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The conceptual differences between Realism, liberalism, and Marxism and their stand on hegemonic stability and global integration
By: Saeed Kakeyi
October 22, 2007

bstract The question arises as to why there are so many theories and why they differ from each other. There are several reasons for the existence of multiple theories. Each theory has a different oal in mind! for example, realism is concerned with the security of the state, liberalism with buildin wealth or cooperation and "arxism in pursuin class equity. #hile they are all tryin to understand the world, they are loo$in at different aspects of human existence. % second and related reason is that a particular theory usually advances the interests of a particular roup. &icher, more satisfied people and states tend to favor liberals which do not threaten their interests while those disadvanta ed by the system are more li$ely to espouse "arxism. % third explanation is that it is impossible to prove a theory ri ht or wron . Evidence is often disputed and interpreted in different ways. "oreover, unli$e the laws of nature, people are able to reflect upon their behavior and chan e their form of or ani'ation and interaction. (n the words of &obert )ox* +Theory is always for someone and for some purpose, -.aufman* 200/, 7021. !ntroduction %ctors in the (nternational 2olitical Economy -(2E1 and those studyin it use a variety of theories and use them for a variety of purposes. 3ome people are interested in predictin a stable economic rowth, or to predict unstable economic situations. Others thin$ that prediction is nearly impossible because so many factors come to ether to influence events. These people often use theory in an attempt to understand the world rather than to predict what will happen next. This paper will describe and compare a number of theories in order to understand and explain developments in the world political economy. 3ince 4570s, the development of (2E is often constructed around a debate between three contendin conceptions or schools of thou ht! &ealism, 6iberalism, and "arxism. (t will be evident that althou h analysts distin uish between these three conceptions there is a wide variety of thou ht within each conception that affects the (2E. 7efore addressin the current state of theory, however, this paper will next introduce the $ey propositions of the three perspectives and hi hli ht the ma8or differences between them. Thereafter, it will provide summary accounts for the Theory of 9e emonic 3tability as well as $ey issues of :lobal (nte ration. &ealism, liberalism, and "arxism* $ey actors and dynamics &ealism is focuses on the role of the state and the importance of power in shapin outcomes in the (2E. 3cholars of this paradi m stress the importance of the interest of the state or the nation in understandin the role of economy in international relations. Economic analysts of this concept are variously termed as mercantilists, neo;mercantilists, statists or economic nationalists. The ori in of this school of thou ht can be traced bac$ to the emer ence of the nation;state in Europe in the fifteenth century. "ercantilism was a doctrine of political economy that overned the actions of many states until the liberal revolution in 7ritain in the mid;

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nineteenth century. (nsofar, realists view states as motivated by power maximi'ation! and, with respect to trade, they view economic statecraft, includin trade policies, as one of many instruments available to states in their pursuit of power. 3cholars wor$in in this perspective ar ue that the nature of the lobal economy reflects the interests of the most powerful states. This he emonic power is needed to provide leadership and absorb the short;term costs of maintainin a free;trade re ime. &obert :ilpin has ar ued that chan es in the distribution of power between states increase the chances of conflict in the international system. 7ecause of this view considerable time can be devoted to contemplatin the rise and fall of reat powers -.aufman* 200/, /77;/</1. (n contrast to the realist theories, liberals focus either upon the individual or a wide ran e of actors. They do not see the state as a unitary actor, but as influenced by numerous factors. &ather than stress the inevitability of conflict, liberals search out the conditions for cooperation. They tend to underplay the role of force and coercion in human affairs and emphasi'e the ability of individuals to choose between stri$in courses of action. 6iberals see the world system as one of interdependence rather than anarchy. 3tates and peoples can cooperate for mutual benefit. &ather than a 'ero;sum ame, liberals see a positive;sum ame where the pie rows bi er and everyone ains. 6iberal theories of political economy emer ed in ei hteenth and nineteenth century 7ritain in the wa$e of the industrial revolution. 2olitical economists such as %dam 3mith and =avid &icardo preached the merits of overnment non;interference in the economy and free trade -200/, /20;/2/1. (n reaction to the liberal thou ht, another conception emer ed in the nineteenth century to move away from the individual and states by considerin other unit of analysis. .arl "arx, with the help of his co;author, >redric$ %n les, developed his "arxist theory by focusin upon class and the interest of wor$ers. =urin the industrial revolution, "arx too$ issue with the idea of a harmony of interests that the liberals advocated. "arx reco ni'ed an on oin conflict between wor$ers and capitalists that would only be resolved when the wor$ers sei'ed power. "arx also reco ni'ed the desire of states to maximi'e wealth, but believed that this oal is pursued to benefit particular classes, rather than society as a whole. >or "arxists, the state is not a unitary actor, but is a structure representin the interests of the dominant classes in society. ?eo; "arxists maintain that the state is fundamentally an instrument of class domination. The "arxist re8ection of the liberal and realist assumption of the neutrality of the state vis;@;vis class interests leads to the conclusion that trade policies do not benefit all individuals within society, but in fact promote the interests of the dominant classes -200/, /2A;/B41. &ealists view the state as the main actor in the (2E. Their ma8or assumption of is the primacy of the political over other aspects of social life. Cnli$e liberals who view state with hostility since it brin s politics into the realm of economics, realists focus on the activities of the state or nation rather than the individual. "ercantilist thou ht be ins from two ma8or assumptions. The first is that the international system is anarchical and that it is therefore the duty of each state to protect its own interests. %t the core of realismDwhich mercantilism has developed fromDis the belief that an economy acts for the ood of all its members. The second assumption concerns the primacy of the state in political life. %s the state is the central instrument throu h which people can fulfill their oals it follows that the state remains the reatest actor in the domestic and international domains. Economic policy therefore should be used to build a more powerful state. #hereas the liberals, on the other hand, believe that if individuals are left freely to en a e in production, exchan e and consumption would benefit all and that the insertion of state control distorts benefits and adds costs to participants in the

