Lecture 1 (17.03.2015)
International Political Economy
1. IPE is more concerned with the primacy of economic factors than IR
2. IPE allows for greater complexity – therefore greater explanatory power
3. “the whole point of studying IPE rather than IR is to extend more widely the conventional
limits of the study of politics” Susan strange
a. If you are just using political factors then you don't get the greater picture of who is
in power, why, how do they hold this power, how is it enforced etc etc.
4. IR = military terms
5. IPE = economic terms concerned with the relationship between wealth and power – seen
as inseparable
Power
1. The ability to make something happen, the ability to produce the intended effect
2. Hard power vs soft power
a. Hard power: a coercive approach to international political relations, especially one
that involves the use of military power
b. Soft power: a persuasive approach to international relations, typically involving the
use of economic or cultural influence
3. Military prowess is dependent on the capacity of the state to produce goods independently
4. IPE: wealth as power economic power is as important if not power important than
military power
a. Interested in the distribution of economic power
b. Who has the most power, and who has the most power relative to others
5. Disparities in power between nations have an important effect on how states behave
a. Occur not only because of diff, in military power, but diff. to produce economic
resources and the power to produce wealth
6. Power that a state wields is dependent on economic production capacity
7. Wealth can be consumed – an end in itself
8. Military might is a means to an end – but it cannot be consumed
a. Exercised to protect wealth or to acquire more wealth
9. Military force is generally required for execution in an external arena
10. But wealth is generated both for internal consumption as well as external gain
11. Duality to studying wealth as power – wealth and power differ in the degree that states can
pursue each without being of detriment to the positions and interests of other nations –
there is a difference in how a state can grow its wealth or military
a. Power in IR seen as a zero-sum gain = when one state gains, another must lose
Basic Problematique of IPE as a global study
1. Just politics or just economics do not provide sufficient solutions to problems in the global
arena
1
, 2. IPE demands an interdisciplinary approach
3. Interplay between state, market and society
a. Understanding how economic factors influence international relations and vice
versa
4. The state: IPE challenges IR notions of states and power by suggesting states can lose power
to e.g.: market actors
a. States lose or gain power relative to other states
5. The market: a system of exchanges that occur between and within states
a. Economics concerned with economic efficiency and scarce resources
b. But from point of view of politics, distribution of scarce resources is not always
about efficiency
6. Society: what role does society and its values and benefits play?
a. Does the example set by the state reflect the values and beliefs of society
7. Private sector: should the state be involved in private life, should there be provision of
health care, education etc.
Locating IPE
1. Impact of political structures on economic interaction and vice versa
2. Interdisciplinary approach gives IPE its strength
3. Emerged as a distinct field (roots in events of 1970s)
a. Arab Oil Embargo 1973-74: power of economic tools in foreign policy
i. OPEC countries opposed the US support of the Jewish during the Yom
Kippur war
ii. Embargo was only lifted when Israel withdrew its troops
iii. Showed power of economic tools in foreign policy
iv. Emerged: growing recognition of interdependence between politics and
economics and a growing shift towards globalisation
v. Globalisation = growing of various state abilities beyond border
1. Growing interdependence of global networks
2. Process of speeding up the growing rate of integration and
exchange
b. Nixon shock 1971: Nixon’s policy was seen as a sign that the US had put its domestic
political and economic problems ahead of its international obligations
i. After WWII in 1944 – Bretton Woods system put into place (USA, UK and
others
ii. BW = key reasons why WWII broke out = lots of economic uncertainty
internationally
1. Resulted from competitive devaluation of currency
iii. Supposed to fix the problem, where states would decide that their currency
was worth less in order to boost exports
iv. Set up GATT and World Bank (IBRD)
v. US dollar tied to gold, other countries tied their currency to the US dollar
vi. The US dollar thereby became defacto world currency
vii. In 1971 Nixon floated US dollar detached gold from dollar
2
, viii. Thus competitiveness of US dollar is reduced
4. IPE and politics are inextricably linked
5. IPE is the set of international and global problems that cannot be usefully understood or
analysed as just international politics or just international economics
6. Susan Strange Since most economic questions are notoriously political, and almost all
political questions involve some economic considerations, one cannot describe issues any
more as ‘purely economic’, or as ‘purely political’. Both are both
Lecture 2 (20.03.2015)
Theories of IPE
1. Theory
a. Distinction between theoretical outlook and policy prescription
b. Theory is NOT normative – it does not say how things ought to be they explain,
prescribe and predict
c. Policy is something to be pursued in order to achieve certain goals normative –
tells you how things ought to be, what must be achieved
d. If a theory can make accurate predictions = powerful theory
e. Theory = a systematic explanation of a body of empirical data – a generalised
explanation
i. In social science, theory is akin to fact
ii. A well-confirmed explanation
f. 3 key features of a theory
1. It is generalised
2. It needs to be testable (has to stand up to scrutiny – constant questioning
and testing)
3. It should have predictive power
1. Approaching IPE theory:
a. What are the theories claims?
b. What assumptions does the theory make?
c. Does the theory stand up to scrutiny?
d. Does the theory hold in all cases (because it has to be a generalisation)?
e. Does the theory have predictive power?
