The Changing International Order and the International Economic System — UPSC PSIR Optional Notes

1. Core Ideas and Definitions

Superpower: a state able to project decisive power across the whole globe; the term was popularised by William T. R. Fox in The Super-Powers (1944), who named the US, the USSR and Britain.

Britain soon dropped out, exhausted by war and losing its empire, leaving two superpowers that controlled most of the world's military strength by the early 1950s.

Bipolarity: a structure of the international system in which two states hold most of the power and others cluster around them.

Strategic bipolarity: two military blocs, NATO (1949) led by the US and the Warsaw Pact (1955) led by the USSR, facing each other across a divided Europe.

Ideological bipolarity: a clash of two universal ideas, liberal democracy with market capitalism against one-party communism with a planned economy, each claiming to show the future of humanity.

Cold War: a state of hostility short of direct war between the superpowers; George Orwell used the phrase in his 1945 essay 'You and the Atom Bomb', and Walter Lippmann's book The Cold War (1947) made it common.

Containment: the US strategy of stopping Soviet expansion, set out by George Kennan in his Long Telegram (1946) and his 'X' article 'The Sources of Soviet Conduct' (Foreign Affairs, 1947).

Deterrence: preventing an attack by threatening unacceptable retaliation; with nuclear weapons on both sides it became mutually assured destruction (MAD), where neither side could survive a full war.

Arms race: a competitive build-up of weapons in which each side's increase prompts the other to match it, as in the nuclear, missile and space races.

2. Phases of the Cold War

Origins (1945–1949): disputes over Poland and Germany after Yalta (1945), Churchill's 'iron curtain' speech at Fulton (March 1946), the Truman Doctrine (March 1947), the Marshall Plan (1947) and the Berlin Blockade (1948–49).

Militarisation (1949–1953): the first Soviet atomic test (1949), the communist victory in China (1949), the formation of NATO and the Korean War (1950–53) turned rivalry into a global military contest.

Crises and brinkmanship (1953–1962): the hydrogen bomb, Sputnik (1957), the Berlin crisis and the U-2 incident led to the Cuban Missile Crisis (October 1962), the closest the world came to nuclear war.

Managing the danger (1963–1968): the Moscow–Washington hotline (1963), the Partial Test Ban Treaty (1963) and the Non-Proliferation Treaty (1968) showed both sides wanted rules to avoid catastrophe.

Détente (about 1969–1979): Nixon and Brezhnev signed SALT I and the Anti-Ballistic Missile Treaty (1972); the Helsinki Final Act (1975) accepted post-war borders and added human rights commitments.

Second Cold War (1979–1985): the Soviet invasion of Afghanistan (December 1979), SALT II left unratified, Reagan's Strategic Defense Initiative (1983) and the Euromissile crisis revived hostility; Fred Halliday analysed this phase in The Making of the Second Cold War (1983).

End (1985–1991): Gorbachev's reforms, the INF Treaty (1987), the fall of the Berlin Wall (November 1989), German reunification (1990), START I (1991) and the dissolution of the USSR (December 1991).

Proxy wars: the superpowers rarely fought directly; violence moved to the Third World, in Korea, Vietnam, Angola, Afghanistan and Central America.

Space and technology race: Sputnik and the Apollo moon landing (1969) made science a measure of system superiority.

Nuclear threat: stockpiles grew to tens of thousands of warheads; the Russell–Einstein Manifesto (1955) warned that nuclear war could end the human race.

3. Thinkers and Theories

Hans Morgenthau, Politics Among Nations (1948): classical realism saw the Cold War as a struggle for power in which ideology often masked national interest.

Kenneth Waltz, 'The Stability of a Bipolar World' (1964) and Theory of International Politics (1979): bipolarity is more stable than multipolarity because each pole knows its rival, responsibility is clear and miscalculation is less likely.

Deutsch and Singer (Karl Deutsch with J. David Singer, 1964) argued the opposite: multipolar systems give more interaction opportunities and reduce attention to any one rival, so they are more stable.

Morton Kaplan, System and Process in International Politics (1957), distinguished a 'loose bipolar' system, with non-aligned states and the UN, from a 'tight bipolar' one.

