Page 89 - Global Political Economy_Understanding The International Economic Order

CHA PTER T HREE
explained endogenously by the methods of economics; that is, in
terms of rational individuals attempting to maximize their economic
self-interest.
As Schumpeter states in another context, conventional economics
can tell us how to manipulate the existing economic apparatus in
order to increase its efficiency, but economics cannot explain how
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that economic apparatus came into existence in the first place. Yet,
identifying the determinants of an economic system is one of the most
important problems that shouldbe solvedby economists andpolitical
economists alike. Indeed, how can economic development be under-
stoodwithout an answer to this question?

Conclusion

The analytic techniques, rich empirical data, and theoretical insights
of neoclassical economics are essential ingredients in the study of po-
litical economy in general andinternational political economy in par-
ticular. Nevertheless, it is important to keep in mindthe fact that
economic activities occur within differing sociopolitical structures
andthat these structures greatly influence their outcomes. Under-
standing of the international economy must therefore be based on
the contributions of international political economics as well as on
economics itself.

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Joseph A. Schumpeter, Capitalism, Socialism, and Democracy (New York: Harper
andBrothers, 1947).
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