sexta-feira, 30 de janeiro de 2009

How do realism, liberalism, and Marxism assess the phenomenon of global integration?

1. How do the three conceptions of the international political economy (realism, liberalism, Marxism) assess the phenomenon of global integration?
Accessing the impact of globalization highlights the distinct assumptions from which liberals, realists and Marxists depart. Gilpin notes that “although no perspective provides a complete and satisfactory understanding of the nature and dynamism of the international political economy, together they provide useful insights” (Kaufmann: 433). Believers in the merits of a free market, liberalists tend to access the impacts of globalization in a positive light. Although they do not deny problems associated with it, liberals tend to assert the overall gains in economic efficiency and prosperity achieved through globalization.

Realists, on the other hand, tend to be more concerned about relative gains. For them, assessing overall gains during the latest phase of globalization misses the essential point. Realists are more concerned about who has gained the most from globalization. Gilpin stresses that nationalists emphasize that although “all may indeed have gained, some did gain more than others” (Kaufmann: 467). Besides, realists are not staunch supporters of free trade, an underlying force of globalization. According to Gilpin, nationalists “believe that free trade undermines national autonomy and state control over the economy to the vicissitudes and instabilities of the world market and exploitation by other, more powerful economies” (Kaufmann: 467).

For realists in the developed world the rapid increase in economic power from developing countries (such as China and India), the displacement of the locus of production and the consequent change in the modus operandi of international production is a cause for concern. Realists in the developing world tend to have mixed feelings about globalization and a lively debate has emerged as to globalization’s merits and shortfalls. Since realists tend to emphasize relative gains, rather than absolute ones, the assessment about whether globalization is a success story often depends on the stand point. Those countries and sectors of societies who achieved relative gains with globalization tend to regard it as positive, whereas those countries and sectors that fear a loss of relative power tend to regard it as negative. Gilpin notes that “behind the technical discussions of trade, foreign investment, and monetary affairs are conflicting national ambitions and the fundamental question of “who is to produce what and where”” (Kaufmann: 449). Other than liberals, who tend to favor commerce, realists (and Marxists as well) tend to favor protectionist practices and therefore are rather cautious in regard to globalization. Gilpin argues that “Marxists and economic nationalists advocate policies of economic autarky” (Kaufmann: 443).

Furthermore, Gilpin notes that “economic nationalists emphasize the costs of trade to particular groups and states and favor economic protectionism and state control over international trade” (Kaufmann: 465). Gilpin concludes that “economic nationalists criticize the liberal doctrine of free trade because the doctrine is politically naïve and fails to appreciate the extent to which the terms of trade and the rules governing trade are determined by the exercise of power, because the doctrine is static and slights the problem of adjustment costs, and because it ignores the problems of uncertainty in its stress on the benefits of specialization” (Kaufmann: 473).

Marxists, by their part, tend to view globalization as another phase in the overall imperialist expansion and are rather skeptical about it. Since Marxists believe capitalism to be intrinsically flawed in its ability to deliver social justice and fair distribution of income, they tend to regard globalization rather as an evil that has to be combated. Not for other reasons, Marxists compose the bulk of the anti-globalization movement.

2. The merits and the dangers of “hegemonic stability” in international trade
Hegemonic Stability Theory focuses on the role of a hegemon in providing a liberal trade order. For Gilpin, “according to the theory of hegemonic stability as set forth initially by Charles Kindleberger (…), an open and liberal world economy requires the existence of a hegemonic or dominant power” (Kaufmann: 477). This hegemonic power should be “both able and willing to establish and maintain the norms and rules of a liberal economic order, and with its decline the liberal economic order is greatly weakened” (ibid).

