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Student Number : 5521286

Course : International Political Economy (POLS5122]
Instructor : Dr Madison Cartwright

INTRODUCTION / CONCEPTS :

International Political Economy (IPE) is an academic discipline that explores the

interaction of politics and economics on a global level, seeking to comprehend the
mutual impact of political and economic factors in the international arena. In this
essay, I will conduct an extensive and critical discussion, comparing two significant
theories, namely the Liberalism and Marxism, that I have examined and deliberated
upon during IPE course.

I am inclined towards Liberalism approach over Marxism, appreciating its focus

on maximising individual rights (Locke 2005), free markets and political liberties, and
economic efficiency. From my lenses of view, these aspects contribute to fostering a
more dynamic and prosperous society.

The foundational principles of Liberalism have strong origins in classical

economic thought, notably associated with influential figures such as Adam Smith
and David Ricardo.

In opposition to Liberalism, we have Marxism which centres upon power

dynamics, class conflict, and economic disparities. Marxism was rooted from Karl Marx
and Friedrich Engels’ ideologies. Marx (1848) assert that their theories provide an
extensive critique of capitalism and propose the establishment of a socialist society
where the means of production are collectively owned.

In understanding social, economic and political development of human

society, the Marxists rely on philosophical basis of dialectical materialism where they
apply Hegelian dialectics. Marxism evaluates historical development through the lens
of economic frameworks (historical materialism) and class struggles (dialectical
materialism), leading to societal transformation.

Marxism sees society as segregated into classes, predominantly the

bourgeoisie (owners of the means of production) and the proletariat (working class).

LIBERALISM AND FREE TRADE VS MARXISM AND FREE TRADE :

Free markets are foundational aspect of liberalism, yield significant benefit for
both the individual nations and the global economy. Liberals insist that when
government does not intervene the markets, they will effectively distribute resources,
fuel innovation – drive technological advancement as manufacturer strive to refine
efficiency (Schumpeter, 1942), and optimise economic growth and personal welfare.
Economic emergences will consequently draw foreign investment (due to nation’s
ability to remain competitive in global market), resulting in economic advancement
and reduced poverty.
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While free trade is fundamental to Liberalism, Marxism, on the other hand, opts
to dissent from it.

Marxism argues that capitalism has exploitative nature whereby they benefited
from profit (surplus value) they extract from the workers’ labours, extending a global
system of dependency and inequality. Marxists contend that the worldwide free trade
system intrinsically generates and contributes to economic inequalities, both
domestically and internationally, enabling multinational corporations to exploit labour
in underdeveloped countries where it is more affordable. These corporations
frequently move their production operations to capitalize on reduced labour costs
and less stringent regulations.

Marxism envisions a proletarian revolution as the method to topple the

capitalist system, ushering in socialism and ultimately establishing a classless society
(communism). In this envisioned society, for Marxism, resources would be collectively
owned and distributed based on need.

LIBERALISM AND PROTECTIONISM VS MARXISM AND PROTECTIONISM :

Liberals contend that upholding the rule of law is fundamental for maintaining
economic sustainability and fostering development. They emphasize safeguarding
civil liberties, private property rights, and the freedom to participate in chosen
economic pursuits (Hayek, 1945) because a nation’s ability to allocate resources
optimally are depended on supply and demand.

Liberals are always in disagreements to protectionism due to several grounded

reasons.

Firstly, while protectionism promotes imposition of trade barriers (due to trade

war by retaliatory measures from other countries), such as tariffs, import quotas, or
subsidies to domestic industries, Liberals argue that protectionist policies disrupt
market dynamics (by artificially supporting inefficient domestic industries) and erode
benefits of free trades. It ends up with consumers having to pay escalated rates for
goods and services (O’Brien and Williams, 2016).

Secondly, liberals argue that protectionism hampers the efficient utilization of

a nation's resources by shielding uncompetitive industries. This obstruction inhibits the
redistribution of resources to sectors where the nation could excel due to a
comparative advantage.

Thirdly, Liberalism argues that protectionism has the potential to suppress

innovation and competition. In a sheltered market, domestic industries ‘suffer
demotivation’ (have no more pushing factors) to produced improved product
quality.

In order to cater the challenges, Liberals have emphasized various strategies

to mitigate the drawbacks presented by protectionist theories, which are further
elaborated below.
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Firstly, Liberals promote diplomatic endeavours aimed at negotiating Free

Trade Agreements (FTAs) to diminish protectionist measures among nations which aim
at striving to establish a more transparent and equitable trade environment by
gradually reducing trade obstacles.

Secondly, Liberalism stresses on active participation in international

organizations like the World Trade Organization (WTO) and International Monetary
Fund (IMF) that work towards fostering collaborative global trade agreements,
contributing to trade arrangements and resolving trade disputes.

Thirdly, the Liberals pinpointed on the importance of educating both

policymakers and the public about the advantages of free trade to mitigate
protectionist inclinations. It is contended by them that policies encouraging open
markets and globalization are more likely to be endorsed by an enlightened society.

