PS 522, Spring 2018
Global Political Economy
Professor James Caporaso
Office hours, Wednesdays 1-3
Global Political Economy
This is an introductory course in global political economy. It is introductory in the sense that there are no other courses that serve as clear prerequisites for it. Nonetheless, the course material involves a blend of political science and economic approaches. A course in political economy implies that both political science and economics be taken seriously. Obviously, the better prepared you are in each of these disciplines, the better you will be able to grasp the material. In particular, you will be advantaged if you have some background in economics and basic international relations theory.
This course title, "Global Political Economy," suggests both a unit of reference (global, not “international”) and a set of structured relations (political-economic). The assumption behind the course is that political and economic forces operate in a sustained and organized way at the global level, and do so, in part at least, not merely as an extension of national and sub- national forces. The primary institutions of the global political economy are the state, the market and public as well as private institutions. In addition, there are firms, households, interest groups, and nongovernmental organizations. Understanding what goes on at the level of the global political economy involves a comprehension of both state and market forces operating simultaneously across many levels (e.g., large corporations, state-industry alliances, international organizations—both NGOs and IGOs, and governments in the traditional sense).
The first part of the course will be concerned with the scope of global political economy. One premise of the course is that there is not one single theory of global political economy. We will examine the theoretical foundations of three bodies of thought: liberalism, realism, and constructivism. Other approaches, such as mercantilism, Keynesianism and Marxism, are regrettably left out. Each of the theories examined tells part of the story. The second part of the course focuses on issues of particular importance in global political economy. Each topic, sometimes encapsulated in a book, sometimes in a series of articles, addresses an important issue from a particular political economy perspective. Our job as a class will be to identify and critically analyze the major puzzles addressed by the literature, the central argument, key hypotheses, methodology, and empirical results.
- ASSIGNMENTS AND EVALUATION
Your final grade will be a composite of:
- Two short papers -- 60%
- Class discussion -- 30%
- Presentations -- 10%
Emphasis will be placed on class participation. It is expected that students will be prepared to discuss the assigned reading at each class session. In addition, there will be two short papers, the first one 5-7 pages and the second 7-9 pages. The first is due on Tuesday April 17 and the second on Tuesday May 29, the last day of class. The papers are due at the beginning of class on the assigned days. Each paper should focus on some issue raised by the readings during the appropriate period (e.g., the first paper should examine an issue raised by the readings for weeks 1, 2, 3, 4, 5). The papers are not to be descriptive, nor are they simply to compare the readings with one another. Instead, they should either be organized as conceptual critiques or development of an idea, i.e., theory. For example, a concept paper could select the concept of market, externality, cross-national class formations, or inequality and provide a critique of the way the concept was formulated and used in the readings. Alternatively, one could formulate a problem, i.e., select a phenomenon that needs to be explained and try to develop an argument (theory) about its occurrence. What role did economic factors play in the end of the Cold War? Why did the modern division of labor develop the way it did? Is protectionism a good strategy in today’s globalized environment? The list of topics on which one could focus is large. The critical thing is the attempt to develop a consistent argument about some feature of the global political economy. The second paper should include a short (2 page) research design at the end suggesting how the theory in your paper could be tested.
This course has a seminar-discussion format. During the first class, I will attempt to provide an overview of approaches used in the course. Also we will discuss the readings for the week. Beginning with the second class, on April 3, we will move to student-led seminar format. At least one student will take responsibility for leading each session. The student’s responsibility is to get the discussion moving--not to describe the readings in great detail. It is assumed that everyone has completed the readings and is prepared to discuss them. The leader is simply a facilitator. To prepare for these sessions, discussion leaders should come up with brief summaries of the readings and a list of questions and/or discussion points. These questions should be sent to all participants by noon on the Monday before our weekly sessions. Questions might focus on the questions asked, the underlying assumptions of the author, the conceptual approach taken, how the author chooses to define (and measure) key concepts, the major argument (or theme) of the writings, the methodology used (research design, data and data collection, and analytic techniques such as large-N statistical analysis, case studies, or comparative approaches). Has the author made his or her case well? Are you convinced? Would you have done the study differently? How? Do you care? Everyone in the class should come with their own questions. The non-presenters may think different questions and issues are more important than the ones posed.
III. REQUIRED READINGS
The following books are available at the bookstore:
(1)Robert O. Keohane, After Hegemony, Princeton University Press, 1984.
(2) Nancy Bermeo and Jonas Pontusson (eds.), Coping with Crisis. New York: Russell Foundation, 2012.
(3) Joseph Jupille, Walter Mattli, and Duncan Snidal. Institutional Choice and Global Commerce. Cambridge University Press, 2013.