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mar$et. #ithin the liberal perspective, however, there are a number of $ey actors. 6iberal economic theory be ins from the analysis of individual wants and preferences. (n the context, liberal theorists focus on the behavior of individuals, firms and states. Cnli$e economic realists, individuals as the $ey economic actorDin pursuit of self;interestDwill maximi'e the benefits of economic exchan e for society -200/, /B4;/B71. (n contrast to both realism and liberalism, "arxism be ins with a focus on class as the main EactorF in the (2E. They re8ect the individualism of liberal theory and embrace the collectivist approach of economic nationalist perspectives. 9owever, "arxism re8ects the realistF nationalism and focuses instead on the si nificance of class. "arx defined class in relation to the structure of production which creates owners of the means of production -the bour eoisie1 and the wor$ers who sell their labor power to the bour eoisie. This focus arises from the "arxist account of capitalist relations which are predicated on exploitation -200/, /B<;//01. Market economy differences >rom a realist perspective (2E is constituted throu h the actions of rational states. (f international relations are conceived as a stru le for power, (2E is a stru le for power and wealth. "ar$et relations are important indicators of power and wealth but the mar$et is overned by the activities of states. Economic activity is subordinate to political oals and ob8ectives. >urthermore, economic actors are sub8ect to political authority. The consequence of the salience of the state is that international economic relations are international political relations. The lobal economy in this view is subordinate to the international political system -200/, /44;/421. >or liberal theorists, however, the mar$et lies at the centre of economic life. Economic pro ress results from the interaction of diverse individuals pursuin their own ends. #hile liberals ac$nowled e that mar$et relations are not always optimal, they tend to ar ue that intervention in the mar$et is most li$ely to produce less favorable outcomes. 6iberals differ over the importance of mar$et imperfections and the policies that ou ht to be implemented to deal with mar$et failure -200/, /<5;/501. =ominance and exploitation amon and within societies provide the main dynamic for "arxist theories of (2E. Cnli$e liberals "arxists view mar$et relations as inherently exploitative. %ccordin to "arxists, under capitalism wor$ers are denied a fair compensation because capitalists pay wor$ers less than their labor is worth. "arxists view international economic relations as inherently unstable and problematic. >irst, the tendency for the rate of profit to fall sees capitalists en a ed in fierce competition with each other and will tend to drive down the wa es of wor$ers. 3econdly, capitalism leads to uneven development as some centers increase their wealth and rowth at the expense of others. Thirdly, "arxists ar ue that capitalism leads to overproduction or under;consumption ivin rise to fluctuations in the business cycle and underminin social stability -200/, 0/A;0041. "onflict and cooperation %s mentioned earlier, realism views the world as anarchic, lac$in any central authority. &elations between states are thus characteri'ed by unendin conflict and the pursuit of power. (nternational economic relations are therefore perceived in 'ero;sum terms, that is, the ain of one party necessitates a loss for another party. The system structure is perceived in problematic terms -200/, /B0;/BA1. This can be seen in terms of security concerns, that is, a state should not be reliant on the import of some specific oods otherwise in times of conflict these oods may be unavailable. (t can also be seen in terms of the preservation of the cultural values of the nation.

