IPE Theories

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IPE Theories
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The Realist Perspective

• Time-tested School of Thought
• Thucydides (471-400 b.c.)
• the first IR/realist work The History of the
  Peloponnesian War
• on wars between the Greek city-states
• Popularity among world powers
• (influencing foreign policy decisions)
• US a hegemonic power for much of the 20th
  century
• USSR military weakness invites aggresion
• PRC China must have nuclear capability to deter
  aggression from the West the USSR

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The Realist Perspective

• Time-tested School of Thought
• Popularity among world powers
• Weakness of Realism in the subfield of IPE
• Realist theory was based more on politics
  history rather than on economics.
• Realist theory focuses too much attention on
  security matters rather than on economic issues.
• Two strains of realism
• Machiavelli realism
• Expanding military power is more important to the
  Prince than the acquisition of wealth.
• Military strength can bring wealth.

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The Realist Perspective

• Two strains of realism
• Machiavelli realism
• Thucydides/Mercantilist realism
• Thucydides the Greek city-state wars are
  attributable to economic changes, trade growth
  and rise of new commercial powers Wealth is an
  important source of military power. War is a
  matter not so much of arms as of money, which
  makes arms of use.
• Mercantilists Wealth expansion should be the
  goal of the states that intend to enlarge their
  military capabilities.

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The Realist Perspective

• Basic Tenets of Realism
• International system
• Anarchy, lack of a centralized power exercising
  authority over states
• Self-help, each state taking care of own survival
  and well-being
• Nation-states
• the principal/unitary/rational actors of
  international system
• Obsessed with the challenge of national survival
  and security
• Obsessed with the need to enlarge national power
  to defend sovereignty and independence

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The Realist Perspective

• Basic Tenets of Realism
• International system
• Nation-states
• Societal groups
• Non-state actors operate within the rubrics of
  state politics
• Limited influence over the actions of the states.
• International Economic Relations Power Politics
• A states power position in the international
  system determines its foreign policy
• Aggressive states may use the international
  economy to pursue imperialist expansion or extend
  their power
• A hegemonic state with dominant power influence
  is likely to defend the status quo of the system

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The Realist Perspective

• Basic Tenets of Realism
• International Economic Relations Power Politics
• Other arguments
• Powerful states can structure economic relations
  at the international level
• Globalization is a myth if globalization does
  exist, states remain the dominant actors and
  allow such a process to happen.
• Major powers can close or open world markets and
  they can use globalization to improve their power
  positions vis-à-vis smaller weaker states
• A hegemonic state has the ability to create an
  open and stable economic order that can further
  the globalization process.

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The Realist Perspective

• Mercantilists Economic Nationalism
• When 1500-1750
• Main arguments
• state power based on size of national wealth
• Acquisition of wealth is a means of gaining power
• Post-mercantilist economic nationalism
• When 1750-1850
• Main arguments
• Industrialization was a central requirement for
  countries seeking to gain national security,
  military power economic self-sufficiency

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The Realist Perspective

• Post-mercantilist economic nationalism
• Main arguments
• National security and independence requires
  economic growth that gives priority to industrial
  development, economic self-sufficiency, state
  intervention and trade protectionism
• Manufacturing was more essential for diversifying
  the US economy and decreasing its vulnerability
  to external forces.
• (Alexander Hamilton (1755-1804) and his Report
  on the Subject of Manufactures)
• Imposition of trade barriers, promotion of
  national unity, and development of human
  capital are key to a national rise in wealth and
  power.(Friedrich List, The National System of
  Political Economy)

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The Realist Perspective

• The Rise of Realist IPE
• When 1970s-1980s
• What triggered the realist IPE
• Decline of Cold War, disarray in the global
  economy forced many realists to look beyond
  security issues
• Realists could not remain silent to the liberal
  and Marxist economic analysis of IPE.
• Major changes in the post-war economic system
  such as the rise of the OPEC, relative decline of
  the US economic hegemony, increasing friction
  competition between US other DCs and the onset
  of the debt crisis

