Political Economy can help us understand the most intensely debated topics of today

An interview with Dawid Walentek by Baturalp Artar

The ongoing COVID-19 pandemic has demonstrated yet again how deeply intertwined the fields of politics and economics are, and studying these two fields through the lens of political economy illuminates important and far-reaching processes at work in the world today. Political economy can offer insights and trigger inquiries into the dynamics of states and markets, voters and firms, and also touches on topics such as income inequality, the elusive idea of ‘growth’, Brexit, and bilateral relations between the United States and China.

We caught up with Dr. Dawid Walentek, Academic Director of our two-week online summer programme on Political Economy. Dawid recently obtained his doctorate from the University of Amsterdam, where he focused on the rise and success of economic sanctions, and is now a Postdoctoral Researcher at the University of Warsaw. We asked him about his personal background and motivations, and Dawid guided us into the heart of the field of political economy, explaining how it sheds light on some of the most intensely debated topics of today.

'We live in this framework of a liberal world order, wherein politics and economics are supposed to flow in spiraling streams, but there are clear cross-overs'

When I ask Dawid about his background, he tells me he didn't always intend to become an academic. Dawid: ‘I did a joint Bachelor’s in International Relations and Economics. While completing my degree, I did an internship in Pretoria, South Africa, and another in Buenos Aires, Argentina where I worked at the economic section of the Polish embassy. After completing my Bachelor's degree, I moved to Amsterdam to pursue a Master’s in economics at the University of Amsterdam. That's when I met my girlfriend, who is now my wife, and she wasn’t so keen about moving abroad. That is why we decided to stay in the Netherlands, and I ended up working as a diplomat in The Hague for the Polish ministry.’

Working in the field of trade and investment, Dawid mostly focused on bilateral trade between the Netherlands and Poland. ‘I was considering whether to stay in the Netherlands or move back to Poland when the idea of doing a PhD first came to my mind. One day I went to the office and saw that we got a letter from the ministry listing the products sanctioned by Russia, in retaliation to the sanctions that had recently been imposed by the EU. As those products were banned from the Russian market, we had to find another market for them that same day, and this truly was the final deadline. It was a crazy feeling: all of a sudden you have to do whatever you can to find a market for products worth billions of euros. I mean, tractor parts will be okay for a while, but think of perishable goods…’

‘On the one hand we are in this framework of a liberal world order, wherein politics and economics are supposed to flow in spiraling streams. Yet, at the same time, there are these cross-overs when a trade negotiations don’t go through or when sanctions are imposed: these are done with clearly political motivations.’

‘This crossing of boundaries starts moving a lot of elements, institutional elements come into play (like the ministry) to find and help businesses, solving the information asymmetry and coordination problems. Sanctions in themselves are an interesting phenomenon: they allow researchers to pick up a lot of interesting dynamics which bring politics and economics together. So this is why I started exploring this topic, and somewhere along the way, I realized I truly enjoyed academic research, and decided this is what I have to do.’

'We live in fascinating times from the perspective of an economist and social scientist'

The entanglement of politics and economics can tell us a lot about significant current events, such as Brexit, or the transition period after the U.S. Presidential elections. ‘We live in fascinating times from the perspective of an economist and social scientist: it’s our task to think about what’s going to happen to the world order we live in. We don’t know to what extent the United States will go on as if the last four years never happened. It’s fascinating because the so-called liberal order is created and designed largely by the U.S.: the free trade institutions, economic systems, the general multilateral institutional system, and we can include even more.’

‘The presidency of Trump undermined many of those elements under the assumption that it is better to do bilateral deals with a business-like approach, instead of through international multilateral institutions. The question now is how resilient those institutions are. For example, can you still have hope in World Trade Organization (WTO), which became substantially undermined in Trump-era? But it is also about how much international trust the United States itself lost.’

If the United States turn towards mainly bilateral relations, would or can the EU be the prime facilitator behind currently-existing international multilateral institutions? ‘I don’t think the European Union can play the same role the United States can. This is simply because it does not have the same military capacity, the same strong and resilient currency, and the same comparably simpler decision-making body. All you need is one veto to deny a sanction in the EU and the interests of the member states differ a lot from each other. To give an example, Hungary has very close ties with the Russian President Vladimir Putin, which makes it harder for the EU to play a role like the United States. Similar arguments can be provided for Cyprus as well.’

‘Seven hundred million consumers following a single standard and set of restrictions, while also being in a lively and entrepreneurial creative space is extraordinary. I would not say the European Union is completely irrelevant, but it is not able to use its power as strategically as the United States. My intuition is that, at least in the short term, we will fall back to the way things used to be. Purely because of the still present role of the U.S. in international organizations and their powerful academia and culture of diplomacy, the United States can claim back their position with less damage than expected.’

