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IPE+Marx Fall2017

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Naama Nagar

on 25 September 2018

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Transcript of IPE+Marx Fall2017

International Political Economy
Theoretical Approaches
Realism: statism or mercantilism
Radicalism: Marxist and dependency interpretations
Economic liberalism
International Trade
Political Economy Defined
do you think trade with other countries – both buying and selling products – is good for the U.S. economy, or is it bad, or does it have no effect?
Key Concepts in Liberal Economics
States differ in land, labor, resources
Worldwide wealth is maximized by international trade
Key role for
multinational corporations
(MNCs); promote internationalization of production
Trade organized by
comparative advantage
A game - the rules
Do you have a candy?
open or eat your candy, you will not be able to play if you open/eat your candy!
Take a long look at your candy and give it a score from 1 to 10.
10 = this is my all time favorite candy
1 = there is no way I am eating this thing
International Economic Institutions
Bretton Woods System established three institutions to facilitate economic coordination between states and development.
World Bank
International Monetary Fund (IMF)
World Trade Organization*
International Finance
Economic Regionalism
Global Economic Crisis, 2008–2009
Midterm evaluations
Round I - baseline
Round II
Round III
Round IV
A. Good
B. Bad
C. No Effect
D. Not Sure
Where do you stand?
The U.S. government should protect American automakers from cheap imports from developing countries such as Mexico and China
A. Strongly Agree
B. Somewhat Agree
C. Somewhat Disagree
D. Strongly Disagree
E. Not Sure
nternational Political Economy (IPE) considers the flows of such production, distribution, and consumption across national borders

olitical economy considers the role that the state plays in such production, distribution, and consumption.

conomics is the study of the production, distribution, and consumption of scarce resources.
Dimensions of IPE
Some think of IPE as the study of
multidimensional bargains
between powerful actors and states
Levels of analysis
: individual, state and international
Global structures:
institutions enforcing rules governing international trade and international finance
A. Creation of new international institutions: IMF, World Bank, GATT
B. Cold War, leading to two separate blocs (East-West) and the rest (Third World)
C. Unprecedented economic growth
D. Rise of Europe, Japan; East Asia; the BRICS
E. Globalization
F. Financial crises
G. Shift toward protectionism?
International Economic History: Postwar Period
Focused on Relative Gains: states must protect interests relative to others (Economics Serves Politics)
Trade maybe risky, create interdependence
As such, advocates Autarky or Protectionism
Based on Adam Smith: humans act rationally.
Humans acting in self-interest leads to benefits for all.
Minimal government intervention
Freedom of trade between states
Economic Liberalism
Comparative Advantage
Each state produces and exports that which it can produce relatively more efficiently.
States import goods that other states can produce relatively more efficiently.
Trade and international wealth is maximized.
do you see in the theory of comparative advantage?
Why Trade?
Focus on what you do best and trade with others what you don’t produce
The basis of domestic trade
The basis of international trade
The foundation of comparative advantage
Trade Strategies
Autarky: reject international trade entirely
Free trade: unconditionally cooperative; keep home markets open regardless
Fair trade: conditionally cooperative; tit-for-tat strategy
Managed trade: manipulate trade on sector by sector basis
Mercantilism: maximize exports and minimize imports across the board
Degree of protectionism
World Bank
From reconstruction to development
Different approaches to development
Economic infrastructure,1950s
Basic needs (health, education), 1960s & 70s
Private sector participation, 1990s
Sustainable development, currently
International Monetary Fund (IMF)
Stabilization rather than development
Short-term loans to countries facing temporary crisis
Structural adjustment policies/Washington Consensus
Trade liberalization
Government reform
Support of trade liberalization
Nondiscrimination in trade; most-favored-nation treatment
Preferential access in developed markets for products from the South
Support for the “national treatment” of foreign enterprises
Settlement of disputes mechanism
Current stalemate in negotiations
International Finance: Some Facts
Two ways international capital traditionally moves:
Direct foreign investment (example: building)
Portfolio investment (example: bonds, stocks)
Today, over 60,000 MNCs, with 800,000 subsidiaries, employing over 90 million people
Top 100,000 produce 80 percent of world’s industrial output
90 of largest in United States, Europe, Japan, or a few Latin American and Asian countries
Africa receives only 8 percent of private capital; most goes to South Africa.
International Finance Today
Currency trading began in the 1980s; by 2000, transactions averaged over $3 trillion a day.
New financial instruments:
Derivatives: options against future
Sovereign wealth funds
Offshore financial centers
Liberal foundation—larger market and free movement of goods, services, capital, and people:
Permits benefits of specialization and better investment opportunities
Stimulates growth, competition, and innovation
Enhances investment opportunities
But also involves uniform tariffs imposed on goods from outside and acceptance of state subsidies
The European Union—a Common Market
North American Free Trade Association (NAFTA)
Phased elimination of tariff and non-tariff barriers
Idea driven by MNCs seeking larger market shares than Japanese or European competitors
Comprises one dominant and two non-dominant economies; combined economic strength of Mexico and Canada is one-tenth of U.S. level
Last agricultural barriers lifted in 2008
New phase of negotiations
Asia: The ASEAN Free Trade Areas
To accelerate the economic growth, social progress and cultural development in the region
Attract foreign investment to the region, taking advantage of economies of scale
Increase members’ competitive edge in the global market by eliminating tariff and non-tariff barriers within ASEAN.
Development of Global Economic Crisis
Financial institutions unable to meet obligations; credit very limited; private investment diminished; business cut expenditures and workforces; consumer demand plummeted
Markets in China, South Korea, and Japan, which are dependent on exports to United States, shrank; earnings fell; production curbed further
Oil prices dropped 69 percent in July–December 2008, severely impacting oil exporters (examples: Russia, Venezuela)
World shipping plummeted
2009 Eurozone Crisis
Problems and causes:
Easy credit in early millennium ushered in a decade of risky borrowing and profligate spending.
Global crisis results in instability in the housing market, unemployment, and declining wages.
Debtor states were turned away from borrowing in the international market, increasing debt.
Imbalances of trade between member states were made even greater, increasing instability.
I took INR 2002, thus far I have learned nothing new
A. Strongly agree
B. Agree
C. Disagree
D. Strongly disagree
E. I did not take INR 2002
Thus far I have learned a great deal in this course
A. Strongly agree
B. Agree
C. Neutral
D. Disagree
E. Strongly disagree
The lectures help me understand the course material
A. Strongly agree
B. Agree
C. Neutral
D. Disagree
E. Strongly disagree
A. Strongly agree
B. Agree
C. Neutral
D. Disagree
E. Strongly disagree
The course encourages me to think critically
The instructor communicates the material in a clear manner
A. Strongly agree
B. Agree
C. Neutral
D. Disagree
E. Strongly disagree
The instructor stimulates my interest during lecture
A. Strongly agree
B. Agree
C. Neutral
D. Disagree
E. Strongly disagree
Jollyland = 224
Lolliville = 182
Nestford = 296
Snickerworld = 247
Jollyland = 255
Lolliville = 180
Nestford = 332
Snickerworld = 261
Jollyland = 275
Lolliville = 200
Nestford = 369
Snickerworld = 270
Jollyland = 298
Lolliville = 215
Nestford = 377
Snickerworld = 295
Problems and causes:
The readings help me understand the course material
A. Strongly agree
B. Agree
C. I did not open the textbook thus far
D. Disagree
E. Strongly disagree
Continental Orgs.
regional organizations with non-overlapping memberships
Since 2015 ASEAN is an integrated Economic Community by 2015 (minus common currency).
23. Which of the following is an example of a tangible source of power? -
c. a highly developed industrial economy.