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The Realist Perspective

• Hegemonic Stability Theory
• When 1970s-1980s
• Central arguments
• A global hegemon contributes to economic openness
  and world stability
• International economic system (IES) is most
  likely to be open and stable when there is a
  single dominant or hegemonic state
• A hegemonic power is one that
• Has a sufficiently large share of resources that
  it is able to provide leadership
• Is willing to pursue policies necessary to create
  and maintain a liberal economic order
• Whose decline in power is likely to undercut
  economic openness

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The Realist Perspective

• Hegemonic Stability Theory
• When 1970s-1980s
• Central arguments
• A global hegemonic power helps maintain an open
  and stable economic system by
• Creating and maintaining liberal international
  regimes
• Sets of implicit or explicit principles, norms,
  rules and decision-making procedures
• Providing public goods and rewards and the use of
  coercion to encourage compliance and punish
  rule-breaking behaviors.

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The Realist Perspective

• Hegemonic Stability Theory (HST)
• Critics of the HST
• Can generalizations be drawn about hegemonic
  behavior based on the experiences of two global
  hegemons during limited historical perioods?
• What constitute a hegemonic power and how to
  measure its power?
• On what ground can HST claim that a hegemon
  contributes to economic openness and global
  stability?

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The Realist Perspective

• Defining a hegemonic power
• Robert Gilpins realist definitiona hegemonic
  power is one that is capable of controlling or
  dominating the lesser states in the international
  system.
• Immanuel Wallerstein's definitiona hegemon is
  one that possesses such a predominant power that
  enables it to impose its rules and wishes (or by
  using veto power) in the economic, political,
  military, diplomatic and even cultural arenas.
• Gramscian definitionHegemony is viewed as a
  complex web of ideas that social groups use to
  assert their legitimacy and authority
• hegemony of ideas such as capitalism

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The Realist Perspective

• Three Types of Hegemon
• A benevolent hegemon
• The hegemon is benovolent in both goals and
  means.
• It is more concerned about promoting generalized
  benefits than its self-interest.
• It uses rewards rather than threats to ensure
  compliance.
• A coercive hegemon
• is exploitative
• exerts leadership out of self-interest
• is more inclined to use coercion to extract
  compliance
• A third hegemon
• Pursues general as well as self interest
• More inclined than the benevolent hegemon to use
  coercion
• More inclined than the coercive hegemon to use
  rewards.

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The Liberal Perspective

• Main ArgumentsIndividual Freedom
• Individuals have natural rights that cannot be
  infringed upon by groups or state
• Individual freedom is vital for the pursuit of
  political and economic interest
• Individual endeavor benefits the society as a
  wholeState or social groups should stay out of
  individual decision-making
• Intl Economic Relations
• Intl groups such as IMF and World Bank are
  politically neutral
• If states conform to their rules, they will all
  grow

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The Liberal Perspective

• Main Arguments
• Intl Economic Relations
• The intl economic system benefits all as long as
  states are willing to pursue rational liberal
  economic policies.
• The roadblock to development is low efficiency
  and lack of freedom, not distributional disparity
  between the North and South.
• Todays LDCs have advantages the DCs did not have
  when the latter were taking off
• LDCs have access to capital and technology from
  DCs
• Globalization contributes to growth of LDCs if
  they follow open and liberal policies.

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The Liberal Perspective

• Main Arguments
• Politics Economy
• Politics and economics are two separate
  autonomous realms
• Government should not interfere with domestic
  intl economic transaction
• Governments role should be limited to
• Creating a favorable business environment
• Providing public goods
• National defense

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The Liberal Perspective

• Adam Smith Orthodox Liberalism
• Adam Smith (1723-1790)
• Advocated laissez-faire economics
• Opposed mercantilist policies
• Advocated freely operating markets based on a
  division of labor
• Free market with division of labor maximizes
  efficiency prosperity
• Called for eliminating barriers of mercantilist
  states so that goods can be exchanged across
  national borders
• Free trade is important because nations are
  interdependent on one another.

