Is IPE an academic discipline or merely a sub-discipline of International Relations?

Introduction

Before I move on to wider exposure on the state of the discipline, I want to give my
contribution in resolving one issue: whether the international political economy is economic or
political science discipline, i.e. whether it falls within the economic or political science?

The international political economy today is a discipline which, in my opinion, is on the

edge: it is equally economic as is political. It is such because in order to engage in international
political economy is necessary to have economic knowledge, especially that relating to the
knowledge of microeconomics. Also, one must have knowledge of international relations,
especially international financial organizations, and knowledge of the situation on the world
market and more.

International trade is an economic issue, but it has always been a political issue as well.
In itself this is a controversial issue because each country wants to benefit, while at the same
time try to limit negative impacts of international trade on its own local economy and society.

After World War 2, international trade registered growth. International trade is based on
the production structure of the international economy, and binds the states, makes them
interdependent. Entrepreneurs and companies are dealing with trade and when we talk about
trade between countries, we are regarding the overall value of trade exchange earned by the
merchants of one country, registered for these activities. For this reason, Mark Blyth speaks of
the International political economy as the global conversation, as the global discourse. He added
that the International political economy is developing much faster in countries outside the USA,
and in some, it is seen as a separate scientific field.1

In Europe, the situation is different. According to the Recommendation of the European

Consortium for Political Science (which became integral part of Bologna Declaration), the
political economy belongs to the so-called core-discipline of political science. Every Public
College in which political science is studied and is located in the signatory countries of the
Bologna Declaration, is obliged, among other things, to have in offer at least one course in
political economy. So today, the political economy becomes one of the obligatory disciplines in
curriculums offered by the greatest number of Western European faculty, together with
traditional and indisputable political science disciplines such as political theory, comparative
political analysis (comparative politics), political sociology, etc. (Klingeman 2007).2

1
Blyth, Mark International political economy as a global conversation, Intriduction, p4.

2
Klingemann, Hans-Dieter [ed.] (2007). State of Political Science in the Western Europe. Barbara Budrich
 Economics is the scientific name for the discipline; it comes from the Greek word
oikonomia and roughly is related to the management or general management of the farm. The
economy today is the totality of economic relations and appears wherever man or society is faced
with some limited resources. A number of scientists believe that the economy is related to the
general economic theory, which usually occurs as political economy. In modern society, usually
dominate the term economy and the term political is leaved out. It is directly related to the
omission of 'social relations' policy which is characteristic of Marxist thought.3

However, due to the much globalized society and many players on the world stage, the
economy, especially in the 20th century, is evolving from the international relations to become
International political economy. The question is how did that happen? After the industrial
revolution the world has developed rapidly in all directions, developing the steam engine and
railroads. Bulky machines could do a lot more than people; it was easier to work on larger areas
of land. Long routes were shortened, it was easier to handle raw materials and even produce
more certain machines. The world in the true sense is become globalized.

With the development of information technology, robotics and transportation, it is now

much easier to reach the farthest reaches of the globe. Cash is reproducing several times until it
changes possessor. Almost all known and unknown analysts, from Adam Smith and Karl Marx
to Milton Friedman and others spoke about economy as one of the most vital part of the whole
society. Political economy evolves with the beginnings of capitalism. Political economy is
actually investigating the legalities of the material life of the people. The creator of the term
political economy was Antoine de Montchrestien around 1615. For a long time it was thought
that between the economy and the political economy there are no significant distinctions at all.

History and Origin of the term

Historically, international political economy begins to develop with the creation of the
first national states in the 17th century. This is the historical period in which these countries are
beginning to conquer new worlds and establishing colonial systems. It is also a period when the
concept of mercantilism was created. 4 The basic concept of mercantilism is that if a country
wants to make a profit in the trade she must achieve it at the expense of another state. Certainly,
country must invest all available resources and protect itself in international trade

At this point, the first larger firms were developing. Those were precursors of large
multinational companies (such as large Dutch East India Company, as well as many others). This
period has enabled many countries to accumulate large quantities of goods. The physiocratists
were reported as opposed to mercantilism. They have sought and advocated for a free market. In

3
http://www.britannica.com/EBchecked/topic/178548/economics
4
http://www.sparknotes.com/testprep/books/sat2/history/chapter5section4.rhtml
the middle of the 18th century, thanks to the weakening of the absolute monarchies, it was
already possible.

