Rogowski

Ronald Rogowski is a political economic theorist that emphasizes the primacy of domestic economic interests as far as explaining the international political economy. His argument draws on classical theorist Adam Smith who believed that interest-based factions explained foreign policy. His basic idea was that markets ruled kings, and it didnt' really matter so much who was on the throne. According to Smith nations went to war not because of their type of leadership, or their religion but due to the pressure from merchants and manufacturers. The producers matter the most. Consumers are too large to organize. Rogowski's argument goes hand in hand with Smith's. Rogowski's Stolper-Samuelson theorem argues that the foreign economic policy of states determines the international landscape and that each states foreign policy is shaped by domestic interest groups, which are divided into two groups: capital and labor. Capital is paying people to use the means and modes of production and Labor is people using the means and modes of production to produce things. Liberalization benefits the abundant factor, so if you are trying to explain the level of integration in the international economy, you need to look at which interest groups are in power in the prominent nation states. If the relatively abundant factors are determining the state's economic policy then the world should be seeing relatively open, free markets. Competition is more rife between factors than it is between particular industries. Rogowski makes the assumption that a person's economic interests determine their political preferences.

Rogowski’s theory, however, is not without its flaws. Rogowski bases his theory off of three assumptions regarding the domestic political process: that the beneficiaries of an increase in trade will try to continue and accelerate the ease and safety of trade; that the beneficiaries of trade, through their increased wealth, will be able to have greater influence in the political sphere; and that as the wealth and political power of a minority group increases, that minority group will be able to gain enough power to push the majority out of the political arena and thus create a vicious circle in which the wealthy minority manipulates policy to its favor to increase its wealth and so on. However, while this assumption holds true in some political regimes, it certainly cannot be considered to be ubiquitous. Democracies and Republics are specifically designed to ensure that the privileged few are unable to take advantage of the underprivileged. This can be seen in that many democracies/republics, such as the United States, Brazil, and much of Europe, have large disparities of wealth yet are not controlled by the interests of the wealthy.

Another flaw of Rogowski's theory is that it neglects to take a key assumption made in the Stolper-Samuelson Theorem into account. The assumption is factor mobility: that factors of production are perfectly mobile between different sectors of an economy. Incidentally, this assumption imposes considerable limitation on the scope of validity of the theorem and, by extension, of Rogowski’s predictions about domestic political cleavages. Notwithstanding such importance, Rogowski neglects to mention the factor mobility assumption in the first four sections of the essay where he lays out his theoretical models and explains his predictions. Perhaps he thinks the S-S Theorem’s reputation of being “generally...almost universally embraced” allows him to dispense with a careful defence of its validity. Nonetheless, reputation is never sufficient evidence of validity; an unjustified assumption creates a logical gap in argument and is open to attack.

Why is factor mobility so essential to the argument? Take as an example the factor endowment type contained in the lower left cell. Suppose the country becomes more exposed to trade. This increases the relative price of good, say corn, that intensively employs the country’s relatively abundant factor of production, land. The result is an expansion of the production of these goods, followed by an excess demand for land relative to capital and labor, which in turn gives rise to higher relative return to capital. Here is where the assumption comes in. If factors are assumed to be immobile, or specific to the industry that employs it, then only the land owners employed in the corn industry derive absolute benefit from liberalization, while land owners in the other industries neither gain nor lose from the change in trade. In the absence of concrete economic gains, it is far from certain that these land owners have sufficient incentive to unite with their counterparts in the corn industry to pursue the same kind of political aggrandizement that the latter are willing to undertake even at the risk of stirring up a collective political adversary encompassing the entire urban sector. In other words, factor specificity casts serious doubt on Rogowski’s prediction of a urban-rural conflict. A very different scenario is likely to materializes if factors are assumed to be mobile between industries, for the higher return to capital is experienced by all land owners in the society irrespective of the industries in which they are employed. The collective commercial gains from increased trade openness are possibly conducive to unanimity of political preferences throughout the land category, raising the likelihood of urban-rural conflict. Thus, only under factor mobility condition are Rogowski’s predictions justifiable.