Lecture notes, lectures 1-11 - complete lectures transriptions of the ipe course held by isaline bergamaschi during the 2015/2016 academic year. PDF

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THEORIES IN IPE (Obrien, chapter 1,2) DEFINITION IPE it is a subfield of IR that study the links between politics and the economy. Ngaire Woods IPE studies the interactions between the economy and political activities on the international scene Robert ilpin Politics and the economy influence each ot...

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THEORIES IN IPE (Obrien, chapter 1,2) DEFINITION IPE it is a subfield of IR that study the links between politics and the economy.  

Ngaire Woods  IPE studies the interactions between the economy and political activities on the international scene Robert ilpin  Politics and the economy influence each other in important ways

Who are the actors of the IPE?    

States (important in the regulations of the economy) Economic Organizations (WTO, IMF, WB, etc…) Firms, Multinational Individuals (consumers, workers, investors, migrants, academics, consultants, experts)

What’s the object of study?          

Foreign economic policy International economic governance Economic regulation/cooperation Trade FID Natural resources Development Finance: crisis, debt, monetary policy Labour, production, firms Globalization

The Greek crisis: 1. 2. 3. 4.

An economic crisis that spill over and turn into a political crisis How to deal with the crisis? Austherity or not? The impact of the crisis on the regional integration, weakening of the EU The impact of the crisis and of the Alexis Tsipras election on the outcome of elections on others country (ex. Podemos in Spain)

French companies in Africa: 1. The impact of foreign investment 2. The access to resources (the role of firms for the growth of France and not the development of African countries) 3. Consolidate international statute through the maintenance of a “special relations” with African countries (French language at the UN; African elites speaking French)

4. Sharing of culture is good for economic links; French advisors have an influence on the African elite and can direct their economic choice 5. Corruption (Foccart, Il Cot) Migrants from India, Pakistan and Ghana in the UK: 1. Former colonial ties and diaspora effect (there is already a community of people of your origin) 2. Remittances (money send back from the migrants to its home country) which are very important sources of revenue at the national level; there is no official number because lots of this money are send trough illegal channel 3. Political debate and economic impact on the sending and receiving country (fuga di cervelli, lavoro sottopagato, ecc..) Football: 2014 World Cup in Brazil: 1. Investment infrastructure that creates immediate job opportunity, and thus growth in the short terms 2. Expenditure of public money in something not useful 3. FIFA having an impact on national legislation (ex. the sending of beer near to the stadium) Trade Negotiation between the UE and the US: 1. The interest of multinationals 2. Is it good for the Eu market and the Us market? Who are the winners and the losers? It is easy to understand when the trade agreement is made between a poor and a rich country, but in the case of two bi economy it is hard to say. 3. Regulations on goods Microsoft and Facebook: 1. Major company that can influence political decisions (data sharing and privacy, that can be used by politics and firms to see which your interest are and put advertising) 2. New technology and democracy (ex. arab spring) Drug-trafficking in Colombia and Mexico: 1. Who’s in charge? The legitimacy gained by Narcos (ex. Pablo Escobar) 2. The real market is in developed country 3. Drug traffickers are global actors, involved in really global networks, and therefore they can have a strong impact on political decisions 4. Para-polìtica

THEORIES OF INTERNATIONAL POLITICAL ECONOMY

Nationalism

Liberalism

Critical/ Marxism theory

Concern

Interest of the nations

Well-being, corporations. Under what conditions is this cooperation between economic actors possible?

The welfare of the working class. Interest of the working class. The dependency theories with the struggle between centre and periphery.

Origins

15th century : emergence Industrial of the nation states and of (18th/19th) mercantilism

Authors

A. Hamilton - F. List - S. A. Smith - D. Ricardo - R. Marx, R. Cox, Cardoso Strange Keohane (dependency theory),

Units

States as unitary actors Big states = winners

Assumptions (economic system)

Economic strength is a The sum of individuals Capitalism based critical component of interest lead to the exploitation collective good. national power domination.

revolution Reaction to liberalism in 19th century

Firms, individuals

Social center/periphery.

classes,

on and

Key dynamics Struggle for power and Mutual benefit, Class struggle, exploitation, cooperation is positive. cooperation is not possible. and interactions wealth Cooperation possible but with winners and loosers : zero sum game (when someone wins another looses) so it is unlikely because of the difference of interest International economic system competitive : promotion of own interest Objectives of Protect the interest of the Free market and rules, economic policy states (taxe on the imports, Enforce property rights in order to make sure that protectionism) people can exchange. There are clear norms that actors can follow to reach the collective goods.

Give more power to the lower classes. Work on the zero sum game. The state is not autonomous. State is an instrument. Promote the interest of the working class. Wants a revolution. Change the terms of the international economic policy and system > leads necessary to the revolution. Renegotiate the terms of exchange

Nationalism Influence

Liberalism

Still have protection of Globalization: main driver national interest. Subsidies in this dynamic. Influential to others countries. for financial institutions, the EU within certains limits, the UN …

Critical/ Marxism theory China (?), some Latine America countries. Some altermondialist movement, this is social movement.

