1 Classic Perspectives on International Political Economy Class 2 – Thursday, 15 September 2011 J...

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Classic Perspectives on International Political Economy

Class 2 – Thursday, 15 September 2011 J A Morrison

John Locke Adam Smith Karl Marx

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Lec 2: Classic Perspectives

I. Locke, Smith, & MarxII. States and MarketsIII. Materialism versus Idealism

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As we saw on Tuesday, there were a number of different ways to

define “political economy.”

We also saw that the definitions we use can privilege certain

understandings of the phenomena involved.

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Today, we’ll continue in the same mode, exploring several

prominent theorists’ frameworks for understanding

political economy.

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I. Locke, Smith, & Marx1. Who they were2. Why we should bother with them

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“John Locke” ?

What gives?

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No--really...

What gives?

=?

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John Locke• 1632?-1704• English philosopher;

developed political connections

• Helped inspire & justify Glorious Revolution 1688-1689

• Secured adoption of fixed exchange rate in 1696

• On Board of Trade, reformed commercial, fiscal, & migration policy

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Adam Smith• 1723-1790• Part of Scottish

Enlightenment• Lectured at Univ of

Glasgow (1750s-1760s)• Worked for Charles

Townshend (1760s)• Wealth of Nations

(1776)• Inspired free trade

movement in 1780s

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Karl Marx• 1818-1883• Prussian; father converted

from Judaism• Student of Hegel• Revolutionary; frequently

exiled• Founder of Communism

(brand of Socialism)• Coauthor of Communist

Manifesto (1848)

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I. Locke, Smith, & Marx1. Who they were2. Why we should bother with them

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John Locke, Adam Smith, and Karl Marx have all been dead for

decades.

Why should we bother with their opaque musings? What relevance could they possibly

have?

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There are several good reasons to “bother” with these very old,

very dead guys...

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(1) Historical Importance

• Locke, Smith, & Marx were among the most influential intellectuals of all time

• Each shaped policy in their lifetimes and for decades to come

• Impossible to understand the history of the global economy without understanding their roles and their ideas

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(Of course, their precise ideas and the roles they played are subject to ongoing debate!

But few deny their importance.)

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(2) Intellectual Importance

• These theorists also bore extraordinary influence on subsequent economic thought– Locke was a pivotal foil for Smith– Marx borrowed from Smith and challenged Locke– And JM Keynes returned to Locke in his attempt to

assault the “classical liberals” (including Smith)

• We lose much of the conversation today if we neglect these persistent voices

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(3) Provide Relief

• Some of the writing is surprisingly unfamiliar– Primeval terms and formulations for familiar

concepts (“vent”)– Nonstandard spellings (“forraign”) and printing– Shocking assumptions about racial, national, &

religious characteristics

• These differences can sharpen our perspective on our own “discourse” of political economy

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(4) Offer Alternatives

• These “great” writers developed solutions to transcendent (timeless) challenges

• These “great” writers were unusual in their attempts to tackle a number of issues in a single framework

• We might revisit these proposals in search of additional alternatives

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II. States and Markets1. What is the Priority: Politics or Economics?2. Whose Property are we Protecting?3. Distinguishing “Political” from “Economy”

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Clearly, states and markets interact.

But does politics serve economics? Or does economics

serve politics?

(Obviously, economists should and do serve political scientists!)

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Aristotle’s classic answer set the tone for centuries to follow…

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“[T]he city…exist[s] by nature, and…man is by nature a political animal.”

(Aristotle, Politics, 1253a2)

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“It is clear…that a city is not an association for residence on a common

site, or for the sake of preventing mutual injustice and easing exchange…

What constitutes a city is an association of households and clans in a good life, for the sake of attaining a perfect and self-sufficing existence.”

(Aristotle, Politics, 1280b29)

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Aristotle’s Political Economy

• State exists naturally• Political life is telos of man’s existence• Market relations exist to facilitate

social/political endeavors

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“In [the state of nature], there is no place for Industry; because the fruit thereof is uncertain: and

consequently no Culture of the Earth; no Navigation, nor use of the commodities that may be imported by

Sea; no commodious Building; no Instruments of moving, and removing such things as require much

force; no Knowledge of the face of the Earth; no account of Time; no Arts; no Letters; no Society; and which is worst of all, continuall feare, and danger of violent death; And the life of man, solitary, poore,

nasty, brutish, and short.”

