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The Complex and Sometimes Confusing World of International Political Economy
Introduction There are many books on International Political Economy, or IPE for short. Not surprisingly, each contains its own assumptions and views about the key concepts, issues, and concerns of IPE. Sometimes the authors of these various books hold the same assumptions and share the same, or at least very similar, views about how the world really “works.” Sometimes not. In fact, as we will see in a few of the chapters that follow, the perspectives of the people who write and think about IPE are often dramatically, if not fundamentally different. You may already have an inkling that mainstream economists and Marxists (or historical structuralists as they are sometimes called) do not agree on many central issues and concepts. But even among those who seem to share many basic ideas, there can be sharp disagreements. Thus in neoclassical economics, as Susan Strange points out (1994), Keynesians are skeptical about the supposedly self-regulating nature of markets and advocate a relatively important role for government
“pump-priming” (which refers to deficit spending). Monetarists, on the other hand, express deep confidence in ability of markets to take care of themselves and therefore only a limited role for governments at the national level, based on ensuring a relatively stable supply of money. Disagreements of a different sort exist within Marxism/structuralism. Marxists, for instance, do not even agree on the best way to define such central concepts as
Pictured: John Maynard Keynes, a key architect of macroeconomics and advocate of deficit spending during economic recessions.
the see one
This photograph is in the public domain. It is free to use for publication purposes. Source: www.imf.org
social class—some focus on property (who owns what), while others focus on social, cultural, and economic power (who rules and who is ruled) (Howard and King 1999). There is, in short, no lack of disagreement in IPE. But why is this? That is, why don’t scholars and others who think about the world of IPE agree on how things really work? Why can’t they even seem to agree on what factors or processes are most important in the world (political) economy? One of the clearest reasons, perhaps, has to do with the subject itself: as with all social sciences, IPE ultimately studies the behavior and actions of human beings, which means that, unlike the physical world of the natural sciences, the social world is populated by “subjects” with the capacity to think, learn, and make willful choices. To understand the difference, just imagine if atoms, planets, or chemicals had minds and wills of their own. Certainly, the task of physicists, astronomers, and chemists would be far more difficult than it is already. But it is not only individual consciousness that separates the social from the natural
sciences. The social world is also composed of historically contingent structures, institutions, and systems of beliefs. To fully understand or explain the social world, then, it is not enough that we find the “universal key” to individual behavior (which some social scientists claim to have done with the concept of rationality), but we must also try understand how the broader social, economic, and cultural contexts in which individuals live alters or renders completely meaningless the search for such keys to human action.
The Social World as an “Open System” From a different perspective, we can say that the social world is by nature an open system, which basically means that the objects or subjects we want to study cannot be isolated from other objects (forces or factors) in the environment. In many of the natural sciences, by contrast, objects of study can be isolated, albeit not always completely. The whole point of many experiments in the natural sciences, in fact, is to create closed or quasi-closed systems so that regular sequences of events can be observed under carefully controlled conditions (Sayer 1992). It is this ability to create closed systems that has led to the precision and predictive success of certain sciences like physics and astronomy. On the other hand, there are some natural sciences —e.g. meteorology, geology, or the environmental sciences more generally—that do not have the ability to directly experiment with closed systems, although they can sometimes borrow from “closed system sciences” to establish rough predictions and explanations (ibid.). It is the relative
lack of precision and predictive power in these more “open” natural sciences that has led to some intense and even fundamental disagreements, which may or may not be amenable to resolution in the long-run. One of the most prominent examples of this is the continuing debate over global warming. After decades of intense research, for example, there is near-universal scientific consensus on theories related to the greenhouse effects of global warming, yet because the global environment is inherently open, there continues to be “room” for debate. In general, the difficulties posed by open systems in the environmental sciences pale in comparison to the social sciences, where the added capacity for learning and self-change means that the subjects of study are never exactly the same from one time period to the next (or from even one minute to the next). Thus, it should be even less surprising that sharp theoretical disagreements in IPE not only exist, but show no sign of ever disappearing. The basic reason, to repeat, is clear: the inherent openness of social systems means that there will always be strict limits on what we can know (although, there are many stalwart social scientists—including, no doubt, several of your past or current professors—who never have and probably never will accept this). Given these limitations, our goal in this book is not to provide a definitive, much less objective exposition on international political economy. We especially do not want to tell you the “proper” or correct way to think. Rather, we want to provide you with knowledge that will enable you to develop your own ideas and your own frameworks of analysis. In this regard, we have two other related goals. First, we wish to get you to think more clearly and explicitly about your own (theoretical) assumptions, values, and beliefs. This is a critical step, since many
students often do not understand the basis and/or implications of their own beliefs about the world. It is this lack of self-understanding that leads to inconsistent, sloppy and sometimes contradictory thinking—the type of thinking that causes headaches in so many of your professors. Second, we want to introduce you to a variety of ways of understanding, explaining and interpreting the world political economy. In doing so, however, we also want to help you make much better sense of the conflicting perspectives and approaches in the field of IPE.
Defining Political Economy: The First Step So far we have referred numerous times to the terms “political economy” and “international political economy,” but we have not yet discussed the meaning of these terms. We will do this shortly. But first, a few words of warning: like other aspects of the field, there is no universal agreement on how political economy or IPE should be defined. This means the discussion that follows will not be as simple or straightforward as you might expect (or want). At the same time, a careful reading of this section will, we hope, provide you a better foundation for understanding and interpreting the concepts, issues, and problems we examine throughout the remainder of this book. Let us start off by making one very important point: Definitions are important. A big reason for this is because they tell us what to include in our analysis and what to leave out. Put in slightly different terms, definitions of any area of inquiry essentially tell what is considered legitimate—“what matters” or what is relevant—within a field of study and
how it is supposed to be studied. In this sense, definitions lead us to ask certain kinds of questions, which is very important in and of itself. Roger Tooze, a leading political economist, explains it this way: ‘What you ask is often more important than the answers you get. Because what you ask and how you go about getting the answer nearly always determine that answer for you’ (1984, p. 7). We can certainly see this in the more common definitions of political economy. One definition from a popular textbook, for example, tells us that political economy “is the study of the tension between the market, where individuals engage in self-interested activities, and the state, where those same individuals undertake collection action …” (Balaam and Veseth 1996, p. 6). This seemingly innocuous definition is based on several important, but unstated assumptions. First, it suggests to us that there are only two significant subjects of political economy: (a) markets, which are composed of self-interested individuals, and (b) states, which are the primary political institutions of the modern international system. Further, it suggests that a clear cut distinction exists between economic or market-based activities, and political or state-centered ones. Second,
In the traditional view, the relationship between the state and market is seen as adversarial, like two boxers each trying to defeat the other. However, this is not the only way to conceptualize the relationship between the state and market.
