1. What is International Political Economy?

This section introduces International Political Economy (IPE) as an academic discipline that studies the
complex interaction between politics and economics on a global scale. It highlights how IPE combines
insights from both political science and economics to understand the global economic system, focusing
on the relationship between states, markets, and international institutions.

1.1 Two Approaches to Political Economy

The section explains that political economy lives in two separate spheres within academia:

 Economics: In economics, political economy traditionally refers to the application of rational

choice theory and neoclassical microeconomic theory to study how individuals and firms
behave in markets. Economists analyze the economy by focusing on market efficiency,
competition, and the role of prices in allocating resources.

 Political Science: In political science, IPE has a more holistic approach, combining economics
with political theory to study how political institutions and power dynamics shape economic
outcomes. Scholars in this field focus on state behavior, power relations, and policy-making at
the national and international levels.

IPE is presented as a field that bridges the gap between these two perspectives, acknowledging the role
of both market forces and political institutions in shaping the global economy.

1.2 The Historical Development of IPE

The section traces the historical development of IPE as a distinct field of study. It describes how IPE
emerged in the 1970s as a reaction to the limitations of traditional economics and political science. The
economic crises of the 1970s, such as the collapse of the Bretton Woods system and the oil shocks,
demonstrated that purely economic models could not fully explain the complexities of the global
economy. This led to the rise of IPE as a field that sought to integrate political analysis with economic
theory to better understand the global system.

1.3 The Role of Power in IPE

One of the central themes of IPE is the role of power in shaping economic outcomes. The section
emphasizes that states and international institutions wield significant power over markets, shaping the
rules of the game through policies, regulations, and diplomatic agreements. This power dynamic makes
IPE distinct from neoclassical economics, which often assumes that markets operate independently of
political influence.

1.4 Theoretical Approaches in IPE

The section briefly introduces three dominant theoretical traditions in IPE:

 Liberalism: This perspective emphasizes the importance of free markets, open trade, and
minimal state intervention in the economy. Liberals believe that free markets promote efficiency
and economic growth and that states should facilitate trade and competition.
  Economic Nationalism: In contrast to liberalism, economic nationalism advocates for state
intervention to protect national industries and promote domestic economic growth. Nationalists
argue that markets are inherently competitive, and states must actively manage their economies
to ensure national security and economic independence.

 Marxism: Marxists see global capitalism as an exploitative system that benefits the wealthy and
powerful at the expense of the poor and marginalized. They argue that economic inequality is a
fundamental feature of capitalism and that the global economic system reinforces the
dominance of the wealthy nations over the developing world.

1.5 The Interdisciplinary Nature of IPE

Finally, the section emphasizes the interdisciplinary nature of IPE, noting that scholars draw from a
variety of disciplines, including history, sociology, political theory, and international relations, to better
understand the dynamics of the global economy. This interdisciplinary approach allows IPE scholars to
tackle complex issues, such as globalization, trade disputes, financial crises, and environmental
challenges, which cannot be fully explained by any single discipline.

Conclusion

The "What is International Political Economy?" section introduces IPE as a field that addresses the
limitations of traditional economics and political science by integrating insights from both disciplines. It
emphasizes the role of political power in shaping global markets and highlights the importance of
interdisciplinary approaches to understanding the complex interactions between states, markets, and
international institutions.

2. Political Economy Roots

In this section, the reading traces the historical development of political economy as a discipline and
explores its intellectual roots, which date back to the classical economists of the 18th and 19th
centuries. The section emphasizes the foundational contributions of thinkers like Adam Smith, David
Ricardo, and Karl Marx and explains how their ideas laid the groundwork for modern studies of political
economy.

2.1 The Classical Foundations

The origins of political economy are grounded in the works of early economists who sought to
understand the relationship between wealth, production, and the role of the state. This classical
tradition explored how markets function, how wealth is created, and how government policies can
influence economic outcomes.

 Adam Smith: Often regarded as the father of modern economics, Smith’s work, particularly in
The Wealth of Nations (1776), focused on the mechanisms of the market, free trade, and the
invisible hand that guides economic activity. Smith believed in minimal government
intervention and that individuals acting in their self-interest would lead to beneficial outcomes
for society as a whole. His work provided the intellectual foundation for the liberal tradition in
political economy.
  David Ricardo: Ricardo expanded on Smith’s ideas and is best known for his theory of
comparative advantage, which argues that countries should specialize in producing goods where
they have a relative efficiency. This theory underpinned the case for free trade as a means of
promoting international economic cooperation and wealth generation.