The fundamental aspect of the theory is that a free and open international market does constitute a collective good, but it is not always in the interest of several states to achieve a free and open international market. The international system is therefore unstable. That is why advocates of HST argue that the hegemon should have “the responsibility to guarantee provision of the collective goods” (Kaufmann: 479). The rationale behind this argument is quite plain: a free trade order benefits everyone; however some might oppose this order because they are not ready to contemplate collective gains but rather their relative perceived loss of power; a hegemon should oblige the reluctant states, therefore, for the sake of the collective good, to accept the free market order.

The merits of Hegemonic Stability Theory in international trade rely on its accurate perception that human selfish behavior suggests that not every nation is ready to abide by an open and free international trade order, even if economic logic might suggest that this open and free trade order is in the interest of humankind as a whole. Hegemonic Stability Theory thus proposes that the hegemon nation should take the burden of this responsibility upon her shoulder, if mankind is to profit from the benefits of a free trade order.

By advocating that the hegemon should impose free trade on reluctant states, however, Hegemonic Stability Theory risks jeopardizing fragile arrangements of peace. HST risks, furthermore, to play a destabilizing effect, for reluctant states might feel threatened by its aggressive policies and start a military buildup, in order to defend their perceived legitimate national policies and interests. It is important to notice, moreover, that it could also be the case that hegemons resort to protectionist policies during their rise to hegemony, thus delegitimizing, in the eyes of the reluctant states, the arguments for free trade. Hegemonic Stability Theory could, in this regard, pose a major threat to international peace and stability, backfiring on its initial noble intent as it awakens unwanted perceptions of coercion and power politics.

3. Bibliography:
Baylis, J. and Smith, S. (2004), The Globalization of World Politics (Oxford: Oxford University Press).
Kaufman, D. J., Parker, J.M., Howel, P.V., Doty, G.R. (1998), Understanding International Relations, The Value of Alternative Lenses (USA: Custom Publishing).
Spero, J. E. and Hart, J. A. (2003), The Politics of International Economic Relations (USA: Thomson Wadsworth).

How do realism, liberalism, and Marxism differ?

1. How do the three conceptions of the international political economy (Realism, Liberalism, Marxism) differ?
According to Robert Gilpin, realism, liberalism and Marxism “differ on a broad range of questions such as: what is the significance of the market for economic growth and the distribution of wealth among groups and societies? What ought to be the role of markets in the organization of domestic and international society? What is the effect of the market system on issues of war or peace?” (Kaufmann: 419). In order to better understand why these three conceptions differ on such fundamental issues, one must first examine some premises upon which these theories of political economy rest. Once the premises are understood, it is easier to realize why all three conceptions arrive at quite different conclusions. In fact, conclusions follow the accuracy of premises. Since it is often difficult, in social sciences, to proof the accuracy of premises, it is difficult to establish which of the three conceptions best represent the reality of international relations. Accuracy in predictions remains, nevertheless, an important tool for assessing the validity of one social theory and all three conceptions have been put to test several times by scholars.

Regarding Realism, Gilpin notes that “economic nationalism (or as it was originally called, mercantilism), which developed from the practice of statesmen in the early modern period, assumes and advocates the primacy of politics over economics” (Kaufmann: 420). Moreover, “It is essentially a doctrine of state-building and asserts that the market should be subordinate to the pursuit of state interests” (ibid).

Considering liberalism, Gilpin asserts that “liberalism, which emerged from the Enlightenment in the writings of Adam Smith and others, was a reaction to mercantilism and has become embodied in orthodox economics” (ibid). Furthermore, he affirms that liberalism “argues that markets – in the interest of efficiency, growth and consumer choice should be free from political interference” (ibid).

As far as Marxism is concerned, Gilpin stresses that “Marxism, which appeared in the mid-nineteenth century as a reaction against liberalism and classical economics, holds that economics drives politics” (ibid).

