INTERNATIONAL POLITICAL ECONOMY I. Management to Governance

ONE  International Economic Regimes-norms, rules and, institutions intended to achieve common economic goals among the world’s peoples.  They range from bilateral to complex multilateral, regional and, universal.  Regimes are shaped by political factors such as the distribution of power, degree of shared goals and, interests, nature of leadership.  International economic systems are clusters of regimes.  Since WWII, three 1) Bretton Woods WWII ) Interdependence ) Globalization 1989-present.

ONE  Bretton Woods  For nearly two decades controlled conflict and helped participants to achieve common objectives.  The regime was built upon three pillars: the International Monetary Fund (IMF); the International Bank for Reconstruction and Development (World Bank) and; the General Agreements on Tariffs and Trade (GATT)  In the early years interaction was limited but growing. Nations were recovering. Protectionism was difficult to unwind. International investment was limited.

ONE  There were three political foundations: the concentration of power in a small number of states; the existence of a cluster of shared interests and; the presence of a dominant power willing and able to lead. Developed nations were the drivers. 2 nd World were no challenge. 3 rd world was inchoate. Japan was an outlier.  Management was made easier by the great degree of consensus that existed. There was a shared belief in CAPITALISM and LIBERALISM, with a reliance upon market mechanisms.  They agreed on the principle of INTERVENTION founded upon Keynesian/Welfare state approach.

ONE  Liberal international economic system. The beggar-thy-neighbor era of the interwar years provided and object lesson. But there was an acknowledgement that free markets could be unstable.  There was a belief that a liberal international economy could assist in the achievement and maintenance of international peace as well as the expansion of economic prosperity and integration.  The Cold War intensified the sense of community in the West.  They agreed upon a stable system, reduction of impediments to the free flow of economic instruments and, a stable monetary system.  US power and leadership was central.