 Karl Marx: Marx, in contrast, offered a critique of capitalism, arguing that it is an inherently
exploitative system that leads to inequality and social conflict. His analysis of the economic and
political structure of capitalist societies laid the foundation for the Marxist tradition in political
economy, which emphasizes class struggle, the concentration of wealth, and the role of the state
in maintaining capitalist interests.

2.2 The Transition from Classical to Modern Political Economy

The section explains how the field of political economy evolved from these classical roots to a more
specialized and complex discipline in the 20th century. As economies grew more interconnected and
complex, scholars began to refine the original ideas of Smith, Ricardo, and Marx, developing new
theories and approaches to understand global trade, industrialization, and economic crises.

 Neoclassical economics: In the late 19th century, neoclassical economics emerged, focusing on
the individual as the central unit of economic analysis and using mathematical models to
understand market behavior. While neoclassical economics diverged from the broader political
economy approach by narrowing its focus on market efficiency and resource allocation, it still
borrowed heavily from the classical foundations laid by Smith and Ricardo.

 Marxist political economy: Marxist ideas continued to influence political economy, particularly
in studies of imperialism, capital accumulation, and the relationship between the state and
capital. Marxist scholars examined how global capitalism perpetuates inequality between
nations and within societies, challenging the liberal view that markets inherently lead to
prosperity for all.

2.3 The Rise of Political Economy in the 20th Century

During the 20th century, political economy became a more structured academic field as scholars sought
to understand the relationship between state power and economic policy. This period saw the rise of
Keynesian economics, which argued for government intervention to manage economic cycles and
address market failures. The Great Depression and the subsequent need for economic recovery after
World War II demonstrated the limits of free markets and highlighted the importance of the state in
managing economic stability.

 John Maynard Keynes: Keynes’s work reshaped political economy by challenging the classical
liberal idea that markets are self-regulating. He argued that during times of economic downturn,
governments must intervene through fiscal and monetary policy to stimulate demand and
prevent prolonged periods of unemployment and stagnation.

 Postwar political economy: In the postwar era, political economy scholars began to focus more
on the role of international institutions and the global economic order. The establishment of
institutions like the International Monetary Fund (IMF) and the World Bank reflected the
 growing recognition that managing the global economy required coordinated policies and
cooperation among states.

2.4 The Interdisciplinary Nature of Political Economy

Political economy remains a multidisciplinary field, drawing from economics, political science, history,
sociology, and even philosophy. The section underscores how political economy does not just focus on
markets or policies in isolation but examines how power relations, institutions, and social structures
influence economic outcomes. Political economy scholars analyze a wide range of issues, including the
distribution of wealth, the impact of globalization, and the role of state power in shaping economic
systems.

Conclusion

The Political Economy Roots section provides a historical overview of the key thinkers and ideas that
shaped the field of political economy. It explains how the classical economists—Smith, Ricardo, and Marx
—laid the intellectual foundation for modern political economy and how their ideas continue to
influence contemporary debates about the role of the state, markets, and global economic relations. The
section highlights the evolution of the field from classical to modern political economy and emphasizes
its interdisciplinary nature, making it a vital framework for understanding the complexities of the global
economy.

3. Contemporary Revisions
This section delves into how the study of International Political Economy (IPE) has evolved, especially
since the late 20th century, with scholars revisiting and refining the traditional paradigms of liberalism,
economic nationalism, and Marxism. The section discusses the significant shifts in IPE, highlighting how
theoretical frameworks have been adapted to address the changing global economic landscape.

3.1 The Classical Paradigms

The section begins by reaffirming the centrality of the three dominant paradigms in IPE:

 Liberalism: This tradition focuses on the benefits of free markets, trade liberalization, and
minimal state intervention. It argues that economic growth and efficiency arise from market
competition, open borders, and a global division of labor.

 Economic Nationalism: This framework advocates for state intervention to protect national
industries, promote domestic growth, and ensure national security. Economic nationalists see
markets as competitive and emphasize the need for states to manage their economies to
achieve long-term prosperity and independence.

 Marxism: Marxists view capitalism as a system of exploitation, where wealth and power are
concentrated in the hands of a few. They emphasize class struggle, inequality, and how global
capitalism perpetuates the dominance of rich countries over poor ones.

