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Political Economy, Reading 10: Gilpin, CHAPTER TWO The Nature of…
Political Economy
Nature of Economic Actors
the multinational corporation (MNC)
aim is to facilitate efficient utilization of the world’s scarce resources and speed economic development of the entire globe
instruments of an expanding capitalist imperialism
aim is to maximize their profits
firms, states, or other economic actors are pursuing
their self-interest
a cost/benefit calculation
Marxist
all corporations (national or multinational) are representatives of the capitalist class that dominates every capitalist economy
state-centric approach
the primary economic actors are nation-states
the nationality of the MNC is of great importance because its behavior is strongly influenced by the policies and culture of its home society
Neoclassical institutionalism
institutions are created primarily to solve economic problems and will result in increased economic efficiency
public-choice position
government institutions are created by powerful groups, public officials, and politicians to promote their own self-interest and that they decrease efficiency
Political economists
institutions are created for a variety of rational, irrational, and even capricious motives
The government determines the purpose of the economy and establish the parameters within which the market (price mechanism)
Definition of political economy
“branch of the science of a statesman or legislator”, Adam Smith
the science that teaches a nation how to become
rich, John Stuart Mill
“Economics is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses.”, Marshall
Economic imperialism - social behavior can be reduced to economic motives and explained by the formal methods of economic science
Neoclassical institutionalism - Economic actions may be motivated by the desire to increase economic efficiency or may be simply rent-seeking
rent-seeking behavior by individuals and groups
Dynamics of the World Economy
The 1992 financial crisis
The huge outflow
of capital from Italy and Great Britain forced both to withdraw from
the Exchange Rate Mechanism
the triumph of transnational economic forces and economic
globalization over the nation-state
“the end of geography.”
impersonal market forces and the deliberate actions of a few powerful states can determine the dynamics of the world economy
the movement toward European monetary unity included the Danish rejection in June 1992 of the Maastricht Treaty
the narrow (51 percent) passage in France of a national referendum on the Treaty
Reading 10: Gilpin, CHAPTER TWO
The Nature of Political Economy
Student: Mamedova Asel