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International Political Economy POLS 5330 Instructor: Amentahru Wahlrab, Ph.D. E-mail: [email protected] (This is the best way to reach me) Office Hours: TBA Phone: (903) 565-5876 (during office hours only, don’t leave voice mail) Course Description Office: BUS 224 This course provides an introduction to the field of International Political Economy (IPE). I define the field as the investigation into the political origins of international economic arrangements. In the spirit of uncovering the political forces that underpin international economic arrangements, the course surveys a number of critical issue areas, including international trade, international finance and the sources of structural change in the global economy, among others. Through many of the seminal works in IPE, the course will also assess the ongoing economic crisis, its origins, the reasons for its global character, and its possible long-term consequences.

Before exploring international economic arrangements, however, the course asks a more fundamental question, which is: What drives human behavior? Economics, political science and sociology tend to answer this question differently. The assumptions analysts make about the basic issue of human motivation in turn affects what kinds of research questions they are likely to ask, the methods they use and the conclusions they draw. Thus learning to identify any research project‘s underlying assumptions is a core objective of the course. Recognizing an author‘s assumptions and assessing them in turn helps one identify the strengths and weaknesses in any given research study.

There are three written assignments during the semester. Each is a seven page take-home exam in which you answer a specific question. The first of the three papers is worth 10% of your grade. Each of the following two papers is worth 20% of your grade. In addition, in-class participation will count for 20% of your grade. A research presentation and corresponding paper will count for 30% of your grade. I will provide the “criteria for assessment” before the first exam is assigned.

Please note that I do not accept any late exams. Most of the required readings on the syllabus are available to you through Blackboard. Unless the syllabus says otherwise, the reading will be on Blackboard. If it‘s not on Blackboard, I note where to find the reading. Many of the optional readings are also available through the same venues. If you want a background text for the course, I can recommend Robert Gilpin‘s 2001 Global Political Economy (Princeton), but this is not required. We will read all of William I. Robinson, Global Capitalism and the Crisis of Humanity (Cambridge: Cambridge University Press, 2014) so please purchase a personal copy of this book.

Important Dates January 12: classes begin January 19: Martin Luther King Jr. Holiday January 26: Census Date February 4: 20th class day March 9-14: Spring Break March 23: Last day to withdraw April 27: Study Day

1 April 28-30: final exams May 1-2: Commencement

Week 1: (F2F)  Introductory lecture: Review of syllabus and assignments. Optional Readings:  Benjamin J. Cohen, International Political Economy : An Intellectual History (Princeton: Princeton University Press, 2008: Chapter 1 & 2. Week 2: (online)  Introduction and Overview: What Drives Human Behavior in the Economy and Polity?  Friedman, Milton. 2008. "The Methodology of Positive Economics." In The Philosophy of Economics: An Anthology, ed. Daniel M. Hausman, 3rd ed. New York: Cambridge University Press. 145-78.  Becker, Gary. 1976. The Economic Approach to Human Behavior. Chicago: University of Chicago Press. 3-14.  Smelser, Neil J. and Richard Swedberg. 1994. “The Sociological Perspective on the Economy,” in The Handbook of Economic Sociology, edited by N. J. Smelser and R. Swedberg. Princeton, NJ: Princeton University Press. 3-26.  Swedberg, Richard. 1990. “The New Battle of Methods,” Challenge 33(1): 33-38.  Ariely, Dan. 2009. Predictably Irrational. New York: HarperCollins. xxi-xxxii; 1-48. Optional Reading:  Rosenberg, Alexander. 1979. “Can Economic Theory Explain Everything?” Philosophy of the Social Sciences 9(4): 509-29. doi: 10.1177/004839317900900409  DiMaggio, Paul. 1994. “Culture and Economy,” in The Handbook of Economic Sociology, edited by N. J. Smelser and R. Swedberg. Princeton, NJ: Princeton University Press. 27-57.  Dobbin, Frank. 2004. “The Sociological View of the Economy,” in The New Economic Sociology: A Reader, edited by F. Dobbin. Princeton and Oxford: Princeton University Press. 1-46. Discussion questions: 1. In your view, is there such a thing as “economic man” in the way Becker portrays the concept? What do the other authors of this week think the answer to that question is? 2. Is Friedman‘s approach useful and appropriate to apply the methods of scientific inquiry to the social world? 3. If there are competing views about the nature of the social world and how to study it in this week‘s readings, what are the public policies that logically follow from each view? Think about this question particularly in the context of advising developing countries in economic management.

