International Political Economy Yearbook

Volume 1: An International Political Economy

W. Ladd Hollist

• Publisher: Routledge
• Year: 2020
• eBook ISBN: 9780429716317
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Customer Relations
• Index: Politics & International Relations

The International Political Economy Yearbook will be published annually under the sponsorship of the International Political Economy Section of the International Studies Association at the Department of Political Science, Brigham Young University. The intent of the series is to describe and explain the structure and the dynamic operation of the international political economy and to explore their political, social, and economic impact on different countries, be they advanced market economies, newly industrializing countries, or underdeveloped countries. This first volume is an overview of the policy and research field of international political economy studies. It explores what international political economy is; what approaches and theories might broaden and deepen our understanding of the phenomena addressed; what perspectives seem inappropriate or misdirected; and why neither international relations scholars nor mainstream economists can any longer claim status as senior partners in the community of scholars and policymakers interested in these issues. It also addresses major policy problems confronting both advanced and developing countries, including commodity trade, foreign investment, regulation of multinational corporations, food shortages and other development problems, industrial crises in the United States and Europe, international debt, and the increased role of the state in different economies.

Part I
The State of the Art

1
International Political Economy: The Story So Far and the Way Ahead

Susan Strange

There are some subjects—as there are some languages, some games, some practical skills—that have a low threshold of entry, making it easy enough to get started, although progress gets harder as you go on. There are others that have a rather high and difficult threshold, but once that is passed, the going is fairly straightforward. In the first category, one might put the study of history, languages like Italian, games like handball or cricket, and skills like cooking or fishing; in the second, the study of physics, languages like Chinese, games like golf, and skills like swimming or cycling.

The study of international political economy belongs firmly in the first group. It is not hard to get into. Indeed, one of its attractive features is precisely that it is still open to all. It is one of the few remaining pieces of open range left on the vast prairies of social science—prairies that once were accessible to all but that have been steadily fenced and enclosed, the way barred to amateurs and uninitiated entrants. But, as with Italian, cricket, or fishing, the passage from the first easy stages to real proficiency and excellence is long and hard. Looking at the state of the art in international political economy in the mid-1980s, I conclude that behind us lie the easy stages and ahead the really difficult development of the subject into a defined and coherent field of inquiry—though one, I hope, that still erects no fences to keep out strangers with new ideas and new insights to contribute. Still uncertain is whether it will continue paddling in the shallows or whether the present generation of younger scholars, now in their thirties and early forties, who have grown up in this subject, will take it out into deeper and more difficult waters. The choice is still wide open between staying content with a sterile infantilism or risking the pains and setbacks of achieving maturity and independence.

I have no doubt that studies could very easily get stuck at this early and somewhat infantile stage of development. The initial understanding in the early 1970s owed little to the appeals of people like myself who for one accidental reason or another had become personally convinced of the inseparability of politics and economics in the study of the international system. It owed a great deal, however, to the crowding out of other kinds of international news by developments in international money and finance, to the first oil price rise and the discussions that followed concerning economic power, to the sharpening of the North-South argument, and finally to the appearance of serious flaws in the world market economy and some fundamental weaknesses of an economic nature in the power of the leading countries. A whole shopping list of highly economic issues, from exchange rates to the exploitation of the seabed to the transfer of technology by transnational corporations came to dominate political relations between states and to spill over into domestic politics and into the new area of transnational relations.

Behind the journalists came the academics. It is not new for trends in social science to be started by trends in society, but it does not automatically follow that social science always adds significantly to the general understanding of these trends. Social science may not prove capable of producing the creative ideas and ways of thinking that help people to make sense of what is going on around them, to make them more able to cope with the new demands of change. In the case of studies of international political economy, the two disciplines most closely related to it—economics and international relations—may both have had a stultifying, smothering effect on its further development. Instead of being like the good fairies at the christening, these two may have been witches in disguise, casting enigmatic curses to blight the infant's future.

On second thought, perhaps "christening" is inappropriate. For it is more a rebirth or revival than a birth of political economy that we have witnessed. Some modern students may be unaware that political economy (economie politique; economía político) was much studied in the universities of Europe in the nineteenth and even the eighteenth centuries. It was essentially the practical complement to the popular study of moral philosophy. All that is new about it today is the broader global context of the issues it addresses.

International Relations: Imposing State-Centric Habits

The study of international relations, whence most international political economists at work today are sprung, has stultifyingly imposed its own statecentric habits of mind upon the new or new-old subject. Those economic relations that suddenly and almost unaccountably became highly political were those that were subject to discussion and negotiation by states with the power to put them on the diplomatic agenda. The scope of the subject thus became defined by the perceived interests of governments, and only the more powerful governments at that. "Issue areas" were limited to those in which states not only knew they had an interest but were also fairly sure what that interest was. Yet the early "politics of international economic relations" soon proved to be like baby clothes that are outgrown and quickly become constricting long before they appear to be worn out. There remained some marginal questions new to the traditional departments of government—how much the state dare tax offshore oil explorers, for example—which no framework derived from international or interstate relations could comfortably contain. And there were many other issues arising from the transnational relations of groups, enterprises, and individuals for which the old notions of "actors" and "systems" were totally unsuited and could not really be used at all.