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>or example, many realists believe that the import of some products pollutes the nation throu h the introduction of forei n values. >rom the fore oin , it is easy to see how realists support the protection of their domestic mar$ets. 6iberals, on the other hand, believe that mar$et relations will lead to positive outcomes for all. (n other words, economic relations are positive;sum. One persistent liberal belief has been that realist policies lead to conflict. Cnli$e "arxists who denounce the rowth of lobal capitalism as a cause of war, liberals view increased international cooperation as a source of prosperity and peace -200/, 00A1. #ithin the study of (2E, liberal theories share assumptions concernin the feasibility of cooperation. (n the 45A0s, the interdependence system was developed to explain the connection between increased economic exchan e and interconnectedness and the lon ;lastin peace amon #estern countries -3pero and 9art* 200B, 2<1. (n the 45<0s and liberals continued to ar ue that international cooperation was both possible and desirable. (n contrast to realists, liberals illustrated that international systems or re imes would maintain international economic order even after he emony -200/, /501. "arxism perceives international economic relations as a 'ero;sum ame. The structure of lobal capitalism is fundamentally problematic and arises from the law of motion of capital. (n the international arena the clash between wor$ers and capitalists is often obscured by nationalism and the intervention of the state. Throu h the mechanism of imperialism dominant states oppress wea$er ones and this nets an international stru le between imperialists and their victims. Therefore, international conflict is inevitable because of the drive for profit. Merits and dangers of the #egemonic Stability 9e emonic 3tability Theory -93T1 was developed by realist theorists to explain the instability between the world wars of the twentieth century. This instability, accordin to &obert :ilpin, was primarily economic in nature, and the :reat =epression was the result -200/, /<B1. 9owever, the instability led to, and ended in, war. The theory holds that international systems are established by very powerful +he emonic, states to advance particular political and economic interests. )harles 2. .indleber er is usually credited with havin introduced the theory which examined the causes of the :reat =epression. 9e concludes that +the main lesson of the inter; war years GisH that for the world economy to be stabili'ed there has to be a stabili'er, one stabili'er, -457B, B001. This one stabili'er can only be the he emon. This is where .eohaneFs definition of he emony* +one state is powerful enou h to maintain the essential rules overnin interstate relations, and willin to do so, is applicable -45</, B/;B01. 2olitical, economic and military powers are all needed. 2olitical stren th is necessary to use military and economic powers to affectDthe willin ness to which .eohane refers, as well as to induce other states to act without recourse to force. Economic power is needed for the he emon to be able to set rules for the wor$in of the liberal international economy. % lar e internal mar$et can be used as an incentive, and serves as a stabili'er in the economic system. "ilitary power is needed to protect the international economic system form the peripheral states which may see$ to impose an alternative system in place of the he emonic system -45</, B51. :iven the assumptions :ilpin and other realist writers ma$e about the competitive, 'ero; sum nature of the international system, he emonic power is consequently seen as cyclical* one power will ultimately be replaced by another as uneven economic rowth fundamentally transforms power relativities between states -200/, /<41.

