How Does Economic Structuralism Differ From Liberalism Politics Essay

Contemporary normative theories of international relations provided by the likes of Brown, Nardin and Rengger (2002) defined normative theory as a body of work which addresses the moral dimension of international relations and the wider questions of meaning and interpretation generated by the discipline. At its most basic, it addresses the ethical nature of the relations between communities/ states. [1] Normative theories aim to establish the proper goals of political actions, [2] where goals refer to the desirable norms or normative positions.

In explaining ‘norms’, several writers of international relations used different definitions and approaches. Paul D’ Anieri, in his book, ‘International Politics: Power and Purpose in Global Affairs’ described international norms as “shared ethical principles and expectations about how actors should and will behave in the international arena, and social identities, indicating which actors are to be considered legitimate”. [3] Walter Carlsnaes, on other hand, defined norms as “a broad class of prescriptive statements – rules, standards, principles, and so forth – both procedural and substantive that are prescriptions for action in situations of choice, carrying a sense of obligation, a sense that they ought to be followed”. [4] 

Based on the broad definitions, we can identify the common themes indicating that normative positions are about ethics, values, and moral behaviours that ought to be. Using this definition, this essay will first examine the normative positions of both liberalism and economic structuralism and do a comparison to draw out their differences in international relations. The essay will then establish economic structuralists’ views on international organisations based on its normative positions.

Liberalism

Generally, liberalism is a response to the realist problem of anarchy. Realists argue that security dilemma will ensue if there is no central control in an anarchical system. Eventually, a balance of power would be inevitable. [5] Liberalists, on the other hand, are optimistic and argue that there is potential harmony of interest between states, and cooperations are possible so that mutual gains could be achieved. [6] This is based on the basic assumption that all states are rational and understand their interest. [7] Specific liberalism theories, such as Liberal Institutionalist, further added that when we end up with security dilemma, the best solution to overcome this would be to stop the arms race at the same time and maintain a stable balance of power through agreements. [8] Democractic Peace theorist also explained that democratic states can be peaceful with each other, instead of tussling for power. [9] 

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Therefore, the normative positions of liberalism can be deduced as follows. First, collaborations between states can mitigate the perils and problems of anarchy. This is because there are mutual interests that benefit the states involved. Given the potential benefits, collaborations should then be placed as a priority in international relations. Thirdly, states should focus on working with each other and establish transparent institutionalized agreements (whether formal or informal) to achieve peace and stability. In other words, international interactions should be about collaborations. Finally, states should adopt democracies as democratic states are peaceful with each other.

Economic Structuralism

While liberalism focuses on collaborations as the motivation for international politics, economic structuralism argues that international politics is a result of economic interactions. Economic Structuralism is an economic power-based approach that looks at the distribution of wealth. It views rich capitalist state as always trying to gain as much wealth as possible from the poorer worker state, while the latter tries to obtain a fair share of the profits from commerce. [10] This is because every government is influenced by a class of owners whose interests the government usually acts upon. [11] 

The fundamental assumptions of economic structuralism are firstly, it is economic deterministic in nature. That is, political behaviors are driven by economic motivations and that political outcomes are determined by economic power. [12] The second assumption is that the world is divided not just into countries, but classes with opposing economic interests. Based on the World-System theory, the world is divided into three classes namely: Core, Semi-periphery, and Periphery states. International relations, hence, is a reflection of the economic interactions between these three zones. [13] 

Economic structuralism is based on the central concept of surplus value, which is defined as the difference between the value of a manufactured product and its raw materials. This concept explained that companies do not allocate the fair share of this surplus value to the workers who created them. [14] Finally, economic structuralists also view the society and world as being structured into two parts: the foundation and the superstructure. The foundation is the economic system that explained the relationship between the poor Proletariat and the rich Bourgeoisie, while the function of the superstructure is to assure the rulers continue dominance and to keep the ruled in place. [15] 

Therefore, the first normative position of economic structuralism argues that economic power should be the motivation for international politics. Economic structuralists also view that the world should comprise of only a single class, with equal distribution of wealth, or that interactions should only be among states of the similar class. This would eradicate the problem of exploitation of the poor by the rich, and avoid the problems caused by economic inequality. Also, to achieve a single class, economic structuralists opined that capitalist system where industries and properties are privately owned should be replaced by public ownership.

Given these normative positions of liberalism and economic structuralism, the followings will examine and explain their key differences.

Mutual Gains vs Exploitation

The first difference in normative position is the view on international collaborations and free trade. Liberalism pointed that there should be free trade among states, while economic structuralism opined that economic interactions should be closed or kept within states with similar economic status.