Fourthly, the legitimacy of concerns regarding job displacement resulting from

trade liberalization is acknowledged by liberals. As a consequence, Liberals
encourages the policymakers to come out with policies to accommodate these
issues, such as providing support for retraining and facilitating the transition of workers
to new sectors.

Despite Marxism's disagreement with the effects of free trade, they propose
measures to address them while upholding their believes towards protectionism ideas.

Firstly, Marxists promote protective measures to bolster domestic industries and

ensure labour rights and standards. They advocate for regulations to prevent the
undercutting of domestic labour by cheap foreign labour and imports, aiming to
guarantee fair wages, safe working conditions, and reasonable working hours to
prevent exploitation.

Secondly, Marxists seek to level power imbalances in international trade. They

contend that safeguarding weaker economic nations from unjust competition
contributes to forge a more equitable global economic system.

COMPARISON AND CONTRAST :

In exploring the spectrum of political and economic ideologies, the

enlightening comparison and contrast between liberalism, a beacon of individual
freedom and free markets, and Marxism, with its distinct perspective, shed light on the
fundamental differences that position liberalism favorably.

Liberalism typically advocates for minimal state intervention in the economy,

aiming to minimize active government involvement and advancing the cause of free
markets. In contrast, Marxism perceives the state as a tool to perpetuate class interests
and envisions a transitional state after a revolution to pave the way for a classless
society.
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Liberals believe that capitalism, when properly regulated and integrated with
free trade, has the potential to foster prosperity and economic growth. In contrast,
Marxists criticize capitalism as inherently exploitative and call for its overthrow.

Liberals frequently highlights the importance of equal opportunities and

alleviating extreme poverty through market mechanisms. On the other hand, Marxists
prioritize the reduction of inherent systemic inequalities by tackling ownership of the
means of production.

Liberalism typically favors a development model rooted from free trade,

globalization, and attracting foreign investment. In contrast, Marxism often criticizes
this model, contending that it sustains global inequalities and dependency.

EVALUATION AND ARGUMENTATION :

The ideology of liberalism manifests strengths in promoting individual freedoms,

market efficiency, and innovation, while Marxism showcases strengths in advocating
for social equality, collective ownership, and addressing systemic disparities.

Liberalism’s emphasis on efficiency, competition, and fostering global

economic growth is substantiated by classical economic thinkers like Adam Smith. In
his influential work 'The Wealth of Nations’, Smith (1776) asserts that free markets and
competition drive economic prosperity by allowing individuals and businesses to
pursue their self-interest. This concept has remained central to liberal economic
thought.

Modern economists such as Milton Friedman further validate liberalism's stance

by highlighting the positive impacts of free trade. M Friedman (1980) and R Friedman
(1980), in 'Free to Choose,' articulates how unrestricted trade enhances efficiency,
encourages innovation, and ultimately leads to an improved quality of life.

Additionally, international organizations like the World Trade Organization

(WTO) and the International Monetary Fund (IMF) align with liberal principles. They
advocate for free trade as a means to stimulate global economic development and
alleviate poverty, affirming liberalism's contemporary relevance in the world
economy.

Meanwhile, Marxism's criticism of the potential for exploitation and the

perpetuation of inequality within free trade draws heavily from the foundational texts
of Karl Marx and Friedrich Engels, notably 'Das Kapital'. Marx (1867) thoroughly
explores the dynamics of capitalism in this influential work, shedding light on how the
capitalist mode of production inherently exploits labor to maximize profits. Marx's
theories emphasize the importance of just labor practices and advocate for workers'
rights as a means to counter the imbalances sustained by the free trade system.

Contemporary scholars like David Harvey, in 'A Brief History of Neoliberalism,'

further delve into the ramifications of free trade policies influenced by neoliberal
ideologies. Harvey (2005) argues that these policies, often linked to free trade
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agreements, disproportionately favor powerful economic entities and worsen

inequalities, providing additional support to Marxism's apprehensions regarding
unrestricted trade.

Marxism's emphasis on protecting vulnerable economies aligns with the

perspectives of dependency theorists such as Raúl Prebisch and Hans Singer. Prebisch
and Singer illuminate how trade dynamics between developed and underdeveloped
economies can bolster global inequalities, underscoring the need to safeguard the
interests of the latter.

CONCLUSION :

In summary, the discourse surrounding free trade versus protectionism within IPE
underscores the foundational disparities in the ideologies of Liberalism and Marxism,
ultimately emphasizing the strength of Liberalism in promoting economic prosperity.
Liberalism places a robust emphasis on the benefits of free markets, globalization, and
the protection of individual rights, advocating for a path that fosters economic growth
and development. In contrast, Marxism's focus on historical materialism and class
conflict tends to critique capitalism, potentially hindering the realization of optimal
economic progress.

Finding a well-managed equilibrium that capitalizes on the advantages of free

trade while mitigating any potential negative impacts is essential, aligning with
Liberalism's pragmatic approach to economic policy. This ideological inclination
significantly shapes how key debates in IPE, including the free trade versus
protectionism debate, are approached, often favoring the liberal perspective and
guiding policy decisions accordingly
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(1988 words)