international political economy

three traditional schools of international political economy

mercantilism, liberalism, marxism

mercantilism

argues that national power and wealth are largely connected—national power is derived from wealth, and wealth is needed to accumulate power, and that trade is the way to acquire that wealth

three tenants of mercantilism

• national power needs economic strength as support

• exports (X) > imports (M)

• manufacturing, especially high tech manufacturing is the best form of production because high barriers to entry can lead to a mono/oligopoly for first entrants.

liberalism

argues that the purpose of economic activity is to enrich individuals, not the state’s power and that countries gain from trade no matter what.

tenants of liberalism

• trade is always beneficial (not always equally beneficial though)

• countries should produce what they have a comparative advantage in.

• prefers a market-based system of resource allocation

• priority of an individual’s welfare.

• governments should solve market failures

marxism

critical theory of capitalism, argues that there is a natural tendency toward concentration of capital (wealthy elites/bourgeois), competition requires incr efficiency and capital stock, if profits fall or efficiency is low, capitalists reduce wage labor. argues that the state should be an agent

tenants of Marxism

Marxian (Cox) rationalist approach

• key actors - social forces

  • transnational K

  • national K

  • established L

  • non-established L

• how actors are formed? where in international production

• what determines actors’ preferences? anticipated costs/benz of policy

• role of ideas: shared notions of social relationships influence behaviors (material interests are not enough)

open economy politics (OEP) (Oately) rationalist approach

• key actors - societal actors (depends)

  • classes

  • industries

  • firms

• how actors are formed? where in international production

• what determines actors’ preferences? anticipated costs/benz of policy (material interests)

• role of ideas: cause-effect relationship

actors in open economy politics

• Factors/classes – abundant factor favors liberalization, scarce factor opposes

  • Industry v. agriculture

• Industries – export-oriented industries favor liberalization, import-competing ones oppose

  • Inter-industry trade (ADC – developing)

• Individual firms – export-oriented firms favor liberalization, import-competing ones oppose

  • Intra-industry trade (ADC-ADC)

tenants of rationalist theory

• interests are material

• you act in the way that best realize your interest material

enablers of globalization

• technological

  • telegraph

  • steam engine (trains and ships)

• gov policy

  • trade liberalization

  • gold standard (made conversion easy)

implications for the modern global economy

• colonialism, timing of industrial revs shaped the distribution of economic power

• geography shaped economic activity

importance of technological change

• source of econ development and inequality (high entry causes for those who fall behind)

• adoption varies and affects development

importance of policy

• Distrbution of anticipated costs/benefits shapes political mobilization, which shape policy – privilege some over others.

• Governments are agents of integration, not just victims.

logic of collective action

• free riding

  • made greater when there are more actors and/or individual stakes are low

• implications

  • concentrated interests better organized than diffused interests

  • once organized mobilization in relatively easy

• means of adressing

  • selective benefits

  • non material motivations

institutions

• reflect power

  • designed to deliver particular ends (rational-choice institutionalism) (OEP)

  • over time diverge from constellation of powers (historical instituitonalism)

• implications

  • rules of the game (OEP)

  • more profound

organized interests

• position in intl production determines how affected by trade liberalization

• winners and losers sorted according to?

  • factors/class - capital v labor (homo unskilled)

  • sector - export oriented v import competing industries and their skilled workers + unskilled workers

    • inter-industry trade ( between countries of diff levels of dev )

  • firms - export orient v import competing and their skilled workers

    • intra-industry trade (between countries w/ similar levels of development)

• off-shoring and the return of class mobilization

• logic of collective action affects groups capacity to mobilize

china shock

• us lost estimate of 560k jobs to trade from 1999-2011

• estimate of 10% in manufacturing (around 985k) and 2m lost in teh whole economy

• concentrated pain

• more than lost employment

• stagnant wages

• not only trade

tariffs

• authority resides w congress

• delegated to the executive - reciprocal trade negotiations

• unilateral instruments

  • trade defense instruments - anti dumping and anti subsidy measures (___ Act of 1934)

  • safeguard measures (sec 201 of the Trade Act of 1974)

• importer pays, meaning that domestic consumers pay more

• justification

  • reshore manufacturing

  • reduce trade deficit

  • addressing unfair trade practices

  • raise revenue