Chapter 10: States and Markets in the World Economy


Economic liberalism
Adam Smith inspired this hands-off school of political economy. The government will take a minimalist role in this capitalist economy. The invisible hand of the marketplace will result in the best economic outcome for society as a whole. Economic liberalists do not believe economics produces winners and losers, rather, everyone will win as gains are absolute, even if some win more than others. Economic liberalists generally desire economic integration into an open world economy.


Your staff sends a memo to the President detailing your decision, highlighting your desire to pursue an open market economy. The memo outlines your plans to allow for domestic competition within industries using a minimalist state approach. The President responds and asks: what will you do with regards to global economic integration in the short term?

What do you do now?

Join international institutionsThis approach entails joining the World Trade Organization, the International Monetary Fund, the United Nations, and regional free-trade organizations. These organizations will integrate your domestic industries into the broader world economy for better or worse. Joining these organizations will also promote linkages with other capitalist countries and potential allies.
Do not join international institutionsFor the time being, Chechen industries will be allowed to develop without exposure to global economic competition (and global resources/firm alliances). As a result, Chechnya will not develop closer ties with other capitalist countries because they desire an open world economy.