Week 3: (F2F) Economic Growth and Stagnation An Interest Group Approach: Olson, Mancur. 1982. The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities. New Haven: Yale University Press. 1-35. Cameron, David. 1988. “Distributional Coalitions and Other Sources of Economic Stagnation.” International Organization 42(4): 561-603. An Institutional Approach:

2 North, Douglas. 1981. Structure and Change in Economic History. New York. Norton. ix-xi, 3- 58, and 143-157. Policy Implications: Lowenstein, Roger. 2006. “Who Needs the Mortgage–Interest Deduction?” New York Times Magazine, 5 March. Lowenstein, Roger. 2007. “Subprime Time: How did homeownership become so rickety?” New York Times Magazine, 2 September: 11-12. Optional Reading (the state and economic growth): Spruyt, Hyndrik. 1994. The Sovereign State and its Competitors: An Analysis of Systems Change. Princeton: Princeton University Press. 3-33. Janos, Andrew. 2000. East Central Europe in the Modern World: The Politics of the Borderlands from Pre- to Postcommunism. Stanford: Stanford University Press. Discussion Questions (on economic growth and stagnation): 1. Why, according to Olson, do interest groups inhibit economic growth? Is it logical in your view that ironically, political stability might actually slow growth rather than enhance it, as Olson‘s theory seems to suggest? 2. Is Olson‘s theory falsifiable? Does it matter to the strength of his argument? 3. What kinds of gains from collective action are divisible and what kinds are not? How do divisible and non-divisible gains figure into Cameron‘s argument? 4. Why, according to North, do property rights facilitate economic growth? 5. What roles do the state and ideology play in facilitating economic growth, according to North? 6. Are there any lessons for developing countries in these readings? Midweek, 5:00pm: Electronic Distribution of Exam #1: Due Monday of next week, by 9:00am on blackboard. The exam should not be longer than 7 double spaced pages in 12 point font. 10% of your grade. Week 4: (online)  Research Week (online) Week 5: (F2F)  International Trade  Kindleberger, Charles. 1975. “The Rise of Free Trade in Western Europe, 1820-1875” Journal of Economic History 35(1): 20-55.  Hirschman, Albert O. 1945. National Power and the Structure of Foreign Trade. Berkeley: University of California Press. ix-xii, 3-40, 53-70.  Frieden, Jeffry and Ronald Rogowski. 1996. “The Impact of the International Economy on National Policies: An Analytical Overview,” in Milner and Keohane, eds., Internationalization and Domestic Politics (New York: Cambridge University Press), 25-47. Policy Implications:  Bradsher, Keith. “On Clean Energy, China Skirts Rules,” New York Times, September 9, 2010, p. A1.  Barboza, David. “As Its Economy Sprints Ahead, China’s People Are Left Behind,” New York Times 10 October 2011, p. A1. Optional Reading:  Gallagher, John and Ronald Robinson. 1953. “The Imperialism of Free Trade.” The Economic History Review [New Series] 6(1): 1-15.

3  Keohane, Robert and Joseph Nye. 1977. Power and Interdependence: World Politics in Transition. Boston, MA: Little, Brown and Company. 3-37.  Gilpin, Robert. 2001. Global Political Economy. Princeton: Princeton University Press. Chapter 8. Discussion Questions: 1. What kind of approach is Kindleberger using to explain the rise of free trade in Europe?