2. Realism
First of all it is important to note that realism is also often labeled as mercantilism, statism or protectionism, and includes such variants as the German Historical Scholl. According to Gilpin, in fact, “economic nationalism is based on the realist doctrine of international relations” (Kaufmann: 432). Realism prioritizes national goals and strategies over economic prosperity. It is, in this sense, a geopolitical construct. For realists, survival in a hobesian state of anarchy is the principal objective state policies should pursue. According to Gilpin, realism`s “central idea is that economic activities are and should be subordinate to the goal of state building and the interests of the state” (Kaufmann: 424). Gilpin notes, besides, that all “nationalists ascribe to the primacy of the state, of national security, and of military power in the organization and functioning of the international system” (ibid).

Realists could be said, therefore, to be more concerned about relative gains than about absolute gains. Even though realists may accept liberal assumptions about the ability of markets to deliver overall prosperity, they ponder that the question “who gets what from this prosperity?” is actually the essential question in terms of international relations that should be posed by scholars and strategists. Other than liberals, who tend to view international commerce in a positive light, realists tend to regard it as a rather complex geopolitical game. This has led Gilpin to affirm that “whereas liberals stress the mutual benefits of international commerce, nationalists as well as Marxists regard these relations as basically conflictual” (Kaufmann: 426).

Realists are not as much concerned with overall economic prosperity, but rather with relative prosperity. It is not enough to be well off; states have to be better than their competitors if they want to avoid external threats to their sovereignty. That is why realists regard industrialization as a paramount enterprise, believing it to have “spillover effects (externalities) throughout the economy and (leading) to its overall development” (Kaufmann: 425). Realists argue that industry is the base of military power and a nation should not rely solely on its agriculture, even if economic considerations and comparative advantages might indicate that specializing in agriculture is the best way to achieve efficiency and prosperity.

It is understandable, therefore, that realists believe the role of markets in the organization of domestic and international society should be a rather limited one. The organization of the international society is driven mainly by power politics and raison d’etat. Realpolitik, not markets, shapes the international arena for realists. It follows from this analysis that the effect of the market system on issues of war or peace is not a preponderant one. For realists, in fact, balance of power and hegemony concerns are the main forces influencing issues of war and peace.

3. Liberalism
The basic assumption of liberalism is the notion that free, unhindered markets are the best way to achieve maximum efficiency in a situation of scarce resources. For liberals, a free market is, therefore, the best way to maximize prosperity. Gilpin defines liberalism as a “doctrine and set of principles for organizing and managing a market economy in order to achieve maximum efficiency, economic growth and individual welfare” (Kaufman: 421). It is clear, from this standpoint, that laissez-faire is an important component of liberalism: the notion that markets work best when left alone. Politics should not interfere with markets, or, if they interfere, such interference should be as limited as possible.

Gilpin asserts that “the rationale for a market system is that it increases economic efficiency, maximizes growth, and thereby improves human welfare” (ibid). Ne notes that “the fundamental premise of liberalism is that the individual consumer, firm, or household is the basis of society” (ibid). Gilpin stresses, furthermore, “individuals behave rationally and attempt to maximize or satisfy certain values at the lowest possible cost to themselves” (ibid).

It derives from this view that, for liberals, markets have a truly determinant importance to growth and to the distribution of wealth. In this regard, liberals argue that free markets are the best way to achieve growth and a fair distribution of wealth. According to Gilpin, liberals believe that governments “should not intervene in the market except where a “market failure” exists or in order to provide a so-called public or collective good” (Kaufmann: 422).

The role of the market is a central one, according to this view, for markets are responsible for guiding the whole economic performance. Moreover, liberals hold that markets have a significant impact on issues of war and peace. For liberals, war is not in the interest of free markets, for it creates externalities which impede them to function properly. Gilpin notes that liberals “believe that trade and economic intercourse are a source of peaceful relations among nations because the mutual benefits of trade and expanding interdependence among national economies will tend to foster cooperative relations” (Kaufmann: 423). In this regard, liberalism could be said to offer a coherent theory of international relations, explaining patterns of conflict and cooperation among nations, once its premises are accepted as valid.