Before the First World War, economic freedom was still prevailing and currencies were
convertible into gold. 1920 brought new repressive measures whose implementation led some
economists and historians to call them the new mercantilism. During the great crisis of the 30s
we can see spreading of the application of protectionist measures. Planning foreign trade has
become normal functions of the state.

After the end of the Second World War and the emergence of two great confronting
powers, USA and the Soviet Union, once again a number of measures which controls the import
and export of goods, as well as the market, are introduced. It was the way to extend influence
over countries that have gravitated around two great and powerful super powers. These events
and trends have influenced the correlation and intersection of politics and economics in
international relations. It also brought, inevitably, closer interest for this particulate political and
economic field.

Officially, most of the credit for throwing shadows in areas of international political
economy had Richard Cooper and his work The Economics of interdependence of 19685
According to Underhill, many notable scientists and people who were involved in the
International political economy began to based their views on the work of Richard Cooper, so it
looks, even though political economy was not his primary area of study, he nevertheless pointed
to something that was the core problem.

From time to time, during the Cold War, focus of international relations has moved on
some very important and disturbing event (e.g., Cuban Missile Crisis) but above the
establishment of a balance in the race for nuclear power, the economic momentum has always
remained as crucial. On the other hand, it seems as if this entire great world crisis during the
Cold War were established in order to achieve the greatest influence and economic benefits.

Development of international political economy was followed with the debate

internationally vs. transnational. Term internationally is here understood as the relationship of
the country with other country or countries, while term transnational does not have to refer to the
relation between the two states, it can also be understood as a relation between some individual
subjects and a state.6 It is particularly pronounced in the period of globalization and globalized
society, where there is no obstacle to the development and fertilization of capital. Only capital
himself breaks all boundaries and tries to reach areas where he will be able to freely multiply and
grow.

5
Underhill, R. D. Geofrrey, State, market and global political economy (International Affairs 76, 4, 2000, 805 –
824) p808.
6
Ibid, 809 – 811.
 Also, during this period, large US companies are rapidly strengthened. With the
development of West Germany, European market is growing. The degree of political and
economic interdependence in international economic relations is now much larger and more
complex than it was before World War II. From the 70s there is no country that does not suffer
from economic problems and the number of national states has increased. They continue to use
different instruments to reduce its dependence in order to maintain the security and wealth.

Economic nationalists and neo-mercantilists argue that states are forced to use
protectionist measures; to protect them against the same measures of other states or economic
integration like is the EU. On the other hand, modern neo-mercantilism has another face seen
through industrial espionage as a way of obtaining information and technology. Since the end of
the Cold War, centers of international conflicts are moving to the economic competition and
question of military security becomes more important than those of economic security.

Mercantilism is not only the oldest international political economy perspective of

economics, but also the most powerful and influential. We can conclude that while there are
national states as the ultimate source of political authority, the market will not be able to break
away from the influence of the state. Before moving on the main topic of the paper, i.e. the
relationship between American and British schools of thought in respect to the discipline of
International political economy, it is necessary to provide a deeper cross-section than the
historical which is already given on this subject. It is necessary to observe in detail the classical
schools of thought and their view on this issue, as well as their opinion about the International
political economy.

Karl Marx, Marxism and international political economy

Also it has lost its appeal after the collapse of socialism in Eastern bloc; Marx's ideas are
still very much alive. Marx was one of the greatest political economists of all time and lots of his
theories are still part of the international political economy. Many aspects of International
political economy could not be clarified if there were not Marx's teachings and modern
structuralisms. Marxism-structuralism is not only an analysis of the existing capitalism, but also
a moral critique of inequality, exploitation and other negative aspects of the current system.