2. Are there international trading relationships that don‘t have power asymmetries built into them? How does Hirschman answer this question? What about Frieden and Rogowski?

3. Does international trade potentially bring conflict between nations, or an incentive for peace? What does the answer depend on?

Week 6: (online)  Money  Simmons, Beth A. 1994. Who Adjusts? Domestic Sources of Foreign Economic Policy During the Interwar Years. Princeton: Princeton University Press. 20-51.  Ikenberry, G. John. 1992. “A World Restored: Expert Consensus and the Anglo-American Postwar Settlement.” International Organization 46(1): 289-321.  Helleiner, Eric and Jonathan Kirshner. 2009. “The Future of the Dollar: Whither the Key Currency?” in Helleiner and Kirshner eds., The Future of the Dollar. Ithaca, NY: Cornell University Press. 1-23.  Germain, Randall and Herman Schwartz. 2014. “The Political Economy of Failure: The Euro as an International Currency, Review of International Political Economy, DOI: 10.1080/09692290.2014.891242. Policy Implications:  Buffett, Warren E. “The Greenback Effect,” New York Times, August 19, 2009. A23.  Bergsten and Subramanian, “America Cannot Resolve Global Imbalances on its Own,” Financial Times, August 20, 2009. P. 7.  Epstein, Rachel. “8 Reasons Why Americans Should Care About the European Debt Crisis,” The Huffington Post, June 8, 2012. Optional Reading:  Eichengreen, Barry. 1992. Golden Fetters: The Gold Standard and the Great Depression, 1919-1939. New York and Oxford: Oxford University Press. 3-28, 390-99.  Gilpin, Robert. 2001. Global Political Economy. Princeton: Princeton University Press. Chapter 9.  Kirshner, Jonathan. 1995. Currency and Coercion: The Political Economy of International Monetary Power. Princeton: Princeton University Press. 3-20, 45-63. Discussion Questions: 1. Do Ikenberry and Eichengreen agree about which conditions must be in place in order for states to recognize which economic policies will work better than those of a previous era?

2. What drives each analysis in this week‘s readings: ideas or interests?

3. Is the United States currently pursuing a strong dollar policy? Or something else?

4 4. According to Helleiner and Kirshner‘s analysis, is the United States currently in a position to manipulate other states, or only in a position to be manipulated?

5. What are the security implications of the European debt crisis?

Week 7: (F2F)  International Finance and Foreign Investment  Moran, Theodore. 1973. “Foreign Expansion as ‘Institutional Necessity’ For U.S. Corporate Capitalism: The Search for a Model.” World Politics 25(3): 369-386.  Gilpin, Robert. 1975. U.S. Power and the Multinational Corporation: The Political Economy of Foreign Direct Investment. New York: Basic Books. 20-78.  Epstein, Rachel A. 2014. “When Do Foreign Banks ‘Cut and Run’? Evidence from West European Bailouts and East European Markets.” Review of International Political Economy, 21(4): 1-31. Policy Implications:  “Globalisation under Strain: Homeward Bound.” Economist, 5 February 2009.  Epstein, Rachel. “A European Banking Union Could Save the Euro,” US News and World Report, June 29, 2012. Optional Reading:  Kindleberger, Charles P. 2000 [1978]. , Panics and Crashes. New York: John Wiley & Sons, Inc. 13-22, SKIM 179-206.  Bandelj, Nina. 2009. “The Global Economy as Instituted Process: The Case of Central and Eastern Europe.” American Sociological Review 74(1): 128-149. Discussion Questions: 1. Does Moran‘s theory apply to corporations today?

2. What‘s the optimal balance of power between states and corporations? Does the state run the economy, or do economic forces run politics? How would one resolve that question?

3. According to Gilpin‘s theory, was the Marshall Plan likely in the US interest? Or did it just create competitors for the United States?

4. What are the upsides and downsides of allowing foreign investment in one‘s own economy? Is there a different calculation for LDCs than there is for industrialized economies?

