Understanding International Relations, Third Edition

Understanding International Relations

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has also experienced (equally uneven) growth. Contrary to expectations
capital has moved to (some) Southern countries. Moreover, real living
standards, measured by such indicators as life-expectancy at birth as well as
by GDP growth have, in general, improved; average life expectancy in the
South increased by 17 years between 1960 and the mid-1990s, though
remaining 10 years or more below that of the North.
How is this stratification to be understood? Most plausibly, what is
required is to reinstate some thinking about developing countries common
to both liberal and orthodox Marxist writings in the 1950s and earlier.
On this account, there is a natural tendency for the capitalist mode of pro-
duction (or, if you prefer, ‘free enterprise’) to spread throughout the world
and the basic obstacle to this spread is to be found local policies. Capitalists
wish to ‘exploit’ the world via industrialization and development –
although they do not express their intentions in such a manner – if they are
allowed to, and they will do so unless prevented by local circumstances. The
key point is that policy matters. If we look at the history of the last quarter-
century in the South, it has been those countries who have adopted appro-
priate policies that have reaped the reward of foreign investment, and those
who have been unable to develop a coherent policy who have suffered.
Getting the policy right in this context does not mean simply adopting free
market, liberal economic policies, as some more simplistic commentators
have suggested, and as the neoliberal proponents of the ‘Washington
Consensus’ for some time in the 1980s and early 1990s made part of the
conditions for assistance laid down by the IMF and the World Bank (on
which more in the next chapter). Instead it has usually involved quite exten-
sive state intervention in free markets in order to shape development in the
right direction, and it has often involved overtly protectionist, nationalist,
policies. In short, the new global economy continues to be open to nation-
alist interpretations, but the particular variant of nationalism that was the
‘structuralist’ model is no longer as relevant – although, as stressed above,
it remains politically very important.
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161
Further reading
For texts on international political economy and the rise and fall of the Bretton
Woods System, see the further reading for Chapter 7.
Karl Polanyi, The Great Transformation (1975), is a fine overview of the
changes wrought by industrialization over the last 200 years, and a sustained
account of the nature of the liberal society it has created. The volumes of the
Pelican History of the World Economy in the 20th Century are generally
valuable: Derek H. Aldcroft, From Versailles to Wall Street 1919–1929 (1977),

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Understanding International Relations
C. K. Kindleberger, The World in Depression 1929–1939 (1973), and Herman
Van der Wee, Prosperity and Upheaval 1945–1980 (1986) are particularly useful.
Classic texts by Ricardo, List and Rudolf Hilferding are collected,
with extended commentaries, in Chris Brown, Terry Nardin and N. J. Rengger,
International Relations in Political Thought (2002). On List, see also
David Levi-Faur, ‘Economic Nationalism: From Friedrich List to Robert
Reich’ (1997).
Paul Krugman and Maurice Obstfeld, International Economics: Theory and
Policy (2002), is a standard text on international economics, but any introduc-
tory economics text will convey the basics of comparative advantage and the
gains from trade. Paul Krugman is a vigorous, accessible and entertaining
defender of liberal orthodoxy on trade; see his Rethinking International Trade
(1994), Pop Internationalism (1996) and The Accidental Theorist and Other
Despatches from the Dismal Science (1998). More recently he has turned his
fire on the Bush Administration: see The Great Unravelling (2004). Susan
Strange, ‘Protectionism and World Politics’ (1985), makes a case for protec-
tionism in some circumstances; Benjamin Cohen’s review article, ‘The Political
Economy of International Trade’ (1990), is also useful.
Apart from the works by Frank and Wallerstein cited above, classic broadly
‘structuralist’ works would include Samir Amin, Accumulation on a World
Scale, Vols I and II (1974), and idem, Imperialism and Unequal Development
(1977); Fernando Cardoso and Enzo Faletto, Dependency and Development in
Latin America (1979); Arghiri Emmanuel, Unequal Exchange (1972); Johan
Galtung, ‘A Structural Theory of Imperialism’ (1971); Raúl Prebisch, The
Economic Development of Latin America and its Principal Problems (1950);
Walter Rodney, How Europe Underdeveloped Africa (1983); Immanuel
Wallerstein,  Geopolitics and Geoculture: Essays on the Changing World
System (1991a); and most recently André Gunder Frank and Barry Gills (eds)
The World System: Five Hundred Years or Five Thousand Years (1993). See
also ‘Special Issue on Dependence and Dependency in the Global System’,
International Organization, ed. James Caporaso (1978). Classic critiques of
structuralism from the left include: Robert Brenner, ‘The Origins of Capitalist
Development’ (1977); Ernesto Laclau, Politics and Ideology in Marxist Theory
(1976); and Bill Warren, Imperialism: Pioneer of Capitalism (1980).
More orthodox approaches to development are still well represented by
Ian M. D. Little, Economic Development: Theory, Policy and International
Relations (1982). Powerful critics of structuralism from the position of neo-
classical economics include Peter Bauer, Equality, The Third World and
Economic Delusion (1981); and Deepak Lal, The Poverty of ‘Development
Economics’ (1983). Stephen Krasner, Structural Conflict: The Third World
Against Global Liberalism (1985), is an excellent work by a leading US
International Relations theorist. On the ‘debt crisis’, see Miles Kaher (ed.) The
Political Economy of International Debt (1986) and, for a different perspec-
tive, Susan George, A Fate Worse than Debt (1988).

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The Global Economy
163
For the new forces in IPE, particularly instructive/entertaining is the ‘debate’
between Stephen Krasner, ‘International Political Economy: Abiding Discord’
and Susan Strange, ‘ Wake up Krasner! The World Has Changed’ (1994).
Robert Gilpin, The Challenge of Global Capitalism: The World Economy in
the 21st Century (2000) presents a wide-ranging, more orthodox, but by no
means uncritical, account of the forces and ideas discussed in this chapter and
offers another way into this material. Specifically on the multinational corpo-
ration, Ohmae, The Borderless World (1990), and Robert Reich, The Work of
Nations (1992), promote globalist accounts of the MNC, as do Richard Barnet
and John Cavanagh in Global Dreams: Imperial Corporations and the New
World Order (1994). More conventional accounts of MNCs would include
Raymond Vernon, Sovereignty at Bay (1971); see also the Millennium special
issue ‘Sovereignty at Bay, 20 Years After’ (1991); and Robert Gilpin, US Power
and the Multinational Corporation (1975). The approach adopted in this book
is heavily influenced by John Stopford and Susan Strange, Rival States, Rival
Firms: Competition for World Market Shares (1991) – see also Strange, ‘States,
Firms and Diplomacy’ (1992); and Louis Turner and Michael Hodges, Global
Shakeout (1992). A valuable study of the state in the age of multinational
economic actors is Philip Cerny, The Changing Architecture of Politics (1990).
For general studies of the changes in the global economy summarized by the
term globalization, see the further reading specified in Chapter 9.
The gap between ‘structuralism’ and new approaches to Southern poverty is