Venturing beyond the familiar ground of interstate relations, therefore, those who chose to write about transnational relations soon found themselves out of sight of known landmarks. They knew not what to look for, how to identify the issues, or how to judge policies unless on the narrow and parochial criterion of "does it suit the U.S. national interest?" They were like my distant namesake who got fatally lost in the Appalachians and before he died carved on a tree,

Strange is my name and I'm on strange ground
And strange it is I can't be found.

The failure of many international political economists to liberate themselves from the dominance of international relations has had the effect of making it harder to consider and analyze the basic structures of the world's political economy that underlie the surface of international economy diplomacy. International relations, motivated by the horror of war, has been naturally concerned with the structure of security—who provides what kind of security to whom, and by what means—and has concentrated particularly on the interstate aspects of that essential structure. Except for Marxist literature, international relations scholars have largely ignored the structure of production—who produces what goods and services, for whom, by what means, and on what terms. Its focus on the territorial state has directed attention to the political consequences of power for only two out of the four major factors of production—land and labor—and has left in the shadows the power derived from the other factors of production, notably knowledge (or technology) and capital, the two that have most easily escaped the control of the state and that can most easily slip across territorial frontiers.

Handicapped by its derivation from international relations, the study of international political economy has had difficulty in coming to grips with the nature of structural power. By that I mean the ability—most unevenly distributed throughout the system—to shape basic structures of production, security, credit, and knowledge. It has been hard to handle the relation between authority and markets—who or what decides where authority resides and how it will be exercised and who or what decides what sort of a market will function, who will operate in it, and how exchanges will be made. Such decisions are often taken in the context of domestic politics, not of international politics, though the impact of the decision, conveyed via the structures, will often be reflected in the reactions of states in their international relations. Yet this has often been obscured by the false separation of domestic and international politics and the concentration of the latter on foreign policymaking (in which the domestic roots are acknowledged) but not on other branches of policymaking (monetary, agricultural, industrial, environmental, and regulatory for transport and communications) in which the domestic decisions of powerful states (especially the United States) also reach far beyond the water's edge. This is a point of which many dependency theorists are acutely aware.

Economists: Practitioners of Intellectual Enclosure

The stultifying effect of economics has been different. Arch-practitioners of intellectual enclosure, the economists have managed, by keeping others out of their territory, to persuade us that within it lay an arcane mystery accessible only to initiates. Political scientists concerned with developments in the world economy were overawed—unduly and too easily overawed—and consequently were often too reticent to question or to challenge the methods, assumptions, or conclusions of the economists. It was a mystery the economists certainly had made and then wrapped in an enigma as they increasingly resorted to communicating their ideas in pseudo-mathematical formats. This high defensive wall, like that surrounding the giant's garden in Oscar Wilde's tale (1964), concealed from those outside that all inside was not paradise—in the giant's garden winter reigned because no children played; spring never came, and no flowers bloomed. And in the economists's enclosure, because human nature and human irrationality (and a few other realistic variables) were excluded, only the most arid conclusions could emerge, couched in the most prickly and impenetrable language.

It is hard to overestimate the impoverishment of study of the international political economy that has resulted from the collective autism that has afflicted so many conventional economists. For it is not just that, like deaf mutes, they are unable to communicate, but that like autistic children many of them do not even want to do so.

Moreover, in the fifteen years since international political economists first began to complain about the economists's indifference to power (Strange 1970; Rothschild 1969), although some valiant bridge-building efforts have been made, the general gulf has if anything widened. This continuing problem has been more than a little due to the internal crisis, as some have called it, in economic theory, by which is meant the erosion, from the right as well as from the left, of the middle ground of neoclassical Keynesian economic theory and methodology on which there was such broad, extensive agreement for over a generation. As Daniel Bell and Irving Kristol have commented, "More and more of the intellectual energy of economists, these days, goes into the disestablishment of what our university textbooks still proclaim with serene confidence. Almost everything—almost every concept, every theorem, every methodology—in economics today has become fair game for controversy" (Bell and Kristol 1983, 202-203). Bell and Kristol suggest that the end result of current "reformationism" in economic theory is likely to be a marked contraction in the pretensions of economics as a science and of economists as a profession. Meanwhile, most of us with some contact with either will be aware that a passionate debate now rages, as it has not done since World War II, over the scope and purpose of economics. The basic premises of microeconomic behavior and macroeconomic models are under coincident attack from the so-called "neo-Austrians," from self-styled "post-Keynesians," and from radical humanists—as well, as always, from neo-Marxists.