Bernard Brodie, The Absolute Weapon (1946): the chief purpose of military forces in the nuclear age is to avert wars rather than win them, the founding idea of deterrence theory.

John Lewis Gaddis, The Long Peace (1987): the Cold War produced the longest period without great-power war in modern history, thanks to bipolarity, nuclear deterrence and tacit rules.

Thomas Schelling, The Strategy of Conflict (1960) and Arms and Influence (1966): nuclear strategy is bargaining through the threat to hurt, including deliberately leaving something to chance.

Security dilemma: John Herz (1950) explained that measures one state takes for its own security make others insecure, which explains the action-reaction cycle of the arms race.

Marxist and world-systems views saw the Cold War as a contest between capitalism and socialism, or as US management of the world capitalist economy.

Constructivists such as Alexander Wendt argue that the Cold War ended when Soviet leaders changed their ideas of identity and interest, not only because material power shifted.

4. Debates on Causes and Responsibility

Orthodox view: early Western historians blamed Soviet expansionism and Stalin's ideology; the US merely responded.

Revisionist view: William Appleman Williams, The Tragedy of American Diplomacy (1959), and Gabriel Kolko blamed US economic expansion and the drive for open markets.

Post-revisionist view: Gaddis, The United States and the Origins of the Cold War, 1941–1947 (1972), spread responsibility on both sides and stressed mutual misperception.

After Soviet archives opened, Gaddis in We Now Know (1997) gave more weight to Stalin's personality and ideology.

Stability debate: was bipolar nuclear peace real stability, or luck, given near misses such as Cuba (1962) and the Able Archer scare (1983)?

Third World critique: the 'long peace' was long only for Europe and North America; millions died in proxy wars in Asia, Africa and Latin America.

Ideology versus power: realists stress power politics; others note that ideology shaped alliances, aid and intervention choices.

5. Indian Context

India refused to join either bloc and made non-alignment its answer to bipolarity, seeing bloc politics as a threat to newly won freedom.

Nehru called for a 'standstill agreement' on nuclear testing in 1954, an early call for a test ban.

India chaired the Neutral Nations Repatriation Commission in Korea (1953, under General K. S. Thimayya) and the International Control Commissions in Indochina (1954).

The Cold War reached South Asia through the US–Pakistan alliance (SEATO 1954, CENTO/Baghdad Pact 1955), which India saw as bringing bloc politics to its borders.

The Indo-Soviet Treaty of Peace, Friendship and Cooperation (August 1971) followed the US–China opening through Pakistan and helped India in the Bangladesh war.

In 1988 Rajiv Gandhi placed an Action Plan for a Nuclear-Weapon-Free and Non-Violent World Order before the UN General Assembly.

India's refusal to sign the NPT (1968) as discriminatory began in this period and shaped its later nuclear choices.

6. Using It in the Exam

10-mark answer: define the concept (bipolarity, Cold War, deterrence), give two or three features with dates, and end with one line on significance or India.

20-mark answer: introduction with a definition or thinker, phases or causes, theoretical explanation (Waltz versus Deutsch–Singer, Gaddis), critique (proxy wars, Third World view), India's response, and a conclusion linking to today's US–China rivalry.

Keywords: containment, bipolar stability, security dilemma, mutually assured destruction, détente, proxy wars.

Quotation: Churchill at Fulton (1946): 'From Stettin in the Baltic to Trieste in the Adriatic, an iron curtain has descended across the Continent.'

Quotation: Truman (1947) said US policy must be 'to support free peoples who are resisting attempted subjugation by armed minorities or by outside pressures.'

Compare the old Cold War with the 'new Cold War' debate on US–China rivalry, noting differences such as deep economic interdependence.

Avoid writing only a history narrative; examiners reward theory, interpretation and an Indian angle.

1. Core Ideas and Definitions

Non-alignment: a foreign policy of not joining military alliances with either superpower, while keeping the freedom to take independent positions on each issue.

Not neutrality: neutrality is legal abstention from a war (as with Switzerland); non-alignment is active engagement in world affairs on the side of peace and justice.