Theories and school are historically, geographically and materially grounded and most of the time they merge in reaction and in opposition to another school or theory. Usually, the field of IPE is divided in the:   

American way British way Latin-American way

The American way of conceiving IPE focuses on interests and at the maximisation of utility through the socalled rational choice, which is a tool to understand economic but also political decisions. This way of thinking is linked to a more quantitative method rather than qualitative. In the UK, the field of IPE is based on the assumptions that rationality is not the only driver of economic decisions. The question for British scholar is hoe is the choice and behaviour of agents shaped by the social structures of the economic environment (identities, ideologies, culture, norms). Theories and schools : what for ? Prio

• ritize information

To

• make predictions

To

• plan action or mobilize support for particular action

To

• give meaning to experience and provide alternative explanation

1. THE ECONOMIC NATIONALIST PERSPECTIVE How States manae their economic affairs and allocate resource domestically to punch their weight in international politics?   

Economic strength is a critical component of national power Trade is to be valued for exports, but governments should discourage imports whenever possible Some forms of economic activity are more valuable than other

It focuses on the role of the State and on the importance of power in shaping the outcomes of any international political economy. Its origins date back to the 15th century, during the emergence and expansion of the nation-state in Europe. Its predecessor is the mercantilist theory, according to which there is only a limited amount of wealth in the

all world and therefore each state must secure its interests by blocking the economic interests of other states. It is a zero-sum game in which one State’s gain is another State’s loss (Hamilton; List) Key actors and dynamics: •

Stat es are the main and most important actor The

• economic power of TNCs is acknowledged but their overall power remains limited •

Pri macy of the political over other aspects of social life Each

• State has the duty to promote its national economic interests • • • • • •

• • •

In favor of state control of key economic activities or for state assistance to central economic sectors. The international system is anarchical Eco nomic policy is a tool to gain more power IPE is a struggle for power and wealth (zero-sum game) Stat es acts as rational individual (rational choice and maximization of utility) The market is governed by the activities of States; they are not « natural » they can only exist within a social context Stat es respect global economic governance norms but cooperation is unlikely The global economy is governed by the interests of the most powerful states Glob alization is largely a myth while the power of States remains undiminished

Economic nationalism today • Cou ntries continue to protect their markets from foreign competition even though they have committed themselves to free trade. • Man y developing countries have relied on their States to boost economic activity, shield domestic industries from competition and direct finance to selected industries • The best example is China, which has engaged itself in economic nationalist policies in the pursuit of development 2. THE LIBERAL PERSPECTIVE What resource allocation would improve the standard of living in society and in the world? The

• State is still influent to a certain extent but numerous other actors must be taken into account (firms and individual)

It

• search out the conditions for cooperation

It stresses the ability of individuals to choose between different courses of action and to negotiate their difference • The world system is interdependent • Posi tive-sum game = the pie grows bigger and everybody gain • Toda y global economy is governed largely according to liberal principles •

The context is that of the Industrial Revolution in England. One of the most important liberal theorists is Adam Smith, who believed in the freeing up of commerce and on the creation of a free national and international market as a method of generating wealth for everyone. Relative vs absolute gains: • tive gains refer to one actor doing better or worse compared to another actor • olute gains refer to whether an actor is better off compared to a previous point in time

rela abs

Different types of liberals Oh

• mae  the State is fading away in an emerging borderless world dominated by corporations •

Keo hane and Nye  the State maintain some influence and power but it is more and more embroiled in webs of interdependence of different kind (TNCs, international organization, other State, firms, banks, etc…)

Key actors and dynamics •

Indi viduals and firms Indi

• viduals and firms in pursuit of self-interest will maximize the benefits economic exchange for society •

Stat e is marginalized because it brings politics into the realm of economics TNC

• s brings advantages to both home and host countries

For

• a market-led system

Key

• nes and Hayek ◦ tive role of markets and the ability of the market to lead to prosperity ◦ is constituted by a search for wealth ◦ support globalization but emphasize the need for attention to market reform •

posi IPE they Coo

peration  everybody win from trade because exchange is mutually beneficial •

Eco

nomic nationalist policies lead to conflict Inte

• rnational interaction as a source of prosperity and peace

Keo

• hane ◦ rnational agreements or regimes would maintain international economic order even if hegemonic states declined

inte

Fuk

• uyama ◦ al democratic model had triumphed over other forms of social organization

liber

Liberalism today Inte

• rnational institutions are founded on liberal principles of free trade •

•

Stat es may be happy to engage themselves in an open liberal market but they might be reluctant to put their own industry at risk by making them competing internationally IPE as a giant web of interdependence

Robert Keohane – liberal institutionalist Insti tutions or sets of rules and norms that can have a significant effect upon State behavior if there is some mutual interest • «Co mplex interdependence »  States could use international institutions to bolster cooperation • The benefits of arrangement in a particular issues areas or regimes continue independently from the rise or decline of the power of particular States • Stat es might not agree to cooperate because they are unsure of the motives of other States.

