KÜRESEL POLİTİK EKONOMİ - Deneme Sınavı - 2

Physiocratic economic doctrine consists of the followings: i. Societies were governed by natural law, which argues that human behaviour and human reasoning are governed by a set of rules inherent in human nature. ii. The basis of the social order lay in the economic order; iii. Agriculture was the supreme occupation not just because it was morally and politically superior to manufacture or commerce, but also it was much more productive than them; iv. Thus, those who engaged in agriculture were productive class while those who engaged in with non-agricultural activities were sterile classes (Meek, 2013, 20). The latter class is defined as sterile because it does not contribute to the creation of agricultural wealth; it only transforms it into consumer goods other than food or capital goods. The proprietary class consists of the king, the tithe holders, and the other landed proprietors.

Liberals basically argue that there is no need for the state to bring together buyer and seller, set prices and quantities, or spur investment and production. The ‘invisible hand’ will find the most effective balance in the market instead of any central authority. That is, markets govern production, consumption, and exchange on its own in a best effective and efficient way. These are orders that, to Adam Smith, spring to life through the operation of an Invisible Hand; to F.A. Hayek, they are spontaneous orders; and to Paul Krugman, they are self-organising systems. Yet, there is room for the state in overseeing the proper functioning of markets, defending property rights, and for the provision of goods and services that markets couldn’t produce, such as national defence.

Bullionism was the earliest phase of mercantilism, and it was derived from the experience of an acute shortage of gold and silver bullion in Europe in the fifteenth and the sixteenth centuries.

Mercantilism was properly regarded as a blend of economic fallacy and state creation of special privilege. As the earliest systemic understanding of IPE, mercantilism goes back to the period between the sixteenth to the nineteenth centuries. To understand mercantilism, we must look back to the eco-political environment of which the mercantilism was born out. Throughout that period mercantilism served both as a state policy and an economic theory. Mercantilists were also in cooperation with absolutist princes during an era of state-building out of the ashes of feudalism. Therefore, mercantilism was a strong nation-building policy as well as an economic policy. In this sense, it was not surprising to see that mercantilism first occurred in Britain and France, two of the successful absolutist states at that time.

Hegemonic Stability Theory (HST)

The stability of the International System requires a single dominant state to articulate and enforce the rules of interaction among the most important members of the system. According to HST If there is such a hegemon, who is willing to bear the costs and enforce the rules while retaining political, economic and military edge for the hegemony, the international system would be stable (stability means the absence of war among major powers).

Remember that in physiocracy profit (in physiocratic language net product) came from agriculture and therefore capital accumulation or the wealth of nations was relying upon effectiveness in capitalist agriculture production. Therefore in physiocracy, the other classes not occupied with agriculture were simply seen as unproductive one. Here in mercantilism, profit or the source of the capital accumulation came from merchandise trade. That is, buying cheap and selling expensive. So, the important question turned to be how to increase effectiveness in trade in order to increase profit. To this end, the mercantilists in cooperation with monarchs had done several things to create a favourable balance of trade by applying: i. Prioritized policies to increase export; ii. Prioritized policies to decrease import; iii. Created trade monopolies; iv. Heavily relied on state coercive powers to expand and protect economic interests.

The global market mechanism, which the U.S. was a pioneer, began to take shape after the Second World War. With the establishment of the IMF, a fixed exchange rate system based on the gold standard was implemented. Therefore, the correct option is A.

With the establishment of the IMF, a fixed exchange rate system based on the gold standard was implemented. According to the established financial system, the U.S. dollar was fixed to the gold and the other countries’ currencies were priced according to the dollar. Therefore, the correct option is B.

With the establishment of the IMF, a fixed exchange rate system based on the gold standard was implemented. According to the established financial system, the U.S. dollar was fixed to the gold and the other countries’ currencies were priced according to the dollar. The U.S. dollar has become a reserve currency worldwide. Therefore, the correct option is B.

With the Industrial Revolution, population growth has been experienced and with the mechanization in the agricultural sector, the same piece of land has been able to feed more people. The Industrial Revolution began in England in the second half of the 18th century. Therefore, the correct option is A.

With the Navigation Act, which was launched in 1651, the UK achieved a great success in declining the Dutch superiority in foreign trade and formed a strong trading network that challenged the Dutch trade network. The capitalist British state has succeeded in realizing the economic dynamics and social transformation that would lead to the industrial revolution by removing the barriers to the capitalist organization of agriculture and industry. Therefore, the correct option is D.

Manchester liberalism is the name of the movement that carried out by people who advocate the idea of free exchange and the principles of liberal economics in England in the nineteenth century. Therefore, the correct option is E.

The European Single Act is the treaty that has undergone radical changes in the Treaty of Rome, which officially initiated the European Union single market and European Political Cooperation. Therefore, the correct option is E.

In 2002, twelve member countries adopted a common currency of Euro. Since then, the Euro zone, composed of Euro-using countries, has reached nineteen countries. In 2004, the European Union saw the largest enlargement in its history with the official accession of ten new candidate countries, most of them former Eastern Bloc countries. Three years later, Bulgaria and Romania joined the Union and the last enlargement of the Union took place in 2013 with the participation of Croatia. Therefore, the correct option is C.

In the second half of the 19th century in Japan, the westernization initiated by the Emperor Mutsuhito is called The Meiji Restoration (1868-1912). Therefore, the correct option is C.

IPE is a discipline that studies the way in which global economy and politics interacts and the result of that interactions. That is, “IPE studies the political battle between the winners and losers of global economic exchange”.

Economics is about the use of scarce resources for unlimited desires while politics
is about order and public goods. These two, -state and market or economy and politics-, are distinct field of studies and they require both distinct approaches and theories.

IPE can be classified into three sub-periods, under which general approaches to the discipline shifted fundamentally:

i. classical period;
ii. the long negligence period;
iii. the rise of IPE.

In the classical period, economics and politics were not divided at all as separate disciplines.