Introduction
The state and its interaction with the international environment are defined by a certain set of actions and decisions which shape the international relations of the state with rest of the stakeholders in the international landscape. In terms of the international business, the multinational corporate often lands in a situation where there has to be a tradeoff between its adherence to the state’s policies and the personal interests. There are specific theories which ascertain how the state and business should conduct themselves with respect to issues of distribution of power, interests, and sustainability in the international relations.
This essay aims at analyzing the possible impact of the interference of political (democratic) decision-making into economic systems of international relations where multinational companies operate. Various theories of international relations are used to understand how the state and the multinationals should behave in this context.
The theory of classic realism explains the three aspects through which the state can conduct itself in the international business environment (Dooley and Patten 255). Firstly, the state acts as an independent and dominant entity that tends manages the international affairs by taking those decisions which the other actors in the international system (like the multinational corporations) cannot. Secondly, the states are supposed to behave like rational individuals who have a judgmental rationale behind all their actions. Thirdly, the international markets are considered to be anarchic and chaotic in nature which can be governed only by the states.
The application of this theory can be testified in the case of Wal-Mart’s overseas expansion under the prime banner of American patriotism although it is the largest employer in this world and has a huge presence in other countries as well.
Structural realism: The control of interest and survival for the international business
The theory of structural realism (aka neo-realism) is an ameliorated version of the classic realism and it defines the states concern over adopting those strategies that mandate its survival and increase its sustainability by maximizing its own interests (Dooley and Patten 259). Thus, this theory guides the state to formulate its regulatory control over the actions and activities of its multinational corporations in the international systems.
The actual implementation of this theory is evident in the global expansion of Wal-Mart, an American multinational, seeking its own format of employment and business expansion to mitigate its risks of international expansion (hedging the risk models across national economies).
Liberalism: Avoiding conflicts by safeguarding the essence of individual freedom
Liberalism is another crucial theory of international relations that presents a relatively lenient model of the state’s stand towards maximizing its interests and sustainability in the international system by ensuring the sanctity of the freedom of other states (Dooley and Patten 265). This theory rectifies the loopholes of the structural realism theory by including the rationality of ensuring the individual freedom for all the states in the international environment while keeping their efforts channelized towards the maximization of their interests.
The system of the political economy is an ideal example for this case because the inclusion of democratic decision making in the international business decisions often causes the imbalance of power and results in severe economic inequalities. This ultimately causes the economic imbalance for power and policy in the international systems for multinational corporations.
Radicalism: Changing the social structure of the dependent states to gain an economic edge
The radical theory of international relations is actually a blend of different approaches which aim at reforming the social systems and values to maximize the individual interests (Dooley and Patten 271). The Marxism theory involves the equal distribution of power and resources from the ruling elite class to the peasants. Similarly, the Leninism is a radical theory that calls for a violent revolution against the capitalist society to develop a communist approach towards the distribution of wealth.
Dependency theory turned out to be the fundamental consideration in both of the above-stated radical theories. The dependency theory considers that global economic growth can be attained by exploitation of the third world countries (poor and undeveloped nations) by the first world countries (Dooley and Patten 275). This theory gave rise to the extremely exploiting aspect of the international relations theories like Imperialism and Colonialism.
This theory of dependency can be ratified in the exploitation of the developing markets by Wal-Mart. The Wal-Mart’s strategy of using the low-wage economies as production hubs and using them for boosting its revenues by selling cheap goods in the USA is almost an act of exploitation for these countries.
Constructivism: Developing values and norms to ensure economic progress for all
The theory of constructivism is perhaps the most balanced approach towards building international relations by targeting a win-win strategy for all the actors in the international system(Dooley and Patten 282). This theory calls for the focused efforts of the state towards adopting a standard ethical code-of-conduct that favors the historical development of those values and customs that favor economic and political growth for all the states.
The example of above practice can be explained by the notion that democratic decision making of the state and multinational operations of the corporations should be kept separate. Rather, the development of economic progress and political economy of the multinational corporations should be enabled by marketplace and consumers.
Conclusion
The essay has envisaged how the different theories of international relations affect the state and all other actors in the international system. These relations between the multinationals and the state decide the future of the political economy and the consequent interactions between the democratic decisions for business and political relations. Hence, a balanced approach like Constructivism can be extremely effective in shaping the international system towards ensuring the sustainability of the state and its multinational corporations.
Works Cited
Dooley, Kevin and Patten,Joseph."Why Politics Matters: An Introduction to Political Science". Cengage Learning, Stamford, USA,2015. Print.