The neo-Austrians on the right are the closest heirs of Adam Smith. Like him they acknowledge the importance of monetary management but otherwise regard the marketplace as a necessary and indispensable organism through which rational human goals can be achieved. The post-Keynesians, of whom Galbraith is probably still the most widely read and understood even if not the most universally respected, are much more critical of decisions reached through markets—decisions that they regard as so distorted by corporate or labor oligopolists that conscious political management or intervention is necessary to correct the distortions. The radical humanists actually agree with the other dissidents about the false claims and pretensions of orthodox economics (for example, research findings facilely based on the assumption that correlation implies causation), but they go further in asserting that welfare cannot be simply defined in terms of material benefit but must include the full range of human values, thus making economics "a subordinate branch of political philosophy, not an autonomous intellectual discipline" (Bell and Kristol 1983, 215). The same observation from a more orthodox angle was made by the late Lionel Robbins in one of his last major lectures given to the American Economics Association in 1980. The great hubristic error of economics, he thought, had been to try to incorporate welfare economics—which inevitably makes subjective value judgments—into economic science. The latter, by simplifying the values and motives of human behavior and making all sorts of unrealistic assumptions to exclude inconvenient variables like time, ought to retain its internal logical consistency and therefore the validity of its claim to be scientific and of its right to use mathematical methods to reach its conclusions. It would have been far better, in Robbins's view, to have kept the two strictly apart, allowing welfare economics to develop in partnership with other social sciences and economic science to maintain at least a measure of logical purity.

Much more could be written about this ongoing debate, about the way it is reflected in disagreements over problems of the world economy and about what Myrdal called the sociology of social science and the political, existential, and temperamental differences that underlie and largely explain these professional controversies. For present purposes, they are worth noting because they go far to account for the rather surprising disinterest of so many economists—theirs is, after all, the most populous (not populist) of the social sciences—in the development of international political economy. They have other and more private fights on their minds.

Besides pointing out this widespread disinterest—to which I need hardly say there are many notable individual exceptions—there are some other things that should be said about the rather meager contribution of economics to the study of international political economy. Some are obvious and have been said before but will bear repeating. For example, there is the observation that the assumption of rational man—thus rational expectations and rational choice—is the legacy of nineteenth-century thinking untouched by Freud and thus can be fatally misleading if rationality is assumed to refer only to the pursuit of material satisfaction and not to any other basic social values. There is also the valid criticism by the post-Keynesians that the Walrasian concept of equilibrium on which so much neoclassical analysis still rests is a totally unreal notion, obliterating time and disregarding the nature of money as an intervening variable. The good opinion that many economists have of their own theories—characteristically that they are "robust," "rigorous," and "parsimonious"—is seldom shared even by their colleagues. A good example is found in Mancur Olson's The Rise and Decline of Nations (1982), in which he uses a rather simple idea—that the differential capacity of nations for change and adaptation depends on social or socioeconomic alliances opposing or aiding and abetting change—combined with some rather narrow-based economic history, to develop a theory to explain the shifting distribution of wealth and power in the international system. Dismissing others's theories in unduly contentious fashion, he claims that his own is robust, rigorous, and parsimonious (i.e., it uses no more variables than are necessary for the explanation). Such claims should be treated with full reserve by political economists.

Other observations are perhaps less often heard. One is that the enclosing instincts shared by many economists lead them into a curious indifference—even myopia—toward factors perceived as lying outside the enclosing fence, especially when these factors smack of the political or of the unexpected. The point is well illustrated by many of the interpretations offered by economists of the great inflation of the 1970s and of the ensuing world depression of the 1980s. Notice how often economists' accounts of this recent history refer to "exogenous shocks," as though the oil price rise of 1973 was some kind of natural catastrophe having nothing to do with the mismanagement of the dollar or the freedom accorded to the major oil companies (Matthews 1982). And another kind of escapism from the realities of political life can be observed in the recent popularity of Kondratieff long waves as partial "explanations" of slowing growth in the industrialized countries, conveniently shifting the blame for current economic problems from policy decisions to a technological hiatus in which we have to sit patiently and wait for new inventions to set off the next long upswing. Any suggestion, however, that this sort of resort to technical determinism is not much different from faith in the influence of the stars or the power of saints and spirits to intervene in human affairs is apt to meet with amazed resentment (Freeman 1965; Rostow 1978a; Beckman 1983; Kondratieff 1935).

The net result is once again to discount the element of choice in the shaping of the basic structures of global production and the global monetary system and the global knowledge and information structure. And there is a converse but related tendency, certainly among liberal economists, to exag...

Table of contents

• Cover
• Half Title
• Series Page
• Title
• Copyright
• Contents
• List of Tables and Figures
• Acknowledgments
• About the Contributors
• Introduction: An International Political Economy Policy and Research Agenda,
• Part 1 The State of the Art
• Part 2 Interpreting Continuity and Change in the International Political Economy
• Part 3 Policy
• References
• Author and Name Index
• Subject Index