4. Marxism
Advocates of Marxism depart from radically different assumptions and thus come to very different conclusions than their liberal or realist counterparts. Marxism’s starting point is the notion of historical and dialectical materialism. According to historical materialism, history evolves as new forces of production emerge, creating contradictions that will in turn overthrow old, outdated modes of production. Marxism can be correctly regarded, in this sense, as a revolutionary theory, for it is mainly concerned with revolution. Dialectical materialism could be defined as a post-Hegelian approach to knowledge that understands social realities as ever evolving organisms. According to Gilpin, the “dialectical approach to knowledge and society (…) defines the nature of reality as dynamic and conflictual” (Kaufmann: 427).

Regarding historical materialism, Gilpin notes that “the development of productive forces and economic activities is central to historical change and operates through the class struggle over distribution of the social product” (Kaufmann: 427). From this it follows that “the capitalist mode of production and its destiny are governed by a set of “economic laws of motion of modern society”” (ibid). These assumptions led Marx to believe in a series of laws of motion of capitalism, the exhaustive discussion of which would not be possible here due to the very nature of this paper. Suffice it to say that Marx believed that capitalism had an intrinsic tendency towards overproduction (the law of disproportionality). According to Marx, this tendency to overproduction would eventually generate acute and recurring systemic crises. Gilpin notes that, for Marx, “these recurring economic crises would become increasingly severe and in time would impel the proletariat to rebel against the system” (ibid). In sum: even though Marx might have accepted the rationality of the individual capitalist (as proposed by Adam Smith), for him capitalism itself was an irrational system, based on exploitation and doomed to succumb to its own malaise of systemic crises.

Due to this irrationality, it would not be conceivable for Marx that markets could deliver distribution of wealth among groups and societies. In fact, Marx was skeptical markets could deliver much more than alienation and exploitation. In his view, only a proletarian revolution that would ultimately abolish the private ownership of the means of production could deliver a humane and satisfactory distribution of wealth. Marx believed, as a consequence, that markets should play no central role in the organization of domestic and international society. Domestic society should be organized in order to abolish private ownership of the means of production, through the organization of the proletariat and socialist revolution, and international society should be a projection of these forces at the international level. Marx proposed, therefore, the creation of an international socialist movement, bent on achieving his ambitious goals and shaping the international society.

The effect of the market system on issues of war or peace is a more complex issue for Marxism due to imperialism, or the belief that capitalism could try to survive its systemic crises and thus overcome the limits imposed by the three laws of motion through overseas colonial exploitation (imperialism). Favored especially by Lenin, this elaboration implies that imperialism was a necessity of chronically ill capitalism and that wars occurred as a consequence of this chronicle illness.

Marxists, influenced by Lenin, believed therefore that imperialism was the main factor behind international conflicts and that a revolution of the proletariat would replace patterns of conflict at the international level with patterns of cooperation, based on proletarian solidarity. This notion has been proved naïve and not accurate during the course of 20th century history. Marxists, nevertheless, still maintain that capitalist exploitation lie at the root of international conflicts. Nevertheless, Gilpin argues that “Marxism correctly places the economic problem – the production and distribution of material wealth – where it belongs, at or near the center of political life” (Kaufmann: 438). The truth is that geopolitical considerations, often based on economic interests, have played a considerable role in patterns of conflict and cooperation during the last century.

5. Bibliography:
Baylis, J. and Smith, S. (2004), The Globalization of World Politics (Oxford: Oxford University Press).
Kaufman, D. J., Parker, J.M., Howel, P.V., Doty, G.R. (1998), Understanding International Relations, The Value of Alternative Lenses (USA: Custom Publishing).
Spero, J. E. and Hart, J. A. (2003), The Politics of International Economic Relations (USA: Thomson Wadsworth).

segunda-feira, 5 de janeiro de 2009

From management to governance

The International Monetary System ought to move from management to governance if systemic crises such as the ones that happened in the 1990’s and the one that is happening right now are to be avoided. The very complex and unavoidable nature of globalization requires some kind of governance system for the International Monetary System.

