Page 16 - Global Political Economy_Understanding The International Economic Order

CHAPTER ONE
The New Global Economic Order

HIS BOOK analyzes the globalization of the world economy and
T its real as well as its alleged implications for the international
political economy. Since the end of the Cold War, globalization has
been the most outstandingcharacteristic of international economic
affairs and, to a considerable extent, of political affairs as well. Yet,
as I shall argue throughout this book, although globalization had
become the definingfeature of the international economy at the be-
ginning of the twenty-first century, the extent and significance of eco-
nomic globalization have been greatly exaggerated and misunder-
stood in both public and professional discussions; globalization in
fact is not nearly as extensive nor as sweepingin its consequences
(negative or positive) as many contemporary observers believe. This
is still a world where national policies and domestic economies are
the principal determinants of economic affairs. Globalization and in-
creasingeconomic interdependence among national economies are in-
deed very important; yet, as Vincent Cable of the Royal Institute of
International Affairs has pointed out, the major economic achievement
of the post–World War II era has been to restore the level of interna-
tional economic integration that existed prior to World War I. 1
My 1987 book lacked an adequate domestic dimension. It analyzed
the international economy as if domestic economic developments
were of only minor importance. In part, this neglect was due to my
desire to help advance an autonomous, self-contained international
political economy. The present book attempts to overcome this unfor-
tunate weakness through a focus on what I call “national systems
of political economy” and their significance for both domestic and
international economic affairs. As national economies have become
more and more integrated, the significance of the fundamental differ-
ences amongnational economies has greatly increased. The 1987
book had several other serious limitations, includingits treatment of
the multinational corporation, economic development, and economic
regionalism; although I discussed all three of these important subjects

1
Vincent Cable, “The Diminished Nation-State: A Study in the Loss of Economic
Power,” in What Future for the State?, Daedalus 124, no. 2 (spring1995): 24.
3