The Structuralist Perspective on International Economics

The Structuralist Perspective on International Economics

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Page 1: The Structuralist Perspective on International Economics

The Structuralist Perspective on

International Economics

Page 2: The Structuralist Perspective on International Economics

Karl Marx is one of the most important thinkers in the history of political economy,

With the end of the USSR it is easy, facile in fact, to conclude that “Marx and Marxism is dead”.

Marxism’s contribution to IPE continues through the insights into IPE, provided by the ideas which originated within the Marxist tradition.

As a consequence Marxism remains very much alive today.

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The general heading “structuralism” accounts for some of the more recent theories and concepts which incorporate a number of Marx and Lenin’s ideas today. Underlying idea of structuralism is that structure conditions outcome …namely both the domestic and global economic structure are the most significant determinants of subsequent economic and political developments.For Marx capitalism was a welcome movement forward in historical progress allowing an abundance of productive wealth impossible under feudalism…..but capitalism too would reach its limits.

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Vladimir Ilyich Lenin suggested that capitalism could extend its life by entering the phase in its development he termed “imperialism” .

Structuralists view the global economy differently from liberals.

Liberals make individuals and the state their basic units of analysis, structuralists focus on the nature of class relations across the globe and examine the power relations across the world derived from economic power.

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“The history of all hitherto existing society is the history of class struggle”

Karl Marx and Friedrich Engels

“Imperialism is capitalism in that stage of development in which the domination of monopolies and finance capital has established itself;in which the export of capital has acquired pronounced importance;in which the partition of all the territories of the globe among the great capitalist power has been completed”

V I Lenin“The third world countries of today were drawn into the capitalist world market under regimes of formal and informal colonialism, as appendages of the metropolitan nations to supply raw materials and exotic commodities to the industrial centre”

Joan Robinson

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Karl Marx (1818-1883)…as a young man…

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Karl Marx (1818-1883)…. Somewhat later on….oh well it happens to us all…

Page 8: The Structuralist Perspective on International Economics

Marx understood history to be a great dynamic evolving process determined fundamentally by economic and technological forces. He believed that historical materialism as a method of analysis helped to explain the process of history. The forces of production (ie the sum total of knowledge and technology in society) set the parameters for the kind of system of political economy, or the mode of production.As Marx put it ‘the hand mill gives you society with the feudal lord, the steam mill society with the industrial capitalist’

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It is the contradictions between the forces of production and the relations of production in a society which heralds change,

Technical changes ushers in new forces of production which eventually outgrow the relations of production…

e.g. the emergence of the entrepreneurial class and steam power and improved manufacturing technologycapitalismstate is forced to represent the interests of the new class which is gaining ascendancyincreased democracy/ decline of aristocracy…also creates an entirely new class the working class..whose only saleable asset is its labour power.

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“The feudal system of industry, in which industrial production was monopolized by closed guilds, now no longer suffices for the growing wants of the new markets. The manufacturing system took its place. The guild-masters were pushed aside by the manufacturing middle class; division of labour between the different corporate guilds vanished in the face of division of labour in each single workshop.”

Karl Marx

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“Meantime, the markets kept ever growing, the demand ever rising. Even manufacturers no longer sufficed. Thereupon, steam and machinery revolutionized industrial production. The place of manufacture was taken by the giant, MODERN INDUSTRY; the place of the industrial middle class by industrial millionaires, the leaders of the whole industrial armies, the modern bourgeois.”

Karl Marx

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“Modern industry has established the world market, for which the discovery of America paved the way. This market has given an immense development to commerce, to navigation, to communication by land. This development has, in turn, reacted on the extension of industry; and in proportion as industry, commerce, navigation, railways extended, in the same proportion the bourgeoisie developed, increased its capital, and pushed into the background every class handed down from the Middle Ages.”

“We see, therefore, how the modern bourgeoisie is itself the product of a long course of development, of a series of revolutions in the modes of production and of exchange. “

Karl Marx –The Communist Manifesto 1848

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“Modern bourgeois society, with its relations of production, of exchange and of property, a society that has conjured up such gigantic means of production and of exchange, is like the sorcerer who is no longer able to control the powers of the nether world whom he has called up by his spells. For many a decade past, the history of industry and commerce is but the history of the revolt of modern productive forces against modern conditions of production, against the property relations that are the conditions for the existence of the bourgeois and of its rule.” Karl Marx –The Communist Manifesto 1848

