POL 2039 REVISION
/A). Grotian Tradition.
Based on natural law. Hugo Grotius (1583 - 1645) The Rights of War and Peace (1625) Introduced the idea of a community of nations based on sovereignty.
Vattel The Law of Nations (1758)
Idea that justice is the basis of all society. Works for nations as well as individuals in society.
Key to understanding IR discipline is Levels of Analysis.
These levels are: Man State System
Derived from Kenneth Waltz’s work on Man, the State and War (1959)
MAN: Spinoza explains violence by referring to human imperfections when passion displaces reason.
THE STATE: War depends on the type of national government or the character of society.
SYSTEM: Notion of International Anarchy
Anarchy v Hierarchy
In international system there is no authority. Leads to the quest for power and the security dilemma.
We can summarize that the permissive causes of war is the condition of anarchy in the international political system of states, whereas the efficient causes of any given war can be found as well in other levels of analysis.
ANTECEDENTS of REALISM
Antecedents are very old. We start with Thucydides (431 BC) History of the Peloponnesian War.
Machiavelli The Prince. (manuscript first appeared in 1513) Made a strong case for a powerful ruler who relied on military force to gain legitimacy.
Thomas Hobbes(1681) Leviathan. Made a case for a powerful centralized authority to mitigate against the anarchy of the state of nature..
Modern proponent is E.H. Carr. Wrote The Twenty Tears Crisis in 1939. Attacked the notions of the idealists during the interwar years.
Realism is taken further by Hans Morgenthau after WWII. Politics Among Nations defined states interests in terms of power and argued that these interests could be reduced to a single idea of security
Kenneth Waltz, differed from Morgenthau as he saw states as searching for security.
The major problem with Realism concerns the balance of power and the distribution of capabilities among states within the international system.
Henry Kissinger argues for more voluntarism and the requirement of diplomatic skill to maintain the balance.
Kenneth Waltz focuses more on the structure of the international system. (“the freedom of choice of any one state is limited by the actions of all the others.”)
Waltz argues in Theory of International Politics (1979) that:
1). States are the key actors within the state system
2). That they are functionally equivalent
3). That they are differentiated only through their differing capabilities.
Opponents argue that differing domestic policies of states will lead to fundamentally differing foreign policies. Before pursuing this argument, look at specific critique of structural realism.
Problem with Structural realism is that it does not account for change in the international system.
Robert Gilpin’sWar and Change in World Politics comes to Kenneth’s rescue.
We have a theory that deals with the structure of the international system. States are our units of analysis and power is the independent variable. So pretty static and too deterministic. Theory says that conflict occurs because of the system and the inherent problems of the security dilemma.
So how does change come about?
Gilpin offers the “Law of Uneven Growth”
1). Costs of sustaining control will outweigh benefits
2). Dominant power will consume more than it invests
3). Dominant power will create rivals through the diffusion of technology
WHAT OF THE ALTERNATIVES TO REALISM?
Pluralism
Opponents argue that differing domestic policies of states will lead to fundamentally differing foreign policies. Ties in with theories we term Pluralism. Where power is the key variable for Realism, interdependence is the key variable for Pluralism.
Core Antecedents:
A). Liberals: Locke; Second treatise on Government (1689) who argued forcefully that the individual is the most important unit of analysis and the claimant of rights.
I want to emphasize that in the main, liberals acknowledge that the system of international states is governed by anarchy, but rather than emphasizing power and war as inevitable results, they believe that there will be a harmony of states.
B). Interest Group Liberals: Harold Lasswell and Robert Dahl are the main exponents. Reject the difference between domestic and international politics.
C). Decision-making within the nation state: Richard Snyder and Robert Jervis. Role of perception and misperception in politics.
D). Organizational and bureaucratic politics: Graham Allison wrote Essence of Decision on the Cuban Missile Crisis. Key is the notion of relaxing the core Realist points of rationality.
E). Transnational Actors: Robert Keohane and Joseph Nye wrote Power and Interdependence. Key is interdependence between states.
We marry the IPE theories to the IR theories:
Sovereignty at Bay and Liberalism
Key idea is: increasing economic interdependence and technological advances in communication and transportation are making the state an anachronism.
Argument: The efforts of nation states to enhance their security and power relative to others are held to be incompatible with an interdependent world economy that generates absolute gains for every-one.
Liberalism
Def: Liberalism today is thought to be active state intervention. In fact def is almost exactly the opposite and more synonymous with Thatcher and Reagan.
Roots in Adam Smith and David Ricardo:
Smith argued against the mercantilist impulse that state power is used to create wealth, which produces even more power. For Adam Smith, the individual freedom of the marketplace represented the best alternative to abusive state power.
Liberals think that society is a positive sum game, everyone can potentially get more out of a bargain than they put in.
The liberal perspective on political economy is summarised by the phrase laissez faire or let it be. Liberalism is very conservative as we understand liberal and conservative politics today.
