An Analysis of The Dominate Perspectives of International Political Economy

1532 Words 7 Pages
In the world of international political economy, three dominant perspectives have emerged over time. The differences and similarities between the realist/mercantilist, liberalism, and historical structuralism perspectives are significant. In this essay, I will compare and contrast these dominant perspectives. First, I will give a historical account of how each perspective originated. Then I will outline the actors involved in each perspective, explore those actors’ interests, and outline which of those actors set economic and political policy. Lastly, I will explore how those political and economic actors relate to each other.
History
Among the three dominant perspectives, realist/mercantilist is the oldest and some would argue the most
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Adam Smith, now known to be the father of classical economics, later built on the theories put forth by The Physiocrats in his book ‘The Wealth of Nations’ . He argued that when individuals were free to pursue self-interest ‘the invisible hand’ of the market would be more effective than the state as a regulator of the economy . Although Adam Smith and his followers were concerned about the abuse of power that the state had under the mercantilist system, they did not argue for an absolute Laissez-faire system, they still found a role for government in places like building infrastructure, creating a legal system, coining money and some regulation of foreign commerce to protect local industries .
Later, John Stuart Mill, took this Laissez-faire theory and modified it “advocating limited state action in areas, such as educating children and assisting the poor where individual initiative might be inadequate in promoting social welfare . John Maynard Keynes further adapted the Laissez-faire theory because he was skeptical of the invisible hand’s ability to regulate the markets. He argued that government had to step in from time to time to regulate the economy, especially in times of chronic unemployment . Keynes’ vision shaped the world economy when it became embedded in the Bretton Woods system of economics that was adopted by the Allied nations after World War Two . In this system, states had an important role within their own borders concerning domestic economic policy…