1. Mercantilism
a. ZERO SUM GAME
i. Any benefit that I have is detrimental to you
b. Can refer to a period in history
i. Linked to rise of nation state in 15th – 18th centuries
ii. States saw need to develop security and power
iii. Had to establish security – this is done through the accumulation of wealth
iv. Seen as a virtuous cycle: power generates wealth, which increases power,
which leads to more wealth
v. Each state must secure its own interests by blocking the economic interests
of other states
3
, vi. 15th – 19th centuries European states strove to establish overseas empires
that would be as self-sufficient as possible trade between colonies of rival
countries was discouraged
vii. Economic nationalism
1. Was a form of mercantilism that developed in the 18th and 19th
centuries
2. Classical mercantilism wealth and power though unequal foreign
trade
Vs.
1. Economic nationalism internal development of national economy
2. Notion of independent economic power (avoiding webs of
dependency) must be achieved if you are to be an independent
political power
3. Fear that if markets were free – it would create webs of dependency
weakens state capacity to act unilaterally
4. State intervention in the economy is necessary for the pursuit of
wealth and power
5. State should support industries within the state (so that domestic
goods become more competitive, can effectively compete with
imported goods)
6. Such behaviour is still seen today in subsidisation and protection of
key industries
viii. Problem at the end of the 19th century was that states themselves could not
absorb everything that the state was producing – and so had to find foreign
markets thereby arguable that economic nationalism led to imperialism
and colonisation (finding new markets, selling to new markets)
1. States could thereby deal with overproduction in home markets
because they could simply export the excess goods to foreign
markets
c. Can refer to a political philosophy
i. View that states prioritise national economic and political interests
d. Can refer to a set of state policies that derive from that philosophy
i. Robert Gilpin: the attempt of governments to manipulate economic
arrangements in order to maximise their own interests where or not this is
at the expense of others
e. Mercantilism as a theoretical paradigm
i. Mercantilism closely tracks realism (from IR)
ii. Focus shifted from military to economic power
iii. Interdependence leads to extinction – strategic resources and security
trump global cooperation
iv. States talk of liberalisation of markets and free trade – states still act in the
opposite manners (i.e.: huge subsidies for local goods in the US for example,
developing countries cannot compete with subsidisation on a global scale)
neomercantilism
4
International Political Economy
1. IPE is more concerned with the primacy of economic factors than IR
2. IPE allows for greater complexity – therefore greater explanatory power
3. “the whole point of studying IPE rather than IR is to extend more widely the conventional
limits of the study of politics” Susan strange
a. If you are just using political factors then you don't get the greater picture of who is
in power, why, how do they hold this power, how is it enforced etc etc.
4. IR = military terms
5. IPE = economic terms concerned with the relationship between wealth and power – seen
as inseparable
Power
1. The ability to make something happen, the ability to produce the intended effect
2. Hard power vs soft power
a. Hard power: a coercive approach to international political relations, especially one
that involves the use of military power
b. Soft power: a persuasive approach to international relations, typically involving the
use of economic or cultural influence
3. Military prowess is dependent on the capacity of the state to produce goods independently
4. IPE: wealth as power economic power is as important if not power important than
military power
a. Interested in the distribution of economic power
b. Who has the most power, and who has the most power relative to others
5. Disparities in power between nations have an important effect on how states behave
a. Occur not only because of diff, in military power, but diff. to produce economic
resources and the power to produce wealth
6. Power that a state wields is dependent on economic production capacity
7. Wealth can be consumed – an end in itself
8. Military might is a means to an end – but it cannot be consumed
a. Exercised to protect wealth or to acquire more wealth
9. Military force is generally required for execution in an external arena
10. But wealth is generated both for internal consumption as well as external gain
11. Duality to studying wealth as power – wealth and power differ in the degree that states can
pursue each without being of detriment to the positions and interests of other nations –
there is a difference in how a state can grow its wealth or military
a. Power in IR seen as a zero-sum gain = when one state gains, another must lose
Basic Problematique of IPE as a global study
1. Just politics or just economics do not provide sufficient solutions to problems in the global
arena
1
, 2. IPE demands an interdisciplinary approach
3. Interplay between state, market and society
a. Understanding how economic factors influence international relations and vice
versa
4. The state: IPE challenges IR notions of states and power by suggesting states can lose power
to e.g.: market actors
a. States lose or gain power relative to other states
5. The market: a system of exchanges that occur between and within states
a. Economics concerned with economic efficiency and scarce resources
b. But from point of view of politics, distribution of scarce resources is not always
about efficiency
6. Society: what role does society and its values and benefits play?
a. Does the example set by the state reflect the values and beliefs of society
7. Private sector: should the state be involved in private life, should there be provision of
health care, education etc.