While Dawid thinks that we are moving towards a more multi-polar world with more competition for leadership roles in the global stage, the population dynamics behind this are often overlooked: ‘It’s not only a matter of the United States, but also Ethiopia, Nigeria and Indonesia - countries which are going to become more prominent on the political stage in the near future. They have enormous markets, and are enormous intelligence powerhouses.’

‘We discuss these and other topics in the Political Economy summer course and look at them from a multidisciplinary perspective. When writing the syllabus, I added Kimberly Clausing’s article “A Progressive Case Against Protectionism” as one of the readings. She comes from a neoclassical economics background, but makes an excellent case for why free trade is best for low-income earners. How can we make sure that those left behind are still going to benefit from economic growth, while also sticking to the core traditional agreements for free trade?’

'It is important for students to learn how to communicate information and to have a broad picture of the world we live in and the fundamental elements which support it'

I ask Dawid if he could give some examples about how this multidisciplinarity plays out in the classroom. ‘Something exciting that this course will offer is that you can choose your own path while understanding the deeper reasoning and motivation behind why politically-influential people say different things.’

‘We will also have a large variety of debates and pitch different angles. A beautiful thing about summer courses is that they bring together people from all across the world, maybe even more so now that they are online. You get to talk about the role of the United States with participants from Poland, South Korea, Australia and also people from the United States themselves and discuss these issues from different enriching angles.’

According to Dawid, being able to communicate across social sciences disciplines is crucial and often lacking. ‘Communicating only in your own discipline makes it difficult for policymakers as well. They struggle to understand why we (social scientists specializing in different fields) are in conflict with each other from time to time. Therefore it is important for students to learn how to communicate information and to have a broad picture of the kind of world we live in and the fundamental elements which support it. Listening to guest speakers and reading the core papers in the course will help students to better understand what is going on around the world.’

Focusing on the fundamental structures at play in our hyperconnected world sheds light on things that we otherwise might not consider. Take for instance the variety within democracies alone. ‘When someone tells us a country is becoming less or more democratic, we immediately assume more democratic will be better than less democratic. What are the ideas behind this reasoning? We know that democracies don’t go to war with one another, but different perspectives provide different answers to this question.’

‘So, just because democracies are less likely to get into tanks and shoot at each other, doesn’t mean this political model produces less conflict in general. Instead, it gestures the fact that democracies encourage ways of resolving existing conflicts other than militarism alone. If you think about it deeply, democracies have a lot of reasons to get into conflict. This has actually been the driving puzzle of my dissertation. Democracies represent the majority opinion of people, thus there are a lot of elements entering the equation. Take concerns about human rights for example: an authoritarian leader is not really known to be concerned about them.’

‘And recently the environment is another side of this coin. In the past few years, a lot of discussion and debates have centered on the Amazon rainforests and whether to sanction the Brazilian president or not. The goal was to put Brazil under economic pressure and push it to handle Amazon fires better. If implemented, this could have caused more tensions between the sanctioned parties and those that imposed the sanctions.’

‘What we definitely observe is a major increase in the use of economic sanctions since the 1990s. This is parallel with the rise of democracy around the world. And as more countries become democracies, already-existing democracies also improve themselves. There is a width and depth to it. Therefore, the argument I put forward is that a number of incentives and constraints which are related to the form and function of a democracy are indeed probable causes for more economic conflict. Maybe even more conflict in general, but I can’t know that for sure.’

‘The counterintuitive part of this story is that more democracy definitely means less war, but it does not mean less economic pressure or conflict in general. As a matter of fact, the evidence points to the opposite. Sanctions are economically painful not only for the ‘bad guys’ but also for people, the citizens of both sides.’

The Political Economy summer programme will cover a wide variety of topics. ‘We will discuss more than  just trade or international relations and include topics like tax evasion and income inequality as well. We will welcome guest speakers, such as data scientist Javier Garcia-Bernardo, who has done leading work in the field. Economic growth in a broader sense will also be our concern, not only focusing on the economic part of the debate but also the results and implications that growth implies.’

The course will include a mix of classic debates within the field while paying attention to some of the more understated developments as well: ‘In the last 20-25 years we have seen major changes in the dynamics of the Central Europe. Poland, The Czech Republic, Slovakia, and Hungary trade with Germany more than China does, which is fascinating. People often overlook the growth in the region. On the other hand, there is Ukraine where the GDP per capita hardly moved in the last decades.’

If you want to learn more about the topic of EU sanctions on Russia, read this article, co-authored by Dawid. Dawid also recommends this article by guest lecturer Javier Garcia-Barnardo on Offshore Financial Centers and the evasion of corporate responsibility and taxes. The article by Kimberly Clausing Dawid is referring to, The Progressive Case Against Protectionism, can be found here.

More information about the Political Economy programme and how to apply can be found here. Or take a look at our full list of summer schools.