Source: Library of Congress, New York World-Telegram & Sun Collection. http://www.loc.gov/pictures/resource/cph.3c14335/ “No copyright restriction known”
this definition tells us that the most important aspect of the relationship between markets and states is based on conflict. In other words, it presupposes that markets and states relate to one another in fundamentally adverserial ways.
On the surface, there is nothing terribly objectionable about this definition of political economy. Markets and states are obviously important, and it seems apparent that a strong degree of antagonism exists between them. Nonetheless, the definition of political economy as “the study of the tension between the market and the state” has tended, as Tooze warned us, to limit what researchers and students have considered relevant in the field. The focus on states as the loci for collective action, for example, can discourage researchers from clearly distinguishing the state from non-state institutions, groups or organizations geared toward collective action. This is a significant limitation: If political society is defined largely in terms of the state (which is what the definition above does),
Marx’s theory is often misunderstood, but it arguably then whole categories of other actors, issues, and activities are still has much to tell us about the world economy. The classessentially eliminated from view, or at least relegated to the analytical basis of Marxist analysis is particularly important. Chapter 2 will outer margins of the field. A good contrast with a statediscuss his theory in more centered definition of political economy is the Marxist view, depth.
which, generally speaking, focuses on the “social relations of production.” From a Marxist perspective, the key aspect of
Source: Unknown. This image is in the public domain because its copyright has expired.
political economy is the inescapable conflict between opposing class interests—that is, between the owners of the means of social production (i.e., modern capitalists) and wage laborers (i.e., workers). The questions and answers that result from a definition that focuses on the tension
between states and markets versus one that focuses on “opposing class interests” are, needless to say, likely to be quite different. The shift from states to social classes, however, still leaves important categories of actors, activities, and issues out of the picture. One of the most salient categories in this regard is gender: until recently gender and the related notion of patriarchy were rare in studies of political economy, both mainstream and Marxist. Similarly, it has only been in the last decade or so that such topics as the environment, migration, social movements (including labor movements), nationalism, and race/ethnicity been considered as appropriate, much less important topics of study in (international) political economy. Even the question of poverty was, for a long time, largely ignored in studies of IPE. What we need to emphasize from the start, though, is that these issues are not ‘naturally’ marginal or unimportant (Enloe 1996). That is, their exclusion in the past does not mean that they were any less important or relevant to the field of IPE. Rather, their marginalized status was the product of particular forces within society—to put it bluntly, they were or are marginal because someone or something made them so (ibid.). When such issues begin to show up in research and public policy agendas, therefore, we know something is going on. Helping you understand just what is ‘going on’ and why is a big part of this book. What is true for political economy in general has been even truer for IPE. The conventional definition of IPE basically extends the notion of political economy to the international or inter-state level; in other words, to relations among sovereign nation-states. For the most part this has entailed a very strong, albeit not quite exclusive, focus on such issues as
international trade, monetary relations, finance, investment, and regime formation—issues that tend to mirror the concerns of the richer, more industrialized nation-states of the world: most of Western Europe, the United States, Japan and a few other affluent countries. The focus on states and their relations with other states is no accident, for IPE, to a very large extent, originally developed as an extension of realist international relations (IR) theory, which portrays the state as the basic and really only significant actor in world politics. Much, though certainly not all, mainstream research in IPE has simply accepted the premise of state centrality. This is most apparent in the approach known as “the politics of international economics relations,” which still enjoys a great deal of popularity today. The tendency of mainstream IPE to focus on the problems and concerns of the Western or Northern states (as they are also called) is also no accident. After all, if states are the only significant actors on the international stage, it stands to reason that the most powerful states should be the center of our attention. And it is clear that Northern states (e.g., the United States, Great Britain, Germany, Japan, France) are the dominant players in the world economy: they control the bulk of world trade; they are the main creditors, whether through private banks or international financial institutions such as the World Bank and the International Monetary Fund (IMF); they are the largest and most influential investors internationally; and they are most responsible for the creation of international regimes and organizations such as GATT (General Agreement on Trade and Tariffs), the WTO (World Trade Organization), and the OECD (Organization for Economic Co-Operation and Development). Even among work that is critical
of the state-centric model, there has been a strong tendency to focus on the North. In research that emphasizes the growing importance of interdependence, for example, most attention is paid to international ‘regimes’ or organizations, or to transnational corporations, which are either products of or reflections of Northern or Western dominance. Not all mainstream IPE research, to be fair, has been devoted to Western (or Northern) issues. Beginning in the early 1960s, but especially in the 1970s, a secondary set of issues emerged, which incorporated (but did not necessarily center on) the concerns of non-Western countries. These include such interrelated issues as “Third World” development, international debt, technology transfer, foreign direct investment (FDI), and foreign aid. Significantly, most of the research on these issues was still primarily based on international or inter-state relations— in this case the relationship between the richer countries of the “North” and the poorer ones of the “South.” Moreover, much of this work was still fundamentally based on Western interests. International debt became a particularly important issue, for example, when Western leaders became concerned about the negative implications of Third World borrowing, which in the early 1980s had become a serious problem for debtor countries (especially in Latin America—see Table 1.1), but an even more serious one for Western creditor nations who feared the economic consequences of a widespread and large-scale default on their international loans. The attention paid to economic development among so-called Third World countries has also tended to reflect a Western bias. This was particularly true during the Cold War period when many studies were guided more by a desire to promote or protect Western political interests and capitalism, than to