Financial exchanges and flow taking place around the world have increased enormously since the collapse of the Soviet Union in 1991, in this financial development phase of globalization. During the last two decades, the world has experienced not only a significant increase in the flow of people and goods, but also in the flow of capital and financial services.

On this subject, two leading scholars (Spero & Hart) mention the “globalization of world markets grew, in part, out of the same forces that had created financial interdependence” (Spero & Hart: 42). In such a world, financial events in Asia can significantly affect the economies of Europe or the Americas, as illustrated by the Mexican Peso crisis of 1994, the Asian financial Crisis of 1997-1998, the Russian financial crisis of 1998 and the collapse of Long-Term Capital Management. For Spero & Hart, “the financial crises of the 1990s revealed serious structural problems regarding the safety and soundness of the global financial system”.

In order to reflect the new realities of the world economy, moving away from management towards governance will have to include the needs and the issues faced by developing nations.

Spero & Hart share this view. For them, “in a world where monetary power is more widely dispersed, governance will depend not on the preferences of a dominant power but on the negotiation of several key players, primarily the United States, the European Union, and Japan.” (Spero & Hart: 59). They go on to assert, “Governance also will depend on incorporating new economic powers that may emerge in the twenty-first century, such as China, India and Brazil” (ibid.)

In this process of renewal, institutions such as the IMF and the World Bank will have to be rebuilt. The World Bank, created during the Bretton Woods conference to help with the reconstruction of post-war Europe, no longer reflects the reality of the world economy. According to another commentator, Sebastian Mallaby, “the world’s premier development institution has come perilously close to losing touch with the needs and realities of developing countries” (Mallaby).

The IMF, also created during the Bretton Woods conference, is in serious financial trouble and has to reinvent itself or risk becoming irrelevant. After a series of financial crises in the 1990s, pundits from the left and right alike have challenged the legitimacy of the Fund. According to Jeffrey Sachs, “The world needs effective international institutions more than ever, yet the legitimacy of the IMF is at a low ebb in many parts of the world” (Sachs).

As the world moves into a new age of more complex and interdependent monetary connections, a new system will have to be implemented to guide the many monetary transactions that take place every day around the world.

The dollar can no longer be the sole currency for monetary actions, which would tie the hands of governments and make an international mess out of domestic monetary policies. A good example of how this happens can be found in China, where the reluctance of the Chinese government to let the Yuan appreciate against the dollar to support rocketing Chinese exports, has led to the Chinese accumulation of a staggering 1.7 trillion dollars in foreign reserves. This unprecedented accumulation threatens the very foundation upon which the modern monetary system is built: the stability of the greenback.

Monetary flow has gotten out of control lately and a system of governance is now more required than ever. The odd thing about the current international monetary order is that no one really knows “what would happen if...” because there has never been a similar monetary order.

There has been a large general consensus, however, as to the need to establish some mechanisms of governance, for predictions of varying economists tend to converge on one aspect: monetary and financial crises will become more frequent and more threatening. In the Age of Globalization, no country can hide away from turbulence elsewhere, not even the truly mighty ones.

Mallaby, S., “NGOs: Fighting poverty, hurting the poor”, in Foreign Policy; Sep/Oct2004 Issue 144, p50-58.

Sachs, Jeffrey D., “The FP Memo”, in Foreign Policy; Jul/Aug2004 Issue 143, p60-64.

Spero, J. E., and Hart J. A., The Politics of International Economic Relations. 6th ed. Belmont, CA: Thomson/Wadsworth, 2003.

Realism, liberalism, and Marxism are not mutually exclusive

Realism, liberalism, and Marxism are not mutually exclusive approaches to understanding international relations. Although all three paradigms have quite diverse assumptions and focus on quite diverse aspects of reality, they provide powerful tools for understanding the international system.

