Global Political Economy: Aims and Perspectives

Outline

The general area of investigation is the sphere of political economy, the principles and tendencies, which are observed in the global processes of political economy. Originally, political economy is the sphere of the economy, which is obeyed to political necessities and relations within and among countries. As for the origins of this approach towards political and economic relations, it should be emphasized that first this term as used in the XIX century as a result of the developing economic relations and the necessities to influence the world political processes by the means of economy. Nowadays, the economy is closely involved with politics, and is often resorted to from the position of power and might, thus, controlling the economic and political relations among countries, or influencing directly the world processes and events within particular countries.

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Considering the fact that political economy and the approaches, which are associated with economic pressure and influence have become the central tool of influence, there is strong necessity to research this tool, review the most important aspects of political economy, and relate them to the issues, which political economy may influence. Originally, the sphere of political economy should be regarded from several perspectives:

  • Historical
  • Political
  • Economic
  • International
  • Legislative
  • Ecological

In the light of this perspective, it should be emphasized that the political economy tendencies and approaches generally depend on the aims and purposes, which are pursued by politicians, who are engaged in the political economic processes.

Originally, focusing on the powerful economic, political and technological forces, which are regarded to be the forces which transform the world, there is strong necessity to pay special attention to the processes of globalization, which entail economic globalization in particular. Thus, the offered aspect of the research is closely associated with the matters of political economy as the global process. Moreover, it defines the central aspect of the global processes and motivation of the performers of the global arena to act this or that way. Thus, the paper should focus on the matters of the key determinants of world economic affairs.

Finally, the attention should be paid to the matters of economic regionalism and the division of the spheres of influence. On the one hand, the political economy may be regarded as the global process, which consists on the numerous sub-processes, dependable on each other, on the other hand, division of this process into regions provides the deeper understanding of the entire political economic processes, and the factors, which form these processes in every particular world region. Surely, it is impossible to consider all the factors and reasons of the processes, nevertheless, the general outline should be provided.

Thus, the proposed line of inquiry would entail the general processes of the political economy, the history of its development and the aims and purposes of these approaches. In spite of the fact that aims of the political economy are closely linked with the reasons and origins of the processes, it should be emphasized that the general outline of the aims will help to explain the processes and sub-processes of the global political economy.

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After the analysis of the aims is provided, the political economy should be regarded from several various aspects, which would help to analyze it considering the systematic character of the political economy. Surely, the political economy will look like an influence tool from any aspect, nevertheless, these perspectives should be regarded as the faces of a single crystal.

Annotated Bibliography

Cohen, Benjamin J., “Comment: The Transatlantic Divide: Why are American and British IPE so Different?” Review of International Political Economy 14 2 (2007): 197-219.

The aim of this paper is to explain the essences of the transatlantic economic relations in the context of the International Petroleum Exchange. The fact is that the economic relations between the USA and Great Britain are regarded as one of the brightest examples of political economic relations. Moreover, it should be emphasized that the necessity to analyze global political economy from the perspectives of petroleum trade originates from the concept that oil and fuels is one of the most important trading good in the global economic system, consequently IPE factor was selected for a deeper analysis.

Jeffry Frieden and Lisa L. Martin, “International Political Economy: Global and Domestic Interactions,” in Ira Katznelson and Helen Milner eds., Political Science: the State of the Discipline (New York:WW Norton, 2003), 118-146.

This research is aimed at describing and analyzing one of the key points, defined in the outline essay for researching the global political economy. Jeffry Frieden and Lisa L. Martin aimed to explain the political processes from the perspectives of global and domestic processes, thus, revealing the key processes of the global economic policy. Global and domestic interactions which are explained in the paper are the sub-processes of the entire political economic practices, thus, this paper may be used for analyzing the tools of influence and the aims of the political leaders to resort to these tools.

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Landes, David. ‘Winners’ and ‘Losers’, ‘How Do We Get Here?’ The Wealth and Poverty of Nations (New York: Norton, 1999), 465-524.

As it has been emphasized in the outline, the political economy in the global scales is often used as the tool of influence, consequently, there are winners and losers may be observed on the political map of the world. The aim of this paper is to explain why some countries win and other lose the political game, and what tools are used by winners. Originally, it should be emphasized that even if these tools will be used by losers, the success will not be granted, as the matter is not only in the tool but in the approach in general, which is defined by the aims and realities of the players.

