Page 90 - Global Political Economy_Understanding The International Economic Order

CHAPTER FOUR
The Study of International Political Economy

HE STUDY of international political economy (IPE)is of necessity
T highly dependent on the theories and insights of neoclassical eco-
nomics. However, IPE and neoclassical economics ask different ques-
1
tions as they apply their own mode of analysis. Whereas economics
is primarily concerned with efficiency and the mutual benefits of eco-
nomic exchange, international political economy is interested not
only in those subjects but also in a broader range of issues. IPE is
particularly interested in the distribution of gains from market activi-
ties; neoclassical economics is not. Although, at least over the long
term, every society gains absolutely from the efficient functioning of
international markets, the gains are seldom distributed equally among
all economic actors, and states generally are very much concerned
over their own relative gains. Whereas economists regard markets as
self-regulating mechanisms isolated from political affairs, specialists
in IPE are interested in the fact that the world economy has a consid-
erable impact on the power, values, and political autonomy of na-
tional societies. States have a strong incentive to take actions that
safeguard their own values and interests, especially their power and
freedom of action, and they also attempt to manipulate market forces
to increase their power and influence over rival states or to favor
friendly states. 2
Whereas economists and economic analysts are generally indiffer-
ent to the role of institutions in economic affairs (due to their focus
on the market), the nature of the international institutions and those
international regimes that govern international markets and economic
activities constitute a central concern of international political econo-
mists. As regimes may significantly affect the distribution of gains
from economic activities and the economic/political autonomy of in-

1
An excellent history of IPE, albeit too focused on American contributions, is Peter
Katzenstein, Robert O. Keohane, and Stephen D. Krasner, “International Organization
and the Study of World Politics,” in Peter Katzenstein, Robert O. Keohane, and Ste-
phen D. Krasner, International Organization at Fifty: Exploration and Contestation in
the Study of World Politics, International Organization 52, no. 4 (autumn 1998).
2
Joanne Gowa, Allies, Adversaries, and International Trade (Princeton: Princeton
University Press, 1994).
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