Welcome !

Hello Guys!

We are students from 02PC3 , International Relations Faculty in Bina Nusantara University. If you want to know us more just click on the squad section.

This blog is made because one of the reason is for our assignment in Introductory in Trade and International Business' subject. But, this blog also help us to express our ideas about Political Economy.

We think that writing is the main ability which us as a International Relations' student so this blog is very useful to practice our writing skill. These topics in here is based on our subject in class. We share our opinion about some issues so it will be different from each of us because it is according to our self point of view.

Enjoy reading . :D

p.s : At the end of this course we have a task to make a documentary film about a subject. And we got ACFTA, simply click on the Final Project an you'll find the journey of us in the making of the film. :3

The Bretton Woods System

Great Depression which occurred after the collapse of Wall Street in U.S. made every country suffered because of the decline in the economy, thus poor people increase and the society become broke down. This bad situation encouraged United Nations (UN) to do a thing that could bring back a welfare society. So, a conference in Bretton Woods was held in 1944 after World War II. U.S and her 44 alliances, Britain and Argentina were agreed to establish an international cooperation that could ensure a peaceful welfare world. They will provide global institutions which will regulate the free flow of the capital and to stabilize the economic in the world.

There are 3 institutions was formed. Firstly, International Monetary Fund (IMF) who will help a country to pay his debt by giving loans. IMF also regulates the monetary system. In 1971, U.S dollar became a based in the international monetary system, whereby 35 U.S. dollar equal with one ounce of gold. Although IMF was made to regulate the monetary system but each country can made their policies by themselves as long as they restrict the short-term movement of capital across borders.

Secondly, General Agreement on Tariffs and Trade (GATT) a forum which is known as World Trade Organization (WTO) nowadays who will manage the free trade among countries. GATT reduce tariff and they also promised not to treat differently among stated which is also signed the agreement. This forum discussed about the bilateral agreement and the decrement of trade barriers. GATT success made the increment of export and the production of export goods.

Lastly, International Bank for Reconstruction and Development (IBRD) or World Bank which is better known now who will help the economy reconstruction and the establishment of the infrastructure in a country. It would made foreign investor become interest to invest in other country. A foreign direct investment which is done by built factories in foreign country especially in the developing countries. Rather than trade they prefer to invest because it enlarge their market and more profitable. Unfortunately, the developed country industries which have better technology and management close local company indirectly because they could produce a cheaper and better quality product and the local market will prefer the products from the foreign firms.

Those three institutions had made a better economic in the world. But, this system also could make a threat to national security because the over-dependently could occur and made a country easier to be attacked by others. These institutions also were accused because of their regulations only fulfill the minority developed countries which is profitable for them. So, I think that a country should try to build up their economy not just borrow the money from IMF to pay his debts. But, use that money to develop his infrastructure and help protect their local company, so it could increase national income and pay the debts. It’s better than to rob Peter to pay Paul.

Source: Frieden, J. A. (2006). The Bretton Woods System in Action. In Global  Capitalism: Its Fall and Rise in the Twentieth Century (pp. 278-300). New York: W. W. Norton & Company.

Gisela Bianca - 1701306070

Could we still trade?

Adam Smith said that, because of the absolute advantage, a country trade with the other to fulfill their necessity with a cheaper cost. Suppose that Indonesia could produce twice in rice than the Thailand but Indonesia only a half times in wheat than the Thailand could produce. So, Indonesia will trade with Thailand in wheat because they spend less cost to buy the goods that has to produce it. But, what if Indonesia could produce rice and wheat with less cost than to trade with Thailand? Could trade still exist?

Yes, of course we could still trade. David Ricardo said that comparative advantage could make a trade possible between two countries although one of them is more productive of both goods.

	Rice	Wheat
Indonesia	50	40
Thailand	20	30

Imagine that Indonesia could produce more both in rice and wheat than Thailand. Based on Smith’s theory, it is impossible to do the trade. But, Ricardo argued that even if Indonesia could produce more but Indonesia will have greater advantage in rice than the wheat. Same with Thailand that she will have fewer disadvantages in producing wheat than rice.

This case made up a conclusion that the country that have an absolute advantage in both product should specialize in one of the most productive goods - in this case rice in Indonesia - and trade with the other who specialize in one of the fewest loss goods – wheat in Thailand.

Source: http://internationalecon.com/Trade/Tch40/T40-0.php

Gisela Bianca - 1701306070

Understanding Capitalism

According to Merriam Webster, the definition of capitalism is a way of organizing an economy so that the things that are used to make and transport products (such as land, oil, factories, ships, etc.) are owned by individual people and companies rather than by the government. It clearly shows us that capitalism is the opposite of marxism a.k.a communism. In the capitalism system, individual role is really important. The government doesn’t control every aspect of the state's affair, they're observing the interests of each classes and how they work, they create a stable system of law that applies to all capitalists, a national currency and customs system. 