O’Brien and Williams, “Understanding the Global Political Economy Evolution and Dynamics” 2ndEdition New York: Palgrave 2007.

The sophisticated world of the global political economy is the scope of processes and tendencies, which are observed and resorted to as the tool of influence and political as well as economic pressure in the case of necessity. The authors of this book aim to explain the evolution and dynamics of the global political economic principles and tendencies, for the readers could realize the processes of international and intergovernmental relations. Some chapters of the book are aimed to review political economy from the perspectives of gender, specific economic ideas, and key current issues and debates, raised in various researches.

Woolcock, Stephen, (1999), ‘The Multilateral Trading System into the New Millennium’ in Brian Hocking and Steven McGuire, eds., Trade Politics: International, Domestic and Regional Perspectives London: Routledge: pp. 25-39.

The trading system is regarded to be the integral part of the political economy, and the paper is aimed at researching the matters of multilateral trading as one of the key aspects of playing the games of political economy. Surely, the global political economy is impossible without players, and the more players it involves, the more complex the game will be. Thus, the multilateral trading relations should be considered as the integral part of the political economy in the context of trading perspective.

Introduction

To begin with, it should be emphasized that the political economy as the aspect of relations was the term, which defined the evaluation of production rates, which are closely associated with the terms of buying and selling, especially in the context of law and political (governmental) relations. In accordance with the historical approach towards studying the issues of political economy, it should be stated that the term was first used in the XIX century, and originated from moral philosophy. Political economy in the global context is an approach which is aimed at studying the social sciences from the perspective of global trade in combination with the political processes. Thus, as an interdisciplinary science it entails also history and cultural studies, related to the participants of the political economic relations, as the cultural differences and historical background often define the character of the relations, and the rules, in accordance with which the political economy processes are performed. From the academic point of view, it should be emphasized that the borders of the political economic approach are flexible enough for considering or rejecting some related approaches. As O’Brien and Williams (2007, p. 310) emphasize:

IPE emerged as a heterodox approach to international studies during the 1970s as the 1973 world oil crisis and the breakdown of the Bretton Woods system alerted academics, particularly in the U.S., of the importance, contingency, and weakness of the economic foundations of the world order. IPE scholars such as Eugene Low asserted that earlier studies of international relations had placed excessive emphasis on law, politics, and diplomatic history. Similarly, neoclassical economics was accused of abstraction and being anti historical. (O’Brien and Williams, 2007, p. 310)

In the light of this fact, it should be emphasized that the original value of the political economy in its global context is covered in the notion of a multi angled approach. The use of the political economic approaches is differentiated by various aims: extension of the cooperation, control of production and industry, influence tool, tool for imposing an economic embargo basing on political considerations, etc. In accordance with Landes (1999), political economy generally refers to researching the various aspects of political and economic behavior, which often range from the joining and combining economic approaches with the approaches from other spheres, to resorting to different assumptions that contradict with the traditional economic principles. Thus, as Cohen (2007, p. 201), claims:

Beyond an interest in marrying international economics and IR, there is no consensus at all on what, precisely, IPE is about. Once born, the field proceeded to develop along separate paths followed by quite different clusters of scholars. One source describes IPE today as ‘a notoriously diverse field of study’. The distinction is not strictly geographic, of course. The distinction, rather, is between two separate branches of a common research community – two factions whose main adherents happen to be located, respectively, on opposite sides of the Atlantic. (as Cohen, 2007, p. 201)

In spite of the fact that Cohen explains these differences on the basis of comparison of British and US trading processes, these distinctions and approaches are common for every participant of the political and economic relations all over the world. Moreover, the IPE is used just as a bright example, while the instances may be numerous, independently on the character of the relations.

Perspectives of the Political Economy

The most important feature of the political economy, especially in the global context is its multi-angled nature. The necessity to review this approach from several various perspectives is explained by the necessity of deeper understanding of the political-economic principles and tools, which are used by the political leaders of the world.