24. What does Wendt mean by ``anarchy is what state make of it?'' -
b. that anarchy is a socially constructed process that depends on how states perceive each other.

25. International institutions are important to neoliberal institutionalists in that they -
d. provide a framework for ongoing interactions between states.

26. Possible explanations for the Democratic Peace include all of the following EXCEPT -
c. democratic countries fight fewer wars than other types of countries.

27. Constructivists argue that sources of power include -
c. ideas, norms, knowledge, and language.

28. Kenneth Waltz, a prominent neorealist scholar, argues that bipolar international systems are
b. more stable than multipolar systems.

29. If the international system is characterized by anarchy, realists argue, then each state must
d. look out for its own interests above all.

30. The ``long peace'' of the Cold War is commonly attributed to five factors, including -
a. deterrence, a roughly equal division of power between the United States and the Soviet Union, and American economic hegemony.

31. ______ is the use (or threat) of force to get a target state to do something or to undo something it has done. -
b. Compellence

32. What does the realist concept of anarchy entail? -
b. no authority above the state at the international level.

33. A state's power potential depends on its natural sources of power, the most important of which are
c. geography, natural resources, and population.

34. To what does the term polarity refer? -
b. the number of influential blocs that exert power in the international system.
35. The authority of a state to govern matters within its own borders is known as:
b. sovereignty

36. A nation is -
a. a group of people who share a common history, language, and lifestyle.

37. The classic example of a _____________ system is the nineteenth-century balance of power between the five European powers -
c. multipolar

38. According to Wilson, what is smart power? -
c. The ability of states to combine aspects of hard power and soft power in ways that reinforce each other.

39. Two principles that rose out of the American and French Revolutions and provided the foundation for politics in the nineteenth and twentieth centuries are: -
d. legitimacy from the consent of the governed and nationalism.

40. Realists argue that states' concern with relative gains will undermine international cooperation. What do they mean by this? -
e. states will be reluctant to cooperate even for mutual gain, because their partners may benefit more, gaining additional power to use against them in the future.

