GPE

A Critical Review of Theoretical Approaches to GPE



A Critical Review of Theoretical Approaches to GPE

Global Political Economy refers to those approaches to analysing world society which seek to overcome the disciplinary divisions of social science. These divisions originate in the late 19th-century separation of classical political economy into an axiomatic economics and an empirical sociology. The core axiom of contemporary, 'neoclassical' economics is that all humans are by nature self-interested, utility-maximising subjects. The empiricism of sociology on the other hand implies an investigative (factual/empirical, historical or evolutionary) approach to its object, society. When this divide came about in the late 19th century, it was a response to two major changes in the class structure of the advanced capitalist countries: first, the growth of a workers' movement, and second, the differentiation, within the capitalist class, between an inactive stratum of investors, the rentiers, and a managerial cadre entrusted with day-to-day operations.

As Susan Strange points out, the origins of the study of International Political Economy can be found in the dilemmas faced by students of International Relations in the Iate-i96os and early 1970s, as the 'established', but arguably quite exceptional, post-Second World War international economic order seemed to fray into disorder (Strange, 1995:45). The Bretton Woods system of fixed exchange rates collapsed between 1968 and 1971, and although initially there were serious attempts to replace it, the structure of floating exchange rates that emerged was much more the result of governments' inability to control exchange and credit markets than it was a consequence of planning. The 1973-4 oil crisis had important effects in terms of fuelling domestic inflation in the West, creating distortions in transport markets, concentrating power even more in the hands of major corpo-rations and, eventually, in driving the debt crisis in the developing world. But its greatest effects included its psycho-logical impact, in its creation of the sense that 'orderly'Western domination of world markets was under pressure as never before from new players in the global economy. The move away from Keynesian economic policies, where they had actually been followed, and the increased questioning, in the 1970s and 1980s, of the role of key international economic institutions, also played a part. And while the US retained a capacity to dominate the rule-making process in international trade (as at the Uruguay Round), the increased volume and diversity of trade, the increase in grey or black economic activity, and the rise of private international regulatory mechanisms contributed to a sense of growing disorder. TTiis gave rise to the question of whether hegemony in a globalising world economy remained possible or, if it carried costly international management responsibilities, even desirable. As Strange rightly suggests, the growth of IPE, and the willingness of major institutions to fund this new academic field and to use its products, often owed much more to these practical problems than to academic debate (Strange, 1995:105)

While IPE often responded to practicalities that were altering in the world economy, there was also academic debate within the sub-discipline, ...