The international Political Economy theory analyses and study on the relationship between Economics and Politics in the global system. The approaches in IPE cover the three main domains which are liberalism, state-centrism and lastly, and marxism. The holistic approaches help people to understand the economy’s foundation of global orders, class orders, and ideational orders to determine how a country structures, functions, and for whom.
The IPE also studies the hierarchies and dynamics of power that is regulating finance and trade, globalization, and nationalism of countries – how it impacts the wealth, GDP, and poverty within and across regions, states, and the world. While change happens over time and impacts conditions of stability and instability of the economy.
International Political Economy theories and approaches serve as a meaningful system to build insights and framework by linking pollical acts across states and regions to international economic relations. This links to builds around various markets, production, and relationships with laws, production, trading, demand, and supply to import and export.
International Political Economy also examines the interaction between political development and economy, organization and the conflict resolves among groups, individuals, and nations on its resources for material and political power, and how it affects the growth, globalization, and structural change of the world. In this assignment, we wish to discuss do the theories matter and how they influence the way we understand international economic issues today.
Liberalism is a theory committed to people and a society in which individuals can pursue and create their interests, the core values of liberalism and its beliefs are associated with freedom, democracy, human rights, and equality. It is historically created by John Locke who is known as the Father of Liberal today, he is a political theorist and English philosopher who was born in 1932.
The theory says the belief in human beings should be given maximum freedom. However, equality should be earned and accompanied by hard work and responsibility. While on the contrary, Statism is created by realists who believe that a nation-state should have the majority and legitimate role to own the aspects of the economy, be it an economic plan of production or indirectly through the state’s household intervention or enterprises.
Statist believes that some people who have political power or power of government have the right to enforce or retrain their country’s resources. It has centralized control by the executive community and authority such as the government over the population in the country. Lastly, Marxism is a political and economic philosopher named after Karl Marx, it is a theory that believes in the power relationship between workers and capitalist has exploitative to differentiate social classes and conflict.
The two classes in this theory are the Bourgeoisie which describes as the business owners who control the production of goods and exploit labor workers to transform raw materials into value goods to trade in or out of a country. Marx’s social theory examines the capitalism of productivity and labor work and argues the system of capitalism is unfair. It is in the hope to turn the workers’ revolution to remove the classes.
In recent political issues that have happened in the infamous US and China Trade War, the US imposes new tariffs totaling up to $34b worth of Chinese goods. There are more than 800 made-in-China products in transport sectors, electronics, and medical devices that will be taxed with 25% import fees. China retaliated back with its own tariffs on US products and more than 500 products made in the US such as food commodities.
Both countries argue about ripping each other off and taking advantage of free trade rules, China criticizes the US administration and Trump being trade bullying and such action has caused global market unrest. After multiple trade talks, Trump continues to intensify the trade war by raising its country tariffs to 25 percent leaving to force China to make a more favorable deal with the US. Moving to early 2020, President Trump and the Chinese Government signed an agreement to the breakdown trade war between the world’s two largest economies to relax the tariffs on Chinese importation.
It is no doubt a game changer for the US to successfully negotiate and navigate through a deal especially since both are the largest economy with huge differences in their wants and needs.
In conclusion, these theories matter as it helps us to understand that politician is after the pursuit of power while economics are in pursuit of wealth. International Political Economy influence people today to understand how a state or region regulates their trade and fiancé, resources, and production of goods to drive globalization and its own economic nationalism.
Both pollical and economic interaction is a complex interplay in the international context between the market and states. There are numerous factors today in the relationship between political and economic influence and how these both can interact in a complicated and puzzling way to cause a civil war, systems, today’s climate change resources depletion, threats of the financial crisis, and rising inequality. It helps us understand how a country uses its resources to gain national power.