00:00:00
money is power we've all heard the quote
00:00:02
but what if I told you there's a whole
00:00:03
academic discipline dedicated to
00:00:05
understanding this phrase and its
00:00:07
consequences well not literally but
00:00:09
within international relations there's a
00:00:11
subfield called International political
00:00:13
economy that examines the intersection
00:00:15
of money power and geopolitics
00:00:18
International political economy or IP
00:00:20
can pretty much be described as if
00:00:22
international relations and economics
00:00:24
had a baby at its core IP is the study
00:00:27
of how political institutions processes
00:00:30
and actors influence economic
00:00:31
interactions and conversely how Economic
00:00:34
Institutions processes and actors affect
00:00:36
political interactions breaking it down
00:00:39
word by word ipe is international
00:00:41
because it focuses on Interstate
00:00:43
economic and political Affairs it's
00:00:45
political because domestic and
00:00:46
international politics are variables in
00:00:48
economic decision-making meaning that
00:00:50
voters interest groups national leaders
00:00:52
and state goals all play a role in
00:00:54
shaping Economic Policy an IP is
00:00:57
economic because we are looking at the
00:00:59
buying and selling of goods and services
00:01:01
across borders the global flow of
00:01:02
investment and the ways economic power
00:01:04
influences the political relationships
00:01:06
among states it sounds pretty common
00:01:09
sense and that's because it is but it's
00:01:11
this marriage of formal economic
00:01:13
theories of trade and finance along with
00:01:15
International relation study of
00:01:16
Interstate interactions that constitutes
00:01:18
ipe as a practical matter it's always
00:01:21
been the case that international
00:01:23
relations and economics are intertwined
00:01:25
but IP as a distinct academic field is
00:01:28
no more than a few decades old its
00:01:30
interdisciplinary tool set allows us to
00:01:32
analyze a variety of political and
00:01:33
economic situations and understand their
00:01:35
impact on the global stage IP asks
00:01:38
questions like who are the winners and
00:01:40
losers from a particular economic policy
00:01:42
or how does the global economic order
00:01:44
benefit some Nations while hurting
00:01:46
others we can get a better picture of
00:01:48
IP's value by dividing it into four
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General subject areas international
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trade international monetary policy and
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finance multinational corporations and
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economic development starting with
00:01:59
International Trade this area seeks to
00:02:02
explain bargaining between states
00:02:03
specifically why States engage in trade
00:02:05
Wars or trade cooperation why States
00:02:08
adopt specific foreign economic policies
00:02:10
and who benefits and loses from those
00:02:12
decisions one of the key debates here is
00:02:14
protectionism versus free trade
00:02:16
protectionism involves the use of
00:02:17
tariffs quotas and other trade barriers
00:02:20
to protect domestic industries from
00:02:21
foreign competition protectionists argue
00:02:24
that it can help promote domestic
00:02:25
employment and economic development
00:02:27
while Advocates of free trade say that
00:02:28
the removal of trade barriers can lead
00:02:30
to increased efficiency lower prices and
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greater consumer Choice next we have
00:02:35
international monetary policy and
00:02:37
finance the finance portion is pretty
00:02:39
straightforward we're looking at how
00:02:41
financial institutions like Banks stock
00:02:43
markets and currency markets as well as
00:02:45
the regulations that govern them affect
00:02:47
National economies and the Global Market
00:02:49
at large this also includes how
00:02:51
multinational financial institutions
00:02:53
like the international monetary fund and
00:02:55
World Bank influence global economic
00:02:57
growth and financial stability monetary
00:03:00
policy is where it gets a bit more
00:03:01
interesting at least in my opinion so
00:03:04
first off monetary policy is the set of
00:03:06
tools countries can use to control the
00:03:08
money supply or the total amount of
00:03:10
money in the economy in order to promote
00:03:12
economic growth and employment and keep
00:03:13
inflation in check so if the government
00:03:15
wants to reduce inflation it needs to
00:03:17
reduce the money supply by selling bonds
00:03:19
and increasing interest rates on the
00:03:22
other hand if the government wants to
00:03:23
encourage public spending then needs to
00:03:25
buy back bonds or lower interest rates
00:03:27
to pump money back into the economy and
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encourage lending not to bore you with
00:03:31
