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This chapter examines the three most important classical theories within the field of International Political Economy (IPE): mercantilism, economic liberalism, and neo-Marxism. It considers the relationship between politics and economics, and between states and markets in world affairs, that IR has to be able to grasp. It suggests that IPE is about wealth, poverty, and power, about who gets what in the international economic and political system. The outlook of mercantilism has much in common with realism, while economic liberalism is an addition to liberalism. Mercantilism and economic liberalism thus represent views on IPE that are basically realist and liberal. The chapter concludes with a discussion about the original theoretical position of Marxism and how this has inspired neo-Marxist IPE theories.

This chapter examines four major issues in International Political Economy (IPE). The first concerns power and the relationship between politics and economics, and more specifically whether politics is in charge of economics or whether it is the other way around. The second issue deals with development and underdevelopment in developing countries. The third is about the nature and extent of economic globalization, and currently takes places in a context of increasing inequality between and inside countries. The fourth and final issue concerns how to study the real world from an IPE perspective and it pits the hard science American School against the more qualitative and normative British School.