This perspective speaks for those who do not have power and wealth. It is dynamic,
because the very essence of the class structure of capitalism is seen as a necessary variable.
Marxists argue for the abolition of private property as a source of injustice among the people,
and the exploitation of the proletarians. They advocate an armed uprising, advocate for the
establishment of joint ownership and planning ways of production and distribution. Especially
sharp is criticized imperialism and colonialism. In the center of the perspective is the structure.
 Marx concentrates on the England, which contains the class structure of society as a
source of exploitation. Lenin's analysis refers to imperialism as a stage of capitalism in which
colonies are exploited. In our time, a large number of Marxist structuralists also deal with the
theme of imperialism, i.e. with the relations of underdeveloped and developed countries. The
economy dominates over politics. A key player in international economic relations is the class
structure. Dependency theory emphasizes the dependence relationships that are imposed since
colonial times on the underdeveloped and developing countries by the colonial powers. Attention
is paid to the analysis of the mechanisms of exploitation, and as such can be seen: multinational
corporations, among financial markets, the IMF, the World Bank, and the World Trade
Organization 7

In order to clarify its understanding of human history, Marx used the method of historical
materialism. The mode of production in each stage of development is determined by the action of
the forces of production, i.e. the technological level of development. The mode of production
imposes an economic structure, and this determines the social, cultural, moral structure... Each
mode of production creates the ruling class and the oppressed. The ruling class is basing its
power on the ownership of capital and that enables it to appropriate what oppressed class has
created. Human history is changing and improving, because there is a mismatch between the
productive forces that are constantly growing and production relations which hampers them as a
result of slowly changes. It creates a class conflict, which leads to the class struggle.8

For Marx, the main protagonist of history and economy is class. It is a community of
people who have the same position in relation to the means of production. In capitalism, the
historical role is the role of the working class and she has a right to destroy capitalistic order with
revolution, to revoke the class and create a classless society. Competition forces capitalists to
harsher exploit the working class, a new machine reduces the need for labor, and they have to
work for lower wages. At the same time, more goods and services is created than it can be spend.
Capitalism fulfills its historic role to liberate human society of feudal system. But it also carries
the seeds of its own destruction, and he will inevitably perish.9

Marx saw people as prisoners of production structure which is determined by their

position in society and it can be changed only with the class struggle. Because the structure is
what dominates the events in the society, Marx's doctrine is classified into economic
structuralism. Marx believed that the international political economy is dominated by capitalism,
with its market forces. This structure raises the question of class exploitation, as well as the
exploitation of the oppressed people and classes by the world's biggest capitalists. State, in this
regard, is just merely helping capitalists. Speaking about the process of capital accumulation,

7
http://www.fifthinternational.org/content/marxist-theory-political-economy
8
Ibid.
9
http://thepoliticalp.wordpress.com/2014/01/14/how-realism-liberalism-and-marxism-relate-to-the-international-
political-economy/
Marx analyzed the emergence of the capitalist world system and highlights the emergence of
international credit systems which he sees as a disguised pillar for exploitative process.

In the early 18th century, the Netherlands was no longer leader in trading and
industrialization but one of hers main tasks was lending money to England. Later, it was also the
case between England and the United States. The Government also introduced a system of
protective tariffs.10

Liberal International Political Economy

This perspective can be traced from the French economists, i.e. physiocratists from 18th
century to the present attempts of transition in the former socialist countries of Europe. It occurs
partly as a reaction to the criticism and mercantilism and is evolving from the teachings of Adam
Smith, David Ricardo, Jeremy Bentham, and John Stuart Mill.

In the center of learning is an individual. They are opposed to active state intervention in
the economy and advocate the release of the individual and the market from the impact of the
state. They are asking from state only to provide a legal framework for free trade and safety.
Human nature is selfish but rational. The benefit that each participant receives is undeniable. The
state and its authority is viewed with great doubt, it is advocated strengthening of democratic
institutions and especially are magnified personal freedoms. The state should engage only where
individuals cannot.