•

3. THE CRITICAL PERSPECTIVE What system of resource allocation would lead to a more equitable distribution of income? 19th

• century

3

• variants : Marxist, feminist, environmentalist theories

inte

• rests of workers, environment or women rather than State interests Marx and Engels  there is an ongoing conflicts between workers and capitalists that would only be resolved when the workers will seize power Key actors •

Soci

al class reje

• ct individualism of liberal theory

emb

• race collective approach of economics nationalist perspectives

TNC

• s contribute to the exploitation and oppression of the working class Key dynamics •

dom inance and exploitation

•

und er capitalism workers are denied a fair remuneration because capitalists pay workers less than their labour is worth

«Dependence theory» poo

• r countries face immense obstacles to development because they are vulnerable to economic exploitation from developed states (Dos Santos)

the

• poor poorer and the rich richer •

opp ose to globalization

Conflicts and cooperation •

Zero -sum game

Wit hin states, capitalists and workers have competitive interests and the State is the stage of this class struggle • The tendency of capitalist States to go to war

•

Critical theory today Wit

• h the demise of the Soviet Union and of Marxist communism it practically ceased to exist Robert cox: historical materialist

eac

• h historical era has a particular sensibility: different set of institutions and of understanding

Clas

• s and class conflict pay an important part in understanding political economy •

•

«pr oduction generates the capacity to exercise power, but power determines the manner in which production takes place » Heg emony require dominance in the economic, political, social and ideological realms

International Political Economy Locating the field mid-

• 1970

sub-

• fields of IR

Ada

• m Smith – founder of liberal economics

IPE:

• crosses the boundaries btw the study of politics

Economics • Markets are places where informed individuals can make mutually advantageous exchanges Neoclassical economics: • It view government and government intervention in the economy as inefficient Keynesian economics: •

Gov ernment are crucial to the well-functioning of the economy

•

Gov ernment intervention is needed to provide a wider range of public goods and to bring economies out of period of recession or depression

Institutional economics: Mar

• kets are not natural but are the result of a series of institutions such as the legal structure, the financial system and social values

It

• focus on the real world Political science: • use of power and politics = subject of political science • erned with power or the ability of one set of actors to have their preferences implemented • gs a number of elements to the study of IPE : the focus on power, the State and the welfare

The conc Brin

Political economy: • How the economy influenced politics • Poli tical economy can be regarded as an attempt to integrate politics and economics along the line of institutional economics, or as the application of neoclassical economics assumptions and methods into the study of politics

International relations: It

• has tended to focus on issues of war and peace, the foreign policy of various states and the operation of international organizations

It

• concentrates on the interactions btw states

Diffe

• rent theories Globalization • increase in the volume of economic flows across border • process of relative deterritorialization • of social relations and new centers of authority • significant obstacles to human interaction as technologies

An A Set Less

Methods Case studies and large n studies • a detailed analysis is designed to reveal causal factors that can either be applied to similar situations or serve as a starting point for theory building • diffe rent kind of case : « least likely » « most likely case » • « lar ge n studies » is a name given to statistical investigations which use a database to fond common features or causes across a large number of cases →it helps us to determine whether a particular proposition is generally applicable or limited to a small number of cases • emp irical material for investigations • nev er sure how representative the case is Rational choice • acto rs : maximize their gains and minimize their losses • indi viduals try to improve their situation by calculating costs and benefits before choosing the best path of action • high lighted the problem of collective action ◦ for some individual it will not be rational to do the work required to provide a public good because it will be consumed by others with only a small benefit returning to the initiator Game theory

•

It examines the decision-making of actors who are heavily influenced by possible behavior of other parties. These actors calculate their own interest in the light of what they believe others will do (Ex : prisoner’s dilemma)

Institutionalism • It focuses on the importance of formal and informal institutions in producing political outcomes. • It tends to use case studies and it stresses the differences between political economies and the distinctive role that institutions play in shaping behavior Constructivism • an intimate and reciprocal connection between human subjects and the social world • nor ms and values go beyond shaping actors' interests in themselves they constitute identities and hence interests • GPE is a set of material conditions and practices John Ruggie: Constructivist practitioner • the international system reflected the social desires or social purpose of the actors created them • anal ysts need to examine actors' understandings of institutions, as well as the institutions themselves • idea about appropriate behavior, the rule governing behavior, and the institutions that embody particular ideas and norms all play a significant part in shaping the global political economy

Trends in contemporary GPE theory Consolidations • subj ect : the politics of international economic relations • to build on a presumed consensus concerning the key questions to be investigated and methods for pursuing that investigation •...