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The Liberal Perspective

• John Maynard Keynes Keynesian Liberalism
• John Maynard Keynes (1883-1946)
• Advocated state intervention at times of economic
  downturn spiral
• Opposed extreme levels of economic nationalism
• Argued that self-interest and public interest do
  not always converge as Adam Smith suggested
• Argued that market did not tend inherently toward
  a socially beneficial equilibrium.
• Argued for government intervention to create
  demand at time of sluggish economy
• Placed less emphasis on specialization and intl
  trade
• Argued that import restrictions may be necessary
  to bolster domestic employment

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The Liberal Perspective

• Interdependence Theory
• Main Arguments
• Advances in transportation, communications
  technology are negating distinction between
  internal external policies
• States are losing some autonomy in managing their
  own affairs because of growing economic
  interdependence
• Cooperation among states is the best response to
  the new situation
• Richard Cooper The Economics of Interdependence
  (1968)
• Interdependence can be asymmetrical
• A less dependent state has more power in the
  relationship
• Interdependence can be complex
• Robert Keohane and Joseph Nye

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The Liberal Perspective

• Interdependence Theory
• Main Assumptions
• States are not unitary actors
• States are not the only important actors in IR
• Military means are not always useful for
  promoting national interests
• IR includes both inter-state and domestic issues,
  intermestic
• The Prisoners Dilemma Intl Cooperation
• The Prisoners Dilemma
• Each is motivated to defect rather than cooperate
• Each strives for sub-optiomal outcome rather than
  best collective outcome
• Cheating by states is prevalent and hinders
  cooperation.

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The Liberal Perspective

• The Prisoners Dilemma Intl Cooperation
• The Prisoners Dilemma
• Cheating by states is prevalent and hinders
  cooperation.
• A hegemon or international orgazations can solve
  the defection problem. How?
• A hegemon prevents cheating by rewards or
  coercions
• Intl organizations prevent cheating by enforcing
  rules, punishing cheaters, and making public
  state policies
• A state in the global economy is less likely to
  cheat because of the inevitability of retaliation

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The Historical Structuralist Perspective

• Basic Tenets of the Perspective
• The concept of class and class dichotomy
• The oppressing class v the oppressed class
• Stateagent of the dominant class
• State reflecting and serving the interests of the
  dominant class
• State to be eliminated as a tool of class
  exploitation only through proletarian revolution
  by eliminating private ownership class
  distinctions
• Inter-state economic ties
• Zero-sum game
• Conflictual
• Between the advanced contries LDCs
• Among the advanced countries

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The Historical Structuralist Perspective

• Dependency Theory
• A theory to explain development of Latin American
  countries
• Main Arguments
• On the source of LDC underdevelopmentExternal
  factors hinder development in the South
• On domestic elites (compradores)
• Served as intermediatories between capitalist
  intl order and the subjected local people
• Allied with the elites in the capitalist states
  to maintain the pattern of LDC dependency
• On potential of LDC development
• Little potential because development of the
  capitalist economies in the core required the
  underdevelopment of the periphery

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The Historical Structuralist Perspective

• Dependency Theory
• A theory to explain development of Latin American
  countries
• Main Arguments
• On potential of LDC development
• LDCs cannot develop as long as they have links
  with the core.
• Dependent Development Theory
• A theory to explain away development in East Asia
• Main Arguments
• Some LDCs can develop when a particularly
  favorable alliance forms between foreign capital,
  domestic capital, and the LDC.
• The alliance allows some development in LDCs.
• Yet, LDCs and NICs are fundamentally dependent
• Their development is conditioned by the needs in
  the core.
• Workers in NICs are low paid NIC produce low end
  goods

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The Historical Structuralist Perspective

• World System Theory
• Main Arguments
• Modern world system (the main unit of analysis)
• It is a world economic system
• Components of the world system
• Core states
• Periphery states
• Semi-periphery states
• Mobility of states is possible
• Countries have moved from periphery up to core
• USA, Japan
• Countries have moved from periphery to
  semi-periphery
• Mainland China, Taiwan, Singapore, South Korea
• Yet, upward mobility is rare
• The unique role of semi-periphery
• Unity of the periphery is undermined

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The Historical Structuralist Perspective

• World System Theory
• Main Arguments
• The unique role of semi-periphery
• Unity of the periphery is undermined
• Semi-peripheral states tend to think they are
  better off than the peripheral states rather than
  worse off than the core states
• Semi-peripheral states are both exploiters and
  exploited
• Core-dominated system is thus stabilized
• The core states dominate the system
• They set market rules for transnational
  transactions
• They use force to enforce the rules when
  peripheral states challenge the rules
• They impose unequal exchange relations on weaker
  states
• They appropriate surplus of the whole world
  economy