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Lecture notes Global Political Economy 7-12
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Lecture 7 Perspectives on the origins of thecontemporary world market
Agenda
Global political economy as a way of seeing world economy.
Theoretical traditions reflect assumption, normative stances.
World capitalism on trial – trade in historical perspective.
Question 1: How can we understand origins of the present world economy?
Intended learning outcomes
Restate the aims of global political economy, this course.
Summarize major theoretical traditions in GPE.
Compare four key focuses of global political economy.
Explain GPE perspectives on trade in historical capitalism.
Introducing Global Political Economy
Global Political Economy, an overview
Part 1 – International Economics Part 2 – Global Political Economy
International Trade: Introduction to Global Political Economy:
World trade: absolute/comparative Historical capitalism.
advantage. From national development to
Trade policy and regulation. neoliberalism.
International Production: Trans-nationalization and state effectiveness:
FDI, theory of the firm, regulation. Global commodity chains,
financialization.
International Financial Systems: Contemporary debates:
Introduction to international finance. Welfare & inequality/social
Exchange rates and the IMF. reproduction & policy.
Monetary unions and monetary crises. Democracy, the world market, inclusive
growth.
Debating a more secure and sustainable
future.
Complimentary insights and counterpoints
Economics useful but alone inadequate, at times misleading.
o It is not context-free.
Economy not independent of politics, social / power relations.
Study of economy always context specific context matters.
GPE also concerns mechanisms, principles, but not abstractions.
o Causes / sources of certain social phenomena. How to make sense of the world?
What is global political economy?
Addresses world economy, its development, dynamics, effects.
o Assumes politics & economy may not be understood independently.
o Historical evolution of the economy.
Draws on multiple, sometimes rival theoretical traditions.
o Rejects key assumptions of economics, draws on certain insights.
A multidisciplinary and in respect post-disciplinary field of study.
, o Old, recent, and changing.
o Intellectual development mainly in North America and Europe.
Focuses of contemporary global political economy
Economic growth or Capital Accumulation – key, not privileged.
o GDP as a measure of growth, however this disregards other aspects such as
inequality.
Welfare, fulfillment of needs, capabilities development, ‘real freedom’.
o Ability of human beings to do things (freedom).
Inequality, i.e. uneven distributions of valued resources.
Environment, the ecosystem as the basis of social life.
o Economy transforms nature for profit.
Inclusive capitalism tends to work in favor of the rich countries. 5% of global GDP goes to
world’s 60% poor people.
Global Political Economy
Affirms social, political foundations of the world economy (emphasis).
o Historically grounded, attention to path dependence, agency.
o Sociological approach to GPE.
Recognizes states’ unique roles, limits of state-centered analysis.
o Emphasizes increasingly transnational features of world market.
o Economy characterized by transnationalization; transnational capitalist class.
Views world from different standpoints, perspectives.
o Does not embrace any particular view of how world is, ought to be.
o Historical features of capitalism.
Limits: could overlook class-relations.
World Bank: global financial institution governing the world economy with other institutions.
They have shaped the logic of the functioning of the world economy.
New global political economy differs
Rejection of notion an “apolitical” world economy.
o Economy social, political, cultural, historical, geographical perspectives.
Embrace of multi-disciplinary approaches.
o Economics, sociology, politics, anthropology, humanities.
Attention to dynamics not top-down processes of change.
o World economy constituted of linked local processes.
o Not world economy determines national economies.
Theoretical traditions in Global Political Economy
Theoretical traditions
Liberal, neo-classical (economics) political economy.
o Self-interest. Trade produces mutual benefits.
Critical political economy.
o Influential figure: Karl Marx.
‘State centered’ / nationalist / ‘developmentalist’.
Analytical focuses and perspectives
Broadening performance analytics.
o Not only / mainly growth welfare, inequality, environment.
, Globalizing global political economy.
o Diversity, world history, area studies, interdependence.
Multi-dimensional awareness.
o E.g. location, time, status / class, gender, ethnicity, racism.
Neoclassical economics & GPE
Markets based on voluntary exchanges.
o Human beings are rational, markets are efficient. Markets are more efficient than
states. Pursuit of self-interest.
o Adam Smith: ‘invisible hand’.
Free trade produces mutual benefits.
o Efficient and equitable.
o E.g. comparative advantage, factor-price equalization.
Factors: land, labor, capital.
David Ricardo: countries should specialize.
A world defined by market “frictions”.
o Constraints on trade, government policy, ‘distortions’.
Recent ‘discovery’ of politics, institutions.
o Liberal institutionalist theory (e.g. Keohane).
Diversity with neo-classical political economy
Champions of capitalism, “free-trade” and markets.
o E.g. Baghwati and neoliberals (Friedman).
o The market is the solution, the market is perfect.
Keynesian and post-Keynesian.
o E.g. J. Stiglitz and Dani Rodrik.
o Economy has been mismanaged. Look at embedded liberalism. States need to
regulate market economy, because the market is imperfect.
New institutionalism.
o E.g. Douglas North, Robinson and Acemoglu.
Critical political economy
Exploitive nature of capitalist social relations.
o World economy founded on unequal exchange (colonization).
o Capitalism is associated with dispossession.
o Free trade is a fallacy.
Countries’ structural modes of integration to world economy.
o Difficult to overcome, limited mobility for developing countries.
‘Combined and uneven development’ (global and local).
o Internal processes of exploitation.
o External processes of dependence.
Diversity in critical political economy
Marx:
o Class struggle, exploitation, (class-) consciousness, revolution.
o Working class subject to exploitation.
Weber:
o Class status and party as shaping opportunity, life chances.
o Power differentials in an economy.
, o Weber also in field of state-centered perspectives.
Polanyi:
o Origins of market-pattern across time as an elite project.
o Market is not natural, it is planned.
State-centered perspectives
States in the world economy.
o Assumes inseparability of politics & economy, but …
o Influence of neoclassical economics.
o State centrism.
Theories of state behavior – what they do and why.
o Two-level games (domestic / international concerns).
o E.g. states motivated by a singular ‘national interest’.
It is difficult to define national interest due to, for example, different interest
groups within a society / state.
Mix of “markets” and political institutions.
o Democratic, authoritarian regimes, etc.
Gendered (e.g. feminist) perspectives
Why a feminist perspective?
o Sex ≠ gender ≠ gender relations.
o Gender is about power relations, differences, conflicts.
o E.g. care: for love or money – or both? (Folbre)
But is there one or may feminist perspectives?
o Intersectionality.
o Third World Women ≅ Underdeveloped.
Racial and economic dominance.
o Concrete manifestations (e.g. feminization of poverty).
o Ways of thinking (e.g. colonial legacy, modernity).
A conceptual and theoretical tool box
Varieties of critical political economy.
Varieties of state-centered political economy.
o State-effectiveness.
Varieties of neo-classical political economy.
o Significance of market / how to regulate the market?
Limitless issues, diverse methods.
Historical capitalism and trade, 1431-2020
1431: Treaty of Lisbon, breakthrough of transportation possibilities. Guns, Germs & Steel. Spanish
needed capital. One option is to plunder, so they went to Italy. Begin of a world capitalist economy.
Theorizing the historical development of capitalism
One world economy.
Competing narratives, competing theoretical traditions.
Multi-dimensional focuses within these stories.
Advantages and drawbacks of theoretical pluralism.
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