ULI459U-GLOBAL POLITICAL ECONOMY
Chapter 1: Definition of Global Political Economy and Basic Concepts
The Concept of International Political Economy
International political economy (IPE), while originating from ancient Greece and therefore not a new concept, emerged primarily during the 1970s with the post Cold War era softening the international system. Not to be confused with international economy politic, a term primarily used by economists where politics are discussed separately from economics, international political economy examines the interdependence of the two fields and therefore combines them in discussion. The primary focus of examination in the field of IPE is determining who primarily benefits from the combination of states, the market, and society. This examination may be conducted on a global, inter-state, state-society, and individual level. While mercantilism influenced and therefore separated the handling of economy and politics up to the 18th century, Adam Smith opposed this view and introduced the combined discussion of these concepts. IPE is a branch of applied science that studies the economic and political systems as they work together. Globalization has accelerated the development of IPE, and the field has many differing approaches. IPE has an autonomous structure, and the proliferation of IPE as a distinct discipline has led to the establishment of international organizations. As such, the field of IPE studies how politics influence economic consequences and how multinational corporations, international economic communities such as trade organizations and other similar economic entities influence political events.
IPE can be traced back to trade caravans of the old world, and the Hammurabi Laws are seen as the initiation of IPE due to the unity of economy and politics in these laws regulating prices, taxes, theft, fraud and proof of trade. While international trade was a given, states did not interfere with the internal affairs of each other until the industrial revolution revealed a shortage of resources requiring the search for new markets that pitted states against each other. The industrial might of the UK led them to be the hegemonic state during the Pax-Britannica period, while the emergence of Marxist thinking criticizing the exploitative nature of the labor industry in the 19th century further revealed the notion that society can
only be fully understood in terms of interdependence and historical conditions. The 20th century, however, was
dominated by the Pax Americana period of the separation of politics and economy as a result of multiple world wars and the Cold War, where states fought for survival resulting in political and economic conflicts. This separation continued until the 1970’s with the rapid globalization of both politics and economics, neither of which are independent from each other in the global financial system. As such, the complex structures and arrangements of security, information, technology, money, finance, production, trade, and even governance all are within the field of political economy.
Theories and Approaches of International Political Economy
Theories help explain certain events in certain periods, assisting in predicting future events. That being said, they may lose their explanatory power, necessitating a new theory to be formulated. In IPE, Mercantilism and realism were the first theoretical approaches attempting to explain IPE by separating politics and economy, primarily resting on the idea that states desire to preserve their territorial integrity and borders in order to survive. The realist approach places the nation-state as the highest authority, and considers the warring nature of the era it emerged as international anarchy. Hence, the national agenda was prioritized over economic concerns resulting in an economic nationalist approach. This approach rests on the shoulders of names like N. Machiavelli, T. Hobbes, Carr, Morgenthau, N. Spykman, J. Herz, R. Aron, Winston Churchill and Goerge F. Kennan.
The history of IPE theory, however, is integral in world history in that in the 18th and 19th centuries, liberalism
emerged as a theory opposing realism. With the industrial revolution, the transition from commercial capitalism to industrial capitalism led the opposition of states to the market. Liberal IPE therefore argues a free market based on economic liberalism dominates the global system rather than state-controlled economies, thereby separating politics from economics. This places emphasis on the welfare of independent (private) actors and individuals, who would be responsible for economic growth, while the sole relation of government in this process would be to protect the free market as much as possible. Liberalism is rooted in the philosophies of the age of enlightenment, based on the thoughts of David Hume, Adam Smith, Locke, Kant, Montesquieu, and Voltaire.
Critical theories in IPE emerged in the 19th century, and
are critical of both liberalism and capitalism. Originating in the thoughts of the Enlightenment period, critical theories are associated with the philosophies of Hegel and Marx, thereby often being referred to as the Marxist approach. This approach is rooted in German philosophy, British political economy, and French socialism. The critical aspect of the Marxist approach refers to relationship between classes following the establishment of the bourgeoisie following the industrial reolution. This class conflict creates a struggle between the working class and people in power, which Marxists argue will create an internal contradiction causing the collapse of the capitalist system.