Efficiency is a key criterion for liberals, because the unions are seen as a disruptive
factor. The market is the subject of the Liberals. They advocate a free market. Freedom in
business brings the best results.11 Adam Smith said that relations between the participants of
economic life should be regulated by an invisible hand.12 For liberals, capitalism is ideal society
with the self-regulation. David Ricardo shared Smith's point of view, especially with regard to
the abolition of customs tariffs. Free international market stimulates the development of the
industry, production ...13 National-states are not opposed to each other. Mil recommends that the
State takes limited responsibility in helping the poor, education fields and in the system of
environmental protection.

Keynes brings in the International political economy a new view which combines the
influences of market and government. It indicates the pros and cons of both the state and the

10
http://www.people.vcu.edu/~wnewmann/IPETheory.365.htm
11
Ibid.
12
Kucukasoy. Ismail, Adam Smith’s conceptual contributions to international economics: Based on Welth of
Nations, (Business and Economic Horiznos) Vol 4, Issue 1, january 2011, p108 -119.
13
http://www.econlib.org/library/Ricardo/ricP2a.html
market. The biggest problems are inflation and unemployment, First World War, the emergence
of the Soviet Union, Great Depression in the 30s. Individuals tend to act very irrationally when
they find themselves in a precarious situation; such were the behavior of American citizens
during the Great Depression. For the development of the system full employment is necessary
(New Deal). Keynes's ideas influenced the creation of many modern institutions (unemployment
insurance, social security, bank deposits ...)14

International markets work best when they are providing public goods (free markets,
peace, security, reliable system of international payments). But often on the world stage, some
national-state takes a leading role and dominates the world economy. This hegemonic state has
so many benefits of global economic growth that it will be happy to provide international public
goods for the smaller states.

History of political economics recognizes three epochs of hegemonic stability in modern

history: the 17th century Netherlands, the United Kingdom in the 18th and 19th century, and the
United States after the World War 2. There are discussions about the motives and benefits of
these hegemonic states, whether they are altruistic. Some believe they are selfish and with
imperial ambitions for molding the entire world. This theory advocates the need to impose a state
framework in the international market in which it would open all its features. Even in the United
States, in the 60s, under the influence of Keynes, social role of the state is increasing.

Advocating liberal economy in the US is called new liberalism or conservatism. The most
important representatives of the new wave of the liberal are Friedrich von Hayek and Milton
Friedman. In his book, The Road to Serfdom, Hayek is talking about socialism and that the
growing role of the state in capitalism essentially restricts personal freedom. In Capitalism and
Freedom (1962), Friedman challenges the possibility of a successful and effective state
intervention. Political freedom is associated with economic freedom, both of which provide
market.

In the 80s and 90s, liberal perspective returns to the Smith's version and in the same time,
loose content of the Keynes variants. The main practitioners of this school were Margaret
Thatcher and Ronald Reagan. They advocated a free market in their countries and in the
international field. Regan conducted market deregulation in the field of telephony, truck
transportation ... which brought reduction of the taxes. UK government privatized state
ownership of enterprises and traffic. That has reduced the share of government in economic life.
Worldwide, this liberal model is copied as a universal recipe for a richer and happier future.15

Since we became familiar with the basic directions in the International political economy
that certainly formed an opinion about the discipline itself, it is necessary to dedicate to

14
http://eh.net/book_reviews/john-maynard-keynes-and-international-relations-economic-paths-to-war-and-peace/
15
http://www.skeptically.org/wto/id10.html
substantive theories which are related to the very notion of the meaning of international political
economy. In the final part, it will allow us to explain the main difference between the British and
American school of thought, which is crucial for the understanding of this topic.

