In light of the rather lengthy discussion above, let us now return to the basic question: what is international, or global, political economy? In the end, the definition I use is simple. International political economy is an area of study. As an area of study, it is concerned with, as Susan Strange (a prominent IPE scholar) puts it, “the social, political, and economic arrangements affecting the global systems of production, exchange and distribution, and the mix of values reflected therein” (emphasis added; 1994, p. 18). This definition has the advantage of expanding—rather than limiting—the range of questions, concerns, and issues considered relevant to the study of international political economy, whether at the local, national, international, or global level (although not everyone would consider this an advantage).
Moreover, it does not lead us to think that any one arrangement or set of values is superior to another; nor does it suggest that certain relationships or dynamics, such as tension or conflict between states and markets, or between opposing social classes, should or must be the focus of study. Similarly, it does not force us to view the world through a particular set of (theoretical) lenses. In short, Susan Strange’s definition encourages us to look at the complex reality of international political economy in an open manner. (Note: to avoid confusion, I will use the term IPE throughout this book, even though I prefer the alternative, GPE, or global political economy.)
Another important advantage of Professor Strange’s definition is that it encourages us to think critically about the global or world economy. On first thought, it may not be apparent to you why this is so. If anything, you might feel just the opposite. The reason, however, is fairly simple: the definition we’ve chosen forces us to ask questions about what and who matters in the world economy, and why. It also pushes us to question many of the basic assumptions and values that underlie dominant and alternative perspectives of IPE. This occurs whenever we ask questions such as: are states still the dominant players in the world economy? To what extent have states lost control of the economic and political activity within their borders? What impact, if any, is the globalization of production, finance, and ideology likely to have on the world? How has globalization transformed relationships of power in the world? Where does the line between the domestic and the international, or between the economic and the political, lie? What is the relationship between democracy and capitalism? Are social justice, political equality, and human rights compatible with the “free” market? Not only do these and many other important questions flow from the definition given to us by Susan Strange, but also, the answers are far from obvious. By asking such questions and developing our answers to them we are, of course, engaging in a highly critical and evaluative process.
The Significance of Power
Thus far, we have covered a number of important definitional issues and posed some key questions. But there is another question we must address in any study of international political economy. In political science, the study of politics revolves around the issue of power. Power is also a central concept in IPE. Yet, in many introductory textbooks on IPE there is, curiously, very little discussion about just what power is. Many writers seem to take for granted that power is an unproblematic, even self-evident concept. If pressed for a more formal conceptualization, however, most might agree with Robert Dahl’s oft-quoted definition, which asserts that power is the ability of actor A to get actor B to do something he or she would not otherwise do (Dahl 1957).
Certainly, this way of looking at power has merit. Sending in thousands of heavily armed troops to keep workers from blocking access to a factory, for instance, is an exercise of (coercive) power whereby A (the state) gets B (workers) to do something they don’t want to do. Conversely, when workers are successful, they can force their company to increase wages, provide more benefits, or otherwise improve the conditions of work—all actions that the company would otherwise not have taken. You can probably think of dozens of similar examples that occur on a regular basis. This type of coercive, or interventional, power is clearly important. But it is hardly the case that most—or even a significant fraction—of what happens everyday in the political economy can be attributed to such direct applications of force or coercion by one actor against another. Most activity in the world political economy, instead, occurs as part of a process wherein power is exercised in a far less direct or interventional manner
Thus, to understand power we need to begin by ridding ourselves of the idea that power is the same as brute force, or, as Mao Zedong put it, that it only “grows out of the barrel of a gun.” Before we consider other ways to look at power, however, let us return to the claim I made above— namely, that excluding power from analyses of the international political economy is a fundamental problem. Why is this the case? That is, why is a firm understanding of power essential to the study of IPE (or GPE)? Part of the reason for this is, I hope, already apparent to you: to the extent that markets play (or do not play) a dominant role in the economic life of a country or system of countries, they do so as a consequence of a political process. In this process, it is the distribution of power in society that determines, to a very large extent, the rules and values that govern economic and social relations. Power (or a particular structure of power), in this sense, is required to create and sustain the framework within which economic activity takes place. An efficient and productive market system, in particular, cannot exist where private property rights are not respected, where contracts cannot be enforced, or where domestic security is weak or nonexistent. Yet, protecting property rights, enforcing contracts, and providing security require a great deal of power, which—it is important to emphasize—must be exercised by a nonmarket actor like the state. To better appreciate this point, consider what happens to societies racked by social and political upheaval. In Somalia, to cite one of the most disturbing examples, orderly market activity is hardly possible when there is no centralized and legitimate political authority capable of governing the entire country.
Sources of Power
Before moving on, let us make one more point related to the Russian case, which reinforces a key argument in this section—that power is not a simple matter of who has the most guns. If it were, the Russian state (with control of the military) should easily have been able to put a stop to the corruption that, in the eyes of one prominent American expert, had “poisoned the Russian political process … [and] undermined the Russian fiscal system” (Sachs 1999, p. 31) prior to 2000. The Russian case suggests, in other words, that power has multiple sources, of which the control over the means of violence (or force) in society is but one.
This raises an obvious question: what are other sources of power and how significant are they in relation to one another? Think about this question before you continue reading: again, what are the sources of power in an economy and a society? On this question, most of us would concede that wealth is clearly another source of power in society. But is wealth always trumped by military force? If not, under what conditions is wealth a more significant source of power? Many of us have also heard the saying,
“The pen is mightier than the sword,” which encapsulates the rather bold claim that ideas are stronger than armies. Can this really be true? Do ideas— ideology or knowledge—constitute a source of power equal, or at least comparable, to military force (or wealth)? Consider, for example, the idea of nationalism or national identity. This idea, which Lind (1994) described as the “world’s most powerful force” (p. 87), should not be underestimated. Many have argued that its binding power is largely responsible for both the stability and instability of the modern state system, and is the force that makes large-scale war possible. After all, why else would ordinary citizens risk their lives to fight wars from which they have little to gain and everything to lose.
