Classical Theories
Shunji Cui
Department of Political Science
School of Public Affairs
Zhejiang University
Email: [email protected]
Introduction I: What is IPE
Wealth, poverty
Who gets what
in the Int. system
Low Politics
War, Peace
conflict, cooperation
between states
High Politics
If economics is about the pursuit of wealth and
politics about the pursuit of power, the two
interact in complicated and puzzling ways.
It is this complex interplay in the international
context between politics and economics, between
states and markets, which is the core of IPE. Eg:
‘free market’ ≠ freedom from politics.
 In order let free market function well,  we need
many political regulations and arrangements: such as
contracts, consumer producer protections, taxation,
working conditions,,,,.
 The
Why and how it emerged
as an academic discipline?
In the 1950s-60s: the politics and economics were
separated and mutually neglected
 But from the beginning of 1970s: began to questioning the
separation between eco & Pol.
The main Reasons for this shift
1. The Bretton Woods system: show sings of crisis; the oil
crisis from 1973
2. Decolonization  a ‘New International Economic Order’
3. The end of the Cold War: reintegration of Eastern Europe
and former Soviet Union into Western political
organizations & economic intedependence
IPE: Three Approaches
Economic Liberalism
1. Mercantilism
Emerged in 16-17c: during the period of
establishing modern state system
Goal: Attempted to use economic activities to
serve the primary goal of building strong
Views: Economics is a tool of politics, a basis
for political power. == a defining feature of
mercantilist thinking.
Mercantilism and Neorealism
Mercantilists: see the international economy as an
arena of conflict between opposing national interests,
rather than an area of cooperation and mutual gain.
Economic competition between states == zero-sum
game == where one state’s gain is another state’s loss.
 states have to be worried about relative economic
because the material wealth accumulated by one state
== serve as a basis for military political power 
which can be used against other states.
== resemble with neorealism in the Neo-neo debates
on states cooperation
Economic rivalry: different forms
(Gilpin 1987)
1. Defensive or 'benign' mercantilism:
 states look after their national economic interests
because that is an important ingredient in their national
 Implications: such policies no big negative effects on
other states
2. Aggressive or 'malevolent' mercantilism.
 Here states attempt to exploit the international economy
through expansionary policies – the imperialism of the
European colonial powers in Asia and Africa.
Mercantilism and Liberalism
1) Mercantilists see:
economic strength and military-political power
  as complementary; not competing goals,
  in a positive feedback loop.
 The pursuit of economic strength supports
the development of the state’s military
political power
 Military political power enhances and
strengthens the state’s economic power.
Mercantilism and Liberalism
2) Liberals:
separation between politics and economic
 The pursuit of economic prosperity through free trade
and opening economic exchange v. the pursuit of power
by the means military force & territorial expansion 
 States can choose the road of eco development & trade
== to become ‘trading states’, like Germany & Japan
after WWII.
 Or they can choose the road of military force and
territorial expansion == and thus base their prominence
on military power (imperialism).
Mercantilism: Assessments
Mercantilists reject the liberal view
More national wealth & more military-political power 
are complimentary stratagems – that serve the same
fundamental goal: a stronger, more powerful state.
Normally, wealth and power can be pursued
simultaneously, in support of each other.
But ultimately, politics must have primacy over
economics == the economy should be subordinated to
the primary goal of increasing state power.
Mercantilism: Assessments
But the content of the concrete policies
recommended to serve that goal has changed
over time == different means to the end (strong &
powerful state)
 16c Spain:
 Netherland:
 Britain:
 Hamilton (US)
 Lis (Germany)
 In Recent year: the ‘developmental’ state model
2. Economic Liberalism
Liberal economics has been called ‘a
doctrine and a set of principles for
organizing and managing economic
growth, and individual welfare’.
 It is based on the notion that if left to itself
the market economy will operate
spontaneously according to its own
mechanisms or 'laws'.
David Ricardo
David Ricardo argued that free trade,
 i.e.
commercial activities that are carried on
independently of national borders,
 will
bring benefits to all participants
because free trade makes specialization
possible and specialization increases
efficiency and thus productivity.
Paul Samuelson summarized the argument
as follows:
 ‘Whether or not one of two regions is
absolutely more efficient in the production
of every good than is the other, if each
specializes in the product in which it has a
comparative advantage (greatest relative
efficiency), trade will be mutually profitable
to both regions’ (Samuelson 1967: 651)
Economic liberals thus reject the mercantilist view
that the state is the central actor and focus when it
comes to economic affairs.
The central actor  is the individual as a consumer
and a producer.
The marketplace -- is the open arena where
individuals come together to exchange goods and
Individuals are rational in pursuing their own
economic interests, and when they apply that
rationality in the marketplace, all participants gain
== positive sum game.
Economic liberals argue that
The market economy is an autonomous sphere of
society which operates according to its own
economic laws.
Economic exchange is a positive-sum game and
the market will tend to maximize benefits for the
rational, self-seeking individuals, the households,
and the companies that participate in market
The economy is a sphere of cooperation for
mutual benefit among states; as well as among
According to Keynes:
 the market economy is a great
benefit to man, but it also
entails potential evils of ‘risk,
uncertainty and ignorance’.
 That situation could be
remedied through improved
political management of the
 Keynes thus argued in favor of
a market which was ‘wisely
managed’ by the state
(Keynes 1963: 321).
John Maynard Keynes, 1883-1946
3. Marxism
For Marxists, the capitalist economy is based
on two antagonistic social classes:
The bourgeoisie, owns the means of
The proletariat, owns only its labor power which
it must sell to the bourgeoisie.
But labor puts in more work than it gets back in
pay; there is a surplus value appropriated by the
bourgeoisie. That is capitalist profit and it is
derived from labor exploitation.
For Marx, capitalism means progress in
two ways:
1. First,
capitalism destroys previous
relations of production,
2. Second,
and most important for Marx,
capitalism paves the way for a socialist
Economic production
 is the basis for all other-human activities,
including politics.
The economic basis consists:
1. of the forces of production == i.e. the
technical level of economic activity,
2. of the relations of production == i.e. the
system of or social ownership which determines
the actual control over the productive forces.
Main Views on IPE:
States are not autonomous; they are driven by ruling class
interests and capitalist states are primarily driven by the
interests of their respective bourgeoisies == (rather than
state’s interests, it is class interests)
As an economic system, capitalism is expansive: there is
a never-ending search for new markets and more profit.
The process of capitalist expansion must always be
unequal or uneven, between countries, industries, and
Such disparities and conflicts will always develop under
capitalist conditions, argued Lenin. That is the ‘law of
uneven development.’
Marxism and Realism
Both views agree on the perennial competition and
conflict between states.
Realists explain this by pointing to the existence of
independent states in a condition of anarchy.
Marxists reject that view as abstract and unhistorical. It
is abstract because there is no concrete specification of
the social forces that actually sustain the conflict
between states.
Marxists argue that conflict between states varies
substantially across history. Conflict between capitalist
states--and ultimately between capitalist ruling classes-is of course connected to the capitalist historical era.
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