Liberalists argue that states are rational and will pursue their self interest to flourish and succeed. [16] So if states were to cooperate and allow free trade, it would assure mutual access to resources. Therefore, states have no reasons to be aggressive. Free trade, thus, is seen as a means to a peaceful world order since it brings mutual gains to all states, regardless of their size or type of economies. [17] 

However, economic structuralists are hostile to the idea and dispute the benefits of free trade. As highlighted under the concept of surplus value, owners of capital will do what they can to gain more. Therefore, economic structuralists view most international cooperation as collaborations at the expense of the poor or weak states. When the rich cooperate with the poor, the gains from the cooperations are divided disproportionately in favour of the rich. [18] For example, in order to attract more foreign investments, labour unions in the poor states tend to be suppressed, workers subordinated and wages kept low. All these are done in order to provide a “friendly” business climate for foreign investors interested in low-wage productions for export to the vast consumer market in the Core. In this sense, the rich exploits the surplus value created by the poor to get richer, while the poor don’t get any better. In fact, the poor gets relatively poorer when prices of manufactured goods grow more quickly than that of their raw materials or income. Thus, by isolating their economic markets, economic structuralists see the eradication of exploitation.

Levelling Up Individual Wealth vs Encouraging Poverty

Next, liberalism argues that states should place priority in promoting free trade and cooperation. However, economic structuralism opined that emphasis should be on the equal distribution of wealth.

Liberalism pointed that, in the long run, free trade levels up the standard of living and wealth of everybody. This is based on the assumption that capitalists want their products to be consumed. When more people become affluent, more can afford to consume their products, and hence more profits could be made. Furthermore, with free trade, prices are determined by market forces rather than tariffs and government policies. That is, prices of goods would not be deliberately raised to create an artificial higher standard of living. Therefore, liberalists see free trade as a way to enhance everyone’s wealth and should be actively promoted.

Economic structuralists, on the other hand, maintain the exploitatory view. They assert that the Core states will exploit the Semi-periphery or Periphery states and use these exploited wealth to satisfy their own domestic workers (or proletariat) instead. [19] This would ensure that their products could be consumed by their own workers, who are the main consumer markets, rather than the third world states. Therefore, to extract more wealth, capitalists would want to keep production costs as low as possible. The ability to keep the cost low would then depend on how desperate the workers are. The more desperate they are for a job, the more cheaply they would work. In other words, a certain level of unemployment actually works well for owners in keeping wages and costs down. [20] Economic structuralists, hence, do not see free trade as an avenue to lift poverty from the developing and third world states. Instead, states should focus on policies to ensure equal distribution of profits (and not free trade) so as to raise their economic status. For example, states could limit the amount of foreign investments, implement tax policies on foreign earnings, or take over large corporations so as to retain profits within the state.

Equity vs Equality

In the third difference, liberalism asserts that there should be institutionalized agreements to cooperations, such as free trade agreement, to ensure equity and peace. However, economic structuralism insists that there should be equality in wealth distribution to avoid exploitation.

Liberal institutionalists see free trade agreements as a solution to an anarchy world. However, they also see a need to ensure that states comply with the agreed rules of interactions. Such behaviours are their rational pursuit for self-interest. Thus, liberalists see agreements as a means to reduce uncertainties of outcomes and enable states to feel more “secure” and assured of their existence. Therefore, an institutionalized free trade would avoid conflict of interest and ensure fair and level playing field for all.

However, economic structuralists see the world as divided into different classes with unequal economic status. Such inequality in economic classes did not just create poverty as highlighted in the argument before, but also create political inequality. [21] In such free trade agreement, weaker states, or the periphery would naturally have unequal bargaining. For example, the bargaining power of multi-national cooperations far outweighs that of workers and their host communities when their mobility is enhanced by free trade. This means that if the Semi-periphery or Periphery states try to raise production cost, the core nation can always move to other areas. Therefore, unequal economic status brings about further exploitation with free trades.

World Peace vs Conflicts

Lastly, on peace and stability, liberalism view that the states should be democratic to maintain peace and avoid conflicts. However, economic structuralists view that only equal distribution of wealth leads to peace.

The liberalist democratic peace theory argues that democracies do not go to war with each other. [22] They view peace as a relationship between states, rather than characteristics of individual states, and political disputes could be resolved by compromising with each other. Such behaviour rules out the use of force as an option to resolve disputes. Though democratic peace theorists do not exclude the possibility of conflict with aristocratic or other non-democracy states, they generally sees democracies as a mean to world peace.

Economic structuralist, however, assert that capitalism and inequality in economic status potentially leads to conflict. The exploitation and expansion of wealthy states and the continued pursuit of increasing access to markets, cheap labour and raw materials will inevitably lead to conflicts between great powers. [23] On top of that, the continued gap in economic status and exploitative relationship creates tensions between the classes. These tensions may also lead to conflicts or clashes between the classes. Therefore, economic structuralism stands for the proposition of a single class where capitalism is abolished for public ownership of industry. Such situation will provide no motivations for competitions, tensions, and eventually conflicts.

Economic Structuralist’s View On International Organisation

After examining and understanding the normative positions of economic structuralism, we can derive their views on the roles and relevance of international organisations. These organisations comprise international members with agenda spanning across regional or global issues. They could be international non-governmental organisations (NGOs) such as Red Cross, or international governmental organisations such as the World Trade Organisation (WTO) and International Monetary Fund (IMF). In the following segments, economic structuralism’s view on the latter will be discussed.

