Political Science International Political Economy:

Political Science

International Political Economy:

Realist, Liberal, and Marxist Perspectives

The current international order is in a state of flux. As economics becomes ever more global in scale, nation states struggle to maintain their independent powers and spheres of influence. The more than three hundred year old Westphalian order has been replaced, to a significant extent, by a system of international organizations, and an international political economy that has attempted to coalesce around a single hegemon. Through agreements such as Bretton Woods, the United States established its currency as the world's reserve standard. The petroleum that fuels the globe's industrial powerhouses is, by and large, bought and sold in dollars. The United States, despite enormous declines in industrial output, and a move toward a post-industrial service economy, has maintained its status as a leading target of international investors. American multinational corporations become more global in their reach, as do similar business enterprises in American allied nations. The collapse of the Soviet Union left the United States in the position of sole military superpower. It garrisons the globe with hundreds of bases, and exerts its influence on every continent. Hard power and soft power combine to paint a picture of unchallenged American supremacy, of an emerging world order that the United States works hard to shape and control. Yet, there are powerful signs of strain. America is mired in a credit crisis that threatens not only its own economy, but that of the world as a whole. The North American colossus is overextended military; bogged down in a seemingly interminable war in Iraq. Rival ideologies such as the neo-Marxist populism of Latin America, and the militant fundamentalism of the Islamic World challenge the free market ideas trumpeted by America's political leaders and commercial entrepreneurs. The rival political philosophies of the modern world - Realism, Liberalism, Marxism - all have their own take on current conditions and possible or desirable directions. A new order is forming, but is it truly global, democratic, and free market? Should it be?

Today's globalizing world is, according to the realist perspective, a result of the natural tendencies of nations, peoples, and economic institutions to work toward their own best interests. American free market capitalism triumphed because it is the system most conducive to business and industrial success. It toppled the Soviet command economy, and has become the motive force behind Chinese success because it provides real, material results. As Martin Wolf states, "The tirades against capitalism come from dreamers who compare it with an ideal system that never existed."

Capitalism finds its strength in the fact that it makes possible the technological innovations, the movements of capital, and the commercial marketing and organization that raise actual standards of living. Countries such as the People's Republic of China and the Republic of India have gained enormously in power and influence on the global stage precisely because their economies have expanded exponentially since their adoption of "American" methods. Capitalism provides powerful incentives in the form of monetary returns to individual investors. Knowing that they will reap the rewards of their own ideas and efforts, capitalist entrepreneurs are encouraged to invest still greater amounts of capital, both financial and intellectual. The planned economies of the old Soviet Union, and of China in its "pre-boom" days, represented the worst excesses of an inherently unresponsive system. Authoritarian rulers and economic decision makers make choices based upon their impressions of reality, and upon perceived goals, that may or may not reflect the real needs of those whom they govern. Such traditions necessarily favor the elite over the many. Centrally planned economies have, throughout history, often devolved into the horrific examples of totalitarian tyranny on nearly every conceivable level:

In agrarian kingdoms and feudal societies, kings and lords could seize at will the labor, possessions, and even the lives of subjects, serfs, and slaves. Perhaps the most unequal societies of all were the state-socialist and national socialist regimes of the 20th century. When, on a whim, Chinese leader Mao Zedong initiated the Great Leap Forward in the late 1950s, some 20 million people died. The irony is that such tyranny was justified by the alleged depredations of capitalism.

By dispersing the decision-making processes, free market economies accord with the real-world wishes of flesh and blood men and women. The millions of innocent people who were massacred by Mao, and other modern day tyrants, would not have chosen, of their own free will, to make economic choices that led them inevitably to the slaughterhouse.

Still, realist notions of international economics have been blamed for a wide variety of ills. Mao's claim to have been rescuing his people from capitalism is one that is frequently repeated by advocates of other economic systems. Bretton Woods, it is averred, unfairly placed the United States in the position of hegemon. So completely one-sided was the process created that other nations were forced either to become the willing tools of American foreign policy, or submit to covert and overt aggression on the part of America and her allies. Much as with the earlier British Empire, an "imperial" order was created that came increasingly to depend on the "violent" and exploitative actions of the recognized superpower. Karl Marx postulated a world that operated according to a socio-economic variant of the Hegelian dialectic. Following Georg Hegel, he believed that history moved inevitably along the lines of syntheses that arose from collision of ideas or trends that antithetical to one another. The crisis of thesis and antithesis produced the next trend, or synthesis.

Marx's interpretation of the dialectic was predicated on a sort of perpetual class warfare. Capitalism's triumph was natural only in the sense that it was the result of the natural - in historical terms - battle between the forces and ideologies of the bourgeoisie and the proletariat. The "creative and destructive societal processes necessary to advance human wealth" determined the course of civilization.

The bourgeoisie were victorious because they managed to control the largest share of wealth and productive capacity, while essentially cutting out the masses of the population i.e. The proletariat, who worked for them as virtual slaves. Marxism is victorious when the proletariat finally gets its due and eliminates the bourgeoisie, thus becoming the soul class in world that is, in effect, classless. There is no inequality because inequities simply cannot exist:

Labor has been dispossessed and has become a commodity that is subject to the price mechanism. In Marx's view these two key characteristics of capitalism are responsible for its dynamic nature and make it the most productive economic system yet. Although its historic mission is to develop and unify the globe [emphasis added], the very success of capitalism will hasten its passing.

In the Marxist view, America and its system of capitalism has indeed brought much of the world closer together, but in the process it has created vast social and economic disparities that continue to bleed the international body politic and foster destructive tensions.

