3. Economic internationalism

A second major theoretical and policy approach to IPE is economic internationalism. This approach is also associated with such terms as capitalism, laissez-faire, economic liberalism, and free trade. Economic internationalists are idealists. They believe that international economic relations should and can be conducted cooperatively because, in their view, the international economy is a non-zero-sum game in which prosperity is available to all.

Economic internationalists contend that the best way to create prosperity is by freeing economic interchange from political restrictions. Therefore, economic internationalists (in contrast to economic nationalists) oppose tariff barriers, domestic subsidies, sanctions, and any other economic tool that distorts the free flow of trade and investment capital.

The origins of economic liberalism lie in the roots of capitalism. In one of the early expositions of capitalist theory, The Wealth of Nations (1776), Adam Smith wrote that "it is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest." Smith believed that this self-interest constituted an "invisible hand" of competition that created the most efficient economies. Therefore, he opposed any political interference with the operation of the invisible hand, including political meddling in trade. It was Smith’s contention that, "If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage."

The pure capitalism advocated by Smith has few adherents today. Instead, most modern economic liberals favor using the state to modify the worst abuses of capitalism by ensuring that monopolies do not form and by taking other steps to ensure that the competition and unequal distribution of wealth inherent in capitalism is not overly brutal. Writing in the 1930s, the British economist John Maynard Keynes found classic capitalism "in many ways objectionable "but believed that "capitalism, wisely managed, can probably be made more efficient for attaining economic ends than any alternative system".

At the international level, Keynesian economics has influenced economic internationalists and the changes they advocate to traditional economic nationalist policies. They are moderate reforms, though, which would alter, but not radically change, either capitalism or the state-based international system. For example, the efforts in the 1940s to set up organizations such as the International Monetary Fund (IMF) and to promote trade through the General Agreement on Tariffs and Trade (GATT) reflect the Keynesian idea of using intergovernmental organizations (IGOs) and agreements to promote and, when necessary, to regulate international economic interchange. Modem liberals also favor such government interference as foreign aid and, sometimes, concessionary trade agreements or loan terms to assist LDCs to develop.

In sum, modern economic liberals generally believe in the capitalist approach of eliminating political interference in the international economy. They are modified capitalists, though, because they also favor using IGO and national government programs for two ends: (1) to ensure that countries adopt future compe¬tition can be fairer and current LDCs can have a chance to achieve prosperity. Thus economic liberals do not want to overturn the current political and economic international system.

4. ECONOMIC STRUCTURALISM

The third major approach to IРЕ is called economic structuralism. Like the other two approaches, economic structuralism has both descriptive and prescriptive elements.

Economic structuralists believe that economic structure determines politics. That is, the conduct of world politics is based on the way that the world is organized economically. Structuralists contend that the world is divided between have and have-not countries and that the "haves" (EDCs) work to keep the "have nots" (LDCs) weak and poor in order to exploit them. To change this, economic structuralists favor a radical restructuring of the economic system designed to end the uneven distribution of wealth and power.

Economic structuralists can be divided into two major camps: Marxist theorists and dependencia theorists. Marxists see the state and capitalism as inherent sources of economic evil; dependencia analysts do not necessarily share this view. Instead, they advocate fundamental reforms to end economic oppression. Both types of economic structuralists believe that significant changes have to be made in the way international politics works in order to promote LDC development, but they disagree about how radical the change must be. Marxists believe that the entire capitalist-based system must be overturned and replaced with domestic and international socialist systems before economic equity can be achieved. Less radical economic structuralists stress reform of the current market system.

Marxist Theory

Marxism is perhaps the best-known strand of structuralist thought. Communist ideology, associated with Karl Marx, maintains that the economic order determines political and social relationships. Thus the distribution of wealth and the straggle between the propertied and powerful bourgeoisie and the poor and oppressed proletariat is the essence of politics. The first Soviet Communist Party chief, V. I. Lenin, applied Marxism to international politics. He argued in Imperialism: The Highest Stage of Capitalism that capitalist, bourgeois leaders had duped their prole¬tariat workers into supporting the exploitation of other proletariat peoples through imperialism. Thus, the class struggle also included an international class struggle between bourgeois and proletariat countries and peoples.