fully understand the unique aspects of economic development among Third World countries. On some occasions, this bias was made explicit, as with W.W. Rostow’s seminal Five Stages of Economic Growth, which was subtitled “A Non-Communist Manifesto” (1960). In sum, mainstream IPE research has tended to exclude much more than it includes; to ask certain questions, but to leave a plethora of other important questions unasked and unanswered. Susan Strange, who has written extensively on IPE and International Relations, puts it this way, ‘Even at their most extensive, the “directional” or “azimuthal” agendas that exists [in IPE] are still far too restrictive and so do not really qualify as the study of political economy’ (1984, p. 13). We agree. This does not mean, however, that we need to completely redefine the field. The core concerns of mainstream IPE, while limited, are certainly not invalid. The questions asked are important. Moreover, even a restricted definition of IPE forces us to look at connections and relationships that have been largely ignored, or at least under analyzed, in other academic disciplines like IR, Political Science and Economics. The two most salient of these, of course, are the connections between politics and economics and between the domestic and international. Traditional IPE not only explicitly recognizes these connections, but attempts to examine and understand them as part of a complex and interactive whole. This said, there are still limitations in conventional notions of IPE that must be addressed. Table 1.1 External Debt Indicators for Latin America, 1981 and 1980-83
Argentina Brazil Chile Mexico Peru Venezuela Weighted Average East Asia Weighted Average
Cumulative Current Account Deficit, 19701980 (% of 1981 GDP) 2.3 22.8 19.8 13.9 19.3 -7.5 13.6 11.9
Debt-GDP Ratio, 1981 33.6 26.1 47.6 30.9 44.7 42.1 31.3 25.9
Debt-Export Ratio, 1981 334.7 298.7 290.0 258.8 223.5 134.0 271.5 82.1
Debt Service Ratio, 19801983 214.9 132.6 153.3 161.8 122.2 117.8 153.8 61.7
Explanation. This table shows that, while the debt-to-GDP ratio in Latin America (at the beginning of the decade) was not particularly high—only slightly higher than in East Asia—the debt-to-export ratio was very high. According to Sachs and Williams (1985), this was likely the critical factor in making Latin America so vulnerable to the external shocks of the early 1980s. Latin America’s debt problem was also indicated by the high debt service ratio (which is the ratio of debt service payments (principal + interest) of a country to that of the country’s export earnings. A debt service ratio of over 100 percent means that debt payments exceed export earnings. Source: Cited in Sachs and Williamson (1985), p. 533
Globalization and the Limits of International Political Economy One of the key limitations of IPE stems from the use of the term “international.” Strictly speaking, international applies only to relations between and among sovereign nation-states, a point that we touched upon earlier. The term also implies a clear distinction between the “national” or domestic and the international—between what goes on inside the state and what goes on outside the state. One problem with this distinction is that a great deal of activity that occurs in the world today is conducted—and sometimes controlled —by non-state actors in ways
that transcend national boundaries. Most of us know, for example, that large corporations engage in all sorts of economic transactions and activities that cut across borders: from buying, selling and trading products and services; to building and investing in global chains of production (whereby a single product is designed, manufactured, assembled, distributed and marketed in various locations throughout the world); to forging strategic alliances with corporations based in a range of different countries. We even have a special name
UAE 360.1 345.6 303.1 248.4 217.7 213.1 190.7 189.8 176.7 Shell (Netherlands) ExxonMobil (US) BP (UK) Sinopec-China PetroChina Toyota (Japan) Chevron (US) Total (France) ConocoPhillips (US) 369.1 341.6 297.1 284.8 222.3 202.8 189.6 188.1 175.6
Table 1.2 Revenue of World’s Largest Corporations (by Sales) Compared to GDP of Selected Countries, 2011 (in US $ Billions)
Country Austria GDP 419.2 Corporation Wal-Mart Stores Sale s 421.8
for these types of firms: Transnational Corporations, or TNCs for short. The more significant aspect of TNCs, however, is not in the geographic scope of their activities per se, but in the fact (according to many observers) that corporate activities and interests are increasingly infringing on or restricting
Thailand Greece Chile Ireland Philippines Algeria Romania Kuwait
http://www.forbes.com/lists/2012/18/global2000_2011.html; data for GDP comes from the International Monetary Fund, “Report for Selected Countries and Subjects,” in the World Economic Outlook Database, April 2012, available at http://www.imf.org/external/pubs/ft/weo/2012/01/weodata/index.aspx
the sovereignty of nation-states. Transnational corporations, to put it simply, are becoming more powerful, both at the domestic and transnational (or global) levels. Their power derives primarily from the position they occupy in the world economy. As a group, they directly control most of the world’s productive, financial, and technological resources. Even at an individual level,
corporate power is significant: the revenue of the world’s largest corporations, for example, exceeds the Gross Domestic Product (GDP) of many nation-states. While a comparison of corporate revenue to GDP is admittedly simplistic, it nonetheless tells that corporations are significant economic actors in their own rights. Where, when and how TNCs decide to invest, manufacture, and/or distribute their products is therefore likely of considerable importance to the world political economy. The ability of TNCs to move operations and assets—physical, financial, technological, or otherwise—easily across and within borders, moreover, has given them an even stronger capacity to influence the course of national and world economic development, and, at times, to directly challenge the state’s authority to regulate economic activity. For example, by threatening to limit or close down their
An Example of Regulatory Arbitrage
operations in one location, they can compel governments to modify local regulations or standards for health, safety, wage levels, or the environment, a phenomenon dubbed regulatory arbitrage. In essence, they are telling states: “If you want our business, then you have to play by our rules.” This is
Explanation. In an era of globalized production, states have more difficulty regulating and taxing TNCs, since corporations can easily relocate some or all of their operations to countries with minimal regulations and taxes. Mobility and their productive capabilities give TNCs significant power in the world economy.
