should a person study international political economy (IPE)?
IPE is interesting.
Samuel Johnson - a person who is bored with IPE is
bored with life!
Study some of the most interesting issues and
questions in the world.
IPE is important.
IPE affects all citizens of the world
Systems of markets that are increasingly global in
IPE is useful.
Public and private employers want individuals who can
think broadly and critically
Who can understand complex and dynamic systems, and
who can appreciate the impact of social conditions and alternative
News is filled with IPE
political economy is complex
International – issues that cross national
borders and relations among nation-states.
Political – state power to make decisions
about who gets what, when, and how in a society.
Politics is a process of collective choice
Competing and conflicting interests from including
individuals, businesses, and political parties.
Economics – how scarce resources are
allocated to different uses and distributed among individuals
All countries use markets to allocated resources
States differ in regulating or controlling markets
Markets are a source of income and wealth and
United States has a 10% unemployment rate
Tax revenues are down
Some states have almost a 20% budget gap between tax
revenue and expenditures
United States has been losing its manufacturing to
China and other countries
China and U.S. are having some conflicts
U.S. has a large trade deficit with China
China holds a large reserve of U.S. dollars and U.S.
China is trying to reduce its holdings of U.S.
Old Example with human rights
China – largest military in the world and the
fastest growing country
China – bad civil rights record
Tiananmen Square in 1989
U.S. routinely rejected China for the Most Favored
Nation Status (MFN)
MFN gives most favorable treatment to export to the
The reason is China’s civil rights record
President Clinton did grant MFN status to China
Benefits – granting MFN status to China
Could force China to become capitalistic rush to
Isolating China could cause them to develop their
Develop their own processors instead of buying them
China developed its own processor, the Dragon chip
Reduce China’s trade barriers
They buy U.S. made products
Invest in China’s manufacturing
Part of the Agreement
China agreed to buy $3 billion worth of American
China will allow American companies sell nuclear
reactors to China
Microeconomics – trade policy impacts the
markets, such as the consumers, producers, and investors
Calculate welfare gains and losses in markets
Macroeconomics – impact on balance of trade
between the United States and China
Affect production, income, and growth rates in the
U.S. politics – did special interest groups
such as labor unions, banking associations, and multinational
corporations influence government.
Political Theory –
U.S. is based on the Jeffersonian principles of
democracy and the individual.
Jefferson is 3rd president of U.S.
Strong rights and weak federal gov.
China's government is based on Lenin and Mao.
Confrontation of two sets of very different
Sociology – how it impacts social classes
Who benefits from free trade?
The U.S. working class (or the proletariat)
The capital-owning class (or the bourgeoisie)
combines many fields like sociology, politics, and economics
States and markets are connected by "global
systems of production, exchange, and distribution"
State (or nation) – a geographic region with
a coherent system of gov. that extends over the region
Author claims the European Union is not a state
Collection of states
EU makes decisions that influence the states
Judgement call – the U.S. is a collection of 50
Culture gets exchanged also
Some nations limit access to foreign movies and
During the cold war between U.S. and Soviet Union
The U.S. sent jazz musicians to Moscow
U.S. is a free, creative, multiracial society
U.S. is different from Soviet image
– allocate and distribute scarce resources
The realm of individual actions and decisions.
Sphere of human action dominated by individual
Forces of competition
Sometimes is a geographical location
New York Stock Exchange
More often a force.
Market motivates and conditions human behavior.
Individuals are driven by self-interest
Workers want high wages
Firms want to make better, cheaper, or more
States and markets may have conflicts and tensions
Wealth can become concentrated in a few
State may want an even distribution of wealth
Markets – a source of wealth
States (politics) – a source of power
States allocate and distribute power
Power is the ability to affect outcomes
Elections – the allocation and distribution
levels of analysis
Individual, state, and international system
Causes of war
Aggressive national governments (state level)
Risky and unstable international power figuration
(international system level)
Types of Power
Relational power - the power of one player to get
another player to do something (or not do it).
Most common – sports like football, soccer, or
Structural power - the power to shape and determine
the structures of the global political economy
All states, their political institutions, businesses,
and people have to operate.
The power to affect the rules, the choice of playing
field, or the way that players can be deployed.
United States had lots of relational power after World
War II years
United States still has lots of structural power
Leader in technology and economics
U.S. has large influence over World Trade
Organization, the World Bank, and the International Monetary Fund
U.S. funds large amount to World Bank and IMF
Both U.S. and China have large amounts of relational
"Sticks" to punish – large militaries and
"Carrots" to persuade – resource
wealth, technology, and markets
power structures - produce, exchange, and distribute wealth and
Security Structure – threats and actions of
Trade embargoes etc. with North Korea
North Korea wants to develop nuclear weapons
Production Structure – what is produced, by
whom and for whom, by what methods and on what terms.
Production creates wealth
Mexico and China became more market oriented and
countries are growing
Finance Structure – pattern of money flows
between and among nations.
Trade surpluses and deficits
United States has large trade deficit and large
Debt is approx. $10 trillion
U.S. dollars are leaving the country
Many countries are worried the U.S. cannot pay its
U.S. dollar may crash
Knowledge Structure – knowledge is power.
Knowledge is wealth
China wanted MFN status in 1997
Greater access to industrial technology
Get know-how from abroad
Three theories – how states and nations should
Mercantilism (or economic nationalism) –
state looks out for national interest
Zero sum game
One person gains while the other person loses
Liberalism – individuals look out for their
Study of markets
Everyone can gain
Structuralism (or Marxism or Marx-Leninism)
–look at society in terms of class interests.
Gov. controls markets
Gov. owns the means of production and distribution