(4) Ronald Rogowski, Commerce and Coalitions. Princeton University Press, 1989.
All of the course readings are either in the above four books, available as PDFs posted on canvas, or accessible through UW’s E-journals.
- BACKGROUND READING
You may want to do some introductory reading to familiarize yourself with basic concerns in political economy as well as with various formulas for integrating the study of politics and economics. For an introduction to the field, see Charles Lindblom, Politics and Markets, especially Chapters 2 and 3; and Albert Hirschman, A Bias for Hope. In addition, there are collections of essays by two prominent (and quite different) economists that are enlightening to read: Thomas Schelling's Choice and Consequence and Albert O. Hirschman's Essays in Trespassing. Todd Sandler's Theory and Structures of International Political Economy demonstrates the international and political extensions of neoclassical economics. James Becker provides excellent treatment of selected topics in his Marxian Political Economy. A very readable, yet analytically sound, introduction to modern (neoclassical) political economy thinking is Michael Laver's The Politics of Private Desires. Also readable is David Hemmenway's Prices and Choices: Microeconomic Vignettes, a book that is organized around a number of topics not normally found in the introductory microeconomic textbook, among them "temptation," "fashion," "grades," "crime," "tipping," and "haggling." And of course there are the classics. Sometimes you can do no better than to read the originals. See Adam Smith's Wealth of Nations, especially Book One's insightful arguments about markets and the division of labor. Book Three, "On the Different Progress of Opulence in Different Nations," could still be read profitably by those interested in contemporary development problems. Also, see David Ricardo's Principles of Political Economy and Taxation, especially his powerfully argued Chapter 7, "On Foreign Trade," which sets out his argument for trade based on comparative advantage. Finally, when you have time, there are three volumes of Karl Marx's Capital and four volumes of Theories of Surplus Values through which to wade.
There are also some very good intellectual histories that try to place the development of economic ideas in their historical context. See Maurice Dobb's Theories of Value and Distribution since Adam Smith for an intellectual history that is sympathetic to the labor theory of value. Frank Knight's On the History and Method of Economics provides a series of essays concerning the development of modern neoclassical theory. Robert Heilbroner’s The Worldly Philosophers is both entertaining and informative regarding the key economic philosophers.
March 27 Introductions and Overviews of Global Political Economy
Katzenstein, Keohane, and Krasner (1998). “International Organization and the Study of World Politics”, International Organization, vol. 52, no. 4, pp. 645-685. (E journals)
Krasner (1994). “International Political Economy: Abiding Discord”, Review of International Political Economy, vol. 1, no. 1, pp. 13-19. (E journals)
Strange (1994). “Wake Up Krasner, the World Has Changed!” Review of International Political Economy, Vol. 1, no. 2, pp. 209-219. (E journals)
McNamara (2009). “Of Intellectual Monocultures and the Study of IPE,” Review of International Political Economy 16:pp. 72-84. (E journals)
April 3 Realism and Global Political Economy
What is the relationship between realism and global political economy? Modern realist GPE finds its roots in mercantilist theory, which insisted on a strong link between state power and wealth. State power was necessary to garner (notice, not produce) wealth and wealth in turn was important to increase state power. Wealth was defined in zero-sum terms so that if one country became richer, another got poorer by an equivalent amount. This was why the balance of trade was so important in mercantilist theory. It was one of the principal means through which states could increase their wealth. Modern realism does not subscribe to mercantilism’s outmoded trade doctrines but it retains the focus on state power and its connection to wealth. Examples of applications of this framework are the role of the state in economic development, the role of the state in structuring international exchange relations, and the role of the state in protecting security sensitive industries.
Grieco, "Anarchy and the Limits of Cooperation: A Realist Critique of the Newest Liberal Institutionalism", International Organization, vol. 42, no. 3 (summer 1988), pp. 485-507. (E-journals)
Krasner “Global Communications and National Power: Life along the Pareto Frontier”, World Politics, vol. 43, no. 3 (April 1991), pp. 336-366. (E journals)
Hirschman, “Foreign Trade as an Instrument of National Power”. In National Power and the Structure of Foreign Trade. Berkeley, Ca.: University of California press, pp. 13-34. (PDF)
Caporaso, "Global Political Economy", pages 460-465. (PDF)
For extensive background information on realist views of IPE, see J. Grieco and J. Ikenberry, State Power and World Markets, W.W. Norton, 2003. Also, David Baldwin (ed.) Neorealism and Neoliberalism. NY: Columbia University Press, 1993.
