INTERPRETATIONS OF THE ASIAN FINANCIAL CRISIS Liberal Causes Crony capitalism lack of transparency State Power Over-rapid liberalization,

reduced state capacity to regulate Clash of AngloAmerican vs. Asian models of capitalism Limit financial speculation through state policies Critical Predatory liberalism, power of financial interests, systemic flaws Human suffering caused by financial collapse

Key Issues

Corruption, lack of liberal economic practices

Lessons

Increase transparency and good practice in developing countries (i.e., more liberalization) Source: OBrien and Williams, p. 12.

Reform international financial system, defend national financial system

SUMMARY OF COMPETING PERSPECTIVES IN IPE Economic Nationalist 15th c. states Liberal 19th c. individuals, firms, states pluralist Critical 19th c. social class

Historical origins Main actors

View of state

rational, unitary actor struggle for power and wealth

representative of class interests exploitative relationship between classes exploitative and oppressive

Key dynamics

unregulated market processes

Market relations

potentially negative (positive for most powerful actors) anarchic/ conflictual zero-sum

positive (as long as market is free)

System structure

cooperative/ interdependent positive-sum

hierarchical/ conflictual zero-sum

Game metaphor

Source: Adapted from OBrien and Williams, p. 26.

THREE THEORETICAL STATEMENTS ON POVERTY

Statement ONE. In the modern age, capitalist development is dependent on establishing and taking part in system of relatively open, free trade. Free trade allows individual countries to maximize their prosperity through specialization and comparative advantage; it also has the added benefit of creating stronger, more peaceful connections of interdependence among nation-states. Countries that participate fully and openly in the global trading system will, over time at least, become prosperous, while those that do not, will remain poor and economically stagnant. Statement TWO. Those with overwhelming economic or political power (whether individuals or countries) have the capacity to write their own rules, and in so doing, have the capacity to keep themselves strong and wealthy while keeping others weak and poor. The only way to change this situation is for those on the bottom to refuse to play by rules; to either manipulate the rules in their favor, or to operate by a completely different set of rules. Once a position of relative equity is achieved, then and only then, is it advisable to do what powerful nations advocate Statement THREE. Because of the way the economic system is organized, there will always be rich and poor people in the world; however, the reason for this division is not because the poor have less talent, less motivation, or a lesser desire to work hard, but because the economic system is inherently exploitative. In other words, the rich are rich precisely because there are a lot of poor people; the wealth of the rich, in fact, depends on the poverty of the poor. This relationship, unfortunately, cannot be changed unless the system itself is destroyed.

THEORY AND FACT

Facts do not exist independently of explanatory frameworks. Facts are pieces of information that are thought to correspond to reality and be true, but the way in which they are perceived and judged is influenced by theory (p. 13)

THREE DOMINANT THEORETICAL PERSPECTIVES IN IPE

The economic nationalist perspective
*Also known as mercantilism, neo-mercantilism, statism, and economic realism

The liberal perspective

The critical or radical perspective

*Includes Marxism, neo-idealism, historical structuralism, Critical Theory, environmentalism, and others