Locating IPE
1. Impact of political structures on economic interaction and vice versa
2. Interdisciplinary approach gives IPE its strength
3. Emerged as a distinct field (roots in events of 1970s)
a. Arab Oil Embargo 1973-74: power of economic tools in foreign policy
i. OPEC countries opposed the US support of the Jewish during the Yom
Kippur war
ii. Embargo was only lifted when Israel withdrew its troops
iii. Showed power of economic tools in foreign policy
iv. Emerged: growing recognition of interdependence between politics and
economics and a growing shift towards globalisation
v. Globalisation = growing of various state abilities beyond border
1. Growing interdependence of global networks
2. Process of speeding up the growing rate of integration and
exchange
b. Nixon shock 1971: Nixon’s policy was seen as a sign that the US had put its domestic
political and economic problems ahead of its international obligations
i. After WWII in 1944 – Bretton Woods system put into place (USA, UK and
others
ii. BW = key reasons why WWII broke out = lots of economic uncertainty
internationally
1. Resulted from competitive devaluation of currency
iii. Supposed to fix the problem, where states would decide that their currency
was worth less in order to boost exports
iv. Set up GATT and World Bank (IBRD)
v. US dollar tied to gold, other countries tied their currency to the US dollar
vi. The US dollar thereby became defacto world currency
vii. In 1971 Nixon floated US dollar detached gold from dollar
2
, viii. Thus competitiveness of US dollar is reduced
4. IPE and politics are inextricably linked
5. IPE is the set of international and global problems that cannot be usefully understood or
analysed as just international politics or just international economics
6. Susan Strange Since most economic questions are notoriously political, and almost all
political questions involve some economic considerations, one cannot describe issues any
more as ‘purely economic’, or as ‘purely political’. Both are both
Lecture 2 (20.03.2015)
Theories of IPE
1. Theory
a. Distinction between theoretical outlook and policy prescription
b. Theory is NOT normative – it does not say how things ought to be they explain,
prescribe and predict
c. Policy is something to be pursued in order to achieve certain goals normative –
tells you how things ought to be, what must be achieved
d. If a theory can make accurate predictions = powerful theory
e. Theory = a systematic explanation of a body of empirical data – a generalised
explanation
i. In social science, theory is akin to fact
ii. A well-confirmed explanation
f. 3 key features of a theory
1. It is generalised
2. It needs to be testable (has to stand up to scrutiny – constant questioning
and testing)
3. It should have predictive power
1. Approaching IPE theory:
a. What are the theories claims?
b. What assumptions does the theory make?
c. Does the theory stand up to scrutiny?
d. Does the theory hold in all cases (because it has to be a generalisation)?
e. Does the theory have predictive power?
1. Mercantilism
a. ZERO SUM GAME
i. Any benefit that I have is detrimental to you
b. Can refer to a period in history
i. Linked to rise of nation state in 15th – 18th centuries
ii. States saw need to develop security and power
iii. Had to establish security – this is done through the accumulation of wealth
iv. Seen as a virtuous cycle: power generates wealth, which increases power,
which leads to more wealth
v. Each state must secure its own interests by blocking the economic interests
of other states
3
, vi. 15th – 19th centuries European states strove to establish overseas empires
that would be as self-sufficient as possible trade between colonies of rival
countries was discouraged
vii. Economic nationalism
1. Was a form of mercantilism that developed in the 18th and 19th
centuries
2. Classical mercantilism wealth and power though unequal foreign
trade
Vs.
1. Economic nationalism internal development of national economy
2. Notion of independent economic power (avoiding webs of
dependency) must be achieved if you are to be an independent
political power
3. Fear that if markets were free – it would create webs of dependency
weakens state capacity to act unilaterally
4. State intervention in the economy is necessary for the pursuit of
wealth and power
5. State should support industries within the state (so that domestic
goods become more competitive, can effectively compete with
imported goods)
6. Such behaviour is still seen today in subsidisation and protection of
key industries
viii. Problem at the end of the 19th century was that states themselves could not
absorb everything that the state was producing – and so had to find foreign
markets thereby arguable that economic nationalism led to imperialism
and colonisation (finding new markets, selling to new markets)
1. States could thereby deal with overproduction in home markets
because they could simply export the excess goods to foreign
markets
c. Can refer to a political philosophy
i. View that states prioritise national economic and political interests
d. Can refer to a set of state policies that derive from that philosophy
i. Robert Gilpin: the attempt of governments to manipulate economic
arrangements in order to maximise their own interests where or not this is
at the expense of others
e. Mercantilism as a theoretical paradigm
i. Mercantilism closely tracks realism (from IR)
ii. Focus shifted from military to economic power
iii. Interdependence leads to extinction – strategic resources and security
trump global cooperation
iv. States talk of liberalisation of markets and free trade – states still act in the
opposite manners (i.e.: huge subsidies for local goods in the US for example,
developing countries cannot compete with subsidisation on a global scale)
neomercantilism
4
