Contents
INTRODUCTION ............................................................................................................. 1
CONCEPTUAL ANALYSIS ............................................................................................. 2
International Political Economy .................................................................................... 2
Economic Liberalism .................................................................................................... 2
Economic Nationalism or Mercantilism ........................................................................ 2
ACADEMIC CONTENT ................................................................................................... 2
Comparing and contrasting between Economic Liberalism and Economic Nationalism
..................................................................................................................................... 2
How they shape the contemporary international political economy.............................. 3
Best Model to provide sustainable global economic Order .......................................... 5
CONCLUSION ................................................................................................................ 6
REFERENCES ................................................................................................................ 7
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INTRODUCTION
International Political Economy (IPE) is a sub-field of Economic, Political Science and
international Relations that is ultimately concerned with political forces like states,
individual actors and institutions global interaction.
IPE simultaneously gained
prominence in academia in the 1960 with the rise of global economic issues and the
development of the Third World. Naturally the fields of social sciences use theoretical
perspectives to understand, interpret and analyze social occurrences and so does IPE.
However, the demise of IPE is that there is not only a single theory that can be used to
describe it but rather more than one. This is due to the complexity and the dynamics of
global economic and political relations. IPE is blended of political, economic and
international approaches thus it requires more than one school of thought to understand
and analyzes economic, political and international phenomena altogether. Therefore,
International Political Economy scholars traditionally study global economic and political
interactions through the lens of three unique schools of thought namely, Economic
Liberalism, Economic Nationalism and Marxism.
The devotion of this paper is the critical review of the contrasts and comparison between
the two major doctrines in IPE (Economic Liberalism and Economic Nationalism) in an
attempt to analyze the contemporary global political and economic landscape. The
intension of this assignment is also to offer a justified discussion on which model is
suitable to provide the best sustainable economic order. This assignment was conducted
using both soft copy and hard copy journals and textbooks as well as web articles. This
paper is divided in to five parts, firstly the introduction that outlines the problem statement
and the structure. On the second section lies the conceptual analysis that defines the key
terms that constitute this essay, thirdly, the academic content that articulates the central
issues of this paper. On the fourth section lies the conclusion that summarizes all matters
that have been discussed in this paper coupled with the findings made by this assignment.
The fifth section which is the last part of this paper contains the bibliography.
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CONCEPTUAL ANALYSIS
International Political Economy
A field of enquiry that studies the political battle between winners and losers of global of
global economic exchange. IPE studies how these political comparisons shape the
evolution of monetary trade system and influences global development strategies and
states operations. (Oately,2010).
Economic Liberalism
Timothy (2014) defines economic liberalism as a mainstream approach of economics that
refers to classical principles of individual liberty and limited government.
Economic Nationalism or Mercantilism
It is an IPE perspective that is closely associated with Political Science, especially the
political philosophy of realism which looks at IPE issues mainly in terms of national
interests and the state’s struggle for power. (Helliener, 2002)
ACADEMIC CONTENT
Comparing and contrasting between Economic Liberalism and Economic
Nationalism
One of the disparity of these two theories can be on the basis of image the international
political economy. In this regard, the Economic liberalism views the international system
as cooperative and harmonious whereby the system offers economic benefits to all
countries and the actors seek absolute gains in wealth, further tolerating income
inequality, (Baldwin,1985). However, Keohane (1984) argues the Economic Nationalism
school of thought view the system as aggressive and conflictual in a manner that wealth
contributes to power, state seek relative gains in wealth and power. This is to say that
states compete to be more powerful than others in terms of wealth. As said that the
liberalists view the international system as cooperative and harmonious, they advocate
and believe that the by building of international organizations, institutes and norms, states
can mutually benefit from the economic exchanges, while Economic Nationalism is
essentially a doctrine of state building for state interests.
For Economic Liberalism, the most important actors are the markets and individuals, while
the Nationalists see the state as most important and main actor in the international
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economic system. The role of the state in the liberal view is to provide regulations that
respond to marker failures but should stay out of the economy. On the other hand, for
economic nationalism, the state controls the economy and is responsible for resource
distribution and allocation. For liberalists humans are rational beings that act to maximize
their self-interest, and when humans act rationally markets are created to produce and
distribute without the state needing to intervene, they believe that the involvement of the
state in the market causes inefficiency, (Harlen,1999).
Nonetheless Economic nationalism view human nature as aggressive and the only way
to control them is by controlling their resources. For liberals the international wealth is
maximized by free exchange free exchange of goods and services on the basis of
comparative advantage and international economic gains. On the other side of the coin,
Economic nationalists believe that humans are aggressive and possess conflictual
tendencies, the state power is achieved by regulating the economic life of individuals. The
economics in this sense is subordinate to the state interest, also the relationship between
domestic and an international society is based on the security of anarchy that breeds the
competition of wealth among states in the international economic system.
