Liberalism in International Political Economy Compared with Marxism and Realism - Research Paper Example

?Liberalism in International Political Economy compared with Marxism and Realism Introduction Liberalism as a theory in International Political Economy (IPE) is related to classical economics, wherein power is put on merchants, markets and privatised enterprises while the governmental influence on economic growth is reduced.1It differs from Marxism because it is also capitalism, which Marxism (and Gramscianism) opposes due to capitalism creating differences and gaps between the upper-class bourgeoisie and the proletariat working-class.2 Liberalism also differs from Neorealism because it emphasises the importance of markets and commerce in the growth and development of the economy, whereas for Neorealism national security and defence is important for the growth and development of the economy.3 While Liberalism, Marxism (and Gramscianism) and Neorealism have common grounds such as the importance of a ruling body to maintain internal and external peace and order, they also differ in other aspects such as what factors control economic growth and core beliefs of each theory. Liberalism and Marxism (and Gramscianism) In the theory of Liberalism, Adam Smith is one of its well-known proponents. His ideas on liberal capitalism focus more on how behaviours and market competitions are controlled by the “invisible hand”, believing that merchants or individuals are reliable on their own in contributing greatly to economic improvement without the need for the intervention of the government.4Also, the collective individual initiatives are just as important as the contribution of each individual, because morality done on a personal level and through the perspective of others is important in order to maintain order and peace under liberalism.5 In essence, under the theory of Liberalism there is an assumption of having similar thoughts and ideas among people, which makes it easier to assess whether an individual’s actions will benefit others or not. Theoretically following these principles will not only assure equality among merchants, markets and consumers, but also will maintain fair competition for all. Marxism shares some concepts with Liberalism in terms of justice and equality. This is because in the Marxist thought it is important that similarity among all peoples must be maintained, so that there will be equality and that everyone will have fair treatment under common governance. This in turn will increase the likelihood that people will start thinking similarly, making it easier to govern them.6 Also, there will be no inequality because everyone is experiencing similar circumstances, and unless there are problems in the ruling body itself, under Marxism there will be peace, equality, emancipation and justice because people share the same ideas and beliefs like in Liberalism.7 Liberalism and Marxism may share some similarities such as the importance of equality, but these two theories differ in other aspects. For example the core belief of Liberalism is that markets wield power over economic growth but does not increase the gaps between various social and economic classes because of morality. However this is contested by Marxism ideas, saying that while everyone may acquire benefit from participating in trade and commerce, the equality of gains will not be absolute among all parties. Because of this there can be unequal distribution of wealth, with merchants gaining more wealth over members of the market or the consumers as the result of differing relative gains for the merchants and the consumers.8More often than not if there is unequal distribution of commodities there is also an unequal distribution of wealth, and vice-versa. Also, Liberalism is highly-idealistic in terms of giving importance to morality, and the fact that the margin between the rich and the poor are not decreased this means that Liberalism does not function as it is supposed to because not all participants in commerce regularly engage in fair trade and fair markets.9 In contrast Marxism ideologies such as equality among people and of their progresses gives better assurance that under an ideal governance wealth distribution will be much more equal within the citizens, because there is a tighter control of the government over trading and markets. While there is lesser freedom for people living under Marxism, there is a better chance that wealth distribution in this kind of society will be more equal compared to a Liberal society.10Lastly, while in Liberalism there is less government control over commerce and trade, this has not been successful for very long. In contrast Marxism views under Gramscian ideals state that there is better economic and political stability when there is hegemonic leadership because self-centredness and the lack of responsibility can be controlled better as opposed to simply relying on self-governance as the case in Liberalism.11 This is also known as the theory of hegemonic stability, which when used in conjunction with Liberalism can improve cooperation among countries through the supervision of stronger hegemon countries. Liberalism and Neorealism Liberalism focuses more on economics fuelled by the markets and is less-controlled by the government, whereas Neorealism focuses more on nationalistic goals and in obtaining a thriving economy due to the need for a stable national security and defence. As such, in terms of leadership and equality all nations are equal and there is no centralised governance or leadership (also known as anarchy) under the Neorealism school of thought.12Also, in terms of foreign relations Liberalism is much more open for cooperation between nations in market expansion while in Neorealism there is a greater need for self-dependence in driving the economy.13This makes Neorealism seem to exclude the need for international policies because it mainly