April 10 Liberalism and Global Political Economy
This is the first topic to be led by student-posed questions. Liberalism is a broad term that encompasses both political and economic strands of thinking. It includes modern neoclassical economics with its many variants: the operation of markets, the political foundations of markets, property rights and markets, institutions and markets and so on. The connections between economics and politics have tended to arise in those places where competitive markets don’t work well, including of course the establishment of the very conditions for markets to function at all (property rights, money). Thus, market failures such as externalities (pollution), public goods (deterrence, clean air), market concentration, asymmetric information (the market for lemons), learning effects (infant industries), and path dependencies (QWERTY “effects”) provide important conceptual spaces where politics and economics can co-exist and even be complementary in an explanatory sense. On the other hand, the thinking underlying competitive markets, to the extent that it relies on voluntary contracts, tends to make discussions of power difficult. This literature is too voluminous to describe. Just a few central names: North on property rights, Ostrom on common property resources, Olson on public goods, and Keohane on institutions.
Moravscik, “Taking Preferences Seriously: A Liberal Theory of International Politics”, International Organization, (1997), vol. 51, no. 4, pp. 514-553. (E journals)
Caporaso, "Global Political Economy", pages 451-460. (PDF)
Baldwin, “Neoliberalism, Neorealism, and World Politics”, in Baldwin (ed.) Neorealism and Neoliberalism, NY: Columbia University Press, 1993, pp. 3-25. (PDF)
Moravcsik, “Liberal International Relations Theory: A Scientific Assessment”, in Colin Elman and Miriam Elman (eds.), Progress in International Relations Theory: Appraising the Field. Cambridge, Ma.: MIT Press, pp. 159-204. (PDF)
April 17 Constructivism and Global Political Economy (First paper due)
Constructivism is the newest paradigm on the GPE scene. Fragments of Constructivism (e.g. importance of ideas) were already present in E.H. Carr’s Twenty Years’ Crisis and the importance of international norms and law has been around at least since Grotius. Constructivism takes aim at two tenets of realism and liberalism. It insists that the global economy is not mostly characterized by material facts (e.g. ICBMs, industrial machinery). Instead, most of what we face in the GPE is “constructed” by human beings in their interaction with one another. Money is a great example. The material basis of (paper) money is meaningless. The important part is conventional, i.e. socially constructed through conventions of shared understandings. We accept money as a store of value and a medium of exchange and we trust that it will be accepted by other economic actors both within and among countries. For example, the worth of the Euro is to a large degree a function of the trust which private and public actors have in its worth (if that sounds circular, it is). When this trust breaks down, as it does in financial panics, markets become chaotic and self-disorganizing. The second target of constructivism is exogenous interests, or preferences. Neoclassical economics takes preferences as given, and makes predictions based on changing costs and benefits of various courses of action. The argument is that one side of the equation has to be anchored and independently measured to make determinate predictions. Constructivism makes preferences endogenous, i.e. explainable within the overall theory.
Abdelal, Blyth, and Parsons, “Introduction: Constructing the International Economy”, in Constructing the International Economy, edited by Abdelal, Blyth, and Parsons (2010), pages 1-19 (PDF).
Schimmelfennig, "The Community Trap: Liberal Norms, Rhetorical Action and the Eastern Enlargement of the EU", International Organization, (Winter 2001), pages 47-80. (E-journals).
Jacoby (2017), “Surplus Germany”, Transatlantic Academy, 2017 paper series, pp. 1-24, (PDF)
Hall, “The Discursive Demolition of the Asian Development Model”, International Studies Quarterly, vol. 47, no. 1 (March 2003), pp. 71-99. (E-journals).
McNamara (1998). The Currency of Ideas. Cornell University Press.
Abdelal, Blyth, and Parsons (eds.). Constructing the International Economy. Ithaca, NY:Cornell University Press, 2010.
Zacher, “The Territorial Integrity Norm”, International Organization, vol.55, no. 2 (Spring 2001), pp. 215-250 (E journals).
April 24 Liberal Institutionalism
First Paper Due
The key problem of liberal institutionalism is to explain how states overcome political market failure. Political market failure occurs when states fail to cooperate, even when there are “cooperative gains on the table”, thus failing to advance their mutual interests. Difficulties in cooperating are increased by the anarchic structure of the interstate system. If the problem is posed in this way, it closely mirrors non-cooperative game theory (weak communication, no third party enforcement, trust is problematic). The puzzle is that each state would gain from cooperating, thus making the outcome a Pareto improvement, yet states often fail to do so. The problem is not resource scarcity either nor the lack of appropriate technology. Preferences are in place, and resources are adequate to the task. The problem is with institutions, or lack of them. In this book, Keohane attempts to show how and under what conditions cooperation will occur, even in the absence of hegemony.
Keohane. After Hegemony.