not to say that TNCs have necessarily become the equal of states, only that the relationship between states and large corporations is not as clear-cut as it once appeared to be. The increasingly important role that TNCs and other transnational actors are playing in the world today can be attributed, in large part, to a process called globalization. Globalization, unfortunately, is also one of those terms about which there is no broad-based consensus. While some see it as an over-hyped myth,1 others argue that it is leading to fundamental changes in the world. We are more sympathetic with the latter view. That is, we believe that globalization is a significant, indeed, critical process that must be accounted for in any examination of “international political economy.” The changes brought about by globalization are taking places in many areas and at several levels. The creation of global production networks is only one of the more obvious manifestations of these changes. Even more significant changes, perhaps, are occurring in the global financial structure. As Strange puts it, ‘Where once the creation and use of credit mostly took place within the societies of territorial states, it
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now takes place across territorial frontiers, in global markets electronically linked into a single system’ (1999, p. 37). Strange points out that another key aspect of globalization is occurring in the realm of ideology, values and beliefs. In other words, people throughout the world are beginning to communicate in terms of a common discourse of human and political rights, democracy, and social justice. Just how meaningful the globalization of “ideas” might be is still open to debate, but we can see evidence of its impact with increasing frequency: from the peasant rebellion in Chiapas, Mexico to the Arab Spring; from the protests against “sweatshop” labor in the garment districts of New York, Honduras, Haiti, and Los Angeles to the Occupy movement in the United States and Europe. What is significant about—and common to—all these cases is that, to varying extents, each is based on an appeal to a set of rights that were once almost entirely within the domain of the nation-state. Even more significant is the fact that social, political and civil rights are now becoming part of a relatively autonomous and transnational source of authority that is increasingly being used to delegitimize state actions (Sassen 1995), as well as the activities of TNCs. The protests against Nike, Reebok and other corporations that “exploit” workers in poor countries are a good example of the latter. In short, the globalization of ideas, like the globalization of production and finance, is showing the potential to challenge the authority of a state and other powerful global actors both within and outside national borders. On the surface, the changes that globalization are bringing about appear to be moving us in a generally positive direction: toward a weakening of central control (by states, for example)
and toward a greater dispersion of power among a plethora of institutions, groups, and individuals. In other words, toward a more democratized world. On this point, some argue that the Internet and other advances in information technology are helping to empower and give voice to people whose concerns may not otherwise be heard—primarily because governments can no longer unilaterally control or even mediate the flow of information. While there is certainly some truth to this argument, we need to understand that globalization is a complex and contradictory process. Thus, while the Internet has undoubtedly opened new possibilities for global democracy, it also provides an opportunity for the state to keep tabs on its citizens more effectively and less obviously than ever before, and at a much lower cost to boot (Mehta and Darier 1998). Just think, for example, how much easier it has become for states to gather, store, analyze, and instantly access information about millions of individual citizens. The same applies to corporations, the most powerful of which are able to exert tremendous influence on the development of the Internet and information technology more generally. Indeed, as corporations become more geographically dispersed, the need for centralized, top-level control becomes even stronger (Sassen 1995). This means, in many cases, not less concentration of power, but more. And generally in fewer and fewer places. It is the complex and contradictory changes being brought about globalization that compels us to go beyond the territorial and substantive boundaries of mainstream IPE. A simple, but not necessarily trivial step in this regard is to abandon the concept of international political economy and replace with global political economy. The move from IPE to GPE does not mean,
however, that we must also abandon the traditional concerns of international political economy. States still matter (a great deal, in fact), but so do TNCs, non-governmental organizations (NGOs), transnational social movements, academic and scientific communities, religious institutions, and so on. Increasingly, then, the activities and concerns of states constitute only part of a much larger, more complex picture. One writer sums up the issue nicely: “The structure of global political economy contains the ‘old’ international economy within a new framework which is based in the territory of states, but not necessarily ‘national’ in terms of purpose, organization, and benefit” (Tooze 1997, p. 221). Placing the “international economy” within the framework of the broader global economy should also move us beyond a second restrictive boundary of mainstream IPE: the state-market dichotomy.
Political Economy and the State-Market Dichotomy Earlier we pointed out that conventional IPE textbooks tend to treat the market (economics) and state (politics) as separate entities, each operating according to its own, largely independent logic. While not entirely unjustified, the separation of the market and state into mutually exclusive zones has always been problematic. One reason for this is clear: a market economy cannot exist, much less operate, without some kind of political order. This is not a new observation, nor is it one about which many (political) economists would disagree. There is, however, a great deal of disagreement over exactly what kind if political order is needed. Some
take a minimalist view: the best political order is one in which the state only provides the legalinstitutional framework for enforcing contracts and protecting private property. Others are convinced that the most appropriate political order is one in which the state plays an active and direct role in all aspects of economic activity. Rather than discuss, in detail, the full range of different perspectives on this issue, it might be better to concentrate on just one. In this regard, we would like to introduce you to Karl Polanyi, whose work, while largely ignored in mainstream IPE texts, may actually offer us one of the best frameworks available for understanding contemporary political economy.
Polanyi and the State-Market Dichotomy More than a half-century ago, Polanyi wrote about the inextricable connection between the emergence and subsequent development of the market economy and the modern state. In one of his most important works, The Great Transformation, Polanyi explains how the “road to the free market was opened and kept open by an enormous increase in continuous, centrally organized and controlled interventionism [on the part of the state]” (1944, p. 140). This was necessary because the market economy, as we know it, required a very unnatural action—i.e., turning land, money, and especially labor into commodities, or things to be bought and sold. To accomplish this required the exercise of a great deal of political power, primarily through the state. For Polanyi, it is not difficult to see why this was so. For prior to the advent of the market economy, land and labor were decidedly not commodities; rather, they were “no other than the human
beings themselves of which every society consists and the natural surroundings in which it exists” (ibid., p.71). To turn them into commodities required an intentional and sometimes highly coercive effort, which only the state was capable of carrying out. Once created the so-called free market continued to rely on the exercise of state power. As Polanyi put it, “Just, as contrary to expectation, the invention of labor-saving machinery had not diminished but actually increased the uses of human labor, the introduction of free markets, far from doing away with the need for control, regulation, and intervention, enormously increased their range … even those … whose whole philosophy demanded the restriction of state activities, could not but entrust the self-same state with new powers, organs, and instruments required for the establishment of laissez-faire” (ibid., p. 140). In other words, the expansion of control, regulation, and intervention is an inevitable outcome of a “free market.” This is a crucial insight, and one that allows us an even stronger understanding of the interdependent—or holistic —relationship of the state, market and society: within Polanyi’s framework, all three exist as part a social whole and none can survive without the others. This was not a generally accepted proposition when Polanyi first wrote about it, and it is even less accepted today. If anything, just the opposite is the case: in the popular media, among prominent economists, and in the halls of governments around the world, there is an increasingly strong conviction that markets can and should be kept isolated from the “meddling” of states and their societies. This conviction, it is important to point out, is based on the assumption that for the market to operate efficiently, it must stand apart from or above the state and society.
23 A Simple Depiction of the State-Market-Society Relationship
To Polanyi, the belief that the market can somehow stand apart from or above society and the state is the fundamental problem. Because it can’t. Or least it can’t for very long, since unhindered market forces, while tremendously productive are also tremendously destructive. In particular,
Source: Created by author.