These paradigms, particularly as structured by Robert Gilpin in his 1987 book The Political Economy of
International Relations, have long served as the foundation of IPE. They are described as "total belief
systems," extending beyond economics into areas like sociology, anthropology, and ethics.
3.2 The Influence of Thomas Kuhn's Paradigm Theory

The section highlights the influence of Thomas Kuhn’s paradigm theory on the understanding of these
three ideologies. Kuhn’s theory, which was initially applied to scientific revolutions, suggests that
different paradigms represent fundamentally distinct ways of understanding the world, and crises within
a paradigm can lead to a shift in how scholars view and interpret phenomena.

In the context of IPE, the section explains that liberalism, economic nationalism, and Marxism are
viewed as broad rival traditions, with each offering different solutions to global economic issues.
However, crises in these paradigms—such as economic downturns or political upheavals—often prompt
scholars to revise or challenge existing theories, leading to new interpretations of how international
political economy operates.

3.3 The Impact of Historical Events

The section emphasizes how significant historical events have influenced the development of IPE and the
three paradigms:

 The Great Depression and World War II: These events significantly challenged liberal economic
policies, as the global economic system faced massive disruptions. In response, Keynesianism
emerged, advocating for increased government intervention in the economy to stabilize growth
and prevent future economic collapses. Keynesian thought blended elements of both Marxism
and economic nationalism into a new form of liberalism, which saw the state as playing a more
active role in managing the economy.

 The Postwar Order: After World War II, the global economic system was reshaped by new
institutions like the International Monetary Fund (IMF) and the World Bank. These institutions
were created to manage international trade, finance, and development, and they were grounded
in liberal ideas about the benefits of free markets. However, the section notes that despite the
prevalence of liberal internationalism, economic nationalism and Marxist critiques continued to
persist, particularly in the developing world, where scholars and policymakers questioned the
fairness and inclusivity of the global economic system.

3.4 Challenges to the Dominant Paradigms

The section also discusses how scholars in the late 20th and early 21st centuries have revisited the three
dominant paradigms, offering critiques and revisions to reflect new global realities. These critiques
include:

 Globalization: The rise of globalization has presented challenges to traditional economic

nationalism. As capital and goods flow more freely across borders, it has become increasingly
difficult for states to control their economies in the way that economic nationalists traditionally
advocated. This has led to new theories that attempt to reconcile national interests with the
realities of an interconnected global economy.

 Neoliberalism and Its Critics: The section notes the resurgence of neoliberalism in the 1980s
and its influence on global economic policies, particularly through organizations like the IMF and
the World Bank. However, critics of neoliberalism argue that its focus on market liberalization
 and austerity has deepened inequalities, especially in the developing world. These critiques have
sparked renewed interest in Marxist and post-Keynesian analyses of global capitalism.

 Postcolonial and Feminist Critiques: In recent years, new perspectives such as postcolonial
theory and feminist IPE have emerged to challenge the traditional paradigms. Postcolonial
scholars emphasize how the legacies of colonialism continue to shape global power relations,
while feminist scholars highlight the ways in which global economic policies disproportionately
affect women and marginalized groups. These approaches broaden the scope of IPE by
incorporating social and cultural factors into the analysis of global economics.

3.5 The Continuing Relevance of the Classical Paradigms

Despite the challenges and critiques, the section concludes that the three classical paradigms—
liberalism, economic nationalism, and Marxism—remain highly relevant in contemporary IPE
scholarship. Each paradigm continues to offer important insights into the functioning of the global
economy, and scholars frequently draw from these traditions, even as they revise or adapt them to new
realities.

However, the section also emphasizes the need for scholars to remain open to new theoretical
developments and to integrate insights from other disciplines. The complexity of the global economy
means that no single paradigm can fully explain all aspects of international political and economic
relations.

Conclusion

The Contemporary Revisions section explains how the field of IPE has continued to evolve by revisiting
and refining the classical paradigms of liberalism, economic nationalism, and Marxism. It highlights how
historical events, globalization, and critiques from neoliberalism’s detractors have influenced these
revisions. Moreover, it underscores the role of postcolonial and feminist critiques in expanding the
scope of IPE. While the classical paradigms remain central to the field, contemporary scholars are
increasingly open to integrating new approaches and perspectives.

4. Beyond the Three Paradigms

In this section, the focus shifts to how International Political Economy (IPE) has evolved beyond the
traditional three paradigms—liberalism, economic nationalism, and Marxism. The section explores new
theoretical approaches that have emerged to address the changing global economic and political
landscape, recognizing that the complexity of global issues requires more than the classical paradigms
can offer.

4.1 The Dominance of the Three Paradigms

Historically, liberalism, economic nationalism, and Marxism have been the cornerstone frameworks for
understanding IPE. These paradigms, particularly as organized by Robert Gilpin in the 1970s, helped
scholars navigate and interpret global economic relations. Each paradigm offered a unique perspective
on the roles of states, markets, and social classes in shaping the global economy.