Liberals believe that with power diffused in both state and market with rights and freedoms guaranteed, conflicts can be resolved through peaceful civil means.
David Ricardo (1772-1823) followed Smith . He was a true political economist. Ricardo opposed the Corn Laws. For Ricardo, free commerce makes nations efficient, and efficiency is a quality that liberals value almost as highly as freedom.
CORN LAWS
Britain’sparliament enacted the Corn laws in 1815, soon after the defeat of Napoleon. The Corn Laws were a system of tariffs and regulations that restricted food imports into Great Britain.
Essentially the Corn Laws represented the legacy of the Agricultural barons over the emerging industrial interests. Change came through the Parliamentary Reform Act of 1832, which revised the system of parliamentary representation in Britain. This reduced the power of the landed elites who had previously dominated the government.
The Corn Laws were repealed in 1846. The repeal of the Corn Laws was accompanied by a boom in the Victorian economy. Cheaper food and bigger export markets fuelled a rapid short-term expansion of the British economy. Britain embraced a liberal view of trade for the rest of the century
JOHN MAYNARD KEYNES
envisioned a liberal international system with open markets and free trade. Within this system however, individual nations would be able to undertake the sorts of domestic policies that Keynes advocated for moderating inflation, controlling unemployment, and encouraging economic growth. In other words, the state had a fairly important macro-economic role within each nation, but free markets were intended to dominate relations between nations. Bretton Woods can thus be thought of a something of a compromise.
BRETTON WOODS
It is important to note that Bretton Woods represented a fundamental change in liberalism. After Keynes and Bretton Woods, liberals no longer viewed IPE as state versus market. Rather, liberals sought the right degree and nature of state intervention within an overall system of open markets.
Keynesian flavour of liberalism became the mainstream IPE view in the industrial world from the 1930s to the 1970s. In general, a balance between state and market along the lines of the Keynesian compromise using state power to supplement strengthen and stabilise the market economy became the norm within the Bretton Woods system of international institutions.
The key to Bretton Woods was the notion of embedded liberalism where nation states operated under a modicum of free market trade, but with fixed exchange rates and capital controls. As a result, states controlled the domestic market through fiscal and monetary policy, but still managed to push the Riccardian ideal of free trade.
Liberalism became associated with state intervention. Liberalism became synonymous of a strong state.
CONSERVATISM
Old liberalism became known as conservatism.
Led to a resurgence of ‘conservative classical liberal ideas.
Two big players: Friedrich von Hayek from Austria and Milton Friedman from USA
Called for laissez-faire
Hayek’s big bookThe Road to Serfdom written in 1944 argued that growing state control undermined individual liberty.
Friedman wrote Capitalism and Freedom in 1962 in reaction to JFK’s inaugural address.
Ask not what your country can do for you - ask what you can do for your country.
Rather Freeman said that man should see what he could do to protect his individual freedoms.. See power concentrating in the state. This is a threat to the individual and this can only be maintained by the market, which diffuses power.
Following Friedman, Reagan and Thatcher designed policies to reduce state control and privatise state enterprises. Success has led to a dramatic drop in state control around the world.
World today is a mix of classical liberalism and Keynesian economics.
Floating exchange rates leads to unholy trinity.
Actors desire following:
1). The ability to respond to domestic political forces (this is called monetary autonomy)
2). International capital mobility (necessary for efficient international finance) and
3). Stable exchange rates (desirable for smooth international trade and investment).
Goals are mutually inconsistent. Must give up one of them
Bretton Woods eliminated capital mobility.
Floating exchange rates now meant that capital controls have proved impossible to enforce.
So states had to choose between stable exchange rates or the ability to enforce their own agenda. Most states try for middle ground of policy co-ordination through central banks.
Dependencia Model
Argues against the liberal conception of the world. The idea is that the developed world is exploiting the periphery through the use of multinationals. Unequal exchange leads to poverty and wealth and thus continuing inequality.
Argues that the structure of the global political economy essentially enslaves the less developed countries of the ‘South’ by making them dependent on the nations of the capitalist core of the ’North’.
Mercantilism
Key variable is the nation state: Views the nation state and the interplay of national interests (as distinct from corporate interests) as the primary determinants of the future role of the world economy.
Mercantilism is a theoretical perspective that accounts for one of the basic compulsions of all nation states to create wealth and power in order to preserve and protect their national security and independence.
Typically mercantilism is defined somewhat narrowly in terms of state efforts to promote exports and limit imports thereby generating trade surpluses to create wealth and power. It puts security at the centre of national concerns.
Economic Nationalism
Economic nationalism is a form of mercantilism that developed during the 18th and 19th centuries
Whereas classical mercantilism focused on gaining wealth and power through unequal foreign trade, economic nationalism focused on the internal development of the national economy. Reaction to economic liberalism practised by the UK.
Most famous proponents were Alexander Hamilton in the United States and Friedrich List in Germany. Hamilton argued for strong manufacturing restrictions to protect infant industries.