Although these two IPE doctrines may seem tightly opposing. It is argued that to some
certain extent, they had commonalties. As mentioned that the liberals believe in free
trade, the nationalist also supports this even though they claim that liberals failed to
provide a realistic vision for many economically weak countries where free trade was an
exception
How they shape the contemporary international political economy
According to Drenzner (2010), Mercantilism is the oldest IPE perspective that owes its
being from the intellectual works of Friedrich Lists who is regarded as the father to this
school of thought. The traditional mercantilism resided under the notion that the prosperity
of a nation is defined by precious metals like gold and silver. The mercantilist believe was
that the way to sustain a nation’s economy was secure these metals through war or
minimizing imports though tariffs. A strong nation for them was branded by high
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populations that ensured an abundant supply for labor, for that matter, colonies and slave
trade were essential parts of the mercantilist economic strategy as they were sources of
labor and raw materials. For mercantilists, nations had to frequently engage in their
military might to ensure that their local markets and supply sources were protected hence
they claimed “a decrease in the economic power of one country implies to another an
increase to another”
However, Mercantilism took a new shift in the present economic political sphere through
few distinctions. Mercantilists no longer put more emphasis on the precious metals but
rather, they appreciate the importance of foreign reserves usually in the form of American
Dollars. States are currently more concerned with developing their country’s
manufacturing capacity and play much more sophisticated interventionist role in the
nation’s economy, the normally do this by nationalizing almost all manufacturing
enterprises in the country in order to control exports. The East Asian economies are an
illustration of the contemporary mercantilism with China being the biggest manufacturing
economy in the world. The mercantilist model still advocates policies that raise barriers
to international trade, this could be justified by the trade war between Unites States of
America and China whereby the U.S imposed tariffs on Chinese imports and Chinese
responded by harsh policies to harm U.S exports, (Bekkers and Schroeder, 2020)
On the other side of the coin lies that Economic Liberalism influenced by the works of
Adam Smith. This school of thought rose in response to mercantilism. Economic
liberalism from its evolution always prioritized individual freedom to pursue their selfinterests. It was founded on the idea authoritarian regimes are no longer welcome. It
supported the measures that sought to limit right of hereditary rulers and establish
democracy. Economic liberalism school of thought focused on the free movement of
goods and services across state borders, they also regarded private enterprises as a vital
component of economic freedom. They believed and still believed that, by allowing free
trade among nations, it would promote the whole world. individuals would benefit from the
same condition as everyone else by a single global economy, (Friedman, 2017).
The contemporary economic liberalism is observed with the rise of globalization in the
international arena. Furthermore, Woods (2001) assets that the increase in the
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interconnectedness of states has proven that the foot prints of economic liberalism will
still continue to be seen and felt. He further claims that globalization enables
internationalization by increasing economic transactions across borders, technological
revolution also allows firms and other actors to operate and communicate without any
border, location or distance restrictions. Globalization also facilitates the liberalist aspect
of and global economic and political cooperation, by doing so, globalization is dramatically
diminishing the role to the state in the economy as the liberals aim to. Also economic
liberalist through the aid of globalization are currently working on ending economic
inequalities among states, thus redistributing wealth. This is done through the formation
of international organizations such as The World Trade Organization and The
International Monetary fund.
Best Model to provide sustainable global economic Order
This essay asserts that there is no best model whatsoever between the two that can order
sustainable global economic order. Both economic liberalism and nationalism have
unique costs and benefits to actors in the international system. For that matter, combining
the two schools in order to achieve a foreseeable global economic order is the best
solution. When these models are united, they are able to cater for the contemporary global
economic dynamics, from both liberalists and nationalist models. Through the influence
of globalization, developed countries like USA have employed the liberalists economic
strategies such as liberalization of trade, privatization of state owned enterprises and the
redirection of public expenditure. However, liberalists strategies may to a greater degree
have negative impacts on Third world economies, for instance developing countries
cannot fully liberalize trade as most of their income comes from their income comes from
the exports and imports. The free movement of goods restrict the imposition of tariffs
which are the main sources national income in the Third world, so most of the economies
especially in Africa require protectionist strategies of economic nationalism. Botswana
and Mauritius are examples of Third World Countries that have achieved greater
economic growth through the nationalization of economies. For that matter merging the
two models to promote a sustained global economic order is the best solution.
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CONCLUSION
This essay has successfully laid down the distinct feature of both economic liberalism and
economic nationalism, it has also prospered identifying the difference of these two models
in analyzing the contemporary global economic land scape. However, this paper has
faced challenges in identifying the similarities of these schools if thought, as they are
completely separate opposing doctrines with opposing ideas.
On a final not the findings made by this essay are that the distinctiveness of these
paradigms can be outlined by their summarizing their explanation altogether. Economic
nationalism is a body of policies that emphasize control of the economy, labor and capital
information, even if it requires the imposition of tariffs and other restrictions on the
movement of the economy in the international system. China is one perfect example of
an Economic Nationalist state where by the governments intervenes heavily in the market
and own many corporations. Economic liberalism is an ideology based on a strong
support for and individualist market, free trade and believes that individuals should have
a right to property and the government should not interfere, the individual decisions of
buyers and sellers should shape the economy not the actions of the government, Europe
and the structure of its economy here is an illustration.
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REFERENCES
Baldwin, R. (1985) ed (1993). Neo-realism and Neo-Liberalism. Columbia University
Press: New York.
Bekkers, E. and Schroeter, S. (2020). An economic analysis of US-China trade war.
Journal of world trade organization.
Drenzner, D., w. (2010). Mercantilist and Realist perspectives in the global political
economy. Oxford University Press: Oxford.
Friedman, M. (2017). Milton Freidman on Freedom. Hoover Institution: Chicago.
Harlen, A. (1999). A reappraisal of classic economic nationalism and economic liberalism.
International Studies Quarterly. Vol. 43(4). P733-44
Helliener, E. (2002). Economic Nationalism as a challenge to economic liberalism?.
Journal of international studies. Vol 43(3) p307-29.
Keohane, R. (1984). After hegemony. Princeton University Press: Princeton.
Oately, T. (2010). International Political Economy. Pearson Education
Timothy, C, L. (2014). International Political Economy- An introduction to approaches,
regimes, and issues. The Saylor Foundation.
Wood, N. (2001). International Political Economy. Oxford University Press: Oxford.
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