Modern theories of structuralism

There are many versions of this perspective. What they all have in common is
comprehension of the importance of the economic structure that is crucial in shaping of the
International political economy. Modern structuralism extends the scope of imperialism on the
knowledge and safety structures. A state that depends on hegemonies because of the safety
reasons are opening the way to be exploited. The imperialist exploitation is carried also through
the structures of knowledge.

Marxism sees structuralism as the systematic exploitation in each of the four aspects of
international political economy: manufacturing, finance, safety and knowledge. One of the most
influential theories is the Theory of the modern world-system (Immanuel Wallerstein). It
considers the emergence of the capitalistic world system from the 15th century, its expansion and
domination in the world.

Every economic system determines the position of the states in the international order.
The world is divided into three functional or socio-economic areas. Central capitalist states in
16th century turned to a more perfect industrial production. That allowed them to penetrate into
other parts of the world and pull those parts of the world into the global capitalistic economy.
During this process, Eastern Europe becomes agricultural periphery. Mediterranean Europe has
become a semi-periphery, i.e. an intermediary between center and periphery. Each individual
state has in itself this division. Center exploits others and transformed them.

Wallerstain, like Marx, believes that the capitalists use the power of the state to ensure
maximum profits for themselves. Strong countries from the centre dominate over weaker
countries from the periphery even in the political sense. That is because the stronger state is in
capitalistic sense, the greater is hers power and role on the world stage.

Wallerstein's theory has had a major impact. It is almost inevitable in the analysis of
North-South relations. Critics blame him for oversimplification of the International political
economy. The biggest objection addressed to this theory is because it is too deterministic, mostly
because it believes that the economic structure determines all, and then because he sees the
world’s capitalistic system as a determining factor for structure of the world.

Next theory is a Theory of addiction. The structure of international economic relations

held in a subordinate position countries in the South, making them dependent on the central
capitalist countries from the North. Dominant countries can prosper and be self-sufficient, while
others can be developed only on the basis of the developed countries, which can have negative
consequences if it develops only one branch, for example. Teoto dos Santos in his work
Dependency structure indicates three dependencies: colonial in the 18th century, financial-
industrial in the 19th century and one that is based on multinational corporations of the 20th
century, regarding the thesis on the development of underdevelopment.

Poor countries have had their own civilization as long as they are not colonized by
Western countries. Imperialism has brought the exploitation and underdevelopment. To
overcome the underdevelopment, developing countries should withdraw from the world of the
global economy. This thesis was particularly strong in the 60s and 70s. What is common to all
structuralism theories is the belief that the system of world capitalism is dominant in today's
world, and that its structure systematically works to the benefit of certain classes and states. Even
after the collapse of the USSR this perspective retains strong political and intellectual
influence16. In contrast to structuralism theories there are critical theories of international
political economy.

Critical perspective of international political economy

It consists of four main criticisms of the theory of International political economy. Each
of these criticisms is very complex and controversial.

Theory or criticism of rational choice: according to this criticism, there are only the
interests of the people, not national interests. According to Bruno Frey, we need to understand
how behave individuals which make the states or classes. In the economy, this is known as the
theory of public choice analysis and it analyzes the actions of appointed officials. The main
figures of this perspective are individuals as they make decisions. They are subject to mutual
influences, the impact of foreign partners, voters, donors ... They are the political market. These
figures are rational and selfish. Their main interest is to earn as much as possible, as in every
market.17 This criticism is particularly relevant for our topic because it reinforces our view that
the international political economy is halfway between economics and politics.

Green perspective of International political economy is theory which indicates the nature
and the environment as a factor in International political economy. This is another piece of

16
Hout Will, Meijernik Frits, Structures in the International Political Economy: World System Theory and Unequal
Development, (European Journal of International Relations) 2(1) , 1996: 47 - 75
17
Gilbet, Robert, The Nature of Political Economy.,
http://foothillpoliticalscience.info/POLI9/Week1/The%20Nature%20of%20the%20Political%20Economy%20-
%20pg%209-24.pdf
evidence in favor of our thesis that International political economy is diversified and varied
scientific topic.18

Feminist theory of international political theory has very complex perspective which is
still evolving and complementing, but its contribution is already large and significant. It
emphasizes that the world is not made up of states and the markets, but of men and women. The
way in which the relationship between women and men is realized often goes to the detriment of
women and takes place through the institutions dominated by men. It offers an analysis of
International political economy through the prism of gender, relating to stereotypes, associations,
and social models that are becoming part of a culture. Theories in international political economy
have expression of male thinking and such are accepted.

