International Relations Theories - Essay Example

? Introduction The international system dictates how s relate to each other and is full of international and global politics. There is a lot of controversy surrounding the notion of state sovereignty and ideas of cooperation and conflict. Countries in the international system realize the need for integration, thus more cooperation and less conflict, but some states argue that this would undermine state sovereignty. Various theorists have tried to explain the nature of international relations but none have come up with a very good explanation of global events such as armed conflicts and trade wars among other areas of conflict and cooperation. Some theorists such as the realists rely on human nature to explain events while others rely on structures and ideologies. However, one thing to note is that international relations have existed as long as states and that states are sovereign and are guided by informal rules in their relations. The purpose of this paper is to describe an international event of conflict or cooperation that has occurred since 1980, and evaluate it using theoretical approaches to international relations. There are many theories such as realism, liberalism/idealism, constructivism, Marxism and feminism, but the paper will focus on liberalism and Marxism. First, a brief summary of the international event will be given in order to understand how, where and when it occurred and to explain how it can be understood as an international event. Secondly, theories of international relations (liberalism and Marxism) will be used to discuss the reasons why the event occurred. This will give the roles played by the state, non-state actors, multinational corporations, etc. Thirdly, strengths and weaknesses of the two theories in explaining the event will be evaluated and a conclusion made about which theory is the most effective in explaining the event. Brief Summary of the Event The 2007/08 financial crisis that began in the United States is a phenomenon that has been discussed a lot in recent years. It almost led to the collapse of the world economy due to collapse of financial institutions, credit crunch, unemployment and bailouts that have cost states billions of taxpayers’ money. The question to ask ourselves is: How did it happen and why did it spread with a great magnitude affecting the whole world? Both first world and third world economies were not spared and are still recovering from the effects of the crisis. The crisis began due to an asset bubble bursting. Economists have blamed the event on monetary policy failure and deregulation of financial institutions, but international relations theorists have different versions of the reasons for the crisis. Financial institutions were not mitigating risks but instead making risky investments in form of mortgage backed securities (Davies, 2010). Housing prices had gone up and the government through mortgage lenders Fannie Mae and Freddie Mac was encouraging low income earners to take up mortgages at low interest rates. The financial institutions saw an opportunity to gain and thus gave mortgages even to subprime borrowers. Mortgage brokers sold the mortgage to banks which, in turn, bundled it into products which they securitized. They borrowed money from other banks to buy mortgages and securitize thus high earnings. The interests were later to rise and home owners were unable to pay mortgages, leading to mass repossession of houses and the housing bubble burst (Kolb, 2010). Financial institutions could not lend to borrowers anymore, leading to a credit crunch and slow economic growth. Financial institutions such as Northern Rock, Lehman Brothers and Merrill Lynch collapsed. Other casualties were insurance companies and stock markets due to falling share prices. A $700 bailout was offered by the Bush administration among other measures, but the economy was badly affected (Davis, 2010). Credit tightening and massive bailouts by US, UK and other western countries were a blow to third world countries that rely on foreign aid for development. These economies also experienced slow economic growth due to lack of funds and foreign investments. The crisis thus spread to every corner of the world due to interdependence. Theories Various international relations theories can be used to explain the spread of this phenomenon. Realism is based on the belief that nation-states are unitary based actors in the anarchic international system. As such, there is no world authority to regulate interactions between states and that each state pursues its own interests. The main actor is the state; hence states are always in competition and struggle for power and to ensure own security and survival (Weber, 2004). Contrary to this, liberalism asserts that there are other non-state actors. Idealism was a precursor to the liberalism theory and is based on the belief that internal political philosophy should be the guiding principle for foreign policy (Weber, 2004). The primary determinant of state behaviour, according to William, Goldstein, and Shafritz (1999), is the state preference and not state capabilities. State preferences may vary depending on the economic system, government type such as capitalist or democracy, and culture. As such, state is not unitary; rather, there is plurality in state actions. Another major assumption of the liberalism theory is that interactions between states are not limited to political security as in realism, but they are also dependent on economic and cultural factors. In this sense, states can cooperate in various areas such as trade. States can also get absolute gains if they cooperate rather than compete all the time. Based on the liberalism international relations theory, we can explain why the 2007/08 financial crisis became an international political issue. First, the theory does not entertain an anarchic international system where no authority rules; rather, it advocates cooperation between nations and broader notions of power. This, according to Baylis, Smith, and Owens (2008), can be