when land and labor are treated as commodities, there is bound to be conflict between the imperatives of the market and the need to protect the physical environment and people from the most pernicious consequences of market competition. The logic here is simple: as the conflict between the market and society grows, pressures are created that ultimately result in a countermovement. Polanyi referred to the counter-movement emanating from society as the second part of a “double movement,” the first part being the expansion or deepening of the free market itself. Ironically, the protection extended to society has generally been provided by the state, which, as we already discussed, was instrumental in allowing the free market to arise in the first place. The state, therefore, serves a critical role of mediating between the market and society. This role has been complicated, however, by the fact that the state does not clearly ‘belong’ to either; as two students of Polanyi’s work put it, “The state was necessarily both a universal, representing the interests of society against the market, and a class state, pursuing the agendas of the capitalist
class, since the reproduction of capitalist relations was necessary to preserve society” (Block and Somers 1984, p. 68). From this perspective, moreover, we can see that state intervention is never simply anti-market or pro-market (or anti-society or pro-society). As an essentially “conflicted” mediator, the concrete result of state intervention between market and societal forces has been a range of political orders or arrangements. Some of these we call neo-liberal or capitalist, others we call socialist or communist. And, of course, there are versions in between, including the modern welfare state, of which the United States is just one example. No one of these arrangements, we should emphasize, can be said to be necessarily superior to another. This is because various political orders represent, at base, a mixture of different values—such as efficiency, equity, security, justice, and so on. Which value is given the highest priority and which is given the lowest reflects decisions made by individual societies, albeit within the context of a broader international/transnational system. Thus, to say, for example, that economic efficiency is more important than any other value is not to make an objective or “scientific” statement, which must apply to all cultures and societies. Rather, it is to make a subjective or normative judgement, which typically reflects how the tension between the market and society has played out over time. Polanyi’s framework and the concept of the double movement specifically, allows us to see that even a very narrow conception of “politics” as state action cannot be seen as standing in opposition to the market or “economics.” Politics, including the exercise of state power, is fundamental to the market. In this sense, politics is economics. It is clear, then, that Polanyi’s
argument goes well beyond the state-market dichotomy typical of most mainstream IPE texts. It is equally clear that his framework incorporates a much broader conception of society—even when compared to Marxist IPE. In this regard, it is important to point out that Polanyi did not see society, or social classes, as defined by economic forces alone, in the way that some Marxists do. Instead, he understood classes as primarily social or cultural institutions formed to redress the cultural devastation created by market society (ibid., p. 67). This is a critical distinction, for when class is defined strictly in terms of economic interests it “… must in effect lead to a warped vision of social and political history, and no purely monetary [economic] definition of interests can leave room for that vital need for social protection …” (Polanyi 1944, p. 154). The key point, for our purposes, is this: when defined as a cultural institution, classes can be organized along and across many different lines, including gender, race/ethnicity, nationality, religion, etc. To see the practical significance of this broader definition of class, one need not look very far. From neo-Nazi skinheads in the Europe to Islamic fundamentalists in the Middle East, from White Supremacist militias in the USA to right-wing nationalists in Greece, we can see societal groups organizing themselves along very different lines, but for largely the same purpose—to protect themselves from unfettered market forces. Polanyi, moreover, was not just concerned with the domestic political economy. Far from it. The central thesis of The Great Transformation, in fact, was based on explaining the breakdown of the international system prior to World War II, which Polanyi attributed to “the utopian endeavor of economic liberalism to set up a self-regulating market system” (ibid., p. 29).
In this regard, Polanyi was one of the first to recognize that a firm boundary between the national and the international could not be drawn—the market economy may have been born in a single country (England), but its impact, both positive and negative, was felt throughout the world. It is not just that Polanyi clearly understood that the market system could not be contained within national borders, but that the tension between the market and society domestically would necessarily have an impact internationally. Specifically, an effort by one state to protect its society from market forces would provoke other countries to institute similar or even more dramatic protectionist schemes, including the turn toward fascism or communism. Similarly, Polanyi was also one of the first to recognize that on the international (or transnational) level, just as on the national level, market society requires a largely state-created political order to function. On this point, Polanyi’s ideas can be easily applied to the process of economic globalization going on today. For it is easy enough to see that the globalization of production and finance is not an automatic process: it requires a range of legal innovations and a new institutional infrastructure, which must be supported by states (Sassen1995). The “global market,” in other words, is as much a product of political action as are national markets.
International (Global) Political Economy Defined In light of the rather lengthy discussion above, it would be useful to return to a basic question: What is international or global political economy? Our definition—or rather, one we borrow
from the writing of other scholars—is surprisingly simple. International political economy is, most generally, an area of study. As an area of study, it is concerned with, as Susan Strange puts it, ‘the social, political, and economic arrangements affecting the global systems of production, exchange and distribution, and the mix of values reflected therein’ (1994, p. 18). This definition has the advantage of expanding, rather than limiting the range of questions, concerns, and issues we consider relevant to the study of political economy, whether at the local, national, international, or global level (although not everyone would consider this an advantage). Moreover, it does not presuppose or lead us to think that any one arrangement or set of values is superior or better than another; nor does it suggest that certain relationships or dynamics, such as conflict between states and markets or between opposing social classes, should or must be the focus of study. Similarly, it does not force us to view the world through a particular set of (theoretical) lenses. In short, Susan Strange’s definition encourages us to look at the complex “reality” of the world economy in an open manner. (Note. For our purposes and to avoid confusing our readers, we will use IPE throughout this book, even though we prefer the alternative, GPE or global political economy.) We realize, of course, that not everyone would be satisfied with the definition given above. There are many people, for example, who are downright hostile to open-ended definitions. Part of the reason for this stems from their interest in discovering general and/or universal “laws” about the social world, an issue we’ve already discussed to some extent. The search for laws or predictable patterns of human behavior, unfortunately, is made much more
complicated when parameters of human action are broad and somewhat fluid. We believe, however, that the open-ended character of the definition given to us by Professor Strange is necessary. We have already discussed a number of reasons for this in the preceding sections. Another important reason, though, stems from our conviction (also noted above) that the framework or structure within which political, social, and economic activity takes place—i.e, “reality”— is not fixed in time, but rather is historically constituted (Cox 1995). This does not mean, we should stress, that reality is whatever we want it to be; rather it means that what we think of as reality is the product of collective human activity over time, and not of some preordained or natural order. Greed and self-interest (economists use the term “rational” to refer to such characteristics), for example, are clearly integral aspects of human behavior today. But they are not necessarily permanent or immutable traits of human beings. It may, of course, be hard for us to imagine otherwise, so perhaps another example might be useful. Centuries ago the great political philosopher Aristotle consider slavery to be an essential part of reality; as he bluntly put it, “There are in the human race individuals as inferior to others as the body is to the soul, or as the beast is to man .…These individuals are destined by nature to slavery because there is nothing better for them to do than to obey.” Obviously, Aristotle was wrong, but it was literally impossible for him to think otherwise. His social ‘reality’ was conditioned by existing relations of power—by the political economy in which he lived. Thus, what he saw as natural was only natural to his particular place and time. Our present reality, then, is not necessarily the way the world always has been and always will be—much less the way it has to be. Rather, it
represents a particular configuration of forces, which shape or constrain both our thoughts and our behavior in certain ways, but which are also subject to change. Another important advantage of Professor Strange’s definition is that it encourages us to think critically about the world economy. On first thought, it may not be apparent to you why this is so. If anything, you might feel just the opposite. The reason, however, is fairly simple. For the definition we’ve chosen forces us to ask questions about what and who matter in the world economy and why. It also pushes us to question many of the basic assumptions and values that underlie dominant and alternative perspectives of IPE. This occurs whenever we ask such questions as: Are states still the dominant players in the world economy? To what extent have states lost control of the economic and political activity within their borders? What impact, if any, is the globalization of production, finance, and ideology likely to have on the world? How has globalization transformed relationships of power in the world? Where does the line between the domestic and international or between the economic and the political lie? What is the relationship between democracy and capitalism? Are social justice, political equality, and human rights compatible with the “free market”? Not only do these and many other important questions flow directly from the definition given to us by Susan Strange, but the answers are far from obvious. By both asking such questions and developing our answers to them we are, of course, engaged in highly critical and evaluative process.