 Liberalism: Emphasizes free markets, trade liberalization, and limited state intervention,
promoting economic efficiency and global cooperation.
  Economic Nationalism: Argues for state-led development, focusing on protecting national
interests and promoting industrialization to strengthen the state’s economic and political power.

 Marxism: Views capitalism as a system of exploitation and inequality, focusing on class struggle,
imperialism, and the ways global capitalism reinforces wealth disparities between nations.

These paradigms continue to be important, but they are no longer sufficient for explaining contemporary
global issues on their own.

4.2 Emerging Theoretical Approaches

The section introduces several newer perspectives that challenge and go beyond the traditional
paradigms. These approaches reflect the growing complexity of the global economy and the need for
more nuanced and interdisciplinary analyses.

 Rational Choice Theory: This approach applies the tools of microeconomic analysis and game
theory to political decision-making. Scholars using rational choice models focus on how
individuals and institutions act strategically to maximize their interests, particularly in the
context of global governance and international trade negotiations. By modeling interactions
between states and markets as strategic games, rational choice analysis provides a mathematical
and behavior-driven understanding of global political economy.

 Poststructuralism: Poststructuralist scholars critique the dominant paradigms for their reliance
on fixed structures and universal truths. Instead, poststructuralism emphasizes the fluidity of
power and identity in global politics, arguing that the meaning of concepts like "state" and
"market" is socially constructed and constantly changing. This perspective challenges the
deterministic views of the classical paradigms and opens up space for analyzing the discourses
and narratives that shape global economic relations.

 Feminist IPE: Feminist scholars critique the traditional paradigms for ignoring gender and social
inequality in their analyses of global political economy. Feminist IPE highlights how global
economic policies disproportionately affect women and marginalized groups, often reinforcing
gendered labor divisions and economic vulnerabilities. By centering gender in the study of IPE,
feminist scholars aim to address the power imbalances embedded in both global institutions
and economic policies.

4.3 Green IPE and Environmental Considerations

Another critical development in IPE is the rise of Green IPE, which integrates environmental concerns
into the study of global political economy. Green IPE scholars argue that the traditional paradigms fail to
account for the environmental impact of economic growth and globalization. They highlight the urgent
need to address climate change, resource depletion, and environmental sustainability in global
economic governance.

Green IPE scholars focus on how economic practices and international institutions can promote
sustainable development, and they critique global capitalism for prioritizing short-term profit over long-
term environmental health. This approach often calls for a fundamental rethinking of how we
understand economic growth, advocating for a shift toward environmental responsibility and equity in
the distribution of natural resources.
4.4 Expanding the Scope of IPE

The emergence of these new perspectives broadens the scope of IPE by incorporating interdisciplinary
approaches and new fields of inquiry. The section emphasizes that IPE is no longer confined to the
traditional concerns of trade, finance, and development. Instead, it now encompasses a wide range of
global issues, such as human rights, social justice, and environmental sustainability.

These newer approaches contribute to a more holistic understanding of global political economy by
acknowledging the role of non-state actors, global institutions, and cultural dynamics in shaping
economic outcomes. By moving beyond the rigid frameworks of liberalism, nationalism, and Marxism,
these perspectives open up new ways of thinking about power, identity, and agency in the global system.

4.5 The Future of IPE

The section concludes by suggesting that while the three paradigms will continue to be important for
understanding certain aspects of global political economy, the field must continue to evolve to keep pace
with the changing global context. Scholars must be willing to challenge traditional assumptions and
incorporate new perspectives to fully understand the complex and interconnected world we live in.

The rise of new theoretical frameworks, such as rational choice, poststructuralism, feminist IPE, and
Green IPE, signals a broader shift in the study of international political economy, one that is more
inclusive of social, political, and environmental dimensions. This shift reflects a growing recognition that
the global economy cannot be understood through purely economic or political lenses alone.

Conclusion

The Beyond the Three Paradigms section explores how IPE has expanded beyond the traditional
frameworks of liberalism, economic nationalism, and Marxism to include new approaches like rational
choice theory, poststructuralism, feminist IPE, and Green IPE. These emerging perspectives challenge
the classical paradigms by incorporating a wider range of issues, such as gender, environmental
sustainability, and non-state actors, into the study of global political economy. The section argues that
IPE must continue to evolve to address the growing complexity of the global system and the
interconnected nature of contemporary global challenges.