economic theory but a central concept
00:03:33
here for ipe is the Unholy Trinity it's
00:03:36
an economic principle that stipulate
00:03:38
states can only achieve two of the three
00:03:40
following policy directions monetary
00:03:42
policy autonomy exchange rate stability
00:03:44
and the free flow of capital for
00:03:46
instance if a country wants to maintain
00:03:48
exchange rate stability and ensure
00:03:50
Capital Mobility it will have to
00:03:52
sacrifice monetary policy autonomy and
00:03:54
Implement fixed exchange rates this is
00:03:56
because the country cannot
00:03:57
simultaneously control its monetary
00:03:59
policy while allowing free Capital
00:04:01
movement as capital flows can exert
00:04:03
pressure on the exchange rate and
00:04:05
undermine stability similarly if a
00:04:07
country aims to have exchange rate
00:04:09
stability and retain monetary policy
00:04:11
autonomy it must restrict Capital
00:04:12
Mobility this is because Capital
00:04:14
movements can create volatility in
00:04:16
exchange rates and limit the
00:04:17
effectiveness of monetary policy
00:04:19
conversely if a country wants to
00:04:21
maintain monetary policy autonomy and
00:04:23
pursue Capital Mobility it will have to
00:04:25
sacrifice exchange rate stability and
00:04:27
accept fluctuating exchange rates this
00:04:29
allows the currency to fluctuate based
00:04:31
on Market forces which may introduce
00:04:33
uncertainty and volatility in
00:04:35
international trade our third area is
00:04:38
multinational corporations this area
00:04:40
examines how multinational corporate
00:04:42
activities affect the relationship
00:04:44
between states and the global economy as
00:04:46
a whole since multinational corporations
00:04:49
operate in multiple countries they can
00:04:50
be seen as a product or an extension of
00:04:53
globalization proponents argue that they
00:04:55
can bring benefits such as increased
00:04:56
employment technology transfer and
00:04:58
economic growth
00:05:00
however critics contend that they can
00:05:01
also lead to increase inequality
00:05:03
environmental degradation and reduce
00:05:05
policy autonomy for governments IP also
00:05:08
looks at how foreign investment can
00:05:10
influence Economic Development
00:05:11
technology transfer and employment as
00:05:13
well as the ways countries can regulate
00:05:15
foreign investment to ensure that it
00:05:17
benefits their own economic interests
00:05:20
finally we have Economic Development
00:05:22
here we are trying to understand the
00:05:23
ways in which countries can promote
00:05:25
economic growth and development reduce
00:05:27
poverty and improve living standards
00:05:30
IP analyzes the ways in which domestic
00:05:32
policies and institutions as well as
00:05:34
global economic factors can influence
00:05:36
Economic Development the role of
00:05:38
international organizations such as the
00:05:40
World Bank and international monetary
00:05:42
Fund in providing economic development
00:05:44
is also important these institutions
00:05:46
provide loans and technical assistance
00:05:48
to developing countries but they've been
00:05:50
criticized for promoting policies that
00:05:51
disproportionately favor wealthy Western
00:05:54
countries and acting as an extension of
00:05:56
multinational corporations you may have
00:05:58
noticed that organiz ganizations like
00:06:00
the World Bank and international
00:06:01
monetary fund are reoccurring themes
00:06:03
here we call these organizations
00:06:05
International financial institutions
00:06:07
they are part of a larger conversation
00:06:09
around economic globalization and global
00:06:11
economic governance the former referring
00:06:14
to the greater interconnectedness
00:06:15
between National economies and the
00:06:17
latter being how we choose to regulate a
00:06:19
more globalized World economy
00:06:21
globalization has led to an increase in
00:06:23
international trade investment and
00:06:25
migration as well as the development of
00:06:27
Global Supply chains and the growth of
00:06:29
multi mational corporations
00:06:31
International financial institutions are
00:06:33
relatively recent developments in
00:06:35
economic history and try to provide a
00:06:37
set of institutional arrangements and
00:06:39
international agreements that guide a
00:06:40
stable global economy they provide loans
00:06:43
to developing nations coordinate
00:06:45
disaster relief regulate global trade
00:06:47
and finance and so many other things
00:06:49
within and Beyond global economic
00:06:50
governance whether all that works out or
00:06:52
not is a separate discussion but what's
00:06:54
important is that International
00:06:56
financial institutions emerged alongside
00:06:58
globalization in the latter half of the
00:07:00
20th century and remain cornerstones of
00:07:02
modern Global economics now IP has a
00:07:05
myriad of theories and perspectives of
00:07:07
viewing International economic relations
00:07:10
but I just want to highlight the main
00:07:11
