Question

Given the collapse of the Berlin Wall in 1989, combined with the demise of the Soviet Union and its satellite states from 1991, critically evaluate to what degree Marxist perspectives provide insights in explaining contemporary IPE?

Answer 1

Let us throw light on this issues with the concept of historical materialism, given by karl marx, according to him the capitalist are the most important class and are capable of bringing the economic development, they make use of the land, capital and labour to make profits, they utilize this economic gains by investing this money on technological development, sooner as the technology advances production will increases, resulting in high econonic growth, but he says that as the technology advances takes place, labour requirements are decreased, again resulting in low wages/ incomes, which will lead to low aggregate demand in the economy, resulting in recession.

After the II nd WW, several european economies are facing the severe downturn, the zone of contention that is germany was divided into several zones with east part to be developed by the US and its historical Marshal Plans, while the west portion are under the control of the socialist russians, the regions that are developed or supported by the US are far economically developed because several capitalist measures and entrepreneurs were supported, while the russian regions are less developed due to protectionist policies. Thus this parity was the reason behind the collape of the berlin wall.

Similarly, low economic development in the satellite states, and the russian policies supporting nuclear, arms, space race resulted in demise of the soviet union.

Thus, in today's era, the concept of mixed economy plays a very important role in determining the overall economic development. A balance between the socialist and capitalist policies are required, because both the cornors are considered to be extremities. With the development of international institutions like WTO, IMF, the wave of liberalisation, globalisation are to be accepted and the protectionist, and other trade barriers are the hurdles in the development of world economy.