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Y669 International Political Economy, lecture #1

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Gradipe01

  1. 1. Y669 International Political Economy August 31, 2010
  2. 2. What the Course is About • How is the global economy governed? • What is globalization and how far has it progressed? • Is global economic governance keeping up with the pace of globalization? • If not, what are the consequences? We will use the idea of international economic regimes to talk about global governance.
  3. 3. Definition of a Regime • A set of norms, rules, procedures and institutions which constrains the behavior of the members of the regime. e.g., the World Trade Organization in Geneva, Switzerland.
  4. 4. Organization of Spero and Hart Regimes Periods Bretton Woods Interdependence Globalization Monetary Trade Investment
  5. 5. Three Traditional Schools • Mercantilism • Liberalism • Marxism Jean-Baptiste Colbert Adam Smith Karl Marx
  6. 6. Three Mercantilist Propositions • Economic strength is a critical component of national power. • Trade is to be valued for exports, but governments should discourage imports wherever possible. • Some forms of economic activity are more valuable than others. Source: Thomas Oatley, International Political ‘Economy, p. 8.
  7. 7. Three Liberal Propositions • The purpose of economic activity is to enrich individuals not enhance the power of the state. • Trade benefits all regardless of the level of imports vs. exports (trade balance). • All productive activity is valuable; the key is to specialize in activities for which the country has comparative advantages.
  8. 8. Marxist Views • Capitalism defined as private ownership of the means of production by capitalists; workers are paid wages by capitalists. • Value of goods determined by labor used to produce them (labor theory of value). • Capitalist never pay sufficient wages to compensate workers for the true value of their labor (class conflict) leading to revolution and the abolishing of capitalism.
  9. 9. Comparing and Contrasting the Three Schools Mercantilism Liberalism Marxism Most Important Actors The State Individuals Classes Role of the State Intervene in the economy to allocate resources Establish and enforce property rights to facilitate market-based exchange Instrument of the capitalist class, used to sustain the capitalist system Image of the International System Conflictual Harmonious Exploitative Proper Objectives of Economic Policy Enhance power of the state in the international system Enhance aggregate social welfare Promote an equitable distribution of wealth and income Source: Oatley, p. 11.
  10. 10. Comparing and Contrasting the Three Schools Mercantilism Liberalism Marxism Most Important Actors The State Individuals Classes Role of the State Intervene in the economy to allocate resources Establish and enforce property rights to facilitate market-based exchange Instrument of the capitalist class, used to sustain the capitalist system Image of the International System Conflictual Harmonious Exploitative Proper Objectives of Economic Policy Enhance power of the state in the international system Enhance aggregate social welfare Promote an equitable distribution of wealth and income Source: Oatley, p. 11.

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