5. What are the advantages and disadvantages of opening banking markets to foreign investment?

Midweek, 5:00pm: Electronic Distribution of Exam #2. This is your second 7 page assignment, to be written in 12 point font and double-spaced. It is due on Monday, by 9:00am on blackboard. 30% of your grade.

Week 8: Online Research Week

Week 9: (F2F)  International Political Economy and Security

5  Keynes, John Maynard. 1920. The Economic Consequences of the Peace. New York: Harcourt, Brace and Howe. 3-8; 27-37; and 226-251.  Kennedy, Paul. 1984. “The First World War and the International Power System.” International Security 9(1): 7-40.  Kirshner, Jonathan. 2006. “Globalization and National Security,” in Kirshner, ed. Globalization and National Security. New York: Routledge. 1-33. Optional Reading:  Kurth-Cronin, Audrey. 2002-3. “Behind the Curve: Globalization and International Terrorism.” International Security 27(3): 30-58.  Kirshner, Jonathan. 2007. Appeasing Bankers: Financial Caution on the Road to War. Princeton University Press. Chapters 1, 5 and 7. Discussion Questions: 1. Is it possible for a state to acquire wealth without also aspiring to develop commensurate military power? 2. When considering the causes of conflict, do economic factors necessarily play a central role? When would they and when would they not? 3. In what ways does globalization enhance or compromise state security? Week 10: (online)  Varieties of Capitalism and Comparative Political Economy  Gerschenkron, Alexander. 1962. Economic Backwardness in Historical Perspective: A Book of Essays. Cambridge, MA: Harvard University Press. Chapter 1.  Hall, Peter and David Soskice, eds. 2001. Varieties of Capitalism: The Institutional Foundations of Comparative Advantage. Oxford University Press. 1-68.  Woo-Cumings, Meredith. 1997. “Slouching Toward the Market: South Korea.” In Michael Loriaux, et al, Capital Ungoverned: Liberalizing Finance in Interventionist States. 57-91.  Hardie, Iain, David Howarth, Sylvia Maxfield and Amy Verdun. 2013 “Banks and the False Dichotomy in the Comparative Political Economy of Finance,’ World Politics 65:4 (October), pp. 691-728. Policy Implications:  “Europe‘s Economies: A New Pecking Order.” Economist, 7 May 2009.  Barboza, David. “As Its Economy Sprints Ahead, China‘s People Are Left Behind,” New York Times 10 October 2011, p. A1. 9 Optional Reading:  Wade, Robert, 2004 [1992]. Governing the Market: Economic Theory and the Role of Government in East Asian Industrialization. Princeton University Press. Please read the “Introduction to the 2003 Paperback Edition: Creating Capitalisms,” pp. xiii-liv; and pp. 3- 33.  Dobbin, Frank. 1994. Forging Industrial Policy: The United States, Britain, and France in the Railway Age. Cambridge, UK: Cambridge University Press. Introductory chapter, 3-27.  Gourevitch, Peter. 1986. Politics in Hard Times: Comparative Responses to International Economic Crises. Ithaca, NY: Cornell University Press. 17-68.  Fioretos, Orfeo. 2001. “Domestic Sources of Multilateral Preferences: Varieties of Capitalism in the European Community,” in Varieties of Capitalism: The Institutional Foundations of Comparative Advantage, edited by Peter Hall and David Soskice. Oxford, UK: Oxford University Press. 213-244. Discussion Questions: 1. How does the international system potentially affect development within states?

6 2. What analytical similarities do you find between Gerschenkron‘s introduction and the chapter by Hall and Soskice?

3. What are the major differences in the European and Asian models?

4. Is the Economist correct to argue that the Anglo-Saxon model is the superior one, the ongoing financial crisis notwithstanding?

