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Contemporary Perspectives on IPE. Class 3 – Tuesday, 20 September 2011 J A Morrison. Barry Eichengreen. Jerry Cohen. Larry Summers. 1. Contemporary Perspectives on IPE. Defining Our Terms IPE as a Social Science IR “Schools”/“Theories” Some Differentiating Questions

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contemporary perspectives on ipe
Contemporary Perspectives on IPE

Class 3 – Tuesday, 20 September 2011J A Morrison

Barry Eichengreen

Jerry Cohen

Larry Summers

1

contemporary perspectives on ipe1
Contemporary Perspectives on IPE
  • Defining Our Terms
  • IPE as a Social Science
  • IR “Schools”/“Theories”
  • Some Differentiating Questions
  • Reference to Empirics
  • Conclusion: How should we study IPE?

2

contemporary perspectives on ipe2
Contemporary Perspectives on IPE
  • Defining Our Terms
  • IPE as a Social Science
  • IR “Schools”/“Theories”
  • Some Differentiating Questions
  • Reference to Empirics
  • Conclusion: How should we study IPE?

3

there are lots of isms in the political economy literature
There are lots of “--isms” in the political economy literature…

Socialism

Autocracy

Democracy

Authoritarianism

Capitalism

Aristocracy

Communism

Liberalism

4

slide5

Since these terms are frequently used in different ways, it will be valuable for us to be sure we use the terms in the same ways in this class.

5

slide6
I like to think about them as describing points along various continua, as representing values for particular variables.

6

regime type who holds the reigns of power
Regime Type: Who holds the reigns of power?

Democracy

Aristocracy

Autocracy

Many

Few

One

political economic system what is the level of government intervention in the economy
Political-Economic System: What is the level of government intervention in the economy?

Capitalist/Free-Market

Socialist/Managed

Low

High

slide11
“Communism,” for me, denotes the political-economic system that Marx predicted would follow inevitably from capitalism.

11

slide12
Remember, these questions relate to variables. Over time, we have observed various combinations of these different values.

12

observed combinations
Observed Combinations

Of course, we might disagree about specific characterizations; but the point remains: different regime types, levels of liberality, and PE systems have been combined.

13

theory versus policy
Theory versus Policy
  • Foreign Economic Policy (“FEP”)
    • The policies designed to influence the relationship between the domestic economy and foreign markets and/or the global economy
    • These are the policies that exist, not necessarily the theories
    • Broad category: everything from tariffs to fertility policy
  • Political Economic System (e.g. Mercantilist System)
    • The proposed bundle of related theories concerning a state’s FEP
    • Note: the proposed system may not always be fully adopted or implemented in practice; the PE systems are distinct from actual policy

14

contemporary perspectives on ipe3
Contemporary Perspectives on IPE
  • Defining Our Terms
  • IPE as a Social Science
  • IR “Schools”/“Theories”
  • Some Differentiating Questions
  • Reference to Empirics
  • Conclusion: How should we study IPE?

15

slide17
We’ll consider that question.But, first, let’s discuss what it means to study something “scientifically.”

17

scientific study is positive
Scientific study is positive.

 Concerned with what is (positive), not what ought to be (normative).

19

slide20
And scientific study relies on the empirical testing of models to explain the relationship between variables.

20

variables
Variables
  • Variables: factors of interest that may vary in value
  • May be continuous, discrete, or a “dummy”
  • Examples
    • Volume of trade (continuous)
    • Type of Exchange Rate Regime (discrete)
    • Status of membership in Int’l Organization (dummy)

22

theories and models
Theories and Models
  • Specify relationship between variables
    • Value of independent (or “explanatory”) variable explains dependent variable
    • E.g. Type of exchange rate regime (IV) explains the volume of trade (DV)
  • May be correct or incorrect (i.e. may or may not align with reality)
  • Endogenous: determined within the model
  • Exogenous: determined outside of the model

23

facts
Facts
  • Descriptions of reality
  • For our purposes, statements about the value of variables
  • May be correct or incorrect
  • Examples:
    • Hong Kong has a fixed exchange rate (correct)
    • The volume of world trade has increased since 1945 (correct)
    • The United States has a fixed exchange rate regime (incorrect)

24

empirical tests
Empirical Tests
  • Theories/Models lead to testable hypotheses
    • E.g. Fixed exchange rate regimes lead to greater volumes of trade.
  • Hypotheses are predictions about the value of variables
  • We test hypotheses by comparing predictions to observed reality
    • Do we observe that countries with fixed exchange rate regimes have greater volumes of trade than countries with flexible exchange rate regimes?