Regarding their diversity, Kaufman & Parker note, in an interesting study, that “Despite continuing evolution, each ideology has maintained an unique set of core assumptions about the manner in which politics and economics interact at the level of the individual, society and the international system” (Kaufman: 412).

Another scholar (Gilpin) adds that these “three ideologies are fundamentally different in their conceptions of the relationship among society, state and market” (Gilpin: 419) and suggests that, “eclecticism may not be the route to theoretical precision, but sometimes is the only route available” (ibid.)

Whereas liberalism argues that markets should be free from state interference so as to function properly and thus maximize efficiency and wealth, realism and Marxism both support state intervention, albeit with diverse purposes.

Mercantilism (or realism) supports state intervention on the grounds that power matters, sometimes even more than economic considerations. Therefore, realists argue that it is sometimes more relevant for a state to secure some aspects of the maintenance of power than to achieve perfect economic efficiency.

Marxism supports state intervention (socialism) with a view to achieving the complete elimination of exploiting labor with capital and thus eliminating class society. In an apparent paradox, Marxism supports state intervention (socialism) to promote the disappearance of the state altogether (communism).

However, the reality of the Soviet Bloc during the cold war has shown that Marxist predictions that the state would disappear proved inaccurate and led instead to a protuberance of state functions which ultimately all but eliminated efficiency and led to economic collapse. In order to eliminate the state, Soviet bureaucracy implemented a super-leviathan that suffocated private initiatives and the role of the individual in creating welfare.

The main objective of liberalism is, on the other hand, to “organize and manage an economy so as to achieve maximum efficiency, economic growth and individual welfare” (Gilpin: 421). Marxism is more concerned with the distribution of wealth and the end of capitalist exploitation of the working proletariat. As Marx famously put it in his book The German Ideology, “philosophers have limited themselves to interpreting the world, whereas the real task should be to transform it”.

Marxism and realism are not primarily concerned with maximizing economic efficiency, but rather with achieving other goals such as social upheaval that leads to complete freedom, for Marxism, and state power for realism.

For Gilpin, “the fundamental premise of liberalism is that the individual consumer, firm, or household is the basis of society” (Gilpin: 421). The state should not intervene in the market, unless a market failure exists or in order to promote the so-called public good. For liberals, therefore, the law of demand is the most efficient way to regulate the marketplace. According to this law, supply and demand will efficiently allocate scarce resources in the economy via prices. If demand rises, so will prices, ceteris paribus. Accordingly, if demand falls, so will prices. The market will drive supply and demand to a point of equilibrium, where prices consumers are willing to pay match the prices producers want to receive. This equilibrium optimizes welfare and efficiency, according to liberal economics.

Nationalists, on the other hand are not primarily concerned with economic efficiency but rather with wealth and national power. To the dimension of national wealth, nationalists add the dimension of national power. According to Gilpin, “its central idea is that economic activities are and should be subordinate to the goal of state building and the interests of the state” (Gilpin: 424). Since they believe industrialization has important spillover effects, nationalists are concerned with achieving this goal, even though it might not maximize economic gains at all times due to differences in comparative advantages. Industry is also the basis of military power and, therefore, an integral component of a state overall security strategy.

Since realism, liberalism, and Marxism do not share identical assumptions and are concerned with different aspects of the same complex social realities, they are not mutually exclusive at all. In fact, they do provide important insights to different aspects of international political economy. As such they constitute useful analysis tools, which should be used without fear by sound scholars and analysts of international relations.

Kaufman, D. J., Parker, J.M., Howel, P.V., Doty, G.R. (1998), Understanding International Relations, The Value of Alternative Lenses (USA: Custom Publishing).

Spero, J. E., and Hart J. A., The Politics of International Economic Relations. 6th ed. Belmont, CA: Thomson/Wadsworth, 2003.