Dependencia Theory

A second variation of structuralist thought is dependencia theory, which is also referred to as neo-Marxist theory and economic radical theory. Dependencia theorists argue that the exploitation of the LDCs by the EDCs is exercised through indirect control and is driven by the EDCs’ need for cheap primary resources, external markets, profitable investment opportunities, and low-wage labor. The South produces low-cost, low-profit primary products such as agricultural products and raw materials. These help supply the EDCs’ production of high-priced, high-profit manufactured goods, some of which are sold to the LDCs. It is, therefore, in the interest of capitalist exploiters to keep LDCs dependent. For this reason, economic structuralists say, neocolonialism (neoimperialism), which operates without colonies but is nevertheless imperialistic, has created a hierarchical structure in which the rich states in the center of the world economic system dominate the LDCs on the periphery of the system. The dependency of LDCs is maintained in a number of ways, such as structuring the rules and practices of international economics to benefit the North. The economic structuralists further contend that neoimperial powers corrupt and co-opt the local elite in LDCs by allowing them personal wealth in return for the governing of their countries to benefit the North in such ways as keeping wages low for MNCs (multinational corporations) and ensuring low prices for the primary products needed by the EDCs.

An economic radical would argue, for example, that the U.S. role in the Persian Gulf region dating back to World War II epitomizes neoimperialism. The devil’s bargain, in the view of structuralists, is this: The United States protects or tries to protect the power of obscenely rich, profoundly undemocratic rulers of oil-rich states, such as Saudi Arabia and Kuwait, as it did in 1991. In return, the king and emir keep the price of oil down, which benefits the economies of the United States and the other oil-importing EDCs. Crude oil sold for an average of about $23 a barrel (equal to 42 gallons) in 1990. During the decade after the Persian Gulf War, oil seldom sold above $20 per barrel. And while the price recently spiked up and by mid-2002 was at about $27 a barrel (current dollars), that amounted to a decreased price, about $20 in real (1990) dollars. It is possible to argue that the bargain basement price of petroleum has been based on supply and demand. Structuralists would differ, though, and argue that those market forces have been manipulated through a greedy conspiracy between capitalist oil consumers and despotic oil producers.

KEY POINTS

• There are numerous schools of thought related to IPE. They can be roughly divided into economic nationalist, economic internationalist, and economic structuralist approaches. They make arguments about how policy should be conducted.

• The core of economic nationalism is the belief that the state should use its economic strength to further national interests. Economic nationalists are realists who believe that conflict characterizes international economic relations and that the international economy is a zero-sum in which one side can gain only if another loses.

• Economic nationalists rely on a number of political-economic strategies:

- Imperialism and neoimperialism

- Economic incentives and disincentives

- Protectionism and domestic economic support.

• Economic internationalists are idealists. They believe that international economic relations should and can be conducted cooperatively because, in their view, the international economy is a non-zero-sum game in which prosperity is available to all. The origins of economic liberalism lie in the roots of capitalism.

• Economic structuralists believe that economic structure determines politics. That is, the conduct of world politics is based on the way that the world is organized economically.

• Economic structuralists can be divided into two major camps: Marxist theorists and dependencia theorists.

• Karl Marx maintains that the economic order determines political and social relationships. Thus the distribution of wealth and the straggle between the propertied and powerful bourgeoisie and the poor and oppressed proletariat is the essence of politics.

• Dependencia theorists argue that the exploitation of the LDCs by the EDCs is exercised through indirect control and is driven by the EDCs’ need for cheap primary resources, external markets, profitable investment opportunities, and low-wage labor.

CONCEPTS AND DEFINITIONS

National interest: in broad terms refers to foreign policy goals, objectives or policy preferences that benefit a society as a whole (the foreign policy equivalent of the 'public interest'). The concept is often vague and contested, however. It is most widely used by realist theorists, for whom it is defined by the structural implications of international anarchy and so is closely linked to national security, survival and the pursuit of power. For decision-making theorists, the national interest refers to the strategies and goals pursued by those responsible for the conduct of foreign policy, although this may mean that it degenerates into mere rhetoric. Alternatively, it may refer to foreign policy goals that have been endorsed through the democratic process.

