International Political Economy Timed Essay

The basic principles of microeconomics rely on the concept of comparative advantage. This functions best in a free-market economy both domestically and internationally, and emphasizes a greater overall benefit for society with the specialization it entails. Martin Wolf seems to have used this simple economic concept as an answer to the very complex issue of how to best address the international political economy. Once countries specialize in production, the free market’s invisible hand will present prosperity. Wolf claims that unchecked markets benefit society as a whole; “dynamic market economies” (Wolf, 45) with no one in charge explain successful economies. Allowing markets to function creates the most efficient international arena.

The first problem this mindset raises is that efficiency often leads to increases in inequality. Free-markets allow for inequality in their nature, but with no international regulations between domestic markets, inequality grows and “the rich [are] getting richer while the poor [are] not even holding their own” (Stiglitz, 8). This manifests itself in both developed and developing countries, with developing countries often receiving the worst of it. Many developing countries have been historically exploited and continue to be in modern day. Nigeria exploited by Britain’s minimalist control that has resulted in a state that is not autonomous or functional in any sense of the word. Their neopatrimonial public sector has allowed elites to control natural resources and personal property, so the country’s rise in GDP from the oil industry has not benefited society. While Wolf and many others advocate an unchecked international market, I fail to see how a 70% poverty rate in an oil-rich country that partakes in this market is not an indication that change needs to occur. While developing countries have been opening up their markets, globalization has only raised inequality; it has “exposed developing countries to more risks” (Stiglitz, 11) without providing any checks to ensure against these risks.

Globalization has the potential to benefit all of its actors including developing countries, but Americanization and the application of comparative advantage does not lead to this result. While Wolf is more correct in his theories of developed countries, developing countries simply do not have the political structure to ensure equity and fairness. Without a just domestic political structure, we cannot expect these country’s problems to be erased once they are in the international sphere. In Nigeria alone, elites reap the benefits from oil trade, and all that many heads of developed countries see is the numeric gain both countries received from trade. We get oil, they get money, end of story.

While we do not have the means to bring all countries up to a state of development, we do have the ability to establish international regulations that are separate from market forces. We need international controls to sustain globalization and end exponential increases in inequality within and between countries. There are no “democratic global institutions” on the international level that have the capacity to deal with the problems of globalization (Stiglitz, 21). We have created an international market that is chaotic and involves numerous actors, the most powerful of which are developed countries.

We must establish global regulations that do not allow for exploitation and abject poverty if the international political economy is to do what Wolf claims it can and actually benefit society as a whole.