Constructivism is an alternative approach in IPE that is relatively new, which is also critical of realism and liberalism due to their approach to the international system as an anarchic structure. Constructivism considers normative and intellectual elements as important factors of national and international systems. As such, the Constructivist approach defines the international system as a social area where actors build each other, and the
relationships of these actors are defined by the changes and transformations of their values and beliefs over time through discourse.
Feminist approaches aim to achieve equality between men and women, calling for an end to sexism, gender inequality, sexist discourse and oppression caused by inequality. As such, supporters of the feminist approach seek equal representation and position for genders in society by rearranging social order to achieve fundamental rights and freedoms without discrimination based on race, class, or gender. This approach is prevalent in many fields, leading to independent fields of study such as feminist psychology, feminist political science, and feminist IPE.
Areas Within the Boundaries of the International Political Economy
IPE is a multidisciplinary field that covers many areas of study, with a primary focus on political science and economics. Other closely related fields include globalization, hegemony, governance, trade, finance, investment, multinational and transnational corporations, energy, environment, and technology. Globalization in particular, which has influenced IPE and its actors on all levels on social, cultural, political and economic matters, may be considered the driving force behind the emergence of IPE as a field. The process of globalization consists of four stages. The first stage, which began with the conquest of Constantinople and the fall of the Byzantine empire marked the end of the middle ages resulted in the Ottoman empire dominating previous trade routes, pushing Western nations to seek new resources which led to the emergence of mercantilist thinking. This period of mercantilism led to colonialism and new geographical discoveries. The second stage of globalization was driven by the Industrial Revolution, following a peak in demand for resources and raw materials during colonialism. Advancements in transportation and communication provided the infrastructure for expansion, while wars and insecurity in global politics led to conservative and protectionist policies, allowing the transition from colonialism to imperialism. The third stage of globalization refers to the Cold War era in which the Western world established international organizations such as the IMF and World Bank, and international systems through liberal policies. The final stage of globalization following the collapse of the USSR is still ongoing, with non-governmental organizations and multinational companies taking an active role in the global economy.
Within the scope of IPE, governance is discussed on a global level, with national authority being transferred to international actors and institutions and the regulation of their interactions. The discussion of hegemony in IPE, on the other hand, revolves around Hegemonic Stability Theory which posits that peace, order and stability in international politics requires hegemonic states. Critics of the theory state that the complex interdependence that has emerged through international collaboration will maintain
order in the event of the disappearance of hegemonic actors. An important aspect of IPE is trade, which is used as both a reward and punishment system between states. The complex interdependence of states, multinational corporations and international organizations has resulted in trade being used as a bargaining chip from an IPE perspective. One of the more prominent examples of this situation was the “Pastor Brunson Incident”. Andrew Craig Brunson, the American Pastor of the Resurrection Church in Izmir and a long-time resident, was taken into custody in October 2016 following the July 15 2016 coup attempt in Turkey. Accused of being a member of the Fethullah Gulen Community, Brunson was tried on charges such as membership of a terrorist organization, attempting to end the Republic of Turkey, and espionage. During the trial, Brunson was used as a bargaining chip with Turkey offering the return of Brunson in exchange for the extradition of Fethullah Gulen from his long-term residence in Pennsylvania, the cleric accused of orchestrating the coup attempt – an offer rejected by the US. After two years of imprisonment, while the US government expected an acquittal, Brunson was placed under house arrest. This resulted in the US threatening to impose heavy sanctions on Turkey, which rapidly deteriorated the value of the Turkish Lira. This was followed by higher taxes on Turkish iron, steel and aluminum exports, seriously impacting the Turkish economy. Political tensions continued and the Turkish economic structure continued to decline until the eventual release of Brunson on October 12, 2018. Despite the best efforts of Turkish institutions to curb the effects, external factors and international politics massively impacted the Turkish economy besides Turkish decisions and actions.