“Within the last decade or so we have witnessed severe economic turbulence, including the Eurozone crisis, the international financial crisis that began in 2007 and 2008, and now the global economic distress caused by the Covid 19 outbreak. The economic and political consequences of these events and the subsequent policy responses are still reverberating. Which of the three main theories (Realism, Mercantilism/Economic Nationalism, and Liberalism) of International Political Economy best captures the contemporary age and why?”

QUESTION

“Within the last decade or so we have witnessed severe economic turbulence, including the Eurozone crisis, the international financial crisis that began in 2007 and 2008, and now the global economic distress caused by the Covid 19 outbreak. The economic and political consequences of these events and the subsequent policy responses are still reverberating. Which of the three main theories (Realism, Mercantilism/Economic Nationalism, and Liberalism) of International Political Economy best captures the contemporary age and why?”

There is no source limit but 2 is the minimum.

ANSWER

Analyzing the Contemporary Age through International Political Economy Theories

The past decade has witnessed significant economic turbulence, with events such as the Eurozone crisis, the international financial crisis of 2007-2008, and the ongoing global economic distress due to the Covid-19 outbreak. These events have had far-reaching economic and political consequences, shaping the trajectory of the global economy and prompting policymakers to respond. To understand the contemporary age, it is essential to evaluate these events through the lens of international political economy (IPE) theories. In this essay, we will examine three main theories: Realism, Mercantilism/Economic Nationalism, and Liberalism, to determine which theory best captures the complexities of the current economic landscape.

Realism

Realism is a theory that posits that states are the primary actors in international relations, and their behavior is driven by self-interest, power dynamics, and competition. Realists argue that economic interests are subordinate to political and security concerns, emphasizing the importance of military power and security in shaping international relations (Trubowitz, 2001). While Realism provides insights into the impact of power dynamics on the global economy, it falls short in capturing the complexities of the contemporary age. The economic crises of the past decade have demonstrated the interdependence and interconnectedness of economies, challenging the purely state-centric approach of Realism.

Mercantilism/Economic Nationalism

Mercantilism, or Economic Nationalism, is a theory that emphasizes the importance of protecting national economic interests, often through trade barriers, subsidies, and strategic industrial policies. It views the world as a zero-sum game, where gains by one country come at the expense of others (Kenton, 2022). Mercantilist policies prioritize domestic industries, often leading to protectionism and trade wars. In recent years, there has been a resurgence of economic nationalism, driven by concerns over deindustrialization, job losses, and national security. While Mercantilism captures some aspects of the contemporary age, such as rising protectionism and trade tensions, it overlooks the benefits of globalization and the potential for mutually beneficial cooperation among nations.

Liberalism

Liberalism, as an IPE theory, advocates for free markets, open trade, and economic interdependence. It emphasizes the importance of institutions, such as the World Trade Organization (WTO) and regional trade agreements, in promoting cooperation and resolving disputes. Liberalism recognizes the potential for win-win outcomes through international trade and investment, emphasizing the positive-sum nature of economic interactions (Meiser, 2018). In the context of the contemporary age, Liberalism provides a more comprehensive framework for understanding the economic landscape. The global economic distress caused by the Covid-19 outbreak highlighted the importance of international cooperation in addressing shared challenges, such as vaccine distribution and economic recovery.

Conclusion

When assessing the contemporary age through the lens of IPE theories, it becomes clear that Liberalism best captures the complexities of the current economic landscape. While Realism provides insights into power dynamics and Mercantilism highlights the importance of protecting national interests, Liberalism’s emphasis on free markets, economic interdependence, and international cooperation resonates strongly in today’s globalized world. The ongoing economic and political consequences of recent crises underscore the need for collaborative efforts and multilateral institutions to address global challenges effectively. By embracing the principles of Liberalism, nations can strive for mutually beneficial outcomes and foster sustainable economic growth in the face of ongoing uncertainties.

References

Kenton, W. (2022). What Is Mercantilism? Investopedia. https://www.investopedia.com/terms/m/mercantilism.asp 

Meiser, J. W. (2018). Introducing Liberalism in International Relations Theory. E-International Relations. https://www.e-ir.info/2018/02/18/introducing-liberalism-in-international-relations-theory/ 

Trubowitz, P. (2001). Foreign Policy Analysis. In Elsevier eBooks (pp. 5737–5740). https://doi.org/10.1016/b0-08-043076-7/01262-6