Capitalism nowadays is the social system that is used by almost all countries in the world. There are classes in capitalism in which the majority of them have to work to earn the wage, we called it working class. They have to produce stuff and the capitalist class is going to sell them to make profit. Capitalist class is living off profit the working class made.  We can say that those two classes are exists and mutual, it’s a reflection of the society we live in nowadays.

The main interest of capitalist class is to make profit. They intend to make themselves as rich as they could, because it’s all about individual wealth. But we couldn’t mistake it as slavery because the working class is getting a proper wage and after all, capitalism makes man become virtuous, appreciates their rights as a man, and it could bring many people out of poverty.

Irena Natasya-1701299185

Credit: http://www.worldsocialism.org/articles/what_is_capitalism.php

           : http://capitalismis.com/

        

Capitalism and Crisis

Capitalism created to help companies promote the company. In addition, this system also provides the opportunity for the public to take part in the company, joined the company, and take profit from it. That opportunity can be accomplished by purchasing shares of company. Capitalism is a system of production and distribution of goods and services in return for what is paid by the consumer.

Initially, this system is running smoothly. But over time, the capitalism is the way for the rich to add his wealth. Since then the country could be used as a business instrument.

Capitalism can eventually lead to a global crisis, the existence of unstable financial and monetary. Economic development sustained by the growth of the real sector. Worse than that, this can affect a deeper crisis, which is the fall in wages and more unemployment. So in the end, lead to chaos as banks collapse, the government uses public funds to bailout banks, people lose jobs, social services budget get cut, the rising prices of food and groceries. Because of this, the capitalist system does not make the world economy safe and puts the world in a dangerous position and guard against crises that may occur anytime. 

Susi Wansaga - 1701315251

Are we really "FREE" ?

In 1945, Bung Karno said that we have our independent. But, is that a real independence now? I don’t think so. As a peripheral state like Immanuel Wallerstein stated in his Modern World System Theory, we are dominated by the core states. They buy our raw material as cheap as possible and then process it into commodities that we need and sell to us in an expensive price.(Balaam & Dillman, 2014) Do you realize that, that is the actual colonization.

But maybe, we couldn’t run away from the reality that we need them because we don’t have any sufficient technology to process all that raw material. Why we as the peripheral states feel being exploited by them while we still need help from the superpower states? Yes, we still need them but I think, there are many people out there who enrich themselves so we are exploited not just by the core states but also buy our people too.

There is also another reason, why we couldn’t avoid them. We live in liberalism world now which we need to depend in others because we can’t fulfill our needs by ourselves. Besides, core states are fewer than the peripheral. So, we don’t have any flexibility in choosing because when we don’t want to give our resources, they could choose other states.

Besides our raw material, do you realize that our culture also being exploited now? Tell me, how many of your friends know the name of traditional house or clothes? All we know is LV, Guess, Esprit and others branded things. Do you know that Nike’s shoes are made in Indonesian with cheap budget and how much do you spend your money just to buy those shoes. Many of Indonesian products also have high quality why don’t we try to buy that? Do you still wanna be a prisoner ?  

Source : Balaam, D. N., & Dillman, B. (2014). Wealth and Power: The Mercantilist Perspective. In Introduction to International Political Economy (pp. 120-122). Harlow: Pearson Education Limited.

Gisela Bianca - 1701306070

OELs or HILs ?

The International Political Economic is influenced by those groups of people. Orthodox Economic Liberals (OELs) group emphasize that market doesn’t need states and Heterodox Interventionist Liberals (HILs) group prefer state intervention in the market. These two groups have their own proposal which have the advantages and also the flaws. Indonesia as a developing country, I think that HILs policy will fit best with our situation today.

As Balaam said, OELs is a group of people who cling to economic liberal ideas, values, and policy prescription. They support that an open and free market could determine socio-political outcomes. OELs suggest that the government support on banks, infrastructure project and social welfare programs should be limited. They wish that state doesn’t regulate of many parts of the economy. They also offer an idea to stimulate the economic growth, the government should cut taxes.

Increasing government spending as long as it creates more jobs is better than just worrying about the inflation. Developing countries need new technology and many kind of way to higher their standard of living. Therefore, the government should invest more in, such as infrastructure, education, healthcare, etc. Banks also need government help to regulate about the derivatives, deposit requirement, pay and bonuses. HILs agree with the globalization but they prefer to manage it than foster it without purposes. (Ballam & Dillman, 2014)

Because of those proposoal from each group, I think Indonesia will prefer the HILs because HILs give more advantages to us. Such as, they suggest that developed country should help developing country. Even Indonesia has been one of the developing country that has a good economic condition but we still need help from HILs to assist us in adopting free market because in here there are many domestic company which is defeated by the international product. So, what do you think? Do you prefer HILs also like I do?

Gisela Bianca - 1701306070

Source : Ballam, D. N., & Dillman, B. (2014). "Laissez-Faire": The Economic Liberal Perspective. In D. N. Ballam, & B. Dillman, Introduction to International Political Economy (pp. 73-76). Harlow: Pearson Education Limited.