25

correlation causation
Correlation ≠ Causation
  • Correlation: the values of two variables vary together
    • E.g. When many students arrive to class carrying umbrellas, overall attendance is poor
  • Spurious correlation: correlation without causality
    • E.g. students do not avoid class because they fear umbrellas!
  • Or causality may be reversed
    • E.g. Perhaps high trade volumes lead to fixed exchange rate regimes (rather than vice versa).

26

scientific study relies on an epistemology
Scientific study relies on an epistemology.

 An understanding of what can be known and how to acquire knowledge.

27

contemporary perspectives on ipe4
Contemporary Perspectives on IPE
  • Defining Our Terms
  • IPE as a Social Science
  • IR “Schools”/“Theories”
  • Some Differentiating Questions
  • Reference to Empirics
  • Conclusion: How should we study IPE?

28

slide29
You hear a lot about the “schools” of IR thought.Realism, Constructivism, Idealism, Liberalism, Institutionalism, &c.

29

slide31
There is simply too much variation within these “schools” for these monikers to convey much useful information.

31

slide32
Many of the “founders” of these schools (Wendt, Mearsheimer) don’t even agree on who belongs where, let alone what defines each school!

32

slide33
So, think in terms of either specific theorists and/or specific theories—meaning, responses to precise questions.

33

and think in terms of multiple dimensions not just a simple one dimensional continuum
And think in terms of multiple dimensions—not just a simple, one-dimensional continuum.

(Don’t think the way my mother does: “liberals” versus “conservatives.”)

34

contemporary perspectives on ipe5
Contemporary Perspectives on IPE
  • Defining Our Terms
  • IPE as a Social Science
  • IR “Schools”/“Theories”
  • Some Differentiating Questions
  • Reference to Empirics
  • Conclusion: How should we study IPE?

35

slide36

Here are some of the essential questions we might ask.Each question constitutes a dimension along which we might organize different theorists & theories.

36

iv differentiating questions
IV. DIFFERENTIATING QUESTIONS
  • Where’s all the action?
  • Does process matter?
  • What makes us tick?
  • What is the nature of our world?

37

the levels images of ip
The Levels (Images) of IP
  • At what level should we look for the key variables?
  • The Levels (Images)
    • Individual (1st): Hitler liked war
    • Unit/State (2nd): Germany was Autocratic; Autocracies are bellicose
    • System (3rd): There wasn’t a hegemon (single dominant power) to check Germany’s rise

38

the primary actors in ip
The Primary Actors in IP
  • Who are the primary actors in IP? What ought to be our “units of analysis”?
  • Potential Units of Analysis
    • States
    • Individuals
    • International Institutions & Organizations
    • Interest Groups and NGOs
    • Socio-Economic Classes
    • Transnational Social Movements (e.g. Feminism, Environmentalism, &c)

39

the types of variables
The Types of Variables
  • What types of variables matter?
  • Material Factors
    • Power
    • Wealth
    • Geography
    • Material interests (income, &c)
  • Ideational Factors
    • Values
    • Perceptions & Understandings
    • Assumptions, Expectations, & Identities

40

iv differentiating questions1
IV. DIFFERENTIATING QUESTIONS
  • Where’s all the action?
  • Does process matter?
  • What makes us tick?
  • What is the nature of our world?