three realism liberalism and
00:07:13
structuralism my previous video focuses
00:07:16
on realism and liberalism in regards to
00:07:18
international relations in general so
00:07:20
check that out if you want to find out
00:07:21
more about them but for the purposes of
00:07:23
this video I want to specifically apply
00:07:25
them to IP in a nutshell realism
00:07:28
emphasizes the role of power and
00:07:30
self-interest in shaping international
00:07:32
relations realists view the
00:07:33
International System as an anarchic
00:07:35
environment in which states compete for
00:07:37
power and resources with national
00:07:39
survival as a main goal for each country
00:07:41
one of the central assumptions of
00:07:43
realism is that economic competition is
00:07:45
a key driver in international political
00:07:47
economy economic power is seen as a key
00:07:49
source of National Power and States
00:07:51
engage in economic policies and
00:07:53
practices that serve their own interests
00:07:55
rather than the broader interests of the
00:07:56
global Community as such weaker States
00:07:59
states are often forced to accept
00:08:00
unfavorable economic arrangements
00:08:03
realists are also skeptical of economic
00:08:05
globalization since it can lead to
00:08:06
increased competition that hurts
00:08:08
domestic Industries and promotes
00:08:10
economic interdependence which can
00:08:11
threaten State survival in the most dire
00:08:13
of situations this positions realists to
00:08:16
be more likely to adopt protectionist
00:08:18
policies such as embargos and tariffs
00:08:20
and other mechanisms aimed at
00:08:21
consolidating National Economic
00:08:23
interests realism also argues that
00:08:26
states are the principal actors on the
00:08:28
international stage meaning that
00:08:29
countries are the only entities whose
00:08:31
actions matter in global Affairs this
00:08:33
gives realists a rather cynical take on
00:08:35
International financial institutions at
00:08:38
best they simply do not matter to
00:08:39
realist and at worst they are controlled
00:08:41
by the large powerful states that
00:08:43
dominate them as opposed to Building
00:08:45
multilateral Solutions to grow global
00:08:47
economic cooperation liberalism on the
00:08:50
other hand says that cooperation and
00:08:52
interdependence actually do have a role
00:08:54
in shaping International economic
00:08:56
relations liberals believe that economic
00:08:58
globalization ation can be a force for
00:09:00
peace and prosperity arguing that as
00:09:02
free trade is embraced countries
00:09:04
establish industry specializations and
00:09:06
Global Supply chains form not only does
00:09:08
this produce absolute economic growth
00:09:10
but it reduces the likelihood of
00:09:12
conflict since it becomes no longer
00:09:14
worth it to rupture the ties of economic
00:09:16
integration liberals also embrace the
00:09:18
role of international financial
00:09:20
institutions unlike realists they argue
00:09:22
that International institutions such as
00:09:25
the World Trade Organization and the
00:09:26
international monetary fund facilitate
00:09:29
Co operation regulate Global economics
00:09:31
and provide a framework for resolving
00:09:33
economic and political disputes for
00:09:35
example the European Union is a
00:09:37
successful model of economic integration
00:09:39
that has promoted peace and prosperity
00:09:41
among its member states if you haven't
00:09:43
noticed yet our global economic order is
00:09:46
set up with liberalism in mind that
00:09:48
brings us to structuralism which is a
00:09:50
perspective fruited in Marxism it
00:09:52
focuses on the structures and systemic
00:09:54
factors that shape and influence the
00:09:56
behavior of States institutions and
00:09:58
other factors in the international
00:10:00
economic system so that basically means
00:10:02
that the global economy is characterized
00:10:04
by inherent inequalities and power
00:10:06
imbalances which powerful countries and
00:10:08
multinational corporations create and
00:10:10
leverage to control production trade and
00:10:12
the distribution of wealth we can see
00:10:15
this perspective reflected in how
00:10:16
structuralists resist International
00:10:18
financial institutions Unlike liberals
00:10:21
who love these Institutions and realists
00:10:23
who largely don't care about them
00:10:24
structuralists believe that they are
00:10:25
tools used to perpetuate the economic
00:10:27
divide between develop and developing
00:10:29
nations for example the World Trade
00:10:32
Organization is criticized for primarily
00:10:34
serving the interest of developed
00:10:35
countries which have the most influence
00:10:37
in setting the organization's agenda the
00:10:40
same thing can be said with the
00:10:41
international monetary fund which over
00:10:43
represents Western democratic nations in
00:10:45
its staff and voting rights this sets up
00:10:48
structuralists to want economic growth
00:10:49
and development that's sustainable and
