REVIEW OF THE NEW GLOBAL ECONOMIC ORDER

BY
ROBERT GILPIN

The essence of the Robert Gilpin’s work is to make an analysis of the globalization of the world

economy and its implications for the international political economy. In doing that, he focused

on what he called ‘National Systems of Political Economy” and their significance on domestic

and international economic affairs. His analysis adopted the realist or state-centric approach in

which his central opinion is that Nation-states remains the dominant actor in both domestic and

international economic affairs. Gilpin claimed that after his 1987 book, many events occurred

and his earlier position especially where he analyzed the “international economy as if domestic

economic developments were of minor importance” have been overtaken by events. He said the

many changes since 1987 impacted heavily on the international political economy. The changes

he identified included;

1. The end of cold war and Soviet threat to U.S and its allies. That the end of cold war

reduced the commitment of the U.S. in maintaining political alliances with the Western

Europe and Japan and other neo-liberal nations and at same time, the market-oriented

world grew larger with the third world and former communist nations participating in the

open market system with their active role in the World Trade Organization (WTO).

2. Trade negotiations. That rounds of multilateral negotiations under the General

agreement on Tariff and Trade (GATT) has significantly reduced trade barriers and

resulted in many nations adopting neo-liberal economic policies like deregulations and

privatization which also increased the market-oriented global economy.

3. Advancement in technology. Technological advances in communications and

transportation reduced costs and significantly encouraged trade expansion. Taking

Gilpin, R. (2001). Global Political Economy: Understanding the International Economic order. Princeton University Press, New
Jersey pp 3 - 24
 advantage of these economic and technological changes, more and more businesses have

participated in international markets.

4. Financial globalization. Financial revolution has linked national economies much more

closely to one another and increased the capital available for developing countries. The

capital inflow especially in less developed countries (LDCs) have made governments

vulnerable to foreign influence.

5. Multinational corporations (MNCs). In combination with increased trade and financial

flows, the increasing importance of MNCs has significantly transformed the international

economy.

6. Computer and advancement in telecommunication. The compression of time and

space resulting from these technological changes has significantly reduced the costs of

international commerce and also greatly increased global financial flows.

Gilpin observed that the globe is moving rapidly toward a politically borderless world,

leading to open and truly global capitalist economy characterized by unrestricted trade, financial

flows, and the international activities of multinational firms. That globalization is not responsible

for most of the world’s economic, political, and other problems as being accused of, but factors

such as technological developments and imprudent national policies are responsible for most of

the ills that is believed to have been caused by globalization.

With increasing globalization, Gilpin observed that there was the spread of economic

regionalism which increased the cooperation of states in order to strengthen their autonomy,

improve their bargaining positions, and promote other political and economic objectives. All

these developments according to Gilpin made the governance of the global economy a pressing

issue. For Gilpin, free trade, freedom of capital movements, and unrestricted access by

Gilpin, R. (2001). Global Political Economy: Understanding the International Economic order. Princeton University Press, New
Jersey pp 3 - 24
multinational firms to markets around the globe should be the goals of international governance.

He also contented that though economic factors will play an important role in determining the

character of the global economy, political factor is greater, that both economic efficiency and

national ambitions are driving forces in the global economy of the twenty-first century.

Since the mid-1980s, according to Gilpin, the relevance of the three perspectives he

identified regarding the nature and functioning of the international economy: liberalism,

Marxism, and nationalism has changed dramatically. That the end of both communism and the

“import-substitution” strategies of many LDCs, greatly reduced the relevance of Marxism, and

that liberalism, “at least for the moment, has experienced a considerable growth in influence”.

The reason he gave is that more and more countries are accepting liberal principles as they open

their economies to imports and foreign investment, and are scaling down the role of the state in

the economy, and also shifting to export-led growth strategies. On the other hand, economic

nationalism, he asserts, is also composed of both analytic and normative elements. “Its analytic

core recognizes the anarchic nature of international affairs; the primacy of the state and its

interests in international affairs, and the importance of power in interstate relations”. However,

“nationalism is also a normative commitment to the nation-state, state-building, and the moral

superiority of one’s own state over all other states”. Gilpin clarified that though he accepts

“economic nationalism,” or what he called “state-centric” approach as an analytic perspective, he

does not subscribe to the normative commitment and policy prescriptions associated with

economic nationalism. That his own normative commitment is to “economic liberalism; that is,

to free trade and minimal barriers to the flow of goods, services, and capital across national

boundaries, although, under certain restricted circumstances, nationalist policies such as trade

protection and industrial policy may be justified”.

