Theories of International Political Economy | International Relations | Arslan Zahid Khan |

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Theories of international political economy provide different ways of answering the above questions. Theories show the different ways these questions have been answered by scholars and policy makers, and also allow for an assessment of how well these theories work. Below I am going to describe four leading theories. They will provide a framework through which you can analyze everything you are reading.
We’ll discuss three main bodies of theory: Economic Liberalism, Economic Nationalism, and Economic Structuralism. Economic Structuralism has two variants: Marxism and Dependency. Liberalism, Nationalism, and Dependency are capitalist theories. They all are based on the idea that creating wealth is the goal of economic activity. They differ on how that should be done. Marxism, however, is not a capitalist theory. Its argument is very different from the others: capitalism -- the creation of wealth and accumulation of profit -- is evil to Marxists.
One more thing about theory is important. Theories are models of how the world works. They are tools for analysis. You will find contradictions within the theories and aspects that don’t make sense to you. That’s good. The world is much more complex than any theory could ever illustrate, so be critical of theory and skeptical of theory.
The theories of liberalism were stated best by Adam Smith in The Wealth of Nations, 1776. The key to national wealth and therefore national power is economic growth. The key to economic growth is free trade - the free flow of goods and services and investment across borders. Political leaders should allow trade between nations to expand and deepen and keep government intervention in that trade down to a minimum. This means that imports (products from other nations’ companies that are sold in your nation) and exports (products from your nations’ companies that you try to sell in other countries) should flourish with as little restriction as possible.
Karl Marx and Friedrich Engels were two German economists who created a huge body of literature outlining a theoretical critique of capitalism. The developed these theories in the mid-19th century. The best place to look for details would be in The Communist Manifesto (1848) or The German Ideology (1845). There is so much on Marxism that this essay can only scratch the surface. Remember this is an ideology that spawned political movements and revolutions that shook the world for roughly 150 years. So, this will be the short version.Marx and Engels examined advanced capitalist nations, particularly England and Prussia. These were nations in the midst of the industrial revolution - manufacturing was booming; people were working in factories; rapid urbanization had begun. To Marx and Engels this advanced capitalism divided people into several classes. For our purposes two classes are important: owners and workers, or rich and poor or haves and have-nots. Owners own everything, and have all the power, and all the money. Workers do all the work, and have no power, and no money. Marx and Engels hypothesized that one day the workers would realize that they were being exploited by the owners and rise up to overthrow the owners’ control of society. This would include overthrowing the government of the country because the government’s main purpose was to enforce owner control of society. Marx and Engels felt that this revolution - workers’ revolution or proletarian revolution - was a natural phenomenon, something that would occur naturally in any nation that reached an advanced capitalist stage. So they predicted it would happen first in England or Prussia and would not happen in more agricultural societies such as France or Russia until much later in those nations’ histories.
Dependency also argues that the rich nations exploit the poor nations. But this is not because capitalism is evil. It is because capitalism needs to be more regulated so it will be more just. The problem is that poor nations remain dependent on rich nations. Even after colonialism, when the poor nations became free, their economies remained dependent on the economies and the technology of the rich nations.
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