00:10:51
inclusive of marginalized groups so
00:10:54
that's a somewhat brief summarization of
00:10:55
what IP is today but that begs the
00:10:58
question how did we get here to avoid a
00:11:01
lengthy talk about IP's history I'm
00:11:03
going to give a short and perhaps
00:11:04
slightly bastardized historical account
00:11:06
of the field let's start by going back
00:11:08
in time to the mercantilist era it's the
00:11:11
16th century and European nations are
00:11:13
all about maximizing their wealth and
00:11:15
power through International Trade
00:11:17
mercantilists believe that a nation's
00:11:18
wealth was measured by the amount of
00:11:20
gold and silver it possessed so States
00:11:22
aimed to increase exports and decrease
00:11:24
Imports through protectionist policies
00:11:26
such as tariffs and quotas this was the
00:11:29
case for international economics until
00:11:30
the late 18th century when we see the
00:11:32
emergence of Adam Smith's classical
00:11:34
liberal economics Smith believed that
00:11:37
free trade was the key to increasing
00:11:38
economic growth and prosperity he argued
00:11:41
that if Nations specialize in producing
00:11:43
what they are most efficient at and
00:11:44
trade with other nations then everyone
00:11:46
would benefit his famous metaphor of the
00:11:48
Invisible Hand referred the idea that
00:11:51
individuals driven by self-interest and
00:11:53
the pursuit of profit engaged in
00:11:54
economic activities such as producing
00:11:57
goods and services trading and investing
00:11:58
vesting these individual actions are
00:12:01
Guided by market forces such as supply
00:12:03
and demand prices and competition and
00:12:05
would ultimately benefit Society free
00:12:07
market capitalism quickly became the new
00:12:09
global economic order alongside the rise
00:12:12
of modern liberal Democratic states and
00:12:14
if you haven't realize yet this is where
00:12:16
the liberal perspective of Ip develops
00:12:18
from then a little thing called World
00:12:20
War I happened ending the era of
00:12:22
classical liberal economics following
00:12:24
the war the flavor of the day was
00:12:26
Keynesian economics John Maynard can's
00:12:28
believed in the importance of government
00:12:30
intervention in the economy to promote
00:12:32
economic growth and stability he
00:12:34
descents from the classical liberal idea
00:12:36
of the Invisible Hand and suggests that
00:12:38
in times of recession governments should
00:12:40
spend money to stimulate the economy the
00:12:42
most notable example being FDR's New
00:12:44
Deal the economic policies of the inter
00:12:46
War period sought return to government
00:12:48
intervention as high tariffs and
00:12:50
currency devaluations became common
00:12:53
however government intervention never
00:12:54
quite reached the levels seen under
00:12:56
mercantilism since the foundations of
00:12:58
free market C capitalism were still
00:12:59
present the outbreak of World War II led
00:13:02
to the collapse of the global economy
00:13:04
once again by 1944 the Allied Powers
00:13:07
were pretty sure that they would win the
00:13:08
war and held secret discussions in
00:13:10
Breton Woods New Hampshire to construct
00:13:12
a post-war global economic order the
00:13:14
conference which would later be dubbed
00:13:16
the Breton Woods conference was attended
00:13:18
by 44 Nations and establish a new
00:13:20
economic order built on the principles
00:13:22
of liberalism known as the Breton wood
00:13:24
system the conference created the
00:13:26
international monetary fund and World
00:13:28
Bank which were tasked with facilitating
00:13:30
International Capital financing and
00:13:32
regulating monetary activities thinking
00:13:34
about the Unholy Trinity the Breton wood
00:13:36
system sacrificed the monetary autonomy
00:13:38
of Nations participating in the
00:13:40
agreement in favor of exchange rate
00:13:41
stability and the free flow of capital
00:13:44
the system achiev this by requiring all
00:13:46
currencies to have a fixed exchange rate
00:13:48
to the US dollar which was in turn
00:13:49
pegged to the price of gold I'm no
00:13:51
Economist so I'm not going to explain
00:13:53
how all this worked but this brought
00:13:55
relative stability to the global economy
00:13:57
which enabled the growth of
00:13:58
international trade thus the liberal
00:14:00
order did as intended influencing states
00:14:02
to embrace free trade economics which in
00:14:04
turn led to the implementation of
00:14:06
liberal political reforms at least for
00:14:08
the most part however the Breton wood
00:14:10
system is often criticized as being an
00:14:12
instrument of American global hegemony
00:14:14
and neoliberalism that to discussion for
00:14:16
another time what was important about
00:14:18
Breton Woods is that it brought together
00:14:20
Nations to establish a new global
00:14:22
economic order and created International
00:14:24
financial institutions that still
00:14:26
persist to this day that brings us to
00:14:28
