Economic Angle In Global Context

There is hardly any doubt that current global system hinges decisively on economic matters and it is quite inconceivable that any state can ignore this important consideration.

It is therefore acknowledged that most important issues on the current international agenda revolve around or hinge upon economic questions.

Economic issues mostly determine the course of international affairs and some of them have become contentious such as economic sanctions and their workability. What is observed currently is that a greater number of significant political and other acts and events including the achievement of peace and the outbreak of war have economic causes.

It is also debated that what role can foreign investment play in underpinning economic development. It should also be remembered that the questions that most exercise the minds of governments are those concerned with economic growth, development, price inflation, unemployment and other economic considerations.

These, after all, are the questions upon which the future electoral success of governments largely depends. Even partially democratic governments need to pay attention to these matters if they are to maintain their legitimacy with key domestic groups such as the armed forces, business elites, tribal leaders and the urban proletariat.

In addition, there is a range of international issues that clearly involve some fairly weighty economic considerations. Take for example UN peacekeeping, or the nuclear non-proliferation regime, or international environmental co-operation. The success of all of these things depends at least in part on proper financing.

This, in turn, depends on the health of the international economy. A sluggish international economy bodes ill for a range of problems that states, and other important actors on the international stage, would like, ideally, to solve.

This is precisely the reason that seasoned scholars consider economic factors to be of vital importance. They consider that the world moved on by forms of social, economic and political organisation, characterised chiefly by large-scale production, the big trade union, the welfare state and economic planning. It should also be pointed out that economic and political factors are inextricably linked.

It is a proven fact that political power contained three elements: military power, economic power and power over public opinion.

However, after 1973 there came a noticeable surge in prioritising economic matters in international affairs with the appearance of books on interdependence, trans-nationalism, international economic organisations, the multinational corporation, economic sanctions, the Bretton Woods system and the politics of foreign aid.

In this context it is pointed out that with the demise of the Bretton Woods system and the oil crisis of the early 1970s many observers reached the conclusion that the US had suddenly lost its grip on the world economy. The primary reason given for this loss of grip was that the world had become highly interdependent. There followed a massive amount of interest in the idea of economic interdependence and related phenomena such as trans-nationalism and international regimes. These phenomena exited before but were overshadowed by uncritical and unreflective acceptance of American economic supremacy.

It is also pointed out that in the early 1970s the campaign for a new international economic order (NIEO) began. It was felt that the classical model of economic development had not worked. Trade was not proving to be the engine of growth. Allowing the market to be the principal means by which resources were allocated around the globe had not led to wealth trickling down from the rich North to the poor South.

On the contrary, the vast inequalities of wealth between North and South were increasing. As a consequence, Third World states called for a radical overhaul of the international economic system, involving the regulation and relegation of the market, and the introduction of radical redistributive mechanisms.

This gave rise to the North–South debate and the NIEO became one of the most important issues on the international agenda. There was consequently a rise in interest in economics, because this debate was one explicitly concerned with the way the international economy should be organised.

Moreover, the intense realisation that International Political Economy is one of the cardinal issues of international affairs. The attention was drawn to the fact that the rapid changes occurring in the international economy could have profound implications for the international political system.

This view did not neglect the relevance and power of the state but it was conceded that certain forms of power such as financial power were increasing in importance, and that new mechanisms would have to be developed in order to manage this rapid change. This change is symptomatic of the ever intimate connections between international economic processes and institutions and international political processes and institutions.

The contention that economic power as an important component of political power was duly witnessed as the Cold War revolved around the issue of economic power and it was proved without doubt that the industrial and financial might of the US as compared to the Soviet Union was a crucial factor in its outcome.