5. Under what conditions does forced savings aid industrialization?

Week 11: (F2F) Structural Change in the Global Political Economy, Part I  Polanyi, Karl. 1944. The Great Transformation. New York: Rinehart & Company. 3-30, 43- 76, 130-150. [Corresponding pages in the recent publication of The Great Transformation, Forward by Joseph E. Stiglitz and a New Introduction by Fred Block are: 3-32, 45-80, 136- 158].  Ruggie, John. 1982. “International Regimes, Transactions, and Change: Embedded Liberalism in the Postwar Economic Order.” International Organization 36(2): 379-415.  Frieden, Jeffry. 1991. “Invested Interests: the Politics of National Economic Policies in a World of Global Finance.” International Organization 45(4): 425-441. 10  Bernanke, B. S. 2005. “The Global Savings Glut and the U.S. Current Account Deficit.” [Board of Governors of the Federal Reserve] 14 April. Discussion Questions: 1. What is the structural change in the global economy that Polanyi is writing about and what are the origins? How is the rise of fascism and socialism related to it? 2. What does Polanyi‘s “double movement” refer to? 3. What was the compromise of “embedded liberalism,” according to Ruggie? Does is still exist? 4. What comes first according to Ruggie—the economic or the social order? 5. With increased capital mobility, have we seen the politicization of exchange rates rather than monetary policy? Midweek, 5:00pm: Electronic Distribution of Exam #3. This is your third, 7 page exam. It should be double-spaced and in 12 point font. The exam is due no later than Monday, 9:00am on blackboard. 20% of your grade.

Week 12: (online)  Structural Change in the Global Political Economy, Part II  Grabel, Ilene. 2003. “Averting Crisis? Assessing Measures to Manage Financial Integration in Emerging Economies,” Cambridge Journal of Economics, 27(3): 317-336.  Johnson, Simon. 2009. “The Quiet Coup.” The Atlantic Online. May.  Posner, Richard A. 2009. A Failure of Capitalism: The Crisis of ’08 and the Descent into Depression. Cambridge, MA: Harvard University Press. 1-74.  Krugman, Paul. 2009. “How Did Economists Get It So Wrong?” New York Times Magazine. September. Week 13: (F2F)  Global Capitalism and the Crisis of Humanity, Part I

7  William I. Robinson, Global Capitalism and the Crisis of Humanity (Cambridge: Cambridge University Press, 2014): read first half of book. Week 14: (online)  Global Capitalism and the Crisis of Humanity, Part II  William I. Robinson, Global Capitalism and the Crisis of Humanity (Cambridge: Cambridge University Press, 2014): finish the book. Week 15: (F2F)  Conference Paper presentations during final exams week

Additional Readings  Realism/Mercantilism  Krasner, Stephen. 1985. Structural Conflict: The Third World Against Global Liberalism. Berkeley: University of California Press. 3-58.  Lake, David. 1987. “Power and the Third World: Toward a Realist Political Economy of North South Relations.” International Studies Quarterly 31(2):217-234.  Spiro, David. 1999. The Hidden Hand of American Hegemony: Petrodollar Recycling and International Markets. Ithaca: Cornell University Press. Preface, Chapters 1 and 2.  Cohen, Benjamin. 1973. The Question of Imperialism: The Political Economy of Dominance and Dependence. New York: Basic Books. 229-257.  Marx and His Descendants  Marx, Karl. From The German Ideology. In Frank Dobbin, ed. The New Economic Sociology: A Reader. Princeton: Princeton University Press (2004). 387-406.  Gill, Stephen and David Law. 1993. “Global Hegemony and the Structural Power of Capital,” in Gramsci, Historical Materialism, and International Relations, edited by Stephen Gill, 93-124. Cambridge: Cambridge University Press.  Wallerstein, Immanuel. 1978. The Capitalist World-Economy: Essays. Cambridge: Cambridge University Press. 1-36.  Grabel, Ilene. 2003. “Ideology, Power, and the Rise of Independent Monetary Institutions in Emerging Economies,” in Monetary Orders: Ambiguous Economics, Ubiquitous Politics, edited by Jonathan Kirshner, 25-52. Ithaca: Cornell University Press.