The Marxist sees globalism as a sign of the abject failure of the capitalist system. The rise of radicalism in the Middle East, Africa, Asia, Latin America, and many other parts of the world indicates that native peoples are becoming aware of the way they are being exploited for the benefit of the bourgeois nations of the West, and those, like Japan, that have also adopted the free market system. Marxist "thinking is also deeply Utopian."

The fact that there have been considerable material gains for huge numbers of people around the globe, and that communism itself has largely collapsed, does not obscure the continued realities of daily life for a very sizeable proportion of the Earth's population. As Marx implied, Globalization is being brought about by the commandeering of the world's social, political, and economic systems by a capitalist power. The United States and its business interests have taken over where previous capitalist empires have left off. By creating a system that fixed the dollar as the world's currency, the United States guaranteed itself a role as global economic hegemon despite any apparent vicissitudes in its real economic might. Any gaps in American economic influence are made up through military "persuasion" in the form of massive U.S. troop emplacements at an ever increasing number of locations around the globe. The Bush Administration alone has seen to the expansion of American influences into nations formerly within the Soviet sphere, stationing troops and planes in Central Asia, and more threateningly, expanding NATO to the very borders of present day Russia. President Bush even plans to install a "missile shield" in the Poland and the Czech Republic. Meanwhile, a credit crisis deepens at home, in America, and the falling dollar threatens the stability of many nations that are already wracked by the threat of populist or fundamentalist violence. Rather than bring prosperity to the globe, the principle of "hegemonic stability" appears to have guaranteed that financial assets will continue to flow disproportionately in America's direction. A handful of leading cities, all of them in nations that are full participants in America's hegemonic game, dominate the financial affairs of the rest of the planet. Investment in the "global economy" remains a domestic matter:

The fact is, the total amount of the world's capital formation that is generated from foreign direct investment (FDI) has been less than 10% for the last three years for which data are available (2003-2005). In other words, more than 90% of the fixed investment around the world is still domestic. And though merger waves can push the ratio higher, it has never reached 20%.

The benefits that were supposed to accrue from the world being brought closer together under the careful and judicious management of a single hegemon and single hegemonic system have certainly not been guided to the many in those parts of the world that do not participate in the system as active members. Developing nations continue to suffer as the already industrialized take advantage of them, using their people as convenient supplies of labor; populations who, in Marx's thinking, should be ripe for revolution. And indeed, these people are beginning to organize, their discontents spawning terrorism and increasing agitation for reform.

Of course, there are ways of alleviating current tensions, even within an environment of seemingly unstoppable globalization. While Marx recognized the importance of providing for all members of the population equally, he did not foresee that other economic theorists would arrive at a similar idea. Welfare capitalism can be seen as a Liberal political and socio-economic response to the potential horrors of an unrestrained free market economy. Liberals saw the possibility of reform where Marx did not.

Social welfare systems offer the realistic possibility of ameliorating the conditions that unfettered capitalistic expansion produces. The dislocation of labor, the robbing of individuals of their "choice" in employment, and their ability to effectively set wages, can all be addressed through appropriate programs and legislation. As capitalism, in the form of industrial development and exploitation, comes to an area, it tends to alter the local basis of subsistence. Traditional ways of making a living are replaced by new methods, often ones controlled by outside forces. This is especially the case in much of the developing world today. Even that great economic success story, China, owes a considerable part of increased production to its having attracted the manufacturing operations of the United States and other long-developed nations. American manufacturing concerns close their own plants and either open new ones in China or simply make use of pre-existing (or recently created) Chinese facilities. Though advantageous to the owners of the original manufacturer, and also to the proprietors of the new plant, the process comes with high costs for workers at both ends of the equation. American workers not only lose jobs, and the nation the buying power that these lost incomes might have meant, but the United States itself is in some sense diminished on the international stage as it loses control over the forces of industrial production. As Jessica Matthews stated in Foreign Affairs in 1995:

National governments are not simply losing autonomy in a globalizing economy. They are sharing powers - including political, social, and security roles at the core of sovereignty - with businesses, with international organizations, and with a multitude of citizens groups, known as non-governmental organizations... The absolutes of the Westphalian system - territorially fixed states where everything of value lies within some state's borders; a single secular authority governing each territory and representing it outside its borders; and no authority above states - are all dissolving. Increasingly, resources and threats that matter, including money, information, pollution, and popular culture, circulate and shape lives and economics with little regard for political boundaries.

Worker discontent arises more and more from factors beyond governmental control. Globalization makes global problems of what were formerly merely local concerns. Government-sponsored social welfare schemes must adjust to new realities, and take into account new causes for problems that may themselves be long standing but have appeared in guises.

As already stated, globalization produces unwanted effects both at home and abroad. Within the old Westphalian system, a kind of mercantile attitude prevailed in which the benefits that accrued to one country were believed to be largely absolute. Today, the same expansion that puts money in the pockets of investors may very well take jobs away from their fellow citizens and give them to people in India, China, or Central America. Social welfare attempts to adjust for these factors. Under the global system, re-training has become particularly important. As workers are pushed out of their former careers, they must go back to school in order to learn new ones. Universal access to education - especially to higher education - is essential if the global system is to succeed. From the liberal perspective, this means ensuring that workers in developed countries possess the financial means for lifelong education. In developing countries, the answer is making education available so that the citizens of those nations do not remain stuck forever in dead-end, low-paying factory jobs with few or no benefits and deplorable working conditions. Observed Adam Smith more than two centuries ago in his Wealth of Nations,