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“The essential conditions for the existence and for the sway of the bourgeois class is the formation and augmentation of capital; the condition for capital is wage-labour. Wage labour rests exclusively on competition between the labourers. The advance of industry, whose involuntary promoter is the bourgeoisie, replaces the isolation of the labourers, due to competition, by the revolutionary combination, due to association. The development of Modern Industry, therefore, cuts from under its feet the very foundation on which the bourgeoisie produces and appropriates products. What the bourgeoisie therefore produces, above all, are its own grave-diggers. Its fall and the victory of the proletariat are equally inevitable…” Karl Marx- The Communist Manifesto 1848

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Marx believed that history would eventually evolve towards a situation whereby the new class-the proletariat-would become dominant, and establish a new political dominance . Just as capitalism saw a political system of dominance by the forces of capital, socialism would see the dominance of the working class. Marx never placed a time scale on this process…

Lenin believed that capitalism had avoided this crisis by expanding the pool of workers it exploited…capitalism he argued “had escaped its three laws of motion through overseas imperialism.the acquisition of colonies had enabled the capitalist economies to dispose of their unconsumed goods, to acquire cheap resources,and to vent their surplus capital”

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Lenin aged 20

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After the Russian revolution in 1917

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Oh dear its that aging process again…Lenin in Summer 1923 shortly before his death

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The critical element fuelling imperialism according to Lenin was the decline of national economic competition and the growth of monopolies.Based on Marx’s law of concentration what emerged was an aggregation of market power in the hands of a “few cartels syndicates and trusts”

Because monopolies concentrated capital they could not find sufficient investment opportunities in the industrialized world..it was therefore necessary to export capital around the globe to earn sufficient profits.

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This created a situation where the working classes of the developed world were in some respects pacified by the benefits they derived from the increased rate of exploitation to be found in the colonies and the third world…the working class in many imperialist nations Lenin’s term as a result becomes “bourgeosified”…racism and gung-ho nationalism are all part of this process.

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Monopolies, oligarchy, the striving for domination instead of striving for liberty, the exploitation of an increasing number of small or weak nations by a handful of the richest or most powerful nations -- all these have given birth to those distinctive characteristics of imperialism which compel us to define it as parasitic or decaying capitalism. More and more prominently there emerges, as one of the tendencies of imperialism, the creation of the "rentier state," the usurer state, in which the bourgeoisie to an ever increasing degree lives on the proceeds of capital exports and by "clipping coupons." It would be a mistake to believe that this tendency to decay precludes the rapid growth of capitalism. It does not. In the epoch of imperialism, certain branches of industry, certain strata of the bourgeoisie and certain countries betray, to a greater or lesser degree, now one and now another of these tendencies. On the whole, capitalism is growing far more rapidly than before, but this growth is not only becoming more and more uneven in general, its unevenness also manifests itself, in particular, in the decay of the countries which are richest in capital (England).

VI Lenin Imperialism –The Highest Stage of Capitalism-April 1917

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The fundamental aspect of imperialism for Lenin was that capitalist nations were able to delay their crisis by keeping the poorer nations of the world underdeveloped and deep in debt, dependent on them for manufactured goods, jobs and financial resources.Unsurprising therefore that Lenin’s theory of imperialism has been very influential especially amongst intellectuals in lesser developed countries.Particularly the view that the relationship between capital-abundant nations and capital scarce nations should be one of interdependence , since each needs the other for maximum growth.In practice what often evolves is a relationship of DEPENDENCE, exploitation and uneven development.The same forces that drive the bourgeoisie to exploit the workers, ultimately drives the capitalist core nations to dominate and exploit the less develoepd countries. ….see section in handout on DEPENDENCY THEORY.

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Globalisation…..This new stage is supposed to have been brought about by a growing internationalisation of production and marketing. Companies, it is said, are much more dependent than ever before on their ability to sell abroad in the face of “global competition”. They can only do this successfully insofar as they become multinational corporations, organising production itself on an international scale, ignoring national borders. They are then able to escape any control by national states or by workers’ movements that operate within national boundaries. They are free to move their capital to wherever labour is cheapest, thus thwarting workers’ attempts to defend wages and conditions through trade union action.

Page 24: The Structuralist Perspective on International Economics

This view of the world today is usually articulated by “neo-liberal” proponents of free market capitalism. They insist that the new global order rules out any attempt to regulate the system through Keynesianism let alone socialism. Any such attempt, they claim, can only result in a backward siege economy, indeed a horrific repeat of Cambodia’s year zero. But it is not only far reaching change which is ruled out. So are the mildest reforms – a minimum wage of more than about a third of the median, any further reduction of the working week, any attempt to protect jobs against the withering effects of recession. If workers push their demands too hard, then companies will simply pack up their bags and move elsewhere. If governments implement meaningful reforms, then new investment will simply flow to more profitable parts of the world. All that can be done is to elaborate policies which will make any particular group of workers more productive and cost efficient than those elsewhere in the world, or which enable one government to outbid others in guaranteeing profitability.