May 1 Trade Theory and Domestic Cleavages
The political implications of economic behavior are not something to which economists have paid a lot of attention. Free trade (or freedom of movement of capital or labor) is usually supported by economists because it is thought to be welfare improving, on the consumption side at least. However, this is a belief about increases in aggregate welfare—not about how the wealth is distributed. One piece of economic theory that has implications for distribution is the Stolper-Samuelson theorem (“Protection and Real Wages”, Review of Economic Studies, 1941). The key theorem of this article is that increasing exposure to trade will benefit those who are holders of the relatively abundant factors of production and harm those who are holders of relatively scarce factors. The Rogowski book attempts to draw out the logic of this theory for domestic cleavages as a result of increasing trade exposure. This is a class or factor-based approach. There are many other contributions that work with a sectoral or industry-level approach (e.g. Frieden) and others who extend the logic of factor-based and sector-based models. Michael Hiscox provides a test of factoral and sector-based approaches (“Class vs. Industry Cleavages”, International Organization, 2001). A good (early) overview of the political economy of trade models is provided by Jim Alt et al. “The Political Economy of International Trade”, Comparative Political Studies, 1996.
Rogowski. Commerce and Coalitions.
May 8 Preferences about Trade Openness and Protection
The classical theory of trade, defended as early as 1817 in Ricardo’s Principles of Political Economy and Taxation, makes a strong case for trade based on more efficient production resulting from specialization and exchange over markets wider than the nation state can provide. Yet, the urge to protect exists (indeed playing a big part in the current primaries in the US). Is this a mistake based on weak knowledge? Is it rent-seeking on the part of powerful interest groups who want to preserve uncompetitive industries? Or do various groups opposed to trade “get it right” in their assessment that they are losers in the cost/benefit trade calculations? We explore the various motivations for trade and protection in this section.
Hiscox. 2001. “Class Versus Industry Cleavages: Inter‐Industry Factor Mobility and the Politics of Trade”. International Organization, 55: 1‐46 (E journals)
Mansfield and Mutz. 2009. “Support for Free Trade: Self‐Interest, Sociotropic Politics, and Out‐Group Anxiety”. International Organization, 63:425‐57 (E journals)
Milner 1999. “The Political Economy of International Trade”, Annual Review of Political Science, vol. 2, pp. 91-114 (PDF).
Hays, Ehrlich, and Peinhardt. 2005. “Government Spending and
Public Support for Trade in the OECD: An Empirical Test of the Embedded
Liberalism Thesis.” International Organization, 59: 473‐94. (E journals)
May 15 Institutions and Commerce
How do we account for institutions, particularly at the international level where trust and social connections are scarce? And how do we account for institutional change, given that institutions are “sticky” (change-resistant, high on friction). These are difficult questions. Drawing on theories of bounded rationality pioneered by Herb Simon, the authors make an attempt to tackle these difficult questions.
Readings Jupille, Walter Mattli, and Duncan Snidal (2013). Institutional Choice and Global Commerce. Cambridge University Press, 2013.
May 22 Globalization and its Impact on Domestic Politics.
Globalization is not “out there”. The origins of globalization lie in domestic economics and policy choices. Also, globalization has profound effects on domestic economics and politics, including (arguably at least) effects on economic growth, inflation/deflation, supply of “domestic” capital, the welfare state, jobs, and even political participation.
Burgoon, (2009). “Globalization and Backlash: Polanyi’s Revenge” Review of International Political Economy, 16 (2):145-177. (E journals)
Hellweg, (2008). “Globalization, Policy Constraints, and Vote Choice”, Journal of Politics, vol. 70 (4), pp. 1128-1141. (E journals)
Hellweg and Samuels (2007). “Voting in Open Economies: the Electoral Consequences of Globalization”, Comparative Political Studies, vol. 40 (3), pp. 283-306. (E journals)
Garrett (1998). “Global Markets and National Politics: Collision Course or Virtuous Circle?” International Organization, vol. 52, no. 4, pp. 787-824. (E journals)
May 29 The International Financial Crisis and Domestic Politics
Second paper due (last class)
What does globalization mean for individual states? We often treat globalization as a big and uniform force to which countries must respond in predictable ways (the golden straightjacket, the Mundell-Fleming theorem, Rodrik’s trilemma). Yet, states have confronted globalization differently. France, Japan, Germany, Greece, China and the US have not responded in the same way. So this is an opportunity to examine national strategies within the context of globalization, much as Gourevitch suggested in his “Second Image Reversed” in 1978 (International Organization).
Bermeo and Pontusson (eds.). Coping with Crisis. New York: Russell Foundation, 2012.
We will focus on selected chapters.