The Significance of Power Thus far, we have covered a number of important definitional issues and posed some key questions. But there is another question we must address in any study of political economy. In Political Science, the study of politics revolves are the issue of power. Power, in short, is a central concept. Yet, in many introductory textbooks on IPE (generally written by political scientists), there is very little discussion about just what power is. Many writers seem to take for granted that power is an unproblematic, even self-evident concept. If pressed for a more formal conceptualization, however, most might agree with Robert Dahl’s oft quoted definition, which asserts that power is the ability of A to get B to do something she would not otherwise do (Dahl 1957). Certainly, this way of looking at power has merit. Sending in thousands of heavily armed troops to keep workers from blocking access to a factory, for instance, is an exercise of (coercive) power whereby A (the state) gets B (workers) to do something they don’t want to do. Conversely, when workers are successful, they can force their company to increase wages, provide more benefits, or otherwise improve the conditions of work—all actions that the company would otherwise not have taken. There are dozens of others similar examples you can probably think of that occur on a regular basis. This type of coercive, or “interventional,” power is clearly important. But it is hardly the case that most—or even a significant fraction—of what happens everyday in the political economy can be attributed to such direct applications of force
or coercion by one actor against another. Most activity in the world political economy, instead, occurs as part of a process where power is exercised in a far less direct or interventional manner. Thus, to understand power we need to begin by ridding ourselves of the idea that it is the same as brute force, or, to paraphrase Mao Zedong, that it only “grows out the barrel of a gun.” Before we discuss other ways to look at power, however, it would be useful to return to the claim we made above, namely, that excluding power from analyses of the world political economy is a fundamental
Pictured: From Amour Magazine: The Chinese Type 98 Main Battle Tank This image is a work of a U.S. military or Department of Defense employee, taken or made during the course of an employee's official duties. As a work of the U.S. federal government, the
A quote from Chairman Mao Zedong (The Little Red Book, 1964
“Every Communist must grasp the truth: Political power grows
out of the barrel of a gun.”
problem. Why is this the case? That is, why is a firm understanding of power essential to the study of IPE (or GPE)? Part of the reason for this, we hope, is already apparent to you: to the extent that markets play (or do not play) a dominant role in the economic life of country or system of counties, they do so as a consequence of a political process. In this process, it is the distribution of power in society that determines, to a very large extent, the rules and values that govern economic and social relations. Power (or a particular structure of power), in this sense, is
required to create and sustain the framework within which economic activity takes place. An efficient and productive market system, in particular, cannot exist where private property rights are not respected, where contracts cannot be enforced, or where domestic security is weak or non-existent. Yet, protecting property rights, enforcing contracts, and providing security require a great deal of power, which—it is important to emphasize—must usually be exercised by a nonmarket actor like the state. To better appreciate this point, one need only consider what happens to societies racked by social and political upheaval. In Somalia, to cite one of the most disturbing examples, “orderly market” activity is hardly possible when there is no centralized and legitimate political authority capable of governing the entire country. The rather sorry condition of Russian capitalism in the decade following the collapse of “communism” presents a less extreme example. In this case, the financial and political power of the once-feared Russian state has proven insufficient to create an orderly and effective framework for a smooth transition to capitalism. Power, instead, rested in the hands of a corrupt “oligarchy” who essentially wrote their own rules—rules that were designed to funnel huge sums of money into their hands at the expense of the larger economy and the rest of Russian society. When Vladamir Putin took control of the state in 1999, however, things began to change very quickly. The Russian economy got back on relatively firm footing and did exceptionally well during his eight years as president from 2000 to 2008 (see Table 1.3). This is not to say that Putin single-handedly solved Russia’s economic problems (he did not); rather, it is to emphasize the political aspects of capitalist development.
This said, most economists might accept the fact that power is required to create and sustain the general framework within which economic activity takes place. Yet, they might also argue that, for capitalist markets in particular, this power must be exercised in a neutral manner. Once the framework for market activity is created, in other words, all actors have an equal chance to compete and flourish—or, at least they should have an equal chance to compete, if the highest level of efficiency is to be achieved. Thus, power becomes largely irrelevant in terms of understanding what goes in within well-functioning markets since everyone is equally empowered. This view, however, ignores a critical issue, which is simply that power is not just needed to create a general framework, but is also needed to sustain that framework.
Table 1.3 Russian GDP Growth Rates, 1990-2011
Chart generated by Google: http://www.google.com/publicdata/
Before moving on, let us make one more point related to the Russian case, which is that it reinforces a key argument in this section—i.e., that power is not a simple matter of who has the most “guns.” If this were the case, the Russian state (with control of the military) should easily have been able to put a stop to the corruption that, in the eyes of one prominent American expert, had “poisoned the Russian political process …[and] undermined the Russian fiscal system” (Sachs 1999, p. 31) prior to 2000. The Russian case suggests, in other words, that power has multiple sources, of which the control over the “means of violence” (or force) in society is but one. This raises an obvious question: What are other sources of power and how significant are they in relation to one another? On this question, most of us would concede that “wealth” is clearly another source of power in society. But is wealth always trumped by military force? If not, under what conditions is wealth a more significant source of power? Many of us have also heard the phrase, “The pen is mightier than the sword,” which encapsulates the rather bold claim that ideas are stronger than armies. Can this really be true? Do ideas—ideology or knowledge — constitute a source of power equal, or at least comparable, to military force (or wealth)?
There are, unfortunately, no easy answers to any these of
questions. But one thing is clear: power is not onedimensional. This is simple yet crucial point. For we believe that the study of political economy must not pay serious attention to the importance of power but to the many different aspects or kinds of power. intention in the last part of this chapter (and throughout our book) is to do just this. Our primarily only
Winston Churchill in 1916 holding a giant pen: “After all, some say the itself, pen is mightier than the sword” Source: F.H. Townsend in Punch. This image is in the public domain because its copyright has expired.
however, will be on the distinction between coercive power and structural power. Both, as we will see, are important but structural power (as we suggested above) has far more day-to-day relevance to the world political economy.