focuses on its own self-sufficiency, while in Liberalism international policies is relevant to assure a fair trade and market expansion.14 Despite some differences between Liberalism and Neorealism, these two theories share some similarities in core ideas. For example, negotiation among countries is valued in Liberalism to promote free trade and expand markets overseas, while in Neorealism negotiations are made to prevent wars between neighbouring and non-neighbouring countries.15 In relation to this, maintaining peace, stability and order are also important, for Liberalism it is important because it is easier to make fair trade with stable and peaceful countries, and while war is something that must be expected, for Neorealism maintaining anarchy and the structure of order prevents the need to use armies and possible economic collapse.16 Comparison and Contrast of Liberalism, Marxism (and Gramscianism) and Neorealism Liberalism, Marxism and Neorealism are three theories that have something in common with one another, such as being able to explain what theories can explain and what forces control a country or the international community’s economy and politics, and that it is important that there is a strong entity to push changes in economy and politics. First is that they have common grounds of giving explanations to what shapes and moves the politics and the economy of one country and how the movement of each country can affect other nations in turn.17For Liberalism it is the markets that shape economy, for Marxism it is the inequality of wealth and commodity distribution, and for Neorealism it is the need for national stability and security. Second is that the working ideas in each theory aids in identifying important forces that shape political decisions and address how to control or decrease the effects of each one.18 Third is that all three theories agree that there is a need for power and to control power struggles to maintain stability, whether this is in national or international level.19 For liberalism markets and private merchants have greater power over the government, for Marxism it is the ruling classes and for Neorealism it is each country’s government. This means that the three theories are more or less equal because it depends on what situations and countries each theory is tested on, and can give different results. In terms of core values the three theories have some similarities, but these differ in details in terms of what shapes the politics and economy, the applicability of the ideas in each theory, and if the theory’s views are optimistic, pessimistic, or realistic. First is that in Liberalism the vigour or decline of markets determine the economy, while in Marxism the inequality between the ruling classes and the working classes in terms of wealth and commodity distribution affects the economy, and for Neorealism the need to survive against possible national security threats pushes governments to improve their economies so that they will not seem weak to the international community.20 Second are theoretical applications of each theory, and despite the products of current thoughts and ideas, Liberalism itself is mostly reliant on its ideologies without scientific testing, whereas Marxism may have been the product of historical records and scientific inquiry but due to inapplicability outside one nation it can cause breakdown in governance like in the USSR, and for Neorealism while it is also a product of scientific inquiry it does not take into account potential changes in either or both economy and politics within and outside countries, making its use limited also.21,22Lastly, Liberalism operates on an optimistic viewpoint that considers every person to be reliable, honest and accountable for their actions, and that in the market there is always an equal and fair trade.23 Meanwhile Marxism operates on a pessimistic viewpoint that leadership is always dependent on the ruling classes and freedom is controlled, and when the balance between controlling individual liberty and government control fails the government or the economy will collapse.24 Finally Neorealism focuses on a realistic viewpoint that while it is possible to maintain peace and order under anarchy, there is also an equal chance that the world order will collapse as a result of wars between countries, so it is important for each country to be prepared when something like that happens.25Comparisons and contrasts between the three theories are summarised in Table 1 in the succeeding page. Table 1.Characteristics of three international political economy theories Aspect Points Liberalism Marxism and Gramscianism Neorealism Key analysis Cooperation of different nations Materialism, Cultural Hegemony Order and hierarchy of structure, anarchy Foreign policy All countries have equal chances in trade and commerce, no divisions Countries are divided based on economic growth All countries are divided based on each one’s capabilities Concerns International free trade Control of capitalism Control over power struggles Distribution of Power Given to individuals or private sector, limited government control, follow international organisation laws Mostly the ruling or hegemonic class Country’s government versus other countries’ governments Core Beliefs Privatisation of traders and less government control improve the economy Capitalism separates the bourgeoisie (elite) and the proletariat (working-class) All countries are equal because there is no central leadership Common Views There is a need for a form of leadership to stabilise the economy, and to maintain both national and international relations. Need for equality and similar thinking, changes and patterns are inevitable Assume no changes in political forces, everything is constant Assume that all people are reliable, no need for governance Function and stability are based on world order, hierarchy and structure Negotiations, maintaining