Main Perspectives of International Political Economy - Essay Example

INTERNATIONAL POLITICAL ECONOMY Student’s Name: Instructor’s Name: Course Code: Date of Submission: Introduction International political economy is the discipline which focuses on the global economic growth or crisis. It helps to understand the growth of economies in developing and developed economies, the main function of international trade in promoting the global economy and finally the effects of the international system of economy (Cohen 2008). The main aim of the international political economy is to develop and improve the economic systems globally and effective distribution of resources between developing and developed economies. In the recent years, there has been global financial crisis and this has been associated with lack of appropriate systems of economy which could help to control the international economy (Cohen 2008). In this regard therefore, this paper tries to distinguish the main perspectives of international political economy and the main theory which can help a learner to understand the globalization in terms of economic systems. Main perspectives of international political economy Globally, there are three main types which try to explain the international political economy.The three main perspectives regarding international political economy include the liberalism, mercantilism and structuralism perspectives. To start with, economic liberalism is the perspective which is mostly associated with the study of markets (Cohen 2008). The heterodox interventionist liberals argue that both local and global markets work better when they are integrated with the government and the governments have no policies to control the markets. They also argue that markets are a source of many international economic problems. Government intervention in international political economy could impose some regulations which could otherwise hinder free trade and this could affect the global businesses. The traders are expected to behave rationally and this could help them to engage in ethical business practices and this leads to globalization due to lack of tarrifs. When there are pure markets, the traders are expected to behave rationally to maximize their profits and avoid any kind of losses which might affect their operations (Gilpin 2001). There is a desire to compete in international markets so that they can generate adequate wealth for their organizations. The scarce resources become unutilized when the markets are inefficient hence there is a need to promote market efficiency by the government. This idea has been applied globally and this has led to globalization. There have been critics about the liberalism theory of IPE. This theory assumes that the exchange in the market takes place in equal terms due to availability of information and competition in the markets. This is not true because the market can be influenced by a number of factors such as unequal bargaining and restraints which are imposed by some other economies especially the developed economies (Gilpin 2001). This is the best phenomenal which affect the economic conditions which the liberalists fail to address. Further, in the liberal perspective, it argued that the market actors have equal conditions. They argue that a one fits all implying that a single prescription can solve all the problems in the despite the circumstance which caused it (Watson 2005). The downfall of this critique is that they fail to recognize that resources are not equally distributed due to rights to property and the powers which imply that there are different optimization solutions. There is also the perspective of economic nationalism. This perspective explores that the main objective of any state is to acquire as much wealth so that it can prevent its people from any economic crisis. This theory further explains that a state is a legal entity (Phillips 2005). The main sources of power for economic nationalism are hard and soft power. The hard power comes from the tangible military and economic assets while soft power comprises of the state’s cultural systems such as values and beliefs. Through these powers, a state can convince other states to adopt their systems and in the process, they can create accumulate wealth for the state. When a state has more sources of power than other states, it will be able to attract the attention of other states and this could include technological advancements, experienced human skills and source of market for the products. As a result of this influence, the state will be able to increase its production than other states due to availability of competent human skills and also the market for the products which improves the economic status of the state. The main criticism of mercantilism theory of IPE is that groups in power can use their power to accumulate wealth and seek the intervention of the government to protect their selfish interests. They may claim to benefit the nation as a whole but in the real sense they benefit their selfish interests (Phillips 2005). This will lead to unequal distribution of resources between economies due to monopolistic practices, hence it does not reflect equitable global economic system. In addition, the mercantilism theory argues that the imports help to reduce the domestic employment. Labor unions have taken advantage of this to import labor from low wage countries and this has led to a debate about the national employment policy (Ravenhill 2005). Off showing puts the local employment at risk since there will be no local employment leading to high rates of domestic unemployment. Finally, the structuralism perspective is also tries to analyze the international political economy. This theory looks at issues which affect the social classes among different states and how these classes are influenced by the economic structure (Sturrock 2003). In most cases it takes into account the methods which are applied by the sociologists to analyze the international political economy. Some of the forces established include political, social and economic forces. These forces influence the management of finance. The main criticism of this theory of international political economy is that it does not consider or account for the human individually. This is because it only considers the economy of the states hence does not consider the individuals (Ravenhill 2005). Human individuality influences much the national economic stability, hence they should be considered when analyzing the international political economy. Further, this theory does not take into account the dynamic perspectives of the culture. Since the theory was developed, there has been no development made on the cultural dynamics (Ravenhill 2005). This implies that the structuralism theory does not reflect the current market situation hence it is not applicable in all circumstances. Considering the above discussions, there are some similarities and differences among the different perspectives. The main difference is that economic liberalism focuses on the markets only as the force which drives the international political economy (Johnson 2007). The mercantile argues that the IPE cannot be affected by the markets only but also by the powers which are vested in the states while the structuralisms argue that both markets and economic nationalism affect the international political economy. This summarizes all the three perspectives of the IPE. The main similarity is that both perspectives focus on the global economic system and they can accumulate wealth by taking into account the international economic system. Considering these perspectives and their criticisms, the main theory which can help a scholar to understand the globalization and the international political economy is the economic liberalism theory. This theory is advocated for as the main theory because it helps the scholar to understand the market conditions like the tax policy (Eric 2002). This theory can be used to explain market conditions such as tax policy and how organizations can achieve their objectives in the market. The liberalists argue that in a free market, there is freedom of competition and ability to reduce the political oppression. Through the free market, many firms can seek to exploit opportunities which have not been exploited in the foreign market (Eric 2002). By going international, there will be international exchange of products and services and this leads to globalization due to free entry and lack of barriers in the international market, hence it is the best theory which can help the scholar to understand the globalization issue. Conclusion International political economy is the discipline which helps a learner to understand the global economic system and the factors affecting the international economic system. There are three main perspectives which explain then International political economy. They include economic liberalism, economic nationalism and structuralism perspective. The economic liberalism argues that global economic system is influenced by the market conditions such as free market while economic nationalism theory argue that the state economy is influenced by the state powers while the structuralisms argue that the economic stability is affected by the political, social and economic systems of a state. Considering the various arguments, the most appropriate theory which can help a scholar to understand the globalization is the economic liberalism theory since it helps economies to interact leading to international market hence globalization. The traders will be assumed to behave rationally when transacting their businesses which could help to eliminate unfair trade practices in the market like discrimination in terms of prices. Reference Cohen, B. (2008). International Political Economy: An Intellectual History. Princeton, NJ: Princeton University Press. ISBN 978-0-691-13569-4. Eric H. (2002). ‘Economic Nationalism as a Challenge to Economic Liberalism? Lessons from the 19th century’, International Studies Quarterly, Vol. 46, No. 3, pp. 307-329.   Gilpin, R. (2001). Global Political Economy: Understanding the International Economic Order. Princeton, NJ: Princeton University Press. Johnson, M. (2007). Archaeological Theory.  Johnson, Matthew.  Archaeological Theory. Phillips, N. (2005). Globalizing International Political Economy. Palgrave Macmillan.   Ravenhill, J. (2005). Global Political Economy. Oxford: Oxford University Press. Sturrock, J. (2003).  Structuralism: Second Edition.  Blackwell Publishing: Oxford, UK.   Watson, M. (2005). Foundations of International Political Economy. Palgrave Macmillan. Read More