Thus, the first perspective is historical. Originally, the economic relations between (or among) countries are explained by the historical tradition. Two or several countries may economically cooperate with each other because of traditions and good relations between nations of these countries. Thus, most European countries trade with each other just by giving tribute to historical traditions, and define beneficial trading conditions for maintaining this cooperation. Like in business, if a company has a trading partner which satisfies all the business requirements, the company will not break these relations mainly because of good tradition, and friendly relations. The same should be stated on the matters of cultural backgrounds, as economic and not only relations are often maintained within the same cultural group, especially if cultural norms are among the most important social aspects. In the light of this fact, strong economic relations among the countries of Muslim world are clear and traditionally based. In addition, in accordance with this reason the Muslim world does not support any relations with Israel. (O’Brien and Williams, 2007)

Political Aspect

Political aspect of political economic relations often fully depends on the historic and cultural aspect. The fact is that, relations between countries are formed on the basis of the cultural and religious particularities. As it is stated by Samuel Huntington (in Frieden and Martin, 2003, p. 133) in his “Clash of Civilizations”, all the political and, as a result, military conflicts will appear on the borders of civilizations. Moreover, these borders are traced in accordance with religious and cultural differences. Thus, the relations within these “civilizations” will be weakened. Moreover, if uncovered confrontation is observed, the political and economic relations may be not only interrupted, but those, who are more powerful will insist on interrupting the trade of the most important goods for those who are weaker. The bright example is the Nuclear program of Israel, and the position of the Western World. While Israel negotiated with France on the matters of heavy water supply for the nuclear reactors, the Arab world negotiated with the USA for it persuaded France to impose a trading embargo on Israel. Thus, in general the political aspect of political economy is explained by O’Brien and Williams (2007, p. 451):

Political economy is mainly aimed at explaining how political institutions, the political environment, and the economic system capitalist, socialist, mixed—influence each other. In the narrow sense, it generally refers to applied topics in economics implicating public policy, such as monopoly, market protection, government fiscal policy, and rent seeking.

Economic Aspect

From the economic point of view, the global political economy looks rather complicated. Originally, the ways in which the persons and countries set their economic relations often seem illogical, nevertheless, the only rule is always working: the economic perspective of any relations is defined by the possible profits and benefits. Thus, if cane sugar is cheaper then beet sugar, the countries would prefer buying it in Latin America. Nevertheless, the things are not so simple. Thus, when the communist regime came to rule Cuba, the western world refused from cheap Cuban sugar, and started purchasing beet sugar in Asia (Landes, 1999, p. 467), while Soviet Union started purchasing all the volumes of Cuban sugar industry in spite of its own developed beet sugar industry. Thus, as O’Brien and Williams (2007, p. 193) emphasized:

Economists and political scientists often associate the term with approaches using rational choice assumptions, especially game theory, in explaining phenomena beyond economics’ standard remit, in which context the term “positive political economy” is common.

Consequently, the economic perspective of the global political economic relations may be regarded as the key for understanding the essence of the trade relations among countries. As a part of the systematic relations, economy may be also considered as a tool, which is used for gaining wealth. In accordance to the Neo-Marxist world-system analysis by Wallerstein, the countries of the center use the industrial powers located in semi-periphery for enriching their own reserves, while the countries of periphery give their resources to semi-periphery (raw-materials for industry, working force, etc.)

the economic perspective

Apart from the world-system analysis, Cohen (2007), gives clarification of the economic aspect on the basis of IPE and trading history of the USA and Great Britain. He emphasizes that the positivist attitude of the Americans towards the trading relations is closely associated with the attempts to develop intermediate level trading relations, and support the trading theory by the quantitative evidence. Cohen claims that “British IPE is more “interpretivist” and looks for “grand theories” (p. 205). Thus, various standards of relations and trade are applied in these States. In general, Cohen regards the economic theoretic ideas in close relations with theories and the behavior of the political economy system participants.

International (Global) Aspect

The fact is that this aspect is the least important for the relations; nevertheless, it is highly valuable by the specialists. International aspect is mainly theoretical, as it gives an opportunity to systematize the global political and economic relations. Thus, researchers have an opportunity to offer various models and theories based on the global processes, and explain the motivations and reasons of the players of the world arena act this or that particular way. The only fact, which should be emphasized in this context, is the possibility to structure and systematize all the aspects of global political economy, as the entire system of these relations reminds chaos and absolute lack of any systematic approach.

