Theoires Of International Political Economy - Essay Example

THEORIES OF INTERNATIONAL POLITICAL ECONOMY By Theories of International Political Economy Introduction Economic theories that have defined the growth of different economies in different centuries are of interest in the modern day. Understanding how the theories emerged and how they defined the economic, political, as well as social structures is critical in understanding history. Some of the theories exhibit relevance in the modern day and have been criticized over time. The continuing criticism of these theories helps in the evaluation of their worth as economic theories. With increased democratization, some economic theories are losing value in the modern society. Three of the economic theories that have been widely discussed by researches and historians include Mercantilism, economic liberalism, and Marxism. Different individuals developed these three theories in an effort to explain the economic systems of different times. For example, mercantilism was a theory evident in the colonial era while economic liberalism emerged after the enlightenment era. On the other hand, Karl Marx developed Marxism in the 19th century in his effort to criticize capitalism, which had taken root in many societies. This paper will describe these three theories presenting details of how they functioned and highlighting the role of the state in accordance with the theories. Mercantilism Theory The Mercantilism theory emerged during the colonial era when European countries had obtained colonies in different parts of the globe. The theory had four main purposes. Mercantilism sought to offer protection to English manufacturers who were not willing to withstand competition from other countries. Moreover, the system protected and promoted the English agricultural system considering the farmers. The third purpose was to ensure a remarkable increase in native merchant ships that could facilitate the transport of raw materials from the colonies to the Great Britain1. Finally, Mercantilism promoted the accumulation of hard money such as gold and silver because many colonies had worthless currencies. The development of Mercantilism was an effort to make the Great Britain attain a measure of self-sufficiency. Notably, the self-sufficiency that the Great Britain wanted needed the colonies to play a critical part2. Mercantilism needed the presence of stringent laws as well as the regulations that could offer the kind of protection needed by the British merchants as well as the owners of industries. In addition, the Mercantilist economy sought to promote the interest of British merchants while exploiting the colonies3. Many of the supporters of this system opined that Mercantilism qualified to be a philosophy that promoted the stability of nations by putting in place the economic regulations that strengthened the economy of one country and giving it a competitive advantage over other emperors. Many proponents argued that Mercantilism was an avenue that could ensure self-sufficiency. Different laws instituted promoted the Mercantilist economy. For example, there were navigation acts such as the one passed in 1651 whose purpose were to ensure the transportation of all the imports and the exports from American colonies via the Great Britain Ships4. The act also ensured that the crew in these ships comprised of more than 50% of British or colonists. Other regulations demanded that colonists could only export enumerated products through Great Britain. Moreover, colonists could only import manufactured goods from Great Britain as well. Evidently, Mercantilism only made colonial governments richer while exploiting the colonies immensely. Economic Liberalism Theory Economic liberalism denotes an economic philosophy, which promotes free trade as well as property ownership. Proponents of this philosophy argue that economic freedom can only result if markets are free form any forms of regulations and if they promote competition from other entities. Economic liberalism does not advocate for stringent government regulations and intervention of trade, which creates barriers to free markets5. This philosophy is contrary to the central tenets of Mercantilism because it demands economic freedom that eventually comes along with both political and social freedom. Adam Smith is highly regarded for his contribution in the development of this philosophy. He made his advocacy of none interference of the government in the economic system. He highlighted that only minimal interferences from the government were tolerable in this philosophy. However, he was keen to highlight that the state has the responsibility of ensuring a constant provision of basic public goods6. These basic public goods include roads, schools, and other public amenities that the private entities could not develop. In his opinion, letting individuals to pursue their interests using their economic devices and this would promote equality in the society. He opined that control by the states introduced inequalities. Economic liberalism highlighted that individuals pursuing self-interests without any stringent regulations were likely to register multiple benefits. One of the most outstanding benefits was the spontaneous order that would result. However, this was possible if governments and states ensured certain basic standards such as justice and public amenities. Economic liberalism also promoted the attachment of a prize on labour. In other previous systems, labour was through coercion and no wages were paid. However, proponents of the economic liberalism argued that there was a salient need to introduce labour prizes in the market7. This would mean that those with a means of production would have to pay labourers working in their industries. Moreover, this philosophy also proposed that the introduction of currencies and money creation were aspects under an automatic mechanism. Evidently, the arguments of economic liberalists have defined the functionality of minimalist governments and they support the deregulation of labour markets. The Marxism Theory Karl Marx who was a staunch communist and opponent of capitalism developed the Marxism theory. He highlighted that capitalism introduced a system governed by money. This aspect divided the society into two classes. Those who had money as well as a means of production qualified as the capitalists, which he referred to as the bourgeoisie and the labourers whom he called the proletariat8. The labourers did not have the capital and were hence unable to access a means of production. The purpose of the capitalists was to ensure that their systems registered the highest profits but minimal costs. This means that they were only willing to pay little wages to the labourers. On the other hand, the labourers purposed to get the highest possible wage while doing the least work possible. Evidently, the needs for both classes were contrary to each other a factor that introduced class conflicts as Marx highlighted9. Notably, the capitalists indulged in a competitive environment with some of them proving to be unable to withstand the pressure and eventually became labourers. On the other hand, capitalists who were the wealthiest had all the chances of getting richer. In the views of Karl Marx, the labourers were under exploitation by the upper class. Marx predicted that a time would come when the oppressed would realize it, and engaged in a revolution against the upper class of the society. This revolution would give birth to a new society10. Although Marxism has been highly criticised, there is no doubt that the class conflict between the poor and the rich has been evident in the society. Conclusion As described above, different historians and economists described the three economic theories. Their relevance in the modern day cannot receive any form of underestimation. Different historians have highlighted that Mercantilism is of significance because it highlights the specific roles that a strong state should play if it is to promote the economic stability and the reinforcement of liberal rules across the globe. On the other hand, there is evidence that Marxism answers the increasing questions on why there is under development in third world countries. Marxists highlight that the developed world has been exploiting the developing world. Bibliography Chernoĭ, L. S. 2004. Globalization : past or future? : transformation of market economic systems / L.S. Chernoy. n.p.: New York : Pleiades Pub., c2004., 2004. OhioLINK Library Catalog – LR, EBSCOhost (accessed November 19, 2014). Darden, Keith A. 2009. Economic liberalism and its rivals: the formation of international institutions among the post-Soviet states. Cambridge: Cambridge University Press. Harris, Jonathan Gil. 2004. Sick economies [electronic resource] : drama, mercantilism, and disease in Shakespeares England / Jonathan Gil Harris. n.p.: Philadelphia : University of Pennsylvania Press, c2004. (Baltimore, Md. : Project MUSE, 2014), 2004. OhioLINK Library Catalog – LR, EBSCOhost (accessed November 19, 2014). Hunt, E. 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