achieved through interdependence among nations. The democratic peace theory which is a subsection of liberalism argues that liberal democracies have fewer chances of conflict, thus peace prevails. Liberalization of trade and globalization have enabled states to cooperate in the international system, making the world a global village. Economic interdependence is apparent as each country seeks to satisfy its preferences. What a country is not able to produce, it can get from other countries, and this also includes labour and capital through foreign direct investments. The interdependence between states led to the spread of the financial crisis from US to the rest of the world. By collapsing of financial institutions and consequently tightening of credit countries that rely on foreign aid, such as African countries, were badly hit. This is because there were little or no more foreign investments as well as funds to finance development projects at home. This consequently led to massive loss of employment due to closure of industries and slow economic growth (Davis, 2010). Though world institutions such as the World Bank tried to save the situation, these countries had already been affected. Furthermore, the state was experiencing slow economic growth leading to reduction of trade, and this affected the trading partners who relied on its imports and exports. Besides, the financial institutions are also integrated, so that if one powerful institution is affected, the rest also suffer. Interdependence among nations is good as it brings about cooperation and peace, but it can also be disastrous as the financial crisis showed. Another crucial theory in explaining the crisis is Marxism. This theory does not accept realist and liberalist views of state conflict or cooperation. Instead, it focuses on economic and material aspects through historical materialism (Morgenthau, 1992). Marxism is bent on criticizing the capitalist form of economy which reproduces classes and encourages exploitation of the poor by the rich. The hegemonic powers such as US are believed to be imposing their ideals and values on developing countries and exploiting these poor countries. This is according to Immanuel Wallerstein’s world system theory. Since the Western world dominates the third world countries, whatever happens in these states affects the third world countries. The collapse of the financial institutions in the West, thus, was able to spread to other parts of the world due to dependence on the North by the South. If these poor countries could be able to sustain themselves, then the crisis would not have been of a very high magnitude. Cooperation between states is enhanced through international organizations such the international government organization, non-governmental organizations and multinational corporations (Baylis et al., 2008). These institutions are very powerful and control the world, e.g., trade. Organizations such as the European Union, United Nations, World Trade Organization, and the World Bank are government organizations that control relations among states. They dictate how trade is to be carried out among nations, leading to cooperation and peace though sometimes trade conflicts may arise. These have created an enabling environment for countries to cooperate and also increased interdependence among states, which accelerated the spread of financial crisis. The states had a role to play to ensure the economy is running smoothly and that risks are mitigated, but they failed in this role by relaxing regulations and this culminated into the crisis. Non-governmental organizations and MNCs are also crucial in the world system according to the liberalism theory. These NGOs help the affected citizens in times of crisis by providing food and other essential services that states are not able to provide (Haas et al., 2009). MNCs cropped up due to globalization and now affect foreign policies. They help to spread culture of one state to others, thus fostering cooperation, but at the same time contribute to rise of hegemonic power. The world system was unipolar in nature with the US being the superpower. It thus controls the world and as such, if a crisis emanates from the US it spreads to other states. However, in recent years other economies such as China are emerging, thus threatening the US hegemony and the change of the world structure into a multi-polar system (Keohane & Nye, 1999). Conclusion The world system is interconnected and states are either in conflict with one another or cooperating. Theories such as liberalism encourage cooperation among states for peace to prevail, thus encouraging interdependence. However, interdependence can also be dangerous as shown by the 2007 financial crisis which spread to the whole world as a result of cooperation. Marxism theory is also vital in explaining the reasons for the crisis in that poor countries rely on rich countries, and this situation is due to inequalities of capitalism. However, liberalism is the most effective in explaining the event as it shows how states cooperate and the role played by states and non-state actors in the process. References Baylis, J., Smith, S., & Owen, P. (2008). The Globalization of World Politics (4th ed.). OUP. Davies, H. (2010). The financial crisis: Who is to blame? UK: Polity Press. Haas, P. M., Hird, J. A., & McBratney, B. (2009). Controversies in globalization: Contending approaches to international relations. Washington, DC: Congressional Quarters Press. Keohane, R., & Nye, J. S. (1999). Power and interdependence (2nd ed.). Glencoe: Scott Fresman. Kolb, R. (ed.). (2010). Lessons from the financial crisis: Causes, consequences, and our economic future. New Jersey: John Wiley and Sons, Inc. Morgenthau, H. J. (1992). Politics among nations: The struggle for power and peace (5th ed.). New York: McGraw-Hill. Weber, C. (2004). International relations theory: A critical introduction. Taylor & Francis. William, P., Goldstein, D. M., & Shafritz, J. M. (1999). Classic readings of international relations (2nd ed.). Harcourt Brace College. Read More