International Political Economy
Summary Mid-Term Exam Session 1 - 5
Session 1
Political economy (PE) addresses real-world concerns in a way that emphasizes the
connections between economic problems, social structures and political processes (Stilwell,
2012).
From this it follows that:
• No separation between politics and economics
• State-market interactions
• Markets are creations and not natural
• Notion of embeddedness = economic activity is constrained by non-economic
institutions
• Capitalism is dynamic, which means transformative
Example: Housing market
• Urbanisation: people want to move to urban areas. We are not living in an old skool
family unit (mom, dad, three kids), but we see more often that there are incomplete
families or ‘modern families’. Far more easy to live for women to live separately from
the father. These are social processes that have emerged the last couple of years, but
this also has an influence on the demand/supply.
• Loans: The Netherlands gave 110% loans. Wim Kok, prime minister late 1990’s Pvda,
if we touch anything concerning loans for owning your own house, we will be out for
next election. Subsidy system is regressive: people who are wealthy are helping
others.
• Social housing: Very high in Amsterdam, but after the 2008 crisis we needed to
include tax on social housing corporations. We don’t have enough money anymore to
build these houses because of these taxes.
• Regulations: IMF tells that Amsterdam should change because of the land:
government owns the land and they can sell to developers etc. If you restrict how
much land you can buy, the price can be higher. Supply is low: because building is so
low. If they build, house prices are very high.
• Gentrification: Creation, it’s not something natural. In the beginning, disused school
buildings are given to artists as working spaces. Students can live there at low price
but have to give back to the community. These are all regulations. And suddenly, the
1
, neighbourhood is very popular. It’s policy driven by the government in order to
upgrade a certain area.
• Investors: Interest rates are really low at the moment. Private investors or
institutional investors such as pension funds; treasury bills/state obligations were
firstly very popular to invest in but changed since 2008.
To look at issues from different perspectives: social structures are connected to economics:
everything has influence at demand/supply.
International political economy (IPE)
• is concerned with the interaction between the state, a sovereign territorial unit, and
the market, a coordinating mechanism where buyers and sellers exchange goods
and services at prices determined by supply and demand (Cohn, 2012).
• is interdisciplinary and focuses on both international and domestic relations (Cohn,
2012).
• is the interplay of economics and politics in world affairs (Woods, 2001). Focusses
more on international/social institutions.
• concerns the social, political and economic arrangements affecting the global system
of production, exchange and distribution, and the mix of values reflected therein
(Sustan Strange). For example: Slavery is a political decision but has influence on
social and economic. The addition of values; the political aspect that underpins IPE.
Gilpin (1987): IR perspective on state-market relation. He tries to explain the market
system and the consequences. Founding father of the American sphere. Focuses on market
economy=
1. Driven by competition: survival of the fittest.
2. Price determines the exchange of goods. Negotiations of the price before you sell a
good of a service.
3. In order to make it; efficiency is important. You have to become more efficient in
order to compete your competitors.
4. It’s not the same as capitalism. Market is bigger/lager and capitalism is the way how
we conduct ourselves in this market system. For example; a market in a capitalist
society, can only be private while the market system could also be public/organized by
the government.
5. Increased commodification= the transformation of goods, services, that are now in
the hands of people as something that can be traded (with money). Example: Your
2
, free room in your house, can be rented through airbnb now. When something is
commodified, that commodity doesn’t come from nowhere.
Underhill (2000): Gives an overview/historical development. How do we organize our
society? State and markets: the driver issue is authority.
The origins of (I)PE
Classical Political Economics
• Adam Smith, The Wealth of Nations (1776)
• Ricardo, Principles of Political Economy and Taxation (1817)
• Karl Marx, Capital: Critique of Political Economy (1867)
What they have in common, is that they have an integrated thinking of markets and states.
Early 20th century split between ‘Economics’ and ‘Political Science’: Economics became
more mathematical. It’s not much looked at politics. For a while, these two were separate and
nowadays it’s more interconnected. Political economy reemerged in 1970’s. Financial
markets became more integrated in Europe, because of the integration of the European
market. Call for more integrated thinking on international economy and international
relations and politics.
• Richard Cooper (1968): The economics of interdependence
• Sustan Strange: International economics and international relations: a case of
mutual react. (1970) IR is really lacking and therefore we should combine these
• Gilpin (1975):
Is the one who looked at political power: US and transnational corporations. How
politics and economics interact when it comes to TNCS.
• Robert Cox: Production, power and world order (1987).
