International political economy is a field that focuses on the relationship between power and flow of goods, capital, and labor. It covers this in three major theories, including the realist theory, the liberalism theory, and the Marxist theory. The realist theory describes nations as self-dependent. In this system, countries compete for economic dominance because it comes with power over other nations and development of military capabilities. Realist economy protects its industries from sabotage by more dominant industries and other countries by imposing trade barriers. It also aims to increase the amount of export to gain competitive advantage. The liberalism system supports countries working together cooperatively for the achievement of a better future. This system has led to global peace and economic growth among countries that were lagging behind. It introduces a free market where goods flowing smoothly across borders.
The Marxist theory seeks to refute the capitalist nature of the realist and liberal systems by proving that they would lead to the destruction of the economy. The theory claims that for a capitalist economy to run efficiently, people need to work. This introduces the bourgeoisie (capital owner) and the proletariat (the worker). As the capital owner seeks to accumulate money, they depress the worker who has to accept low wages at their own expense. This creates two classes of people; the rich capital owners and the workers who are being antagonized.
The countries of East Asia have a liberal political-economic environment. This is seen in neighboring countries that show similar development rates. Moreover, the gross domestic products (GDP) of these countries do not differ much. Consequently, increased trade has resulted in interdependency, benefiting them and equally judging from the development levels. The development of the East Asian region has and continues to lead to a competitive business environment. This is so, because states first develop internally and then bring what they produce to the free market. This pessimist nature will create competition when every country wants to be the more potent. The paper will, therefore, investigate some of the East Asian economies and offer viable evidence of the best applicable theory in the region. Moreover, the research will investigate the role of Japan and its economy in maintaining a balance in the region that is rife with age-old economic rivalries.
Realism, Liberalism, and Marxism in the East Asian Economy
International political economy is a field that analyses economics and international politics or relations. It combines a study of economics, politics, international relations, and other social sciences in a unique way. It seeks to inform how political instructions and processes affect economic interactions, and vice versa how economic growth affects regional politics. It is the relationship between power and allocation of scarce resources. There are several theories of international political economy. These approaches are the realism, nationalism also referred to as mercantilism, liberalism, and Marxism. Through the implementation of various approaches to an economy, a region can realize its strengths and weaknesses, and work towards making a functional resolution for overall development. A liberalist approach best describes the East Asian international political economy, because it supports the region’s economic integration and growth towards globalization, with well-off economies providing support for smaller economies to grow.
Realist International Economy
A realist approach believes that there is no centralized authority governing sovereign states and their actions. Nations rely on themselves for economic growth. The only aim of the realist approach is survival due to the uncertain future of the international system. This, in turn, relies on power. The more powerful a nation is, the more chance of survival it has. Nationalism is often criticized as being pessimistic, because it promotes following one’s own interests, e.g. every man for himself. The nationalist approach is relevant in an international political economy, because power and military capabilities depend on the economic development and capital accumulation in a country. The international aspect arises in the states competing against each other for power, prestige, and influence. Moreover, the approach focuses on moderate politics that are based on financial power rather than the high politics of military power. The primary goal is to increase the state’s power to compete on a global stage. Realist economic policy is achieved by imposing trade barriers to control imports coming into a country, as well as increase the number of exports to improve the state’s financial standing. This, in a realist viewpoint, protects the infant industries in the country from global competition until these industries have matured and can compete on a global level. Therefore, international economics is termed as a zero sum game, where one country’s loss is another’s gain. Industrialization will protect a country from external threats, because the country is self-reliant and dependence on imports will weaken the country’s military power. According to Putnam (2016), a country’s rise to power and freedom results from trade protectionism, support for local producers, and development of commerce capital.
Industrialization can offer development in two ways, including a strong economic standing of a country developing the military sector and more powerful weapons, thus gaining power. Additionally, manufactured goods have a higher value compared to raw materials when it comes to import (Falkner, 2011). Therefore, supporting local infant industries will create a trading surplus and lead to a competitive advantage. The realist approach creates a competitive, rather than a cooperative, environment. In pursuing economic dominance, countries try to avoid open aggressiveness by acting according to the prevailing international norms embedded in international institutions. These organizations include the world trade organization, world bank, and the international monetary fund among others.
