Page 96 - Global Political Economy_Understanding The International Economic Order

INT ERNAT IONAL POLIT ICAL E CONOM Y
In the past, the rules governing the international economy were
quite simple and informal. Insofar as the implicit rules were enforced
at all, they were enforced by the major powers whose interests were
favored by those rules. For example, in the nineteenth century under
the Pax Britannica, overseas property rights were frequently upheld
by British “gunboat diplomacy,” 12 and the international gold stan-
dard, based on a few generally accepted rules, was managed by the
Bank of England. Now, formal international institutions have been
created to manage today’s extraordinarily complex international
economy. The most important institutions are the Bretton Woods in-
stitutions such as the World Bank, the International Monetary Fund,
and the World Trade Organization. The world economy would have
difficulty functioning without these institutions. Therefore, under-
standing their functioning has become an extremely important con-
cern of political economists. 13
The concept of international regimes, defined as “sets of implicit
or explicit principles, norms, rules, and decision-making procedures
around which actors’ expectations converge in a given area of inter-
national relations,” has been at the core of the research on interna-
14
tional institutions. Although a distinction can be made between an
international regime as rules and understandings and an international
institution as a formal organization, the word “regimes” and the
word “institutions” are frequently used interchangeably in writings
on international political economy. Moreover, what is really impor-
tant for the functioning of the world economy are the rules them-
selves rather than the formal institutions in which they are usually
embodied. To simplify the following discussion, I shall use “interna-
tional regime” to encompass both rules and such formal international
organizations as the International Monetary Fund or the General
Agreement on Tariffs and Trade.

12
Charles Lipson, Standing Guard: Protecting Foreign Capital in the Nineteenth and
Twentieth Centuries (Berkeley: University of California Press, 1985).
13
Many realists would disagree with my belief that international organizations are
important, at least in the area of economic affairs and insofar as they do not infringe
on the security interests of powerful states.
14
Stephen Krasner, “Structural Causes and Regime Consequences: Regimes as Inter-
vening Variables,” International Organization 36, no. 2, (spring 1982): 186. As
Krasner himself points out, there are several variants of regime theory. For this reason,
I shall focus on what I consider to be the common denominators in these theories.
Richard N. Cooper coined the term “international regime” in his “Prolegomena to the
Choice of an International Monetary System,” International Organization 29, no. 1
(winter 1975): 64. The term “regime” was introduced into the IPE literature by John
Ruggie, “International Responses to Technology: Concepts and Trends,” International
Organization 29, no. 3 (summer 1975): 570.
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