International Political Economy - the US - Essay Example

? International political economy International political economy is growing at a fast rate in the society. The field tries to understand international and global challenges by the use of interdisciplinary theoretical and analytical tools and perspectives. This paper accesses the most appropriate theoretical approach in the international political economy. The field of international Political Economy thrives as a result of disciplinary breakdown between political and economics in social sciences. Most of these problems are inter and trans-disciplinary in nature. Governments have to relate with other government. Governments must also consider the non state actors if they are to have an impact in the trade and policies. Some states are influenced by liberal theories. Trade must be having some duty and tariffs. These tariffs are sources of government revenues. Mercantilists’ theory has also been instrumental in the International Political Economy. Liberalisms dates back to the revolutions in the 18th century. The mercantilist financial arrangement developed into free enterprise. They were initially termed as centrists believed there should be little state intervention in the economy. According to the liberal economic theory, states were discouraged to minimize intervention in the economy. The theory advocated for free market and believed that internal markets should have negligible intervention from the state. The theory suggested that tariffs should not be used to prevent competition between countries (Eatwell & Wright). According to Comfort, the initial liberal market theory advocated for a free market approach and was referred to as left wing or centrist in terms of outlook (Agh 1998). The liberal theory was enshrined on the premise that people can acquire wealth and property whenever they want. The basis was that freedom in culture and belief was influential in developing capital and gaining property. According to Wright, states, individuals and businesses were encouraged to freely gain capital under the liberal theory. The classical liberal approach suggested that free market should come up with system of setting the process of goods and services. The theory set currency exchanges and wages and resources. The move depended on sheer optimism in the free market (Smith 2003). However, it became clear that fluctuations in the free market have caused serious consequences politically and economically. This has resulted in unemployment and poverty. This has made international competition hard. Governments have attempted to deal with this challenge by establishing strict tariffs on goods. Governments have attempted to set up welfare or subsidizing businesses and industries. According to Harvey, tariffs and restricting trade were the foundation and reasoning behind the capitalist premise. The theory suggests that the government should be involved in restricting trade and controlling the flow of goods and services. The government does this in an attempt to reduce the challenges that are created by international competition (Ambrose & Brinkley 1997). The government believes that the use of tariffs shields the populace from international trade aggression and becomes a dominant source of revenue. During the 19th century, the theory of broadmindedness was the popular in IPE. Britain dominated the global trade by lifting restrictions. This facilitated Britain’s spread in the international trade arena (Smith 2003). The liberal theory of the power of international political economy seemed unassailable. According to research, the economic elites in many developing countries had no reservations in playing subordinates because they made profits in the process. Nonetheless, steps were made to start restricting trade. The initial moves came from the United States of America and Germany. The United Kingdom started to doubt the free market venture. After the First World War, the prominence of the liberal theory appeared to decline in the sphere of international political economy (Agh 1998). The paradox is that liberal theory would gain popularity in the international political economy after the year 1945. By that time, most of the free trade policies had been tampered with by communist governments and welfare states. The power of international political economy was driven by the ability of states to develop a common understanding protocol that facilitated exchange of goods and services. At the same time, states wanted to be assured international political and economic practices would not jeopardize the local industries. The United States of America promoted free trade during the inter war period. This was inspired by the desire prevent downturn in the popularity of international political economy. The move was also inspired by the self interests of the United States of America. The liberal theory suggests a shared approach in the international market and is perceived to yield powerful control when it comes to the international political economy. However, trade imbalance especially from the small economies causes them to feel disenfranchised. The United States ushered the era of free market and liberalism in the international market. This was done with the help of World Bank, Bretton Woods and International Monetary Fund. This era is said to be operational to date. The liberalism that is being experienced differs with the linearity in the 19th century. The liberal theory in the international political economy has minimum restrains with the act as safeguards. The American aid has been successful in influencing Japan and Western Europe to recover (Ambrose & Brinkley 1997). The process of recovery has caused the countries to play a significant role in the global economy. The premise of the foundation world bank has been the liberal theory. The international monetary fund encourages states to adopt the free trade policies and give loans to countries that subscribe to liberal theory of free market in the international political economy. According to Keegan, government has to be open to multinationals for them to get loans from international monitory fund. This is supposed to cause a reduction on education and welfare (Smith 2003). The United States of America has been dominating international political economy. This has caused the United States to promote the liberal theory. The power of the liberal theory grew significantly in the free market. The United States of America dominance in the free market and its position in the liberal theory have caused the country to still dominate the trade even if its trade partners impose tariffs. In the year 1953, the United States of America had a 29 percent share in the world trade. The share declined to 13 per cent in 1980s. The profitability of American multinational company like Coca-Cola and Microsoft has played a crucial role in the world trade. The rise of Apple Inc., which is the world most valuable company has equally benefited American influence in the free market globally. According to DuBoff, most countries pursue liberal theory in the international political economy. The rationale behind this is seen to be a lack of economic autonomy or through their choice. As a result, the liberal theory in the international political theory has expanded in terms of influence and power in the global market place. The restrains that have been placed by some governments have not posed a significant threat to the theory of liberalisms (Harvey 1995). Tariffs have not been entirely removed by all governments. The establishment of trading blocs has posed a new dimension in the international political economy and its practices. Therefore, the liberal theory does not entirely dominate the international trade practices both politically and economically. The