Hegemonic Stability Theory
Political economists generally recognise three instances of hegemonic stability in modern history:
1). The United Provinces (Holland) in the 18th century
2). Great Britain in the 19th century
3). The United States in the post was era.
And generally analysts believe that Great Britain and the United States created and enforced the rules of a liberal international economic order.
The two central propositions that underpin HST are:
1). That order in world politics is typically created by a single dominant power. Since regimes constitute elements of an international order, this implies that the formation of international regimes normally depends on hegemony.
And
2). The maintenance of order requires continued hegemony. This implies that cooperation within the international system of states also depends on the perpetuation of hegemony.
Regime Theory:
Regimes have Norms, Principles, Rules and decision Making Procedures
Bretton Woods System
1). Norm of Free Trade
2). Principle of reciprocity, liberalisation and non discrimination
3). Rules of GATT and WTO
4). Decision making: Legislation e.g. tax law
Question: Can hegemonic stability theory account for changes in economic regimes?
Yes. The theory surrounding HST would predict that as the hegemon goes, so goes the regime.
Gold Standard
The gold standard has no precise date of origin. It gradually emerged between 1870-1880. The gold standard lasted until the outbreak of WW I in August 1914.
During the gold standard period, prices were relatively stable.
Problems with the Gold Standard and the Interwar Years
The key point I wish to make on the gold standard is that ‘The gold standard is deflationary’.
For example, Great Britain went back on the gold standard in 1925 at its pre-war parity, which was totally over-valued, and the attempt to reduce prices and wages to support the overvalued Pound provoked a general strike.
Let me remind you that under the gold standard, a country has to resort to the classical medicine of deflating the domestic economy when faced with chronic Balance of Payment deficits.
By 1931, Gustav Cassel could argue with conviction that the fall in world prices was due to increasing demand by central banks for gold cover. His conviction that countries would eventually leave the gold standard rather than endure the economic distress caused by deflation came true in September 1931, when Britain led more than a dozen countries (including Sweden) off the gold standard.
Now please remember this point. It’s important. Not a single country left the gold standard ‘voluntarily’; only adverse circumstances forced them to do so.
Gold Standard Lessons for the Eurozone
Certain politicians still believe strongly in reviving the gold standard to mitigate against liberal tendencies. This same impulse is driving certain conservative Republican Party candidates today.
By the same token, Germany, which is now by far the largest economy in Europe, still has a huge fear of inflation due to its experience with hyper-inflation during the interwar period.
Lessons for the Eurozone
The abandonment of the gold standard in the 1930s exhibits at least three similarities with the Euro crisis.
1). In both cases, a major global recession coupled with financial turmoil brings a system of fixed exchange rates under severe pressure.
2). Both episodes also share the reasons behind policy-makers’ determination to maintain fixed exchange rates. In the 1930s, hostility to devaluation was driven by fears of inflation. While little systematic research has been done on why countries on the European periphery cling to the Euro, anecdotal evidence suggests the same: a return to the Drachma, for instance, is portrayed as ‘chaotic’ and likely to result in considerable inflation.
3). There is always an alternative policy of reflation, based on a Keynesian-style view of economics.
INTERNATIONAL TRADE
GATT and the liberal post war trade structure really begins with the establishment of the world’s political economy in 1944 at the Bretton Woods Conference. US tried to promote an International Trade Organisation (ITO) that would serve as an international counterbalance to domestic tendencies toward protectionism. ITO killed by protectionist interests in Congress.
Harry Truman advanced the idea of GATT as a temporary alternative. In 1948 GATT became the primary organisation responsible for the liberalisation of international trade.
GATT was based on the principles of reciprocity and non-discrimination.
Trade concessions were reciprocal as all states agreed to lower barriers together.
Non discrimination meant that imports from all countries would be treated the same way. So imports from one nation cannot be given preference over another. Called MFN Most favoured nation-trading status. Idea to stop bilateral trade wars.
URAGUAY ROUND and WTO
Eighth GATT round got underway in Punta del Este, Uruguay in 1986. Finally completed on December 15, 1993.
Uruguay established new rules on trade items including agriculture and textiles. Also reviewed dumping, state subsidies and in particular services like insurance and Trade-Related Intellectual Property Rights(TRIPs) Key was the deal to try and phase out agricultural subsidies.
Uruguay also launched the World Trade Organisation (WTO) comprised of 135 members with 30 countries seeking membership. WTO accounts for 90 per cent of world trade and is headquartered in Geneva.
Nevertheless, the wheels have come off the WTO. The key problem is the notion of multi-lateral trading regimes.
So where are we going on this? Trade is under pressure today as China, and the BRICS, which have been the engines of growth in world trade, are slowing down. Brazil is a basket case. South Africa does not bear commenting on. Russia is a pariah nation, so this leaves India as the only growth point.
On the bright side, however, I feel that new countries are pushing up green shoots and will challenge for a place in the global sun in the future. And don’t count out the United States, which has a habit of resurgence and renewing itself.
