INTL. POLITICAL ECONOMY: THE NORTH
I. 3 dominant views
A. Liberalism: market economy, minimal state intervention;
comparative advantage
B. Mercantilism: states pursue power through trade, investmt.
C. Marxism: core vs. periphery; MNCs more impt. than states
D. Ecological: inclusionist; brings in nature;
II. Interdependence & mutual vulnerability
A. 16th-18th C: Mercantilism
No country has industrialized under a free trade regime
Q: Why?
B. 19th C: Liberalism in Europe
C. WWI: end of free trade regime,
Treaty of Versailles: punitive peace
Reparations >> Econ. crisis
-- shows how hurting others can hurt yourself
Dawes-Young Plan
U.S. ---------> German reparations (loans)
France & Britain
(asymmetric interdependence)
D. Depression: rule of self-interest; huge tariffs;
nonexchangeable currencies
Q: How does WWI peace compare w/ post-WW2 peace?
E. Post-WWII:
1. Keynesian economics: more govt. intervention in mkt.
2. U.S. hegemony
Post-1970: Decline of U.S. hegemony
-- 1980s: #1 creditor > #1 debtor (Reagan "get govt. of our
backs" -- drain of military spending)
-- Symptom: decline in U.S. foreign aid
** Show transparency
Post-Cold war >> more European & Japanese unilateralism
3. Multilateral inst's >> policy coordination
a. Monetary (Bretton Woods)
Gold Standard >> floating exchange rates
-- Annual G-7 summit mtgs. discuss monetary policy
IMF: loans for exchange rate stability, not development
per se
b. GATT (liberal)
MFN principle
Reciprocity
Nontariff barriers to trade
Negotiations: state trade reps. & corporations
("rounds")
Now covers services, intellectual prop. & agric.
3. WTO: GATT descendant
Approx. 80 members --
Notable exceptions: Russia, former Soviet
republics, the Middle East, most of Africa
--Binding decisions by panel of experts
>> erosion of sovereignty
EX: calls for huge decrease in agric. subsidies
U.S. has acted or threatened to act
unilaterally in several trade disputes
[over EU favoritism towards Latin American
banana growers over U.S.-based growers;
w/ China over intellectual prop. rights;
w/ Japan over cars & cellular phones]
>> will WTO work??
III. Global economy or regional trading blocs?
Liberalism vs. mercantilism
A. E.U.: began w/ Steel & Coal Community in 1950s w/ 6 members
Now, moving toward single currency, perhaps common defense
B. NAFTA: response to European integration
Theory is that U.S. will benefit from cheap labor & Mexico
will benefit from more jobs, which will create markets for
U.S. jobs
C. APEC: Largest (Japan, China, U.S.), but mostly just a forum for
discussion; no real homogenization like EU
-- Human rights issues (China, Indonesia)
Q: Who is missing from these trade blocs? (Marxists wd ask)
-- most of Latin America, all of Africa, former Soviet states
**Like GATT, WTO does not consider the environmental & social costs
of free trade. (Exclusionist)
IV. Emergence of inclusionist political economy
A. Trade & environment debate
1. EU harmonization of envt'l standards
2. NAFTA debate >> envt'l side agreement
EX: When tens of thousands of birds died around a Mexican
lake, side agreemt. provided for investigation
3. Critics want envt'l arm of WTO
B. Aid to DCs increasingly linked to sustainable techs.
1. World Bank restructuring
2. Green conditionality = "eco-imperialism"?
C. New economic indicators
1. GNP/GDP as exclusionist indicators
EX: Indonesia deforests, increases GNP
2. Index of Sustainable Economic Welfare: takes into account
depletion of envt'l "capital"