporations or TNCs are the vehicle that drives capitalism across the globe. They avoid government regulations because of their mobility. If one country decides to impose strict regulations on a TNC, that TNC can simply move to another country with less regulations. These differences in regulations will make developing nations lower their regulations to attract business and strengthen their economies. The lower the regulations a country has means the more exploited the workers of that country are and therefore the lower the social quality of life for their workers. This is the race to the bottom that Marx and Lenin were talking about. This inevitable problem with capitalism can only be solved through world-wide regulations or a more popular term, world government. Lenin also realized that it had to be international revolution because no single country could defeat capitalism since it would simply spread to the rest of the world. The economic powers, according to neo-Marxist, control the world. In comparing and contrasting the three major paradigms of IPE, I noticed the idea of a world government was a reoccurring theme. In some form or another, all three paradigms call for some governing international body or force to keep the world in line. For Realists (neoMercantilists) it’s the HST (Hegemonic Stability Theory) that says there needs to be one country who takes the position of a reluctant leader in the world. (Frieden and Lake, 2000: 12) This leader is who watches over the world and keeps security and peace. Liberals share this belief that there needs to be a leader in the world that governs the interactions between states. Whereas Realists (neo-Mercantilists) believe a hegemon should take this role, Liberals differ slightly in believing that international institutions should take this role. A possible difference could be that institutions often are sovereign over their states and a hegemon is only sovereign over itself. Either way they both believe a governing force is necessary. Neo-Marxist stand right alongside Realists and Liberalists in their belief that a global government is the only thing that can keep security and equality in the world. Even though neo-Marxist are fighting against the free market of Liberalism and disagree with neo-Mercantilists in that the economic actors don’t control the 3 state, they still call for world government. It’s interesting to see such differing theories be united under a single idea. Whether you call yourself a neo-Mercantilist, a Liberalist, or a neo-Marxist, economics play a strong role in the politics of decision making. In a world with a shaky future due to environmental issues, possible trade wars, nuclear proliferation, and as some would argue, the decline of American hegemony, the importance of political and economic relations throughout the world is more important than ever. Understanding these theories and the international relations associated with them will help us predict and/or decide where our world is headed. WORD COUNT: 1354 4 Bibliography: Frieden, Jeffry A., and David A. Lake. "Introduction: International Politics and International Economics," in International Political Economy: Perspectives on Global Power and Wealth, 4th edition, edited by Jeffry A. Frieden and David A. Lake. Boston: Bedford/St. Martin's 2000, pp. 1-16. "Trade Winds." The Economist, 8042, No. 345, November 8, 1997, pp. 85-86. Balaam, David, and Michael Veseth. "Wealth and Power: Mercantilism and Economic Nationalism," "'Laissez-Faire, Laissez-Passer': The Liberal IPE Perspective", and "Marx, Lenin, and the Structuralist Perspective," in Introduction to International Political Economy, 2nd edition. Upper Saddle River, NJ: Prentice Hall, 2001, pp. 25-44, 45-66, 67-86. Fukuyama, Francis. Conflict After the Cold War: Arguments on Cause of War and Peace, “The End of History?” Macmillon Publishing Co., 1989, pp. 5-18. 5