American and British theory of international political economy

On the basis of everything written it is clear in which direction developed International

political economy. There are multiple evidences in favor of one or the other view from the
beginning of the text. Exposed theories, views and standpoint precisely indicate the main thing,
the essence of the questions. Is the International political economy established discipline,
independent and free or is it just category of the science of international relations as such?
American and British theory is subliming comprehension of the International political economy.

Three scientists expressed their attitude that in the late 70s of the last century there was
intention to divide scientists who were engaged in International political economy. They should
be divided on two divisions, one, who are more interested in empirical evidence regarding the
international system and those who are interested in ontological settings and evidence.19 From
these divisions two schools were developed, British and American.

According to Blyth, an American school is more connected to International political

economy and its dominant branch, referring to international relations. Why? Well, because the
origin of International political economy is at the soil of the United States, it is created there with
the help of several different disciplines. It does not change the situation that the views of
''American'' scientists are extremely dominant and present in the scientific sphere also.20

I would like to quote Mark Blyth: “Once dormant traditions of cognitive and ideational
analyses found a new lease of life at this juncture, and eventually even Friday the constructivist

18
http://global.oup.com/uk/orc/politics/ir_theory/dunne3e/01student/guide/ch14/
19
Shields, Stuart et al, Introduction: ‘’Critical” and ‘’International Political economy’’ (Mac/Inl November 9,
2010) p1.
20
Blyth, Mark International political economy as a global conversation, Intriduction, p5.
analyzes that had revolutionized security studies in the 1990s began to filter into American IPE,
creating new pathways for research.” 21

As claimed Shields et al, this development of science in the USA came from different
scholars like Schumpeter, Foucault, Marx and others.

As for the British theory or Positivist theory, it raises the question how is possible that
American and British theories and views on this issue vary so much? There are several answers,
but in general, it was possible that within the British scientific thought special look at this
problem could be born because Britain and their pound sterling throughout history played a
dominant role on the world stage. There are also a lot of authors who dealt with the economy
issues, on which basis economy was able to remain independent and to survive impacts from the
side.22

''British International Political Economy has become historically focused more and more
open to a variety of perspectives than its American counterpart.'' One of the most important
figures for the British school of international political economy is clearly Susan Strange, which
many consider to be a pioneer of the modern scientific discipline in the full sense of the word.
Her opinion was that economists do not understand the international and global markets. To
understand it, it is necessary that their awareness about international economic developments be
raised to a higher level. The whole point of studying International political economy, not
international relations, is to extend the conventional limits of the study of politics and
conventional concepts that are involved in politics, and how and by whom power is exercised to
influence outcomes.23

Conclusion

In conclusion, I would like to look upon the question of the future of International
political economy in the modern world. Modern society by itself wants to step out of the norm
and the shackles which hinder him, so International political economy cannot be just linked to a
one science branch, one topic or just one field.

Respect for difference and multiplicity is the only way to avoid the totalitarianism and
imposition of “one artificial truth” which would be valid always and everywhere. Under the
influence of postmodernist, multidisciplinary became a feature of most sciences. So, I'd like to
finish in the same way that I started.

21
Ibid, 5.
22
Ibid, 8.
23
Cohen, J Benjamin, The transatlantic divide: Why are American and British IPE so different? (Review of
International Political Economy 14:2 May 2007) p209.
 In a very diversified and globalized world, where everything is changing very quickly,
based on two centuries long experience of various theories of international relations and various
schools of international relations, International political economy should remain
multidisciplinary and postmodern discipline.