41

static versus dynamic models
Static versus Dynamic Models
  • Static Models
    • “Snapshot” of current situation
    • History, momentum, &c., do not matter
    • Many variables treated as exogenous
  • Dynamic Models
    • Process matters
    • Virtually all variables could be endogenous
    • E.g. The economic situation Obama faces must be understood in the context of previous administrations

42

why use static models at all
Why use static models at all?
  • parsimony—dynamic models are quite unwieldy.
    • E.g. Did Andrew Jackson’s administration help to generate the current financial crisis?
  • The question: which variables can we assume to be exogenously determined?
  • Disagreement arises over answers

43

iv differentiating questions2
IV. DIFFERENTIATING QUESTIONS
  • Where’s all the action?
  • Does process matter?
  • What makes us tick?
  • What is the nature of our world?

44

logics of human behavior
Logics of Human Behavior
  • Consequentialist (Functionalist)
    • Actions chosen based on expected consequences
  • Appropriateness (Normative)
    • Actions chosen based on normative standards of right & wrong

 Which mode did Locke, Smith, & Marx use?

45

narrowness of our interests
Narrowness of Our Interests
  • Egoism
    • Almost total emphasis on one’s own welfare
  • Altruism
    • Considerable weight given to the welfare of others

 Which view did Locke, Smith, & Marx hold?

46

source of our interests
Source of Our Interests
  • Rationalism
    • Preferences are exogenously determined
  • Constructivism
    • Preferences are endogenous to interaction

 Are we social or unitary/atomistic actors?

47

iv differentiating questions3
IV. DIFFERENTIATING QUESTIONS
  • Where’s all the action?
  • Does process matter?
  • What makes us tick?
  • What is the nature of our world?

48

do markets work
Do Markets Work?
  • Market Failure
    • Without active management, markets often produce suboptimal outcomes
  • Invisible Hand
    • Markets produce best outcomes when intervention is minimized (laissez-faire)

49

compatibility of interests
Compatibility of Interests
  • Mutual Benefit
    • Pursuit of private interest serves public good
    • “Private vices are public benefits” (Mandeville)
    • E.g. Competition between producers  better products at lower prices
  • Zero-Sum
    • Benefits can only come at others’ expense
    • E.g. Allocation of rival goods; pursuit of status

 What areas of the market face which circumstance?

50

slide51
So…There are a lot of different questions to consider; and there are a lot of different ways to group scholars and approaches to IPE.

51

contemporary perspectives on ipe6
Contemporary Perspectives on IPE
  • Defining Our Terms
  • IPE as a Social Science
  • IR “Schools”/“Theories”
  • Some Differentiating Questions
  • Reference to Empirics
  • Conclusion: How should we study IPE?

52

slide53
Remember that our theories specify the relationship between variables.We test our theories using empirical evidence.

53

slide54

Throughout the term, we’ll rigorously examine a range of empirical cases.This will help you to build a universe of cases upon which you can draw as you attempt to develop and test theories about IPE.

54

i m going to talk a lot about the anglosphere the english speaking part of the world here s why
I’m going to talk a lot about the “Anglosphere”—the English-speaking part of the world.Here’s why…

55

why focus on the anglosphere
Why focus on the Anglosphere?
  • Important
    • Historical influence of British state and empire
    • Influence of British thinkers
    • Familiar case in the literature
  • Accessible
    • Writing is in English
    • Rich array of sources, perspectives on context, &c.
    • This is the case I know best!

56

slide57

Some of this you will have to know because that history was influential. But in this class—and every other—you should evaluate theory using the cases you know best.Combine what we study here with what you already know.

57

contemporary perspectives on ipe7
Contemporary Perspectives on IPE
  • Defining Our Terms
  • IPE as a Social Science
  • IR “Schools”/“Theories”
  • Some Differentiating Questions
  • Reference to Empirics
  • Conclusion: How should we study IPE?

58

slide59

Today, I’ve tried to briefly introduce some of the major issues and perspectives in the study of IPE today.I want to emphasize, though, that there continues to be disagreement about how (and what!) we should study in this field.

59

slide63
How scientific should our inquiry be? How rigorous should our empirical standards be?Should we only formulate refutable hypotheses?

63

whom should we study how much emphasis should we place on the state versus individuals ngos mncs c
Whom should we study? How much emphasis should we place on the state (versus individuals, NGOs, MNCs, &c)?

64