Gilpin, R. (2001). Global Political Economy: Understanding the International Economic order. Princeton University Press, New
Jersey pp 3 - 24
 In distinguishing between economic nationalism as a normative position and political

realism as an analytic perspective, Gilpin opined that “while all nationalists are realists in their

emphasis on the crucial role of the state, security interests, and power in international affairs, not

all realists are nationalists in their normative views regarding international affairs”. He stated that

realism is a philosophical position and an analytic perspective; it is not necessarily a moral

commitment to the nation-state. He argued that although realists recognize the central role of the

state, security, and power in international affairs, they do not necessarily approve of this

situation, therefore, “nationalists may be realists, but realists are not necessarily nationalists”.

Gilpin however distinguished between the two major realist interpretations of international

affairs, that is, between state-centric and system-centric realism. That while state-centric

realism’s emphasis on the state and state interest, Systemic realism, or what is sometimes called

structural realism or neorealism emphasizes the distribution of power among states within

international system as the principal determinant of state behavior. That the state-centric realist

basic assumptions regarding the nature of international affairs as anarchic does not mean it is

characterized by a constant and universal Hobbesian war of one against all but that states

obviously do cooperate with one another and do create institutions in many areas. The anarchy to

Gilpin means there is no higher authority to which a state can appeal for succor in times of

trouble. Again, that the assumption of territorial as the primary actor in both domestic and

international economic affairs does not mean states are the only important actor, “other

significant players include the World Bank, the International Monetary Fund (IMF), and the

Commission of the European Union”. But that despite the importance of these other actors,

national governments still make the primary decisions regarding economic matters; they

Gilpin, R. (2001). Global Political Economy: Understanding the International Economic order. Princeton University Press, New
Jersey pp 3 - 24
continue to set the rules for other actors, and they use their considerable power to influence

economic outcomes.

Robert Gilpin recognized Constructivism as one of the most important contemporary

critiques of realism which sees international politics as “socially constructed” rather than

constituting an objective reality. That in the analysis of international affairs, key is the idea of

identity; how a society defines itself. According to constructivists, realists neglect the importance

of identity and focus only on material interests and power considerations. In a response, Gilpin

argued that “Ideas are obviously important, but the world is composed of many economic,

technological, and other powerful constraints that limit the wisdom and practicality of certain

ideas and social constructions”.

Gilpin’s conclusion is that the functioning of the world economy is a function of markets

and the policies of nation-states. That rivalries and cooperation of states interact to create the

framework of political relations within which economic forces operate; while states set the rules

that individual entrepreneurs and multinational firms must follow, economic and technological

forces shape the policies and interests of individual states and the political relations among

states.

STRENGTH OF GILPIN’S WORK

1. His interpretation of the global political economy is the reflection of today’s reality as

most nation-states are increasingly participating in the international open marketing.

2. It is also true that nation-states today consider their political interest over economic

interest; the rhetoric of “America first” of former President Trump and ‘Brexit” is on

point.

Gilpin, R. (2001). Global Political Economy: Understanding the International Economic order. Princeton University Press, New
Jersey pp 3 - 24
 3. The increasing role of MNCs in the global political economy is not truly showing any

sign of slowing down, at least in the foreseeable future.

WEAKNESS OF THE WORK

1. The exoneration of globalization as not responsible for most of the world’s economic,

political, and other problems is incorrect as globalization is actually responsible for

widening the inequality and other ills within and among nations today.

2. That technological developments and imprudent national policies are responsible for

most nation-state’ inability to benefit optimally in the global political economy is also

defective because the very globalization negatively affects the technological and political

development of developing nations.

3. The idea of the decline in Marxists’ influence in international political economy is also

not valid as third world nations are increasingly protesting their marginal role in the

international political system and they will not stop until they achieve their objectives.

CONCLUSION

Though the arguments put forward by Robert Gilpin describes the happenings of the

international system today, Africa and some Asian countries are adversely affected by the

globalization of the political economy as they have limited power to compete in the global

economy and their political processes are badly influenced by the global political economy. This

means globalization of political economy is only benefiting the powerful nations at expense of

developing nations.

Gilpin, R. (2001). Global Political Economy: Understanding the International Economic order. Princeton University Press, New
Jersey pp 3 - 24
Gilpin, R. (2001). Global Political Economy: Understanding the International Economic order. Princeton University Press, New
Jersey pp 3 - 24