Fundamentals of IPE
1. Economic and political domains interact
2. Political process is means by which economic structures are transformed
3. Market interaction feeds back into political process/governance patterns
4. Domestic and international levels of analysis are interconnected
3
Summary Mid-Term Exam Session 1 - 5
Session 1
Political economy (PE) addresses real-world concerns in a way that emphasizes the
connections between economic problems, social structures and political processes (Stilwell,
2012).
From this it follows that:
• No separation between politics and economics
• State-market interactions
• Markets are creations and not natural
• Notion of embeddedness = economic activity is constrained by non-economic
institutions
• Capitalism is dynamic, which means transformative
Example: Housing market
• Urbanisation: people want to move to urban areas. We are not living in an old skool
family unit (mom, dad, three kids), but we see more often that there are incomplete
families or ‘modern families’. Far more easy to live for women to live separately from
the father. These are social processes that have emerged the last couple of years, but
this also has an influence on the demand/supply.
• Loans: The Netherlands gave 110% loans. Wim Kok, prime minister late 1990’s Pvda,
if we touch anything concerning loans for owning your own house, we will be out for
next election. Subsidy system is regressive: people who are wealthy are helping
others.
• Social housing: Very high in Amsterdam, but after the 2008 crisis we needed to
include tax on social housing corporations. We don’t have enough money anymore to
build these houses because of these taxes.
• Regulations: IMF tells that Amsterdam should change because of the land:
government owns the land and they can sell to developers etc. If you restrict how
much land you can buy, the price can be higher. Supply is low: because building is so
low. If they build, house prices are very high.
• Gentrification: Creation, it’s not something natural. In the beginning, disused school
buildings are given to artists as working spaces. Students can live there at low price
but have to give back to the community. These are all regulations. And suddenly, the
1
, neighbourhood is very popular. It’s policy driven by the government in order to
upgrade a certain area.
• Investors: Interest rates are really low at the moment. Private investors or
institutional investors such as pension funds; treasury bills/state obligations were
firstly very popular to invest in but changed since 2008.
To look at issues from different perspectives: social structures are connected to economics:
everything has influence at demand/supply.
International political economy (IPE)
• is concerned with the interaction between the state, a sovereign territorial unit, and
the market, a coordinating mechanism where buyers and sellers exchange goods
and services at prices determined by supply and demand (Cohn, 2012).
• is interdisciplinary and focuses on both international and domestic relations (Cohn,
2012).
• is the interplay of economics and politics in world affairs (Woods, 2001). Focusses
more on international/social institutions.
• concerns the social, political and economic arrangements affecting the global system
of production, exchange and distribution, and the mix of values reflected therein
(Sustan Strange). For example: Slavery is a political decision but has influence on
social and economic. The addition of values; the political aspect that underpins IPE.
Gilpin (1987): IR perspective on state-market relation. He tries to explain the market
system and the consequences. Founding father of the American sphere. Focuses on market
economy=
1. Driven by competition: survival of the fittest.
2. Price determines the exchange of goods. Negotiations of the price before you sell a
good of a service.
3. In order to make it; efficiency is important. You have to become more efficient in
order to compete your competitors.
4. It’s not the same as capitalism. Market is bigger/lager and capitalism is the way how
we conduct ourselves in this market system. For example; a market in a capitalist
society, can only be private while the market system could also be public/organized by
the government.
5. Increased commodification= the transformation of goods, services, that are now in
the hands of people as something that can be traded (with money). Example: Your
2
, free room in your house, can be rented through airbnb now. When something is
commodified, that commodity doesn’t come from nowhere.
Underhill (2000): Gives an overview/historical development. How do we organize our
society? State and markets: the driver issue is authority.
The origins of (I)PE
Classical Political Economics
• Adam Smith, The Wealth of Nations (1776)
• Ricardo, Principles of Political Economy and Taxation (1817)
• Karl Marx, Capital: Critique of Political Economy (1867)
What they have in common, is that they have an integrated thinking of markets and states.
Early 20th century split between ‘Economics’ and ‘Political Science’: Economics became
more mathematical. It’s not much looked at politics. For a while, these two were separate and
nowadays it’s more interconnected. Political economy reemerged in 1970’s. Financial
markets became more integrated in Europe, because of the integration of the European
market. Call for more integrated thinking on international economy and international
relations and politics.
• Richard Cooper (1968): The economics of interdependence
• Sustan Strange: International economics and international relations: a case of
mutual react. (1970) IR is really lacking and therefore we should combine these
• Gilpin (1975):
Is the one who looked at political power: US and transnational corporations. How
politics and economics interact when it comes to TNCS.
• Robert Cox: Production, power and world order (1987).
Fundamentals of IPE
1. Economic and political domains interact
2. Political process is means by which economic structures are transformed
3. Market interaction feeds back into political process/governance patterns
4. Domestic and international levels of analysis are interconnected
3