(Hobbes, Leviathan, Ch XIII)

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In Leviathan (1651), Hobbes followed largely in Aristotle’s mode: market

relations were inconceivable without political society.

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Locke wrote the Two Treatises just a few decades

after Hobbes published Leviathan.

According to Locke, what was the end (purpose) of political

society?

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2929

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“The great and chief end therefore, of Mens uniting into Commonwealths,

and putting themselves under Government, is the Preservation

of their Property.” (Second Treatise, § 124.)

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What does this imply about the capacity of market relations to

exist beyond the realm of political society? (see §108)

For Locke, did the market serve the state? Or did the state serve

the market?

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John Locke was among the first to challenge Aristotle’s

prioritization of the state over the market.

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But this raises a question: whose economic interests are to

be served by the state?

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Meaning of “Preservation of their Property”

• Narrow Interpretation: Protect specific possessions, our (negative) liberties, and our bodies– Protect propertied from unpropertied

• Broad Interpretation: Protect the health and welfare of our economy from foreign competition and invasion– Protect public/common interest

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So, which view did Locke hold?

“And all this to be directed to no other end, but the peace, safety, and public good of the people.” (§131; See also §§ 97, 120)

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What did Smith suggest was the original end of political society?

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“Laws and government may be considered in…every case as a combination of the rich to

oppress the poor, and preserve to themselvesthe inequality of the goods which would

otherwise be soon destroyed by the attacks of the poor, who if not hindered by the

government would soon reduce the others to an equality with themselves by open violence.”

(Smith, Lectures on Jurisprudence, 208)

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Locke versus Smith

Locke SmithNature of Agreement Compact; consent Coercion

Govt Invention Created in single moment

evolved historically

Whose property? community; public good

Rich vis-à-vis poor

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Let’s back up.

We’ve been talking about “states” and “markets” as if it were obvious what the differences between the

two are.

What are the differences?

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Distinguishing States & MarketsA) Nature of decision-making: centralized versus

decentralizedB) Breadth of interests considered: public good

versus private goodC) Locus of Accountability: owners/shareholders

versus electorsD) Amount of competition: monopoly versus

competitiveE) Power: market power versus political power

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III. Materialism versus Idealism

1. Smith’s Historical Materialism2. Marx’s Historical Materialism3. The Question of Revolution & Policy

Change

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In his historical analyses, Smith generally held that the evolution of

material factors—interests & institutions—powered social,

political, and economic development.

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Smith’s (Infamous) Four Stages

• 1st – Age of Hunting & Gathering• 2nd – Age of Shepherds• 3rd – Age of Agriculture• 4th – Age of Trade and Commerce

(LJ(A)i.27)

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“Base” and “Superstructure” (Marx’s Terms)

• Each stage brings with it a different set of values and allegiances

• Politics are organized in each “age” according to the interests of the ruling class– Agriculture Feudalism (rule of landed elites)– Commerce Mercantilism (rule of “merchants &

manufacturers”)

• As the economy develops, the burgeoning class overthrows the old guard

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So, where did Smith think history would end?

(See the end of the Wealth of Nations.)

It’s not clear. He certainly doesn’t seem to have been as

optimistic as Marx.

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Change

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“The Premises of the Materialist Method”

“Life is not determined by consciousness, but consciousness by life. In the first method of approach the starting-point is consciousness taken as the living individual; in the second method, which conforms to real life, it is the real living individuals themselves, and consciousness is considered solely as their consciousness.”

(GI, 181; Preface 425)

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Marx’s “Stages of Development”

• 1st – Tribal Ownership• 2nd – Ancient Communal & State Ownership• 3rd – Feudal or estate Property• 4th – [Market/industrial age]

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The Communist Revolution

• Communism is the telos (endpoint) of historical evolution (GI, 196)

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Change

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In this treatment, Marx’s “Communism” is a subset of

Smith’s view of political economy.

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Of course, there was much disagreement about specifics.

But several of the major components are there…

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Marx and Smith Commonalities

• State is instrument of dominant class• Materialism: ideas are generally product of

interests and material factors• Historical materialism: political-economic

development progresses as different groups become empowered by changes in the means and modes of production

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But there was a major difference: what would the end of history

bring?

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Marx was optimistic: Communist Revolution.

Smith was less obviously so.

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What do you think determines foreign economic policy?

1 Classic Perspectives on International Political Economy Class 2 – Thursday, 15 September 2011 J...

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