Introduction
First of all, the definition of “international political economy” should be stated. Frieden and Lake (1999, p. 1) state that political economy has a number of meanings. It may primarily refer to “the study of the political basis of economic actions”, that is the way how the policy of government influences market operations. Others believe that political economy mainly deals with “economic basis of political action” (Frieden & Lake 1999, p. 1). However, it is clear that politics and market may be characterized by constant interaction with each other. International political economy is defined by Kegley and Blanton (2009, p. 258) as the study of the way “how changes in one country’s economics and politics influence trends in world politics”. In the light of the present situation in the world, international political economy has proved to be very important, mainly, for the reason of the globalization of finance and trade in the world. It is necessary to analyze the main authoritative theories of international political economy to understand its essence.
Two competing theories
In the course of development of international relations two competing theories may be defined. They are mercantilist theory and liberal theory of international political economy. Their primary common feature is that both of them analyze the role of state in political economy. However, since the theories are opposing and contradicting, there are many differences between them.
Kegley and Blanton (2009, p. 284) define five primary differences between the theories. The attitude of the theories towards economic relations is the first difference: liberalism treats them as harmonious, while mercantilism considers them as conflictual. The above mentioned difference between the attitudes toward state in both theories is the second difference: state is the main actor for mercantilism, the theory promotes its power, but liberals want to restrict and eliminate the influence of the state on political economy; in their opinion international trade should be free, and households and firms are the main actors. What is more, there is considerable difference in the ultimate goal of economics ascribed by the theories: for liberals it is maximization of welfare on the global arena, but for representatives of mercantilism the national interest is their first consideration. Besides, there is the opposition in the mechanisms of political economy: to liberals “economics should determine politics, but to mercantilism politics determines economics” (Kegley & Blanton 2009, p. 284). Finally, liberal theory describes “global change in a dynamic ever-adjusting equilibrium, whereas mercantilism postulates that world transformations are the products of shifts in the distribution of states’ power” (Kegley & Blanton 2009, p. 284).
It is evident, that neither of the theories is ideal. Liberalism has been criticized for its ignoring political context of the operation of market. This belief of liberals is, evidently, wrong, because markets cannot be detached from politics, they are not spontaneous. Also the theory is criticized for “ahistoricism”, that means that no attention is paid to the importance of history for market. Finally, liberalism is charged with reductionism, “a simplistic reflection of the international market” (Jones 2001, p.707). The weak point of mercantilism is its aggressiveness, which may cause a threat of conflict and war between states.
Conclusion
In conclusion, in may be stated that nowadays there exists no ideal theory of international political economy. It is difficult to define, which theory explains international economy better, as both of them have serious weak and strong points. The fact remains that nowadays there appear other theories, which combine and restate the main postulates of liberalism and mercantilism, such as neomercantilism. Perhaps, an ideal theory of international political economy will appear soon, and it will ensure national wealth, social justice, stability and freedom of international relations.
References
Jones, RJB 2001 Routledge Encyclopedia of International Political Economy, Volume 2. Taylor and Francis, New York.
Frieden, JA & Lake DA 1999 International Political Economy: Perspectives on global Power and Wealth. Routledge, New York.
Kegley, CW, & Blanton SL 2009 World Politics 2009-2010: Trend and Transformation. Cengage Learning, Boston.