41. The theory most focused on the idea that states define their interests in terms of power is:
a. realism

42. Marxists argue that the international system empowers the rich and disenfranchises the weak, and that the capitalist tools used to perpetuate this system include all of the following EXCEPT
e. labor unions.
Practice Questions
Which economic policy would a mercantilist favor?
a. promoting exports over imports
b. free trade
c. promoting equitable distribution of resources in the international system
d. promoting cheap imports
e. encouraging weak governments with little economic role
2. British economist David Ricardo argued that states should trade based on their ________, whereby each state produces and exports those products that it can produce most efficiently relative to other states.
a. competitive trading bloc
b. absolute advantage
c. national interest
d. floating exchange rates
e. comparative advantage
Although originally designed to facilitate reconstruction in post–World War II Europe, much of the World Bank’s funding actually has been used to
a. promote economic development.
b. increase government bureaucracy.
c. lower trade barriers.
d. implement structural adjustment programs.
e. loan money to the UN.
Map Quiz: Middle East
Why do Marxists including John A. Hobson believe that capitalism necessarily leads to imperial expansion?
a. Goods produced in industrialized countries can be sold in markets abroad.
b. Workers’ wages in industrialized countries will rise to match wages in the colonies.
c. Profits from capitalism can be invested in improving global working conditions.
d. Large corporations are owned by capitalist governments that are seeking new profits.
e. Capitalists wish to spread industry to all areas of the world.
According to Marxists and most other radicals, the international system is characterized by crippling stratification caused by
a. behavioralism.
b. capitalism.
c. liberalism.
d. realism.
e. constructivism.
Form 1
Form 2
Saudi Arabia
Form 3
Form 4
Evolution of Marxist Thinking
World Systems Theory
Accepts dependency theory's stratification of the world
Combines elements of realism with Marxism.
International system has division of labor with three regions:
Core: powerful industrialized states.
Periphery: weak states providing raw materials to core.
Semi-periphery: mixture of core and periphery – Newly Industrialized Countries (NICs).
Marxism & IR
Marxism/Radical Theories
Karl Marx, Communist Manifesto (1848)
Capitalism = exploitation of workers by bourgeoisie.
Impoverishment & growth of proletariat -> proletarian overthrow of bourgeoisie through a revolution
Retains relevance despite collapse of Communist rule in former Soviet Union
Focuses on global capitalism
Not an explicit theory of IR
Varying interpretations of Marx’s writings --> competing schools of Marxism
Global system is hierarchical by-product of imperialism
Under-consumption, over-production, & over-savings:
Developed states expand to find new markets, which keeps wages low due to foreign competition, and savings are invested into new markets rather than improving workers’ conditions
The Age of Imperialism
Trotsky, Luxemburg, and Lenin
capitalism creates dependency between states
the growth of capitalist states depends on pre-capitalist societies
Monopoly capitalism – two tier structure of the world economy – core and periphery
Harmony of interests among the workers is not guaranteed.
Dependency Theory
Flourished in 1970s.
International system has own class structure: metropolis (exploiter) and satellite (exploited).
Multinational corporations in the developed world play a key role in maintain the relationship
Andre Gunder Frank's Hypotheses:
Metropoles develop; satellites underdevelop.
Satellites develop when ties with metropoles weakest.
Most underdeveloped regions today had closest ties to metropoles in the past.
Dependency Theory
How metropoles overpower satellites:
Foreign investment in poor countries limited to extracting raw materials
Westernizing domestic elites in poor countries.
No direct relationship between states’ reliance on raw materials industries and poverty/ underdevelopment.
States are dependent because they are underdeveloped; not vice versa.
Why do some satellite states manage to escape (NICs) – Brazil, India, South Africa
Critiques of Dependency Theory
Developed countries
few states, disproportionate share of resources
Emerging economies
Developing countries
most states, few resources
Immanuel Wallerstein
What are the deadlines for either Spring/Summer intern applications? You must provide both deadlines as discussed in the presentation on Thursday.
On your quiz form answer the following question to earn extra 2 points on the midterm
MNCs are instruments of working-class exploitation in developing countries
MNCs exploit the resources of the poor
MNCs perpetuate dominance of the North: instruments of dependency and imperialism
MNCs may co-opt state decision makers to act on behalf of MNC interests
The Role of MNCs
Economic policy should be subservient to
state interests
Some industries should get special tax advantages
Promoting exports over imports promotes
educational and technological innovations
that increase international competitiveness
Multinational corporations (MNCs) should serve the state
Mercantilists Critique of economic liberalism
Do not ensure transparency for developed countries, especially the United States
Explosion of unregulated, highly leveraged financial instruments
Excess credit against insufficient equity in many sectors
Importation of cheap Chinese goods left an unsustainable trade imbalance
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