the 19 1970s where IP officially began
00:14:31
to form as its own academic field
00:14:33
profound economic issues of the time
00:14:35
such as the oil embargo and stag plation
00:14:37
alongside Nixon's decision to end the US
00:14:39
Dollar's convertibility to Gold brought
00:14:41
the Breton wood system to a close these
00:14:44
events as well as the new reality of
00:14:46
globalization and importance of
00:14:47
international financial institutions
00:14:50
sustained a new need within
00:14:51
international relations scholarship to
00:14:53
focus on global economic governance
00:14:55
what's interesting is that the field was
00:14:57
born simultaneously yet separately in
00:14:59
the UK and the US Robert cohane Joseph
00:15:03
NY Robert Gilpin and Benjamin Cohen are
00:15:05
some of the founding members on the
00:15:07
American side while Susan strange and
00:15:09
Robert Cox represent the British side of
00:15:11
things Cohan and NY are some of the most
00:15:13
Forefront thinkers of the field and
00:15:15
here's a quick clip of cohain explaining
00:15:17
the idea behind the development of
00:15:19
Ip the earlier Trend with jonai was to
00:15:23
to contravene the notion that world
00:15:26
politics is only about security Affairs
00:15:28
and that political economy uh is is not
00:15:31
an important part of it when we started
00:15:34
this work in
00:15:35
1970 um people were ignoring
00:15:37
Multinational Enterprises uh they were
00:15:39
looking at only at the state system they
00:15:42
considered the the economic relations
00:15:45
among the advanced countries to be low
00:15:46
politics not very interesting what was
00:15:48
interesting was the US Soviet conflict
00:15:52
nuclear weapons uh International crisis
00:15:55
and our view was that that was also that
00:15:57
was also interesting but there was a
00:15:58
whole phen phenomenon which was
00:15:59
certainly increasingly important of
00:16:02
political economy of the use of politics
00:16:04
to shape the economy of the use of
00:16:06
economic wealth to shape politics which
00:16:09
was not being studied a quick tangent
00:16:11
about Professor Benjamin Cohen but I
00:16:13
actually took a couple classes from him
00:16:14
as an undergrad which were the
00:16:16
inspiration behind this video but more
00:16:18
importantly he wrote a lot about the
00:16:20
British American divide in ipe both
00:16:22
approaches to IP follow the general
00:16:24
framework laid out in the beginning of
00:16:26
this video however they depart on
00:16:28
several foundational areas American IP
00:16:31
prioritizes the scientific method in its
00:16:33
mode of analysis meaning that research
00:16:35
tries to emulate the objectivity of hard
00:16:37
Sciences British ipe is less attached to
00:16:40
Conventional social science and instead
00:16:42
lends some importance to historical
00:16:44
sociological and critical analysis this
00:16:47
results in American ipe having more
00:16:49
focus on economics while the British
00:16:51
weigh more emphasis on politics American
00:16:53
IP tends to be a more State Centric
00:16:55
study meaning that states are assumed to
00:16:57
be the primary actors in global
00:16:59
economics and thus the main focus of
00:17:01
analysis this positions the perspectives
00:17:03
of realism and liberalism to be popular
00:17:06
while structuralism is not really
00:17:07
entertained the British on the other
00:17:09
hand argue that states are just a
00:17:11
portion of global actors among a myriad
00:17:13
of non-state actors like International
00:17:15
financial institutions multinational
00:17:17
corporations non-governmental
00:17:19
organizations and individuals this along
00:17:22
with the previous point about British
00:17:24
IP's multi-disciplinary approach means
00:17:26
that it's more open to constructivist
00:17:28
and structuralist perspectives there is
00:17:30
some Credence to lend to the narrative
00:17:32
that British ipe was deliberately
00:17:34
developed to contrast what was going on
00:17:35
on the other side of the pond but it's
00:17:37
an overstep to say that this was the
00:17:39
whole story the difference between the
00:17:40
countries reflect long entrenched
00:17:42
divisions in their approaches to social
00:17:44
science objective heart science versus
00:17:46
subjective critical theory this isn't to
00:17:48
say one is better than the other but
00:17:50
perhaps two different yet equally
00:17:52
important approaches to understanding
00:17:54
International political economy so
00:17:56
that's International political economy
00:17:58
I wanted to make a video about IP since
00:18:01
it's an area of international relations
00:18:02
that I really enjoy because it's a real
00:18:04
Melting Pot of theory application and
00:18:06
history Professor Benjamin Cohen and his
00:18:09
lectures were what introduced me to IP
00:18:11
and were major Inspirations behind this
00:18:13
video so I can only thank him for
00:18:15
opening my eyes up to this
00:18:17
field like always thanks for
00:18:19
[Music]
00:18:26
watching