Structural and Coercive Power When someone holds a gun to your and demands you give him all your money, this is coercive power. When the United States under George Bush undertook a massive military campaign to
overthrow Saddam Hussein that, too, is an example coercive power. But when Chinese, Cuban, or Vietnamese conduct financial transactions in American dollars (both domestically and internationally), or when workers agree to do dangerous and difficult jobs for little pay, are these also purely demonstrations of coercive power? Our view is that they are not. The latter two examples reflect what can be called structural power. One of the key differences between coercive and structural power may already be apparent: the exercise of coercive power reflects an interventional, cause-and-effect relationship, where the intervention of the more powerful agent directly causes the weaker agent to do something he or she would not have otherwise done. Structural power, by contrast, is not easily reduced to such a simple equation of force. For example, workers who agree to do dangerous and difficult jobs for little pay do so because they have few other options, not because they are directly forced to do so (at least in democratic countries). China, Cuba and Vietnam, to use our other example, do not use US dollars because the American government (or anyone else) forces them to; rather, these ostensibly communist countries use dollars because they are the world’s “top currency” (Cohen 1998). The structure of the international financial system, in other words, creates a framework (and financial hierarchy) that strongly influences and/or limits the choices available to most actors. In particular, those who occupy peripheral positions within this structure are subject to rules, values, and practices over which they have little to no control. (Although, in the case of China, this is not necessarily the case.) They agree to abide by the rules of the system because failing to do so is too costly— in this sense, there is certainly an element of coercion. At the same time, participation also brings
some benefit to weaker actors, which may or may not work in the interests of the more dominant players. Those who occupy central positions within the structure of international finance, on the other hand, have the power to “write the rules” or to define the framework itself—usually in ways that put them in an advantageous position. This has certainly been true in the case of the United States, which played the key role in shaping the international financial system following World War II. It is important to understand, however, that structural power is not just a broader, more generalized version of coercive power. To see why this is so consider the following three related points. First, we need to recognize that once a framework or structure is created, all actors— from the most powerful to the weakest—become subject to the same system of constraints and opportunities (albeit on different terms). In the international financial system, this might mean that a “weak” currency can become a source of strength. Consider, in the regard, China: throughout the 1990s and into the first decade of the 2000’s, Chinese authorities intentionally worked to keep their currency, the renminbi, weak relative to the dollar. This helped to spur China’s extraordinarily fast growth in exports (a weaker currency means that Chinese products have a competitive advantage in world trade since they are “cheaper” than would otherwise be the case). In other situations, monetary policy can be transformed into an exercise in political symbolism, and support “of the national currency may be promoted as a glorious stand on behalf of the imagined community—the ultimate expression of amor patriae” (Cohen 1998, p. 121). Conversely, a strong currency may become a source of weakness for governments, particularly if
authorities attempt to preserve an international role for a money whose popularity has begun to fade (ibid., p. 122). This happened to Britain after World War II. In the future, it may well happen to the United States. Second, we need to understand that structural power is based on a network of (historically constituted) relationships that extend well beyond the interaction of two individual agents. This may sound abstruse, but it is really not. Consider, for example, the relationship between a student and a teacher. Teachers have power over students not because teachers are necessarily smarter, stronger, or wiser than their students. And it is certainly not because teachers are richer. Rather, a teacher has power over a student because he or she can assign a grade that others—such as a parent, an honor society, a law or medical school admissions committee, a potential employer—will use as a basis for determining the “quality” (and sometimes fate) of the student. A student’s well-being, in other words, “is affected by the grade only through the mediation of human beings [or institutions] situated outside the classroom, who use the grade as a sign that results in their administering ‘harm’ [or benefit] to the student—for example, by denying him access to the opportunity to further his education” (Wartenberg 1990, p. 145). In this situation, real power is exercised, not by the teacher per se, but by range of external actors. This aspect of structural power also helps us understand its context-dependent nature. In the case of the student-teacher relationship, we can easily see the significance of the broader context: the power of the teacher, for example, will necessarily erode if the grade no longer functions as a means of access to a decent job (which may help to explain why discipline
is a major problem in many of the poorest urban schools). In the international political economy, to put this issue very simply, this means that an exclusive focus on dyadic relations (e.g., the U.S.-China relationship) will not tell us all we need to know. We need to evaluate the relationship in terms of the broader structures and institutions of the global economy. Third, we must recognize that structural power is reciprocal. This means that, in any relationship of power, both parties have a degree of power no matter how wide the disparity may seem. Again, this may seem an abstruse or perhaps trite point. But it is a crucial one, for it tells us that power is never absolute—that there are always structural limits to power. This suggests, in turn, that power relationships are rarely, if ever fixed. We can see this is the constantly shifting relationships between capital and the state, between capitalists and workers, or between rich and poor countries. In this sense, understanding the structural limits of power is important if we want to understand, first, how and why things change in the international political economy, and second, what the possibilities for change are. Indeed, without understanding the reciprocal nature of structural power, it would be hard to explain how or why change in the political economy ever takes place. After all, if those who lack power also lack the capacity to challenge those with power, how can unequal relations of power change once established? Taken together, these three aspects of structural power can help us develop a deeper, more ‘realistic’ understanding of international or global political economy. But, these are not the only aspects of structural power about which we should be concerned. Susan Strange (1994), to whom we have referred several times already, argues that structural power should also be
separated into four distinguishable but integrally related structures: security, production, finance, and knowledge. Each of these structures, Strange notes, highlights critical aspects of power, which are generally ignored or glossed over in more conventional analyses (especially those that focus on coercive power). Yet, according to Strange, each is no more than a statement of common sense. The security structure, for instance, is simply the framework of power that provides protection to human beings from both natural and man-made threats. Those who provide this protection (or security) acquire a certain kind of power which lets them determine, and perhaps limit, the range of choices or options available to others (p. 45). It is here that states tend to dominate, especially in terms of providing security against external threats. The production structure includes all the arrangements that determine what is produced, by whom, by what methods, and on what terms. Those who control or dominate the production structure clearly occupy a position of power in any society, in part because the production structure is the primary means of creating value and wealth. The finance structure determines who has access to money, how and what terms. Money itself, however, is not critical; rather it is the ability to control and create credit. As Strange puts it, “whoever can so gain the confidence of others in their ability to create credit will control a capitalist—or indeed a socialist— economy” (p. 30). The knowledge structure—perhaps the most overlooked and underrated source of power—“determines what knowledge is discovered, how it is stored, and who communicates it by what means to whom and on what terms” (p. 121). To appreciate the