Liberal International Economy
Liberalism is the most dominant global political economy perspective today due to countries supporting globalization and economic integration. Liberalism is the opposite of realism. It takes the competitive nature of realism only in a constructive way guided by reason. It forms an approach according to which economic integration between countries will lead to a better world where all nations work together. It lessens the value of a state by working towards interdependence of states by integrated economic and political structures. The liberal theory views economic integration as the path to global peace under one economy and cultural world order. Supporters of this theory purport that this interdependence between countries has increased security and caused a substantial growth of countries. For instance, China has recorded growth rates of about 7% in the past 25 years (Studwell, 2014). Furthermore, Studwell argues that liberalism is a positive sum game, where every state gets more than it brought in initially. The role of a state in liberalism, however, lies in controlling inflation, creating employment, and encouraging economic growth. This microeconomic duty must be fulfilled in each country to ensure that a state can bring something to the global market, because too much dependence on other countries would render it weak.
Furthermore, liberalism introduces the free market with reduced or abolished barriers to the flow of goods, capital, and labor (Segrillo, 2012). Liberalism stands for involved individualism and individual liberty. Individuality is the heart of liberal politics. Segrillo argues that the pursuit of personal interests from the free market is an expression of self-liberty. A state pursues the resource in scarcity and provides what is has. According to liberalism, the development of market and division of labor is the prime source of economic development. Liberalists are skeptical about the power the government to govern the society and the economy. Pei (2016) believes that the government is an obstruction to individual liberty and the functioning of the free market. Globalization seeks to limit the power of governments, but also acknowledge certain duties the government has to fulfill to control this economic integration. According to Yongcheng (2015), all countries can benefit from liberalism, even those that do not have a competitive advantage in production. This happens if they are willing to specialize in what they have a relative advantage in. For example, a country with a high labor force which is short on capital should invest in labor-intensive goods, such as agriculture, whereas those with capital intensity that lack labor force could focus on manufactured goods.
Moreover, liberalism will also promote peace, because it will help create lasting international order. The free market will lead to the creation of wealth and stability, and mitigate the desire of states to build empires and use military force for economic growth. It would take out the realism approach of economic domination and bring forth the joint interest of people to have peace and cooperation. The idea of military expansion and development is less attractive compared to an integration of countries that have come to a mutual understanding.
Marxist International Economy
Realism and liberalism both accept capitalism as the driving force of economic growth (Segrillo, 2012). Karl Marx, the creator of the Marxist theory, expounded on capitalism and hoped to overthrow that system. Marx disagrees with these theories and says that capitalism was built on the logic that would ultimately lead to its failure (Segrillo, 2012). Furthermore, Marx argues that in a capitalist economy people have to work to help the system run. Capitalism seeks to accumulate capital and protect property. This allows capital owners to exploit the workers by paying them a wage that is smaller than the price of the goods or services they put on the market.
Capitalism is divided into two classes; the bourgeoisie (the owner class) and the proletariat that is the workers. Capitalism is a system based on the ownership of the means of production. This means that workers sell their skills at a price determined by the market. This leads to workers being paid less than the value of goods and services they produce for the market. The difference between the work that was provided and the wage that was given is referred to as the surplus or profit. Segrillo suggests that capitalism displays a certain greed for this profit, leading to the adoption of cost-effective production. Cost effective production involves the use of technology and labor saving techniques. As the competition increases, it becomes hard to maintain the same rate of profit, and this might lead to workers being exploited to maintain profit gains. The proletariat class is the larger portion at the disadvantaged end.
In addition, there is a disproportionality in capitalism, as there is a tendency to overproduce what one can produce efficiently. The rate of production, in hand, does not match the consumption rate. Over time, Marx depicted that crises would emerge over this issue, eventually causing the failure of the system. Capitalism seeks to accumulate and concentrate capital to gain a competitive edge. As the system evolves, wealth will be concentrated among the few elite capital owners to the disadvantage of the impoverished masses. This increases the number of unemployed workers, and the wages will continue going down.
However, after Marx’s death, it became apparent that his predictions would not come to be true. That is when Lenin, another philosopher, came up with the expansionist ideology that capitalism decayed in the most developed countries. and in the quest to accumulate capital they ended up exporting capital abroad (Falkner, 2011). This , in turn, leads to inter-country conflict where governments try to protect their capital. Consequently, Lenin supported Marx in saying capitalist tendencies are threatening. In the Marxist theory, states are not autonomous. The bourgeoisie from different countries controls the international trade instead of the national interests .