Internationalism: the theory or practice of politics based on cooperation between states or nations. It is rooted in universalist assumptions about human nature that put it at odds with political nationalism, the latter emphasizing the degree to which political identity is shaped by nationality. However, internationalism is compatible with nationalism, in the sense that it calls for cooperation or solidarity among pre-existing nations, rather than for the removal or abandonment of national identities altogether. Internationalism thus differs from cosmopolitanism.

Laissez-faire: (in French meaning literally ‘leave to do') - is the principle of non-intervention in economic affairs, it is the heart of the doctrine that the economy works best when left alone by government. The phrase originated with the Physiocrats of eighteenth-century France, who devised the maxim ‘laissez-faire est laissez passer’ (leave the individual alone, and let commodities circulate freely). The central assumption of laissez- faire is that an unregulated market tends naturally towards equilibrium. This is usually explained by the theory of ‘perfect competition’. From this perspective, government intervention is seen as damaging unless it is restricted to actions that promote market competition, such as checks on monopolies and the maintenance of stable prices.

Protectionism: the use of tariffs, quotas and other measures to restrict imports, supposedly to protect domestic industries.

QUESTIONS FOR DISCUSSION

1. What are the key determinants of the course of world politics?

2. What is the core of economic nationalism?

3. What categories do economic nationalism rely upon?

4. Speak about imperialism.

5. Speak about economic incentives and disincentives.

6. Speak about protectionism and domestic economic support.

7. What is the core of economic internationalism?

8. What is the best what to ensure prosperity (according to EI)?

9. Speak about the origins of economic liberalism.

10. What is the core of economic structuralism?

11. What are the two major trends in economic structuralism? What do they have in common? What is the main difference between them?

12. Speak about Marxist theory and dependencia theory.

13. Through what means is the dependency of LDCs maintained? 

CHAPTER 3.THE STATE AND FOREIGN POLICY

1. The emergence of the modern state system

2. The international and internal determinants of states’ foreign policy behavior

- Geopolitics

- Military capabilities

- Economic characteristics

- Type of government

3. States and sovereignty

4. The state and globalisation

5. States’ transformation

6. From national government to multi- level governance

1. THE EMERGENCE OF THE MODERN STATE SYSTEM

As a network of relationships among independent territorial units, the modern state system was born with the Peace of Westphalia in 1648, which ended the Thirty Years’ War in Europe. Thereafter, European rulers refused to recognize the secular authority of the Roman Catholic Church, replacing the system of papal governance in the Middle Ages with geographically and politically separate states that recognized no superior authority. The newly independent states were all given the same legal rights: territory under their sole control, unrestricted control of their domestic affairs, and the freedom to conduct foreign relations and negotiate treaties with other states. The concept of state sovereignty—that no one is above the state—captures these legal rights.

The Westphalian system still colors every dimension of world politics and provides the terminology used to describe the primary units in international affairs. Although the term "nation-state" is often used interchangeably with "state" and "nation," technically the three are different. A state is a legal entity that enjoys a permanent population, a well-defined territory, and a government capable of exercising sovereignty. A nation is a collection of people who, on the basis of ethnic, linguistic, or cultural affinity, perceive themselves to be members of the same group. Thus the term nation-state implies a convergence between territorial states and the psychological identification of people within them. However, in employing this familiar terminology, we should exercise caution because this condition is relatively rare; there are few independent states comprising a single nationality. Most states are populated by many nations, and some nations are not states. These "non-state nations" are ethnic groups, such as Native American tribes in the United States, Sikhs in India, or Basques in Spain, composed of people without sovereign power over the territory in which they live.

When we speak generically about foreign policy and the decision-making processes that produce it, we mean the goals that officials heading states (and other transnational actors) seek abroad, the values that underlie those goals, and the means or instruments used to pursue them. To begin our inquiry into how foreign policy choices are made, we first consider the setting for states’ choices and the circumstances outside national borders that make such choices necessary. Next we look at decision making as a rational process before considering two ways of viewing national decision making: the bureaucratic politics and the history-making individual models. We conclude by examining how states’ national attributes influence their foreign policy behavior.