Friday, January 9, 2015

Lecture 3 - Liberalism

1Liberalisms Origins¶

• Mercantilism: focused on gold and silver. The idea was that governments (monarchs) needed gold and silver to buy mercenaries to protect their people.
  • Would only trade internationally if you made money and the other country didn’t.
  • Adam smith writes Wealth of Nations; in which he attacks mercantilism because it accumulates wealth in the hand of monarchs while those in the countryside starve.
    • argues that the most important thing is the goods that your economy can produce and consume.
  • If the british had successfully put down the american rebellion they would have been able to continue pursuing mercantilism.
    • American colonies had a large population, their rebellion destroyed their version of mercantilism.
      begin to think that they should open up trade, doesn’t last long, too many wars in europe.
    • David ricardo uses logic and math to argue that engaging in trade shouldn’t just occur when you can’t produce something, but when somebody else is better at producing it.
• After mercantilism Britain adopts classical liberal policies externally and internally in the early nineteenth century.
  • takes key steps to get rid of legislation of mercantilism in favor of fostering trade between other countries.
  • argued endlessly about wheat, britain wasn’t very good at producing it: not a lot of land, country was starting to industrialize. Realized its cheaper to buy wheat from America, Canada, Russia, and grow other crops more efficiently and sell it back. Can focus on industry and sell final goods.
  • this encourages other countries to follow suit because they see how rich britain is getting.
• Classical Liberalism
  • Assumptions made are the same made in economics.
    • Individuals are the primary actors
      • Mercantilism stresses states as primary actors but don’t confuse it with realism.
      • Individuals have to be thought of in a way that allows you to talk about them as actors in a market. Usually what this means is that you consider the household as a unit.
      • corporations can be considered individuals
    • Individuals are rational unitary actors
      • not necessarily the same as saying states are rational unitary actors, but still it’s hard to say individuals are always rational.
    • Individuals maximize utility.
      • you get to decide whats important to you
    • Everything can be traded
      • can be a little problematic as well. If you get utility from happiness or free time, how can you trade that on the market?
    • Individual indifference curves can be summed into societal indifference curves
• Versions of Liberalism
  • Some stress the role of individuals, others of states...
  • All share an emphasis on exchange and mutual benefits
    • Individuals know what they want, can rank those preferences, and can act rationally to exchange goods for what you want.
  • Very different from realism, stresses cooperation and mutual benefit instead of competition.
  • Making them similar to idealism...
    • similar to idealism but not the same. They can work together very nicely but liberalism is much more about individuals engaging voluntarily in mutually beneficial transactions. In liberalism it’s more about institutions making good laws that help keep people in a state of peace.
  • All quite different from realism
    • realism stresses power, liberalism stresses trade over coercion, takes power out of the equation.
    • Realists look at states as allowing corporations to exist. e.g. American firms are blocked by American and N.Korean gov’t from trading in north korea.
  • Wealth vs. Power (or absolute vs. relative gains)
    the assumption that everything can be traded allows you to say that everything has a price.
    if you ask the question: “Am I wealthier today?”, you think about am I wealthier today relative to yesterday or a week ago? If you ask the question “am I powerful” you think relative to other actors.
  • Different ideologies tell the same stories with different interpretations
• Liberal Ideas
  • Individuals know their own desires. Individuals should determine their outcomes.
    • Nobody can decide what is important to an individual but himself.
  • Voluntary exchange (through markets) works well to satisfy individuals desires
  • Cooperation can effectively resolve most problems
    • This applies for both individuals and states
    • for a very long time people have written that free trade promotes peace. Builds off the key insights from a long time ago about achieving mutually beneficial gains.
    • Most is an important word, things like national defense can’t be achieved through exchanges on markets.
• Liberalism in IPE
  • Analitycal liberalism is probably the most dominant approach in IPE today
    • people emphasized liberalisms prescriptive aspects
    • Emerged after the cold war
    • people emphasized theories based on observation, description, and prediction.
    • Moravcsik described these new ideas (1997), part of this is due to failure of realists to predict the end of the cold war.
      • Liberalism can do a good job of describing past events.
    • The reason this becomes the prominent view in IPE is it borrows nicely from economics, and it adds in the poli sci part.
• Analytical Liberalism
  • Anytime an economic policy is being changed, it might be good or bad for a country as a whole, but we know it’s going to have a distributed impact on society. e.g. If the value of the canadian dollar changes it impacts importers and exporters differently.
  • Economic models identify array of domestic interests -> domestic politics to control policy -> state pursues preferences -> International politics as states interact -> repeat
  • each different policy has different winners and losers, whoever argues best domestically that their policy should be kept will eventually win. Or if it can be agreed that everyone wants the same thing it’s easy to achieve through negotiation.
  • Very popular right now but has its downsides
    • It’s not parsimonious, if you want to get a picture of the international system you have to get a picture of domestic politics for every state in the system which is difficult.