East Asia Political Economy
Liberalism explains the East Asian political economy best. Globalization thrives because of domestic growth in this region. Asian states work to enhance their industry sector by providing subsidies, infrastructure, and state-led coordination (Shambaugh & Yahuda, 2008). Asian countries nurture their private sector to compete in the world market. Shambaugh and Yahuda conclude that countries located in North East Asia are dominating the top ranks when it comes to levels of development in the region. This can be explained by a free market where goods flow freely across the borders. Countries like Myanmar that used to be an anti-market experience low growth and high poverty levels. Asian states have adapted the macroeconomics that makes the internal affairs related to economy stable and microeconomics public policies needed to increase social opportunity in the overall integrated Asian market
South Korea, Japan, and China are at the top, following each other regarding economic development, with China being the second strongest economy globally (Yahuda, 2004). Yahuda explains that free trade benefits everyone, and economic gains are mutual. South Korea, Japan, and China are big producers. Their gross domestic product ranges in trillion dollars. With the exchange of product, these countries benefit each other. Likewise, countries in the Southeast seem to be liberal. Neighboring countries like China from Northeast Asia and Thailand from the southeast have high growth rates. These countries have enhanced globalization, and the interdependence among them is apparent. However, Singapore as a country seems to be focusing on being self-reliant, seeing that it is bordering Malaysia and Indonesia who are at medium development. It seems to be a realist economy focusing on its production, because its GDP is at the same level as that of northeast Asia countries. However, its population is much smaller than the rest, thus the high per capita income.
Effects of Increase in Development in East Asia
An increase in development in the East Asian countries will lead to a competitive environment. However, it will not be apparent. The countries will want to have a competitive edge as compared to the others (Goswami, 2013). Nevertheless, the interdependence must continue. States will control their macroeconomics to prevent other countries taking over them, enhancing production. This form of interlinking dependency is the kind advocated by liberalism. Countries such as Myanmar, which are at low development levels,will now be crushed, unless they will have developed their output as a country (Mark, 2006). These countries combine good governance and moral mechanisms of accountability, and this leads to strengthened regional power.
The Fate of CCP
China is under autocratic rule of the Chinese Communist Party (CCP). Referring to historical evidence, the Chinese Communist Party is already being threatened by several factors, namely the upper-middle income earners with high education levels and the fall of dictatorships in other countries. More importantly, if China’s economic development continues as it is, a new socioeconomic condition will be created that will make it harder for the CCP to survive in a non-oil state (Gilley, 2014). The loss of faith in the party has been ongoing since the end of Cultural Revolution four decades ago due to corruption and lack of trust in communism. The CCP is already facing power decay due to the power struggle and fight for power among the top leaders of the party. Intra-party problems render it weak to powerful external forces seeking its demise. The socio-economic environment, being created, will make the people push for democratic rule. Unless the party converges in the 19 congress and makes up a new order to concentrate power rather than share it, the party will be weak and more likely to be overthrown (Cai, 2008). Therefore, the end may not be guaranteed, but if it does not gain power it is likely to end.
Japan's Position in Case of Decline
Japan has attained very high rates of development. If there were a relative decline in the development of Japan, its political role and military power would be affected. These Asian countries operate in a way that supports their industries, while participating in the free market. Japan has restrictive immigration rules that prevent entry of workers into the country. This leads to the issue of an aging workforce. A decline would mean that Japan has to cooperate with the rest of the Asian countries and open up its barriers to trade and compete with China, as well as participate in the Pacific trade (Kawasaki, 2008). Japan is in competition with China or rather mutual trade; China provides exports to Japan and vice versa. The decline in Japan’s economic growth will lead to a dissolution of this trading agreement. Economic development means political power, and so Japan’s decline will reduce its political and military power.
The adoption of various political, social, and economic ideologies has different consequences on local and global markets. This is because of the interlinking dependency created within the world market due to increased globalization. The theories – realism, liberalism, and Marxism – advocate for different policy adoption, the consequences of which last for short or long duration. Within the Asian economy, the adoption of such principles would ultimately affect the balance of trade, influencing political shifts. Nonetheless, the best applicable approach for this region as a whole would be liberalism to ensure political transparency, open markets, and increased trade.