Page 36 - Global Political Economy_Understanding The International Economic Order

THE NEW GL OBAL E CONOM IC ORD ER
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reciprocal. The international political and security system provides
the essential framework within which the international economy
functions; domestic and international economies generate the wealth
that is the foundation of the international political system. Then, over
time, the economic base of the international political system shifts
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accordingto “the law of uneven growth”; the resultingtransforma-
tion of the international balance of power causes states to redefine
their national interests and foreign policies. Such political changes
frequently undermine the stability of the international economic/po-
litical system and can even lead to international conflict.
The ways in which the world economy functions are determined
by both markets and the policies of nation-states, especially those of
powerful states; markets and economic forces alone cannot account
for the structure and functioningof the global economy. The interac-
tions of the political ambitions and rivalries of states, includingtheir
cooperative efforts, create the framework of political relations within
which markets and economic forces operate. States, particularly large
states, establish the rules that individual entrepreneurs and multina-
tional firms must follow, and these rules generally reflect the political
and economic interests of dominant states and their citizens. How-
ever, economic and technological forces also shape the policies and
interests of individual states and the political relations amongstates,
and the market is indeed a potent force in the determination of eco-
nomic and political affairs. The relationship of economics and politics
is interactive.

Purpose of Economic Activity

Most economists, trained in the discipline of neoclassical economics,
believe that the purpose of economic activity is to benefit individual
consumers and maximize efficient utilization of the earth’s scarce re-
sources. While other values and goals may be important, they are not
of fundamental concern to economists qua economists. The basic task
of economists is to instruct society on how markets function in the

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Ralph G. Hawtrey, Economic Aspects of Sovereignty (London: Longmans, Green,
1952). Hawtrey’s book is still one of the very best ever written on the subject of eco-
nomics and national security. A more recent and excellent discussion of the relationship
of power and plenty is Theodore H. Moran, “Grand Strategy: The Pursuit of Power
and Plenty,” International Organization 50, no. 1 (winter 1996): 176–205.
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Gilpin, War and Change in World Politics, 94.
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