Carla Zappala – Undergraduate Student
INS 537 – Comparing Political Economies
ESSAY 1 - Part I
Origins and evolution of IPE and its relationship with International Relations, Comparative Politics and Economics International Political Economy can be defined as the study of how economics and politics influence each other in the global system; the interaction of those two aspects of the global society. IPE focuses how governmental policies affect the way economic resources are used and what are the consequences of those policies, especially economic consequences (welfare consequences). Although the terms “globalization” and IPE are relatively new, global political economy, as the study of interaction between politics and economics, has existed for more than a century. The first global economy took place during the nineteenth century when the British Empire was the center and hegemony of the global economy and trade. In a time when mercantilism was the dominant economic system, Britain made its economy more flexible and opened to the exterior; this first global economy was based on bilateral agreements that reduced tariffs and on a stable international monetary system (starting with the British abolition of Corn Laws and the British-French Cobden-Chevalier Treaty). The gold standard was also adopted by many nations as the fixed rate exchange. By these years, the first perspectives of international political economy were used to explain the situation and the future of the global economy: • Liberalism: that encourages international economic interactions in order to enrich each of the involved countries. Individuals are the main actors ruling the economy and cooperation benefits all of them. • Mercantilism: which argues that economic power is necessary to gain national power; it supports that the State is the most important actor in economics. • Marxism: that divides the global economy in two groups: advanced countries that explode the poorest countries. However, the beginning of the twentieth century was characterized by multiple changes in the system. The First World War meant the collapsed of the British hegemony and the raise of the American power. Despite the collapsed of the global economy in 1929, the Great Depression, USA regained its economic power during and after the Second World War (period known as the Pax Americana). Since WWII was caused in part by the failure to reconstruct a stable global economy after WWI, United States, as the hegemonic power, worked in order to create international institutions to provide a more stable structure and integrated international economy. Therefore, developments after 1945 have increased the interactions between economies. In this post-war period, new international organizations were created: World Trade Organization, International Monetary Fund, and the World Bank have strongly shaped the international political economy and its study. Today, the understanding of their function is essential to the study of IPE; they are key focuses of the IPE. However, some argue that the IPE was not developed until the 60’s and 70’s, when the Pax Americana was declining. This was a period characterized political and social instability; economy was not as prosper as it used to be in the past and the Cold War was increasing the international tension between capital and communist blocs. Moreover, events such as the Oil Embargo in 1973 and the breakdown of the Bretton Woods monetary system are key factors that influenced the development of IPE. For these reason, the old theories were not able anymore to analyze and understand the global political and economic situation. Theories like the hegemonic stability, which argues the necessary existence of a hegemonic country which controls the global political economy, failed in their attempts to predict the future of the international system based on state-power explanations. USA hegemony has been collapsing since the 60’s;...
Please join StudyMode to read the full document