A student taking an introductory class in International Relations (IR) or International Political Economy (IPE) today will likely learn about the main paradigms or approaches and how they differ on a few key elements. Chief among these is their unit of analysis. For example, realism takes the unitary nation-state as its unit of analysis. Liberalism incorporates various other actors such as corporations, non-government organisation and – more fundamentally – the individual. Marxism, of course, focuses on class. These differences suggest a fundamental incompatibility among the various approaches. However, my award-winning entrance to the 2018 E-IR Article Award attempts to synthesise two of the main approaches in IPE: realism and Marxism. Whilst the economic focus of Marxists and the political focus of realists may suggest their analyses are fundamentally different, I question the significance of this. Realist notions of hegemony and relative gain and Marxist notions of world-systems both create an international hierarchy of states, with wealth focused in an elite core.
Despite their class focus, Marxists often incorporate a state-capital nexus that places states in the centre of their analyses. For example, both Leninist notions of imperialism and World-Systems Analysis describe a territorial partition of the world based on a hierarchy of national economies. Imperialism was a political project carried out to serve needs of capital for evermore expansion, creating rival imperial powers and hyper-exploited colonies. In its aftermath, colonies, now “independent” nation-states, were locked in a position of dependence on the former colonial powers for export markets for their commodities. Whilst scholars have discussed the role of the “core in the “periphery” (elites in peripheral states) and the “periphery in the core” (the impoverished in core states), the world system is nevertheless a hierarchy of states and national economies – just as realist IPE would argue.
Realists such as Robert Gilpin have had their work compared to Marxism before. Gilpin’s response to these comparisons was to argue that whilst Marxists put economics before politics, he puts politics before economics. However, my argument is that this is a distinction without much significance. Both states and powerful capital have interests that are intertwined, and engage in efforts to arrange the international economic order, or the world system, to their mutual benefit. This is simultaneously politically and economically driven.
I draw on Hannah Arendt’s concept of ‘political emancipation of the bourgeoisie’ in The Origins of Totalitarianism to illustrate how capital and the state are interconnected. Arendt argues that the bourgeoisie were traditionally characterised by their economic power and political indifference, content to leave issues of politics and of governing to the state. However, as capital commodified almost all aspects of society, avenues for additional accumulation dwindled. Facing the limits of their national markets, the bourgeoisie experienced a crisis of savings, or ‘superfluous money’. New markets needed to be established to export this superfluous money to. Arendt argues that after their political emancipation, the bourgeoisie adopted and pursued a political project of ‘expansion for expansion sake’, just as they had always adopted the mantra of ‘profit for profits sake’ in their private undertakings. This manifested in imperialism.
The bourgeoisie of today remains emancipated and are deeply involved in political affairs. They also continue to demand more markets for exploitation and depend on the state to secure these for them. Despite the so-called globalisation of the economy, in reality MNCs remain territorially embedded on their host states, as John Mikler has argued. The states of the core do not advocate the interests of a transnational capitalist class, but rather for the interests of their capitalist class.
States benefit from this because MNCs can play an important role in a states’ international economic power, and thus the growing power of giant MNCs complements the international hierarchy of states. As Sean Starrs argues, the dominance of United States’ firms means that despite growing cross-border economic exchange, “the power to profit from these flows remains highly vertical with the United States at the summit”, maintaining the United States’ position as the most powerful economy in the world.
Manufacturing is no longer the base of the core’s economic power. Today it is finance and the ‘knowledge economy’ industries that are amongst the most profitable. In 2017, United States companies accounted for 26 of the 50 most profitable companies in the world, collectively amassing $382.32 billion in profits. Seventeen of these are in finance, technology, media or pharmaceuticals. The foundational agreements of the World Trade Organisation reflect the needs of these industries through rules on services (General Agreement on Trade in Services), investment (Agreement on Trade-Related Investment Measures) and intellectual property (Trade-Related Aspects of Intellectual Property Rights).
We thus have an international economic order governed by rules established by states, which benefit certain commercial interests. These interests are highly profitable and located in the most powerful states. This creates a hierarchy, or world-system, concentrating high-value added, profitable and innovative industry in the core.
Therefore both Marxism and realism analyse the international economy as one of hierarchies that territorially partition the world and concentrate economic wealth within core states. States compete with one another for a more favourable place in this hierarchy. This is done in concert with MNCs, which share the goals of their host states.