International Relations 101: International Political Economy - What is IPE StateMarket Relationship Theories Mercantilism Liberalism Marxism

What This Is

International Political Economy (IPE) is the study of the complex relationships between states, markets, and non-state actors in the global economy. Understanding IPE is crucial for grasping global affairs, as it helps explain the dynamics of globalization, the rise and fall of great powers, and the impact of economic policies on international relations. For instance, the creation of the World Trade Organization (WTO) can be explained by liberal institutionalism, which emphasizes the importance of international institutions in promoting cooperation and free trade.

Key Theories, Concepts & Thinkers

• Mercantilism (Thomas Mun): States prioritize economic self-sufficiency and export-led growth to accumulate wealth and power – explains why countries impose tariffs and trade restrictions to protect domestic industries.
• Liberalism (Adam Smith, David Ricardo): Free trade and economic interdependence promote peace and prosperity – underpins the creation of the WTO and the European Union.
• Marxism (Karl Marx, Friedrich Engels): Capitalism is a system of exploitation, where the ruling class exploits the working class – explains why socialist and communist movements often reject globalization and promote economic nationalism.
• Neoliberalism (Friedrich Hayek, Milton Friedman): Markets are more efficient than governments in allocating resources – explains why many countries have adopted neoliberal economic policies, such as deregulation and privatization.
• Dependency Theory (Andre Gunder Frank): Developing countries are exploited by developed countries through unequal trade relationships – explains why many developing countries have struggled to achieve economic development despite globalization.
• Realism (Morgenthau, Waltz): States prioritize security and power over economic interests – explains why countries engage in arms races and military interventions despite economic costs.
• Institutionalism (Stephen Krasner): International institutions, such as the WTO and the International Monetary Fund (IMF), play a crucial role in promoting cooperation and stability – explains why countries participate in international institutions despite potential costs.
• Constructivism (Alexander Wendt): Ideas and norms shape state behavior and international relations – explains why countries adopt certain economic policies or participate in international institutions based on shared values and norms.

Step-by-Step Analysis

1. Identify the key actors and their interests: Who are the main players involved in the IPE issue? What are their economic interests and goals?
2. Analyze the institutional framework: What international institutions, if any, are relevant to the issue? How do they shape the behavior of the key actors?
3. Evaluate the economic factors: What are the economic costs and benefits of the issue? How do they impact the key actors' interests and behavior?
4. Consider the power dynamics: Who has the power to shape the outcome of the issue? How do the power dynamics impact the behavior of the key actors?
5. Assess the impact of ideas and norms: How do shared values and norms shape the behavior of the key actors? Do they influence the outcome of the issue?
6. Evaluate the potential outcomes: What are the possible outcomes of the issue? Which one is most likely, and why?

Common Misconceptions

• Misconception: "The United Nations is a world government."
• Correction: The UN is an international organization that promotes cooperation and stability among its member states, but it does not have the authority to make laws or enforce them.
• Example: The UN's role in the Korean War, where it provided a framework for international cooperation but did not have the power to enforce a peace agreement.
• Misconception: "Sovereignty means absolute freedom to do anything."
• Correction: Sovereignty refers to a state's independence and autonomy, but it does not mean that a state can act without regard for the interests of other states or international law.
• Example: The concept of sovereignty was used to justify the invasion of Iraq in 2003, but it was later criticized for violating international law and the sovereignty of other states.
• Misconception: "All conflicts are about religion or culture."
• Correction: While religion and culture can play a role in conflicts, they are not the sole causes of conflict. Economic, political, and strategic interests often play a more significant role.
• Example: The conflict in the Middle East is often attributed to religious and cultural differences, but it is also driven by economic and strategic interests, such as access to oil and control of territory.

Exam / Essay Tips

• Deploy theories in an argument: Use IPE theories to explain the behavior of key actors and the outcome of the issue.
• Integrate historical and current examples: Use historical examples to illustrate the relevance of IPE theories to contemporary issues.
• Be aware of tricky distinctions: Distinguish between different IPE theories and concepts, such as realism and liberalism, and explain how they apply to the issue.
• Use IR theory to explain the outcome: Use IPE theories to explain the likely outcome of the issue and why it is more or less likely.

Quick Practice Scenario

Scenario: Two rising powers in the Asia-Pacific engage in a naval buildup. Using realism, explain the likely outcome. Which other IR theory would predict a different outcome and why?

Answer: Realism would predict that the two rising powers will engage in an arms race, as they prioritize security and power over economic interests. Institutionalism would predict a different outcome, as international institutions, such as the Association of Southeast Asian Nations (ASEAN), could promote cooperation and stability among the rising powers.

Last-Minute Cram Sheet

• Mercantilism: States prioritize economic self-sufficiency and export-led growth to accumulate wealth and power.
• Liberalism: Free trade and economic interdependence promote peace and prosperity.
• Marxism: Capitalism is a system of exploitation, where the ruling class exploits the working class.
• Neoliberalism: Markets are more efficient than governments in allocating resources.
• Dependency Theory: Developing countries are exploited by developed countries through unequal trade relationships.
• Realism: States prioritize security and power over economic interests.
• Institutionalism: International institutions, such as the WTO and the IMF, play a crucial role in promoting cooperation and stability.
• Constructivism: Ideas and norms shape state behavior and international relations.
• "NATO" is a collective defense organization, not a collective security organization – Article 5 is triggered only when a member is attacked, not every threat."
• "The Bretton Woods system" refers to the post-WWII international monetary order, not the current international monetary system."
• "The G20" is a forum for international economic cooperation, not a decision-making body."