peace, order, and stability Differing Views Markets control economic growth Need for equality in the population controls economic growth Need for national security fuels economic growth Greater reliance on ideology, not on scientific inquiry, impractical in anticipating changes Was borne out of scientific inquiry and historical events, useful in anticipating changes but impractical in long-term implementations Uses scientific inquiry to create usable theories but does not incorporate possible changes in structure, relations, (i.e. assumes things are constant) Optimistic Pessimistic Realistic Strengths and Weaknesses of Liberalism, Marxism and Neorealism The strength of liberalism is that its views are optimistic, does not discriminate individuals, reduces government intervention in economics, promotes peace among nations and strongly believes that all people are free, equal, just, and true. However, its weaknesses are that it needs the cooperation of all participants to work and that there should be agreements between countries whether liberal or not, or else there will be wars between them.26Also, it is possible that countries’ with governments that do not work well with liberalism ideas and are not fully-prepared to change their economic policies based on liberalism will suffer the consequences of improper policy implementation such as economic instability and decreased national security.27 In theory liberalism will only attain its goals if each country is fully aware of how liberalism works and follows all important rules and laws, if all countries become liberal-thinking or if all agree to perform trade and commerce through liberal ideas. Meanwhile, the strength of Marxism is that it puts more focus on how important the working-class is when it comes to economic growth, and ideally this prevents exploitation of the working class in general, such as preventing social and economic inequalities between exporting countries and importing countries.28This is because one of the most basic ideas in Marxism is that the exploitation of the working-class by the upper-class bourgeoisie causes inequality, injustice and unrest.29However the importance of equality among the people can remove individuality, creativity while slowing down technological progress if not handled properly by the ruling classes, and this can lead to lack of industrialisation and eventual mass enslavement, which happened in Soviet Russia during the years of the cold wars.30There can also be dissent among the people, especially if the ruling classes become abusive of the weaknesses of the working-class, and this can remove stability of the politics and economy as it was observed in the dissolution of the Union of Soviet Socialist Republics. Thus the main weakness of Marxism is that there is a struggle between industrialisation and the need for equality of the masses, which can affect the advancement or degeneration of production or work methods of the working-classes. Lastly, for Neorealism its strength is that it sees all nations as equal, there is no hegemon country and that all nations aiming for self-sufficiency are recognised to have power on their own.31Because there is no central power exerting force over other potentially weaker countries, it will be easier for other countries to make peace treaties and agreements that can benefit all parties involved.32Also, because power-balance is rather controlled in countries that exercise neorealism, even if there is a shift in the regime as long as the industry of the country is active and able to support national stability and economy, theoretically no heavy problems will happen.33However the weakness of neorealism is that there is no absolute concept of governance for every state and that national goals are most important, so some governments may develop tendencies of exploiting their citizens in exchange for national security and economy.34 Basically neorealism is much more dependent on national defences in order to maintain the country’s stability regardless of what methods are used for this purpose. Conclusion Liberalism is a theory that relies on the inherent nature of humans to be reliable and honest, which in turn improves the equality among all people and expands beyond countries. This ideology is being applied to larger areas such as markets and commerce. However because it is more focused on theories than on finding actual results of its applications, other theories emerged to explain some of its loopholes. Of these, Marxism and Neorealism stand out to contest how Liberalism functions in society and why it is hard to put its principles in motion. This is because for Marxism, Liberalism is also capitalism and it increases the gap between the working class and the ruling class, while in Neorealism its core belief is that in order to maintain peace and economic stability the country must be prepared to wage wars, ideas which are not included in Liberalism way of thinking. Also, Liberalism mainly works on optimist viewpoints, Marxism works on pessimistic inferences, and Neorealism works on realistic assumption. Because of the differences in the ideas in each of the three theories, it seems that these three have no common ground with each other and must exist separately from one another. However it is not truly so, as each one has core values that seem parallel with one another, like in identifying which factors contribute to a robust or a declining economy, or the need of governance or leadership or power to prevent waging of wars, inequality and unfair trade. In conclusion, despite the wide variety of differences between Liberalism, Marxism and Neorealism the structuring of these theories are similar in the sense that power is something that needs to be controlled to prevent chaos, as well as a factor that moves and changes economy and politics within and among nations. Bibliography Blyth, M. 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