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(n the 45<0s most liberals were primarily concerned with how to encoura e international cooperation Eafter he emonyF -.eohane 45</1, as the anticipation was that %merican he emony would decline. 9owever, by the end of the )old #ar and with the C3 assumin a relatively uncontested EunipolarF position in the world, attention has turned to explainin the failure of other countries to EbalanceF %merican he emony in the way realist theory predicted. : Iohn ($enberry ar ues that wars and their aftermaths present especially fluid moments in which emer ent he emonic powers can create a new international order. 3i nificantly, however, the international order the C3 was instrumental in creatin was one characteri'ed by a hi h de ree of institutionali'ation -2004* /B;7<1. The liberal 7retton #oods system not only provided a capacity to mana e and uide international economic and political relations, but it provided economic rowth, $ey incentives and pay;offs for all concerned -200B, 70;721. #hile the overall liberal international re ime may have reflected and furthered the interests of the C3 as the dominant power, its subordinate countries benefited from the creation of a predictable, open, liberal economic order -200/, /<01. On the other hand, as :ilpin lo ically cautions bout the dan ers of shifts in international mar$et developments, the realist he emonic stability view holds that +unleashin of mar$et forces transforms the political framewor$ itself, undermines the he emonic power, and creates a new political environment to which the world must eventually ad8ust, -200/, 2<21. #ith the decline of the he emon in an anarchic world, +the possibility increases that a financial crisis or some other economic calamity will occur that will cause a dramatic collapse of the system, particularly if a diver ence of interests amon ma8or powers ta$es place, -200/, /<B1. $lobal integration indifferences (n the debate over lobal inte ration both defensive and sceptical realist perspectives can be heard. The defensive posture arises from a fear that lobal inte ration may prevent state actors from fulfillin their oals. Cnli$e proponents of free trade, realists believe that the ains from trade are unequally distributed and favor those with reater economic and political power. Thus defensive realists can reco ni'e lobal inte ration as a threat and see$ to counter its impacts. On the other hand, sceptical realists re8ect many of the current liberal ar uments about lobali'ation and lobal inte ration. They contend that lobali'ation is lar ely a myth and that the power of the state remains undiminished. "oreover, it can be claimed that since states remain powerful actors and the only le itimate centers of authority in the modern world, nothin si nificant has occurred in the (2E -7aylis and 3mith* 2000, 477;4751. "any liberal theorists have been at the forefront of the debate on lobal inte ration ar uin that is not only a reality it is a positive force for ood. (n the liberals view, lobal inte ration pushes the state to retreat and by unleashin the force of production it can contribute to enhanced happiness for human$ind. (nsofar, if one has to examine todayFs lobal economy carefully, he will conclude that it is overned lar ely accordin to liberal principles. >or example, the trade re ime is based upon the oal of free trade* money flows into and out of most countries without reat difficulty and all forms of economic activity are increasin ly liberali'ed -2000, 450;4551. Jet, "arxism has tended, for a variety of reasons, to oppose lobal inte ration. %ccordin to this ar ument, lobal inte ration represents an ideolo ical intervention into political economy. (t supposedly describes chan es in the world but in reality it is a set of prescriptions in support of free mar$ets and an instrument to increase the power of capital over labor, the #est over other states, and an instrument desi ned to further the interests of the

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leadin capitalist power, the Cnited 3tates. (n this sense, "arxists resist lobal inte ration since it too maintains and increases exploitative relations -2000, 2/0;2/A1. Summary of the theories This paper hi hli hted the existence of various interpretations. 7ut what is the relationship between various theoriesK %re they in conflict or can they be made compatibleK %t their core, theories about (2E are incompatible because they have different basic assumptions about the units of analysis, nature of the system and the motivation of actors. Jet, each theory can point to some evidence to support its existence and each seems to be useful in explainin some aspect of the lobal (2E. >or example, one could have a eneral realist approach while concedin that the system is also characteri'ed by class exploitation and that there are times when cooperation can be more beneficial than conflict. %lternatively, some theories may be more applicable in selected time periods.

Selected References:
7aylis, Iohn, and 3teve 3mith -20001. The :lobali'ation of #orld 2ollitics. Brd. ?ew Jor$* Oxford Cniversity 2ress. )harles 2. .indleber er, -457B1. The world in depression, 4525;45B5. 6ondon* %llen 6ane. ($enberry, :. Iohn -20041, %fter victory* institutions, strate ic restraint, and the rebuildin of order after ma8or wars. 2rinceton* 2rinceton Cniversity 2ress. .aufman, =aniel, Iay 2ar$er, 2atric$ 9owell, and :rant =oty, -200/1.Cnderstandin (nternational &elations* The Lalue of %lternative 6enses. 0th. 7oston* )ustom 2ublishin ; "c:raw;9ill. .eohane, &obert -45</1. %fter he emony* cooperation and discord in the world political economy. 2rinceton* 2rinceton Cniversity 2ress. 3epero, Ioan E. and 9art Ieffery %. -200B1. The economic of the international economic relations. -A th ed.1* #adsworth, 7elmont.