Int Econ National Security

3 Credits · Level: Graduate

The study of interntional economics has always been been a lively and important part of economics. Many of the most important insights into modern into the subject first emerged in the eighteenth and nineteenth centuries. They evolved in sharp debates over the impact of trade and monetary policy. Yet the importance of international economics has never been more important than it is today.Through the international trade of goods and services and the international flow of currencies, the economies of the world’s countries have never been more tied to each other. At the same time, the world’s economy has never been more turbulent than it is today. Keeping up with the shifting international emvironement has become a central concern of national economic policy makers and statesmen around the world as they contemplate the needs of national security. The formal study of economics can correctly be said to have begun with the writings of Adam Smith as an outgrowth of the Scotish Enlightment of the 1700s. With the publication of his major work “An Inquiry into the Nature and Causes of the Wealth of Nations” in 1776 it was immediately recognized as a major work and has influenced public policy ever since. But its clear and direct connection with national security, coming as it did in the early years of the Industrial Revolution has been unmistakable. It was quoted and debated by innumerable writers and thinkers as disparate as Alexander Hamilton and Karl Marx. Since then, the basic concepts have been proven time and again – though ironically the debate continues to roll on. Over the last three centuries it has become abundently clear, that the ebbs and flows of ecomomic activity have a direct and across the board impact on national security budgets everywhere. The Pentagon frequently speaks about the concept of DIME, the four elements of national security – diplomacy, intelligence, military and economics. While they are all important and interrelated, it is clear that the funding of the first three are directly related to the health of a nation’s economy. In our own lifetimes we have seen this reality dramtically played out. The collapse of the Soviet Union economy ended the Cold War and rendered the former states of that union as second and third tier powers. At the sametime, the sudden and wholly unexpected rise of China has dramatically changed the world’s economic, political and military landscape. In many ways, China’s rise is a restoration of the historic role that it has played for thousands of years. But it also underscores the importance of economics in the balance of military and political power. At the height of its economic standing in 1800, China was the largest economy in the world. Over the next two hundred years China’s economy collapsed to below that of Sudan and with it, became only a bit player in Asian and global affairs. As such, it was easily overrun by the colonial powers of Europe and Japan. China’s economic resurgance since the 1980s has once again catapulted China into the dominant political and military power in Asia, easily eclipsing Japan, which for one hundred and fifty years held that distinction. By the same token, it was the stagnation of Japan’s economy that allowed China to race past it. A related issue is also important to note. Both Japan and China were at one time inward looking countries that eschewed foreign contact and trade. While Japan burst out of its insularity and embrased modernity, new ideas and trade relations, China withdrew all the more and allowed its economy to weaken further. Japan prospered and grew in power, while China became an easy mark for the colonial ambitions of both the Western powers and Japan itself. It was only with China’s newfound openness under Deng Xiaoping that China reversed its two-hundred-year decline. The lesson could not be more clear: countries that are open to the world prosper and grow in importance while those that close themselves off to the rest of the world are doomed to regression. The importance of these lessons is underscored by the resurgence of Asia relative to the West which has enjoyed a two-hundred-year domination of the international order. As Europe’s economies shrink in relative importance, the center of power in the world is clearly shifting to the east. The aim of this course is to give our students an introduction to the field of international economics as it relates to national power and security which are clearly tightly correlated. It is intended for non-economists. With this in mind, it is our hope to allow our students the become informed consumers of economic thinking to dispel many of the falatious arguments that are often presented in international fora. It is important to note that while economics has become extremely mathematical in the past fifty years, THIS COURSE DOES NOT require a background in mathematics. The book also makes extensive use of graphs. While students are encouraged to delve into them, we will not require a full mastery of those tools. One point warrants an early mention. As with all disciplines, international economics carries with it its own distinct vocabulary. It is imperative that students develop an easy familiarity with that vocabulary. To assist everyone with that endeavor, each class will end with a list of the most important vocabulary words covered in the lesson.