Question:

Realism and Liberalism differ in their take on power and how it functions in structuring the global political economy; focusing on international organizations and multinational corporations assess these differences.

Answer:

Title: Political economy

Both the realism and liberalism touch on the issue of international governance. In realism, the international governance system functions in a state of anarchy. In other words, at the international level, there is no legitimate authority for all nation-states to submit to (Gilpin, 2001). On the other hand, liberalism explains the conditions that are needed for the governments to operate liberally and for political liberty to be realized. The modern economic thinking is founded on liberalism, whereby the individual, as opposed to classes or groups, is assumed to be the basic social unit (Held, 2002).

Clearly, there are some fundamental differences between these two philosophies take on the issue of power and its influence on the structure of the global political economy. One of the areas where these differences can be clearly explained is in the case of international organizations and multinational corporations (Cutler, 2003). In realism, there is a state of anarchy in the operations of international organizations and multinational corporations. Realists assume that these institutions operate in pursuit of competing interests. The international level within which these interests are pursued is without a supreme authority, meaning that a state of anarchy prevails.

In contrast, liberalists argue that over the long term, there is always an unavoidable sense of harmony of interests among all the individuals who participate in the operations of international organizations and multinational corporations. They argue that this long-term harmony of interests is responsible for sociopolitical and economic stability. The idea of an underlying harmony was reinforced by Adam Smith when he coined the term ‘the invisible hand’ (Held, 2002). The idea here is that when each individual pursues his self interests, the automatic outcome in the end will be to the betterment of humankind. This line of thinking makes liberals to argue that in spite of numerous setbacks, the human race is making progress towards better prospects for the largest section of the global population.

References

Cutler, C. (2003) Private power and global authority: transnational merchant law in the global political economy, Cambridge: Cambridge University Press.

Gilpin, R. (2001) Global Political Economy: Understanding the International Economic Order, Princeton: Princeton University Press.

Held, D. (2002) Governing globalization: power, authority and global governance, Oxford: Blackwell Publishers.