introduction of trading blocs like the North American free trade area, the European Union and the Latin American group has created a challenge for the international free market. The rationale behind these trading blocs is developing trading terms, which are favorable to the trading partners in the same bloc. This lessens the free trade with the non bloc members. Free trade areas offer advantages to the economies which are supposed to act as an incentive to the non members. The former communist economies in Europe have considered the advantages offered by these trade practices. According to Keegan, the fall down of SU resulted to the collapse of the economic countermeasures that were propagated by economic and political viewpoint of the communist state. This gave space to spread to the liberal theory in the international political economy (Harvey 1995). Some of the former communist states suffered from unemployment and factories closure as they attempted to adopt the liberal free trade (Freeland 2000). According to Freeland, central planning led to stagnation in many countries. However, the same move bore fruits in some countries like Hungary, Baltic States and Poland. The countries have embraced the political and economic reforms and have joined the European Union. The non member of the free trade areas have been forced to consider the demerits they face both economical and politically. Ordinary people longed to have high living standard just like the Japanese, western Europeans and those in the United States of America. Reformers were drawn to the liberal theory. The mercantilist perception must be viewed as the opposite of the liberal trade concept. Mercantilist theory shows the need to governments to create restriction on free trade areas in readiness for intervention. The theory suggests that if need be trade can be foregone or bypassed. This is the theory have given rise to separate trading blocs. The international political economy began to embrace nationalism in terms of economic engagements and trade (Ambrose & Brinkley 1997). The modern capitalism is said to have developed from an earlier merchant era. This came about due to construction of empires of French, Spanish and Portuguese origin competed for global dominance. The empires did their best to confine trade within their empires. The European empires did their best to colonized territories and expand their economic influence. The United Kingdom has a superior navy. Therefore, it was able to dominate the international political economy. The British tried to remove trade restriction in many parts to allow trade to freely flow (Hobsbawm 1975. The mercantilist theories have remained in the international political economy ever since. The United States of America, Russia, the Germans and Russians used the idea of protectionism. Under this concept, they were able to prevent their rival from shutting their economic achievements, and this enhanced their industrialization process. Japan began importing goods with were perceived to be superior in quality. The idea was to copy them and export a cheap version of the same goods. The imperialism in the 19th century caused the competition to increase in search of new colonies. The idea was to get captive markets. The mercantilist concept was popular in that, it placed emphasis on national interest. This often happened at the expense of others. The United States of America, just like the British, pursued the concept of liberal theory (Carroll and Noble 1988). This United States is known to gain most from these policies. The small economies are tempted to protect their industries by restricting trade. Free trade causes small trade partners to depend on the advanced economies. However, these countries do not have the absolute power of choice (DuBoff 1989). The concept of imposing tariffs and restrictions is one of the ways of enhancing the theory of mercantilist. The use of quotas, trade bans and strategic restrictions is common in the implementation the theory of mercantilists. This is profound to unfriendly states. Restrictions have an economic advantage if well used (Freeland 2000). They are also used as economic and political sanctions to punish transgressor states. A good example is Iran. Whether the use of sanctions in enforces certain positions on other countries are effective remains a matter that is debatable. However, the use of mercantilist theory is perceived to be self centered by many. The crude oil embargo is often seen as an exception to restrictions. This is due to the effects of the 1979 gulf war and the recent Iran invasion. The wars exposed the vulnerability of the global economy due to over dependence on oil. The international political economy is urged to be cautious when contemplation restrictions on essential and necessary goods. In inter was era best demonstrate that there can be imbalances that result to bad consequences when it comes to working with mercantile and liberal theories and their influence in the international political economy. Tariffs were raised during the period of war (Hobsbawm 1975. Many European nations like Britain expanded their imports to their colonial territories. They are minimized imports from their rivals. However, some economies used war as a means for economic survival. Italy and Japan used conquests as a way of protection their economic strategies. Germans used war as a means to economic enhancement and expanding their influence. In conclusion, the mercantilist theories did more harm than good in the international political economy. According to Brendon, the acclaimed depression aggravated the impact of the mercantile theory. The resentment and war affected many European economies and lead to instability. The contemporary IPE can borrow a leaf from the inter war period. The governments have worked hard to prevent a recurrence of the same. The liberal theory is seen as the most influential approach to achieve prosperity and stability. The rise of trade blocs is seen to strengthen the mercantilist theory. Trading partners are seen to lessen restrictions to the member’s states. However, the blocs have both merits and demerits. They are, therefore, not a perfect response to the international political economies inclination to liberal theory. Successful trade is must be seen as the ability of governments to coexist in harmony. It is not enough to have trading polices. The policies must support internetworking of economies to foster a growth with is common and shared among the trading partners. The liberal theory is seen to favor the strong economies like the United States of America. This attracts some resentment from the small economies. The liberal theory exerts power and influence the international political economy. However, the liberal theory has been effective in sustaining stability and prosperity in comparison to any other theoretical approach. References Agh, A. 1998 The Politics of Central Europe, Sage Publications, London. Ambrose S E & Brinkley, D G 1997, Rise to Globalism - American Foreign Policy Since 1938, Eighth Revised Edition, Penguin Books, New York Carroll, P. N and Noble, D. W,1988 The Free and the Unfree - A new history of the United States - 2nd edition, Penguin Books, New York DuBoff, R B 1989 Accumulation & Power - An Economic History of the United States, M E Sharpe Inc. New York Eatwell, R and Wright, A 2003 Contemporary Political ideologies, 2nd edition, Continuum, London Freeland, C 2000 Sale of the Century -the inside story of the Second Russian Revolution, Little Brown and Company, London Harvey, J 1995, Mastering Economics 4th edition, Macmillan, London Hobsbawm, E 1975 The Age of Capital 1848-1875, Weidenfeld & Nicholson, London Smith, D 2003 Free Lunch -Easily Digestible Economics, Served on a plate, Profile Books, London Read More