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first and most obvious consequence has been the “third world”-isation of the ex-USSR bloc; countries where the average mode and standard of living was different to both the rich oppressor countries and the poor oppressed nations are now surely being pushed down into the Third World camp. There is no 'Second World' any more.

There are qualitative changes within the technical mode of production which have given capitalism an apparent vitality, especially in the areas of communications and IT which also require structural changes within the working populations both as producers and consumers of the new commodities.

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Imposition of neo-liberal economics in the interests of the multinationals. Neo-liberalism is the political economy of imperialism today. The drive to privatise resources, deregulate and diminish the role of the state is underpinned by the IMF, World Bank and WTO organisations. The most pivotal of these economic policies is the continual pressure on Third World currencies to depreciate their value.

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The elevation of the power of finance capital as a seemingly independent force. First, despite the claims of the G7 at the Cologne Summit the foreign debt is worse every year for the LDC’s . Between 1987 and 1997 the indebted nations paid $2,200 billion in repayments, and yet their debt grew by $900 billion and now stands at $2,500 billion, most of this now to private banks. Secondly, money capital is moved in and out of Third World currencies and economies adding a degree of volatility in the system never before known. The potential for a local crisis becoming a global financial crisis has never been more likely than it is today.

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A UNIPOLAR AND DANGEROUS WORLD? The end of Cold War, imperialist triumph and "unipolarity" ?

USA now exercises un-paralleled military and economic dominance in conditions where inter-imperialist rivalry has openly reasserted itself. Imperialism's assertion of its supposedly unique "civilised" values is contradicted by the devastation and civilian casualties arising currently in Iraq-some estimate that as many as 40,000 Iraqis have been killed since the invasion

On the basis of this self-proclaimed superiority, the USA claims the right to intervene politically and militarily in the internal affairs of any country in the world.


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It is believed by many commentators that the immediate reward for the USA is intended to be a securing of oil supply.

The reserves in the Caspian prospects pale in comparison with Iraqi oil wealth. Iraq has the world’s second largest reserves (at present 115 billion barrels, but long-delayed exploration may take that figure to 220-250 billion barrels).

Moreover, its oil is, along with that of Saudi Arabia, Kuwait and Iran, by far the cheapest to extract. The US is now quite openly offering the French and Russians, who had giant contracts with Saddams regime, which could not be realised under sanctions, slices of the post-invasion cake in exchange for a more conciliatory approach in the United Nations security council .

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Control of petroleum resources and pipeline routes is obviously a central consideration in US strategy worldwide—note the long-term installation of US forces from Afghanistan through Central Asia to the Balkans; the entry of US troops in the Philippines and the pressure on Indonesia to involve the US in a campaign against Islamic fundamentalists in the region; the drive for US military intervention in Colombia and the attempt to oust Chaves in Venezuela. The US is particularly anxious to install a large contingent of troops near Saudi Arabia, anticipating the collapse of, or drastic change in, the regime there.

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Saudi Arabia has the world’s greatest stock of oil wealth. Indeed the US is contemplating using the invasion of Iraq as the springboard for a drastic political ‘cleansing’ of the entire region, along the lines of the process long underway in the Balkans and continuing in Afghanistan-Pakistan. Indeed it is even willing to provoke, by its invasion of Iraq, uprisings in other states of the region, in order to provide it with an occasion to invade those states. This is not speculation, but has been explicitly spelled out in various policy documents authored by or commissioned by those now in charge of the US military and foreign policy.

Linked to the above is a further, strategic, dimension to the US designs. Not only is the US increasingly dependent on middle east oil for its own consumption; Its capture of middle east oil is also intended to secure its supremacy among imperialist powers.

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The Project for a New American Century made explicit its aims when it was established in 1997-this conservative “think-tank” wields considerable influence over the current White House administration…its aims are explicit in its founding statement

“• we need to increase defence spending significantly if we are to carry out our global responsibilities today and modernize our armed forces for the future;

• we need to strengthen our ties to democratic allies and to challenge regimes hostile to our interests and values;

• we need to promote the cause of political and economic freedom abroad;

• we need to accept responsibility for America's unique role in preserving and extending an international order friendly to our security, our prosperity, and our principles.”

Project for a New American Century 1997

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But this trajectory of US policy has created an unprecedented amount of opposition to US foreign policy.