International Organisations Serve the Core

Economic structuralism’s skeptical approach towards free trade and international cooperation similarly result in negative attitude towards international organisations. Liberalists believe that peace could only be secured with creation of international organisations to regulate the international anarchy. [24] However, economic structuralists find that these international organisations are not serving their real purposes. They equate these international organisations as the superstructure of the society, setting policies and rules to ensure that the ruled remain where they are in their status.

Economic structuralists assert that these international organisations are sponsored by wealthy countries. In turn, these wealthy countries are influenced by wealthy capital owners who support the government through campaign funding, or lobbies for government proposals that benefits them. Therefore, it is asserted that these international organisations, inevitably, serve the larger interest of the capital owners, rather than the workers. [25] For example, international organisations such as WTO are seen as helping the Core states expand and gain access to foreign markets and raw materials so as to facilitate the latter’s economic benefits. This could be done through coercion into trade pacts or through conditions tied with financial assistance. And in such economic interactions, the poor will inevitably be exploited.

International Organisations Create Dependency

One of international organisations’ functions is to help the developing states. In doing so, they asserted that there is a need to accelerate their growth and tap the experiences from the Core. This can be done by providing them with technological transfer, investments, and integrating the Semi-periphery or Periphery with the rest of the world.

Economic structuralism’s dependency theory argues that developing countries had much to lose and little to gain from furthering international economic relations because resources are exploited from the weak state to benefit the rich. [26] Thus, the works of these international organisations are seen as ensuring such dependency of the poor on the rich by binding them in with the terms of financial support or others. Therefore, while liberalism preaches the benefits and good-will of extending financial, technical and expertise assistance to developing countries, economic structuralism sees it as reinforcing the dependency of the Periphery on the Core. Such dependency, according to economic structuralists, is argued to constraint their development.

International Organisations Impact Social, Economical and National Development

On a similar note, international organisations such as World Bank provide financial assistance to countries, particularly during financial crisis, so as to help the states to overcome economic challenges and progress. This is illustrated in the World Bank’s mission where they aim “to fight poverty with passion and professionalism for lasting results and to help people help themselves and their environment by providing resources, sharing knowledge, building capacity and forging partnerships in the public and private sectors.” [27] 

However, these financial arrangements are often packaged with terms of liberalising their financial markets, deregulations, and privatising nationalised industries. Economic structuralists view such liberalisation and privatisation efforts of the capitalists as exploitations. Sometimes, international organisations such as IMF may even intervene and influence economic and social policies of states who accepted financial assistance, so as to further their larger economic interests. Therefore, economic structuralism argues that international organisations encourage exploitation and intervene with national development.

International Organisations Create Uneven Playing Field

Another role played by international organisations, as explained by liberalists, is to provide a level playing field for all states to compete in, regardless of their size and status of economies. They opined that international regulations ensure that trades are determined by market forces.

Economic structuralists disagree. Firstly, they opined that players have different head start in their economic development. The rich have had several hundred years of head start through colonialism. Secondly, they argued that the market is dominated by the large wealthy corporations that monopolise the market. Small and poor states do not have the economic power to compete freely and survive in such environment. Hence, economic structuralists do not agree with this notion of level-playing field. They see that level-playing field will only be possible if the differences in economic power are resolved. Only then would states be able to compete with equal bargaining power. [28] 

Conclusion

In summary, the normative positions of liberalism and economic structuralism have given us different perspectives towards analysing the costs and benefits of international actions, particularly on the notion of free trade and international collaborations. Liberalists are generally pro-cooperation and pro-free trade. They argue that free trade leads to greater good for everyone, brings mutual gains to everyone, and levels everyone upwards. It also provided peace and stability through institutionalized agreements and democracies. However, economic structuralists are generally anti-free trade. They see free trade as a lead up to exploitation by the rich, and that it’s the interest of capitalists to maintain a certain level of poverty and unemployment. On international agreements, economic structuralists view that poor states have unequal bargaining power compared to the wealthy Core. Lastly, economic structuralists argue that peace can only be achieved if there are equal distributions of wealth. Otherwise, the inequality in economic status will eventually lead to conflicts and even war.

Given economic structuralism’s normative positions, it is arguable that international organisations may indeed be serving the purpose of the Core. Establishment such as the World Bank and IMF who preached to fight poverty have not produced significant results, while we see the world powers continue to flourish. In order words, the economic gaps between the rich and the poor have continued to widen. Therefore, given the ill-effects of international organisations and their regulations, economic structuralists find little relevance of their existence.

In conclusion, this essay illustrated that both the theories of liberalism and economic structuralism continue to be relevant today in explaining global affairs. The study and comprehension of these theories and other contemporary theories, thus, formed the foundation for one who seeks to understand global affairs and politics. Ultimately, it is the understanding of these fundamental assumptions and perspectives that will enable policy makers and state actors to be able to critically analyse situations, formulate options and prescribe policies to effectively achieve the political goals of the state.