significance of the knowledge structure, Strange points to the example of Catholic Church in medieval Christendom: the extraordinary power of the Church was, first and foremost, a reflection of its ability to dominate the knowledge structure—to establish itself as the only legitimate source of moral and spiritual knowledge. These four structures of power, according to Strange, are inextricably connected; nor is one dimension inherently or necessarily more important than any of the others. “Each is supported, joined to and held up by the other three” (p. 26). This reinforces a point we made earlier, namely, that power does not merely grow out the barrel of a gun, but also (for example) from the factories that manufacturer guns, from the technical knowledge needed to produce weapons, from a belief system that legitimizes mass violence against others, from a financial system that provides credit to create the weapon’s industry, and so on. Understanding this multifaceted nature of power, we believe is critical for anyone who wants to make sense of the international or global political economy. Consider, on this point, the power of transnational corporations: one cannot explain the increasing significance and autonomy of TNCs—and the concomitant erosion of state sovereignty—in the world political economy without paying serious attention to changes in the underlying structures of power. There is, we should note, considerable debate on this issue. Many scholars assert, for example, that TNCs are little more than extensions of state power because enterprises still retain clear-cut nationality: Apple Computer is American, Sony is Japanese, BMW is German, Hyundai is South Korean and so on. And even if this were not the case, states still hold all the cards so to speak, since states control armies, while
corporations do not. Such arguments, however, miss the basic point, since judging power strictly in terms of coercive potential obscures other more meaningful changes. For example, it is now almost undeniable that changes in the system of global finance have seriously eroded the capacity of states to control credit–the lifeblood of any capitalist enterprise. As this power erodes, state authority diminishes, which leaves the door open for those who are better positioned to deal with internationally mobile funds—TNCs, international banks, fund managers and even a few wealthy asset holders (such as George Soros)—to exert greater control not just how funds are allocated, but over government policy that deals with finance. On this point, consider the 2012 Senate Banking Committee hearing involving Jamie Dimond, CEO of JPMorgan Chase. The hearing was meant to examine the reasons behind a multi-billion loss tied to the bank’s trading of credit derivatives. As one observer put it, “The senators should have interrogated Dimon about his role in moving toward that reckless gambling strategy”, one which posed a threat to the entire financial system. “Instead, they mostly cowered and cringed and sat mute with thumbs in their mouths, while Dimon evaded, patted himself on the back, and blew the whole derivative losses episode off as an irrelevant accident caused by moron subordinates” (Tiabbi 2012). Changes in corporate power, in short, cannot
Jamie Dimon, CEO of JPMorgan Chase Source: Financial Times. Licensed under the Creative Commons Attribution
properly be understood without considering the financial structure of power. The issue, of course, is more far complicated than we have suggested here. Certainly, we need to examine all the structures of power and the different aspects of state-business relations in the global political economy to achieve an adequate understanding. The basic lesson, however, should be clear: questions of structural power must be addressed. A second example we would like to discuss is perhaps the most problematic. Many of you probably agree that large corporations are capable of exercising structural power. But what of ordinary citizens working together in grassroots organizations, unions, or broad-based social movements? What is the source, if any, of their power? Can such groups even hope to have a meaningful impact on the world economy? For example, do the groups who challenge neoliberal globalization—such as those who participated in protests against the World Trade Organization in Seattle in December 1999, the 2011 G20 Summit in Cannes (France), or the 2011-12 Occupy Wall Street movement—have any chance of succeeding? Or are they simply wasting their time? The easy answer, of course, is that they are wasting their time. States, despite an erosion of sovereignty, are still extremely powerful and coercive institutions. Corporations, if anything, are getting stronger. Ordinary citizens, on the other hand, have neither armies nor wealth; they truly seem powerless. We have learned, however, that social power is invariably reciprocal and context-dependent. The reciprocal nature of social power, for instance, tells us states and corporations, to a significant degree, depend upon the perception or belief that their activities are “legitimate.” In this sense, global
Chapter One Figure 1.- A Lone Protestor—The WTO Protests in 1999 (Seattle)
This shot was taken by J. Narrin during the protests in Seattle, Washington in November 1999. Permission is granted to copy, distribute and/or modify this document under the terms of the GNU Documentation License and under the Creative Commons Attribution 3.0.
capitalism survives because a larger proportion of the world’s population believe it serves their interests. Take away or undermine this belief and the system itself is threatened. This helps us understand, we might add, why capitalism is more than just an economic system, but (according to some critics) a cultural system as well. Capitalism (or neo-liberalism), in other words, is an ideology that convinces people that it is the only rational—even conceivable—way of organizing an economy and society. In a similar vein, the context-dependent nature of social power tells us to look at broader forces that exist outside, say, the relationship between citizens and corporations. What effect, for example, will the spread of political liberalism (i.e., democracy) and human rights across the
globe have on the capacity of citizens to exercise power? What of the seeming dispersion of control over access to information via the Internet? What role can transnational institutions, like the Catholic Church, or transnational religions, like Islam, play? We do not want to try answering any of these questions now; rather, we would like you just to think about the ways in which a structural analysis of power compels us to address hitherto hidden or obscured aspects of important issues. For this is perhaps the best way to learn about the complex and sometimes confusing world of international or global political economy.
Chapter 1 Study Question 1. Why are there strong disagreements among scholars studying international political economy? In other words, isn’t there a single, unified theory on which all or even most scholars agree?
2. What is the difference between an open system and a closed one, and what is the significance of the difference between the two types of systems for social scientists?
3. One definition from a popular textbook tells us that political economy “is the study of the tension between the market, where individuals engage in self-interested activities, and the state, where those same individuals undertake collection action …” (Balaam and Veseth 1996, p. 6). What are some issues with such definitions?
4. Why is the term “international” problematic when studying the world (political) economy today? (Hint. Consider the differences between global and international.)
5. Is globalization strengthening or weakening the power of states today? Explain.
6. The chapter asserts that the tendency to see states and markets as separate and antagonistic entities is mistaken. What is the problem and how should the relationship be conceptualized?
7. One of Mao Zedong’s famous quotes is, “Political power grows out of the barrel of a gun.” In this quote, Mao was suggesting that military power is the only type of power that matters in the world. Is this really the case? How might you argue that other forms are power are equally important, especially in the contemporary period of globalization?
8. What is the difference between structural and coercive power? Can you provide your own examples (i.e., examples not discussed in the chapter)?
9. What is the alternative definition of international political economy offered in the chapter? Do you agree or disagree with this definition?
10. It is relatively easy to argue the corporations have power in the global economy, but what about ordinary citizens working together in grassroots organizations, unions, social movements, etc.? Do they have power? Explain.
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