On the other hand there is strong necessity to consider the issues of globalization, which are closely associated with the matters of systematizing. Thus, global processes, which regulate the political economy tendencies and principles are originated from the international relations of the countries, which participate in the political economic games. The regard of the political economy as a game generally belongs to the young generation of the researchers, who combined the theory of international relations, conflict theory and social studies with the politics, global trade and historical origins. Moreover, such interdisciplinary approaches may be compared only with a game of complex and entangled rules.

Legislative Aspect

Like in the case with the international aspect, the aspect of legislation and law is aimed at regulating and systematizing world trade. Nevertheless, it is unable to control and regulate the political economy approaches, as these are much deeper than the trading rules in general. As Woolcock (1999, p. 475) claims:

The expanding global market system is regarded as one of the aspects of the global political economy. Thus, according to a former director-general of the World Trade Organization, the WTO represents the “constitution” of the new global economy. This may be an overstatement. Nevertheless the policies of the WTO, the IMF, the World Bank, and other global regulators, represent the dominance of the investor class in the politics of the emerging global economy.

On the one hand the WTO and IMF are just the parts of the system, which perform some regulatory functions of the global political economy, on the other hand these are regarded as the integral controllers, and organizations which set the rules of global processes. Anyway, these can only control the economic aspects, and these are effortless in the political sphere.

Environmental Aspect

The environmental aspect is the least important and the least valuable in the context of economic relations. Originally, this aspect may be associated with the economic angle of the global political economy, as environment is often the popular reason for imposing embargo. In the light of this fact, environment is often regarded ass the tool for influencing the financial and trade markets. As O’Brien and Williams (2007, p. 185) stated: “as no system of global political economy is in sight, the simplest solution is including another regulative aspect, and unite all the aspects in a single regulating system.”

The environmental aspect of the global political economy process generally entail economic embargo of the States, which violate the conditions of the environmental agreements and conventions, aimed at improving the measures of the environmental protection.

Aims and Purposes

The aims of the political economy depend on the participant of the global arena, who resorts to the measures of political economy. Thus, the brightest examples are the conflicting nations, who use the economy in the political aims, and influence the weaker participants of the global process.

From the global point of view, the aim of the political economy is the functioning of the economic system in the context of the political events. Considering the fact, that numerous political actions and events influence other aspects of the global life, including economy, the approaches of the political economy are aimed at making the system functional. Thus, as Landes (1999, p, 515) emphasizes:

A fully functioning global economy is like a fully functioning national economy. It requires the system of central banking in order to maintain overall growth. Nevertheless, there will be neither a global central bank nor a global government budget for a long time, so these functions must be performed by the governments of the three largest economies – the United States, Europe, and Japan – acting together.

Thus, Landes splits the world into three spheres, and regards it as a system of global brutal competition within these three spheres. The major powers, which regulate the relations of the world political economy, should observe an obligation “to maintain sufficient global demand with low interest rates and other macroeconomic policies” (Landes, 1999) On the other hand, it is difficult to agree with Landes, as Asian region should be divided into Western (Middle East) and Eastern Asia (India, Japan, China), as these are different geopolitical regions, which have different aims and purposes in the political economic games.

Conclusion

Finally, it should be emphasized that the original value of the political economy is covered in its multi-angled approaches. Considering the fact that various States pursue their own aims and purposes playing the games of political economy, it should be emphasized that it is rather difficult to systematize all the aspects and elements into a single system. Having analyzed all the central aspects of the political economy, the only conclusion which should be made is that the political economy approaches are successfully applied for the influence and control of the political processes and economy by the means of economic observation and tools, associated with economic embargoes, economic negotiations and economic cooperation.

Works Cited

Cohen, Benjamin J., “Comment: The Transatlantic Divide: Why are American and British IPE so Different?” Review of International Political Economy, 14, 2007: 197-219.

Jeffry Frieden and Lisa L. Martin, “International Political Economy: Global and Domestic Interactions,” The State of the Discipline, New York, 2003: 118-146.

Landes, David. ‘Winners’ and ‘Losers’, ‘How Do We Get Here?’ The Wealth and Poverty of Nations, New York, 1999: 465-524.

O’Brien and Williams, “Understanding the Global Political Economy Evolution and Dynamics” 2nd Edition New York, Palgrave, 2007.

Woolcock, Stephen, “The Multilateral Trading System into the New Millennium” Trade Politics, International, Domestic and Regional Perspectives London, Routledge, 1999: pp. 25-39.

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