The Ideological Basis of the World Economy

The fifth aspect of change that is significant for our consideration of IPE is the ideological basis of inter­national/global economic relations. The ending of the cold war and the internal collapse of most of the centrally planned economies has led to the 'tri­umph' and spread of one form of political-social-economic organization: modern capitalism. Capitalism has a number of different forms, depending on the cultural and political balance within particular national economies, but, since 1989 at least, has 'been the only game in town' as far as the arrangement of economic and political life are concerned. If we move away from the tri­umphalism of the immediate post-1989 phase, what we see is that the ideological basis of capital­ism has been further reinforced and legitimated. This base is 'economic liberalism' (see Ch. 8) and it has been the fundamental ideology of the interna­tional economy since the reconstruction of the international economic order at Bretton Woods in 1944.

Liberalism separates 'economic' life from 'pol­itics' and privileges 'economies', based on individ­ual market rationality, above all other forms of social organization. 'Neo-liberalism' has now taken this to the level of the international system in the argument for unfettered global markets and a con­sumer-based individualist ethic which transcends national communities. It represents the triumph of the interests of capital over labour at this point of world history. This view has become the new 'com­mon sense', the unconscious basis from which judgement is made and the basis of institutional­ized power in the world economy. It forms the (often unspoken) framework for international eco­nomic policy, although the precise questions of 'who benefits' create much political dispute (see Case Study 6, Box 11.8). What is often not ques­tioned is the neo-liberal framework itself—its assumptions, concepts, and institutions.

Neo-liberalism is not a neutral description which generates a prescription for action—it is an ideo­logy which serves particular interests and groups of people—and should be evaluated as such. As an ideology it serves to help determine 'who gets what' in the world economy, by legitimating certain structures, processes, and behaviour, by reproduc­ing a certain distribution of power and by laying out a framework for action based on a particular intersubjective view of the world (see Case Study 2, Box 11.3). Hence, neo-liberalism should be seen as part of the political process of globalization, rather than as an 'academic theory' purporting to offer a form of neutral, objective knowledge.

Key Points

• The processes of 'globalization' have been uneven, and most of the poor countries are now effectively left out of the global political econ­omy, whilst in the Triad regions the process has quickened and deepened—this has created a new and different structure of international politics.

• Vast increases in global capital flows have pro­duced a 'symbol' economy separated from the 'real' economy, and, again this has largely bypassed the poorest countries.

• International production has become the most dynamic aspect of world production and trade and has changed the structure of the IPE.

• 'Domestic' economic activity is now 'interna­tional'—almost impossible to think of a 'domes­tic' economic activity that is not, in some way, 'international'...

• 'Neo-liberalism' provides the ideological basis for globalization and has become the unquestioned 'common sense' of the world economy.