Lecture On IPE Theory of IR

Lecture on
International Political Economy Theory

of IR
Course: Theories of International Relations
Summer 2023
University of Sharjah
M. Moniruzzaman
• If Economics is about the pursuit
of wealth, and
• Politics about the pursuit of power
and state. Then-
What is IPE
• IPE is the complex interplay in the
international context between
politics and economics, between
states and markets
• Core IR issues: politics and power
• War and Peace
• Power and dominance
IPE on the • Security and interests
Core IR • IPE Core IR issues:
Issues • IPE shifts the attention to issues of
wealth and poverty, and to who
gets what in the international
system
Mercantilism
Main
Theories of Economic Liberalism
IPE
Marxism
Economic activity is and should be subordinated to
the primary goal of building a strong state
Mercantilism
worldview: In other words, economics is a tool of politics, a basis
for political power
(16th –mid 18th
centuries) International economy as an arena of conflict
between opposing national economic interests
Economic competition between states is a ‘zero-sum

game’ where one state’s gain is another state’s loss
Mercantilism as a Theory
 The theory that a country’s power depended
mainly on its wealth to build strong navies and
purchase vital trade goods.
• When?
16th – 18th C
• Where?
• Western Europe- Spain, Dutch, England and France
Who?
• Niccolo’ Machiavelli (1469-1527)

• Jean Bodin (1530-1596)
• Antonio Serra (1580-1650)
• Alexander Hamilton (1755-1804)
• Friedrich List (1789-1846)
Types of Mercantilism
• Defensive or Benign Mercantilism:
• States look after their national economic interests because
that is an important ingredient of their national security; such
policies need not have overly negative effects on other states
• Offensive or Malevolent Mercantilism:
• States attempt to exploit the international economy through
expansionary policies: Colonialism, imperialism
• Commodities: bullion, raw materials, export
• Cyclical relationship: military/political and economic
power
 Neo-Mercantilism
 Policies to save national interests in the face of free-trade and
interdependence
 Reserve or alternative source for strategic resources
 Export subsidies, import quotas
 Defensive mercantilism against globalization
 MNCs and International institutions as tools
 Export of finished and high-value added commodities
• ‘A doctrine and a set of principles for
organizing and managing economic growth,
and individual welfare’
• When?
• Mid 19th-20th centuries
Economic • Where?
• England
Liberalism • Who?
– Adam Smith (1723–90)
– John Stuart Mills
– David Ricardo (1772–1823)
• Based on French and British
Liberal political traditions
• Rational individual actor
Economic • A belief in progress
Liberalism • Mutual gain from free
Worldview exchange
• Economic marketplace is the
main source of progress,
cooperation, and prosperity
Principles of Economic Liberalism
• Positive-Sum game: every nation gains
• laissez-faire: freedom of the market from all kinds of
political restriction and regulation
• Cooperation and interdependency among nations
• ‘Law of comparative advantage’
• bring benefits to all participants because free trade
makes specialization possible, and specialization
increases efficiency and thus productivity
Types of Economic Liberalism
• Classical Economic Liberalism
• Adam Smith, JS Mill, David Ricardo
• Laissez-faire economy
• Comparative advantage
• Market and product interdependency
 Neo-Classical or Neo-conservatism
• Combination of invisible hand and state control
• Keynesian compromise/Hegemonic stability: state to control inflation,
unemployment, public goods such as peace, security, sound international
payment
• After 1990: NFI- New Financial Architecture
• After 2008: heavy government intervention
– OEL: Orthodox Economic Liberals
– HEL: Heterogeneous Economic Liberal
IPE Theory of IR:
Marxism
• It is based on Marxism
• What is Marxism ?
• Ideas of Karl Marx (1818-
1883)
• Class struggle
• Economic determinism
• Labour Theory of Surplus
Value
• Marx’s political economy is a
fundamental critique of economic
liberalism.
• Marx argue that the economy is a site
of human exploitation and class
inequality.
What is
• The capitalist economy is based on two
Marxism antagonistic social classes: the
bourgeoisie- owns the means of
production; and proletariat- owns only
its labour power.
• Class struggle and mode of production
as economic determinism
Marxist Framework for the Study of IPE
• First,
• states are not autonomous; they are driven by ruling-class interests, and
capitalist states are primarily driven by the interests of their respective
bourgeoisies. This means that struggles between states, including wars, should
be seen in the economic context of competition between capitalist classes of
different states
• Second,
• Capitalism is expansive: there is a never-ending search for new markets and
more profit- colonialism and imperialism
Types of Marxism
• Classical Marxism
• Marx and Angels: national economies
• Leninism: international economies
• Lenin
• Neo-Marxism: World Systemic
• Robert Cox
• Immanuel Wallerstein
IR Framework of Robert Cox
• Historical Structures
• ‘a particular configuration of forces’
• Three categories of forces that interact:
• Material capabilities, ideas, and institutions
• Three different levels:
• ‘social forces’, ‘forms of state’, and ‘world
orders’
IR Framework of
Immanuel Wallerstein
The World System

Theory
The WS is built on a
hierarchy of core,
semi-periphery, and
periphery
economies.
1. The Core economies: advanced and complex (mass-market
industries and sophisticated agriculture).
 These activities are controlled by an indigenous bourgeoisie.
 Democratic, welfare state, and high standard of living
2. Semi-peripheral are economically mixed; they are a middle
layer between the upper stratum of core economies and the
lower stratum of peripheral economies.
3. Peripheral economies are at the bottom of the hierarchy; they
produce primary goods such as grain, wood, sugar, and so on.
 They often employ slavery or coerced labour; what little industrial
activity exists is mostly under the external control of capitalists from
core countries.

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Lecture on

International Political Economy Theory

Economic competition between states is a ‘zero-sum

• Western Europe- Spain, Dutch, England and France

• Niccolo’ Machiavelli (1469-1527)

The World System

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