In recent years the presence of a global economy has become more apparent. Financial institutions throughout the world are now connected through a vast computerized network. As a result of this global economy issues associated with the international political economy has become an increasingly important issue. The purpose of this discussion is to explore the manner in which the three conceptions of the international political economy (Realism, Liberalism, Marxism) differ. The research will also focus on how the advocates of each assess the phenomenon of global integration. Finally the discussion will investigate the merits and the dangers of hegemonic stability in international trade? The discussion will begin with a description of international political economy.
International Political Economy
Political economy is defined as the "theory or study of the role of public policy in influencing the economic and social welfare of a political unit ("Political Economy")."
In a broader sense international political economy encompasses public policy in influencing the economy on a global scale. As it pertains to international political economy there are three primary theories. These theories are realism, liberalism, and Marxism.
According to a journal article found in the Cambridge Journal of Economics Realism is not a new economic theory. However in recent years the idea of realism within the context of international political economy has reemerged. There are two primary schools of realism as it pertains to international political economy. These two schools are scientific realism and critical realism.
The scientific realism theory of international political economy asserts that in order for economic study to be logical it must be based on economic realities as opposed to more abstract reasoning. In addition realism emphasizes the need to understand and know the truth based on objective measures independent of science (Fabienne, 2001).
On the other hand, critical realism argues that there is a specific ontological foundation for international political economics. As such this foundation must be taken into consideration (Fabienne, 2001). When the foundation is taken into consideration outcomes are consistently successful. According to the author this form of economic realism is a self-contained concept but lends itself to the ideas presented by Roy Bhaskar (Fabienne, 2001).
In recent years global integration has become a major issue in the realm of the international political economy. Nations, particularly the worlds leading nations, are not only concerned with their on well being but also in the plight of the entire global economy. Although there has always existed some amount of global integration, this integration has become more prevalent in recent years because of advances in technology and various methods of communication.
According to a speech made by Chairman Ben S. Bernanke technological advances continue to play an important role in facilitating global integration. For example, dramatic improvements in supply-chain management, made possible by advances in communication and computer technologies, have significantly reduced the costs of coordinating production among globally distributed suppliers (Bernanke, 2001)."
Indeed technology such as the internet, has provided businesses, financial institutions, and individuals with the ability to connect, communicate, share ideas, create business relationships, buy and sell goods and offer a plethora of services. In many ways global integration is an extremely positive situation because it improves economies throughout the world which improves living conditions. However, there are also some serious problems associated with global integration.
One of the primary problems existing today as it pertains to global integration is the securing of information and goods as they are transported from country to country. As it pertains to securing information governments throughout the world have to ensure that they have adapted laws and standards that protect the information of customers, specifically as it pertains to internet transactions. As it pertains to goods nations have to ensure that both imports and exports are safe for consumers. In recent years there have been several occurrences of Chinese companies that have exported products that were extremely dangerous including lead paint. As the world becomes more integrated nations have to learn to work together to ensure that people from all nations are safe.
As it pertains to global integration, proponents of the realism school of thought would seek to focus on the actual or "real" issues occurring as it pertains to global integration. This would include practical concerns such as logistics, the security of various economic and business mechanisms, the influence of certain industries on the economy and the overall health of the global economy. A realist approach to global integration would have as a foundation the actual factors that contribute to global integration. Once these factors and the issues that effect them have been established, analysts could produce successful forecasts of future economic events.
As it pertains to liberalism and the international political economy, a book entitled Classical Liberalism and International Economic Order: Studies in Theory and Intellectual History gives a thorough overview of liberalism. The book explains that there are various approaches to the theory of liberalism. However he asserts that all liberalists theory have in common the freedom of the individual and that capacity and right of individuals to make their own choices. This is in juxtapose to socialism or communism. However, the manner in which these theories are applied or the underlining currents of liberalism theory can differ greatly.
According to the author there are four man approaches to the theory of liberalism. The first approach asserts that individual freedom is endowed by the creator -- it is a gift from God. This aspect of liberalism is built upon the foundation of the law of human nature. It is from this vantage point that those who believe in this aspect of liberalism build their argument through logical reasoning. Philosophers such as Thomas Hobbes and John Locke would likely embrace this school of thought.
The Second school of thought as it pertains to liberalism asserts that liberalism is a theory that is appropriate not only for the present but for the future as well. The premise for this aspect of liberalism is the idea that liberalism is consistent with the "laws of history and progress. This approach to liberalism is consistent with the philosophical thinking of John Stuart Mill.
The third approach to liberalism embraces the idea of the social contract made popular by John Locke. The Philosophy of the social contract asserts that political and moral obligations of citizens are dependent upon a social contract. That is if an individual conducts himself in a manner that is outside of the parameters of a "social contract" that individual should be punished.
The fourth aspect of liberalism is based on the doctrine of utility. That is, this aspect of liberalism asserts that cost benefit analysis is needed in determining what mechanisms would be best for society as a whole. According the author this particular theory is the foundation for welfare economics.
Each of these aspects of liberalism have been utilized in the context of individual nations and in the broader sphere of international political economy. However, the author explains that classical liberalism is probably a more succinct and accurate way of describing liberalism as a theory of international political economy. The author goes back to one of the chief cornerstones of any theory of liberalism which is individual freedom. The author argues that within the sphere of classical liberalism individual freedom is only understood within the context of laws that place certain parameters on that freedom.
In other words classical liberalism asserts that individual freedom must be governed by certain laws that protect the individual and society as a whole. The individual still has the freedom to do as they please just as long as their decisions and actions are not outside of the established laws. The author further explains that "this latitude of action encompasses a positive aspect of individual freedom, for, acting in his own interest, or that of his family, friends or acquaintances, man discovers an inestimably vast range of present and future actions, allowing for the powerful expression of his individuality in all departments of life (Razeen, 1998, 17)."
The book explains further that the aforementioned foundation of individual freedom accompanied by boundaries can be applied to the economic environment. That is, as it pertains to economic transactions the classical liberalism belief holds that individual freedom (governed by the appropriate laws) encourages the freedom to produce and consume goods and services -- the basis of a social order comprising an extensive division of labour and market exchange. Hence the normative core of classical liberalism is the approbation of economic freedom or laissez faire -- Adam Smith's 'obvious and simple system of natural liberty' -- out of which spontaneously emerges a vast and intricate system of cooperation in exchanging goods and services and catering for a plenitude of wants (Razeen, 1998).
Additionally every preferred system is taken away and the easy system of natural liberty is established (Razeen, 1998. In this natural system all individuals who choose to conduct their affairs within the parameters of the law can freely pursue whatever interests…