Nehru stressed that India would not be neutral where freedom was threatened or aggression took place; non-alignment meant judging issues on merits, not staying silent.

Non-alignment versus NAM: non-alignment is a policy of individual states; the Non-Aligned Movement is the organisation of states that share it.

Strategic autonomy: the core purpose was to preserve the newly won freedom of decision of post-colonial states.

Panchsheel: the five principles (mutual respect for territorial integrity and sovereignty, non-aggression, non-interference, equality and mutual benefit, peaceful coexistence) were written into the India–China agreement of April 1954 and later shaped NAM thinking.

The term 'non-alignment' is often credited to V. K. Krishna Menon, who used it at the UN in the early 1950s.

NAM has no charter, no permanent secretariat and works by consensus; the chair rotates with the host of each summit.

2. Origins and Evolution

Bandung Conference (April 1955): 29 Asian and African states met in Indonesia and adopted ten principles of peaceful coexistence, building on Panchsheel.

Brioni meeting (1956): Nehru, Tito and Nasser met in Yugoslavia and set out a common position on peaceful coexistence.

Cairo preparatory meeting (June 1961) fixed criteria for membership, including an independent policy and no membership of a multilateral military alliance linked to great-power conflicts.

Belgrade Summit (September 1961): the first NAM summit with 25 member states; founders are usually named as Nehru, Tito, Nasser, Sukarno and Nkrumah.

1960s–1970s: Cairo (1964), Lusaka (1970) and Algiers (1973) summits shifted focus from Cold War peace to economic justice, decolonisation and the New International Economic Order.

Havana (1979): Fidel Castro argued that the socialist bloc was the 'natural ally' of the non-aligned; Tito resisted, exposing a split over closeness to Moscow.

New Delhi (1983): the seventh summit, chaired by Indira Gandhi, focused on disarmament and North–South economic issues.

After the Cold War: Jakarta (1992) and later summits redirected NAM towards development, South–South cooperation, UN reform and opposing unilateralism.

Membership has grown to 120 states, making NAM the largest grouping of states after the UN; the 19th summit was held in Kampala, Uganda, in January 2024.

NAM works closely with the Group of 77 (formed 1964) on economic questions in the UN system.

3. Aims of NAM

Keeping out of bloc politics and military alliances, and opposing foreign military bases on members' soil.

Ending colonialism and racial discrimination, especially apartheid in South Africa and white minority rule in Rhodesia.

General and complete disarmament, with special stress on nuclear disarmament and test bans.

Peaceful coexistence and settlement of disputes through negotiation and the UN.

A just world economic order: fair trade, transfer of technology, development finance and control over national resources.

Democratising international institutions so that small and new states have a real voice.

Protecting the sovereignty and identity of post-colonial states against neo-colonial pressure.

4. Achievements

Decolonisation: NAM pressure supported the UN Declaration on the Granting of Independence to Colonial Countries and Peoples (1960) and liberation movements in Africa.

Anti-apartheid: sustained campaigns isolated South Africa diplomatically until apartheid ended in the early 1990s.

Softening bipolarity: a large bloc outside the alliances widened the space for diplomacy and made the system 'loosely' rather than 'tightly' bipolar.

Economic agenda: NAM's Algiers summit (1973) pushed the 1974 UN declaration on a New International Economic Order and strengthened UNCTAD and the G-77.

Disarmament: NAM states pressed for test bans and helped convene the first UN Special Session on Disarmament (1978).

Voice in the UN: the numerical weight of NAM changed General Assembly agendas towards development, Palestine and racial equality.

Identity: it gave post-colonial states a collective identity and confidence, the root of today's 'Global South' idea.

5. Critiques and Limits

Western critics, including US Secretary of State John Foster Dulles in the 1950s, called non-alignment immoral or a cover for pro-Soviet leanings.

Inconsistency: members criticised Western interventions more sharply than Soviet ones (Hungary 1956, Czechoslovakia 1968, Afghanistan 1979).

Members took aid and arms: many members, including India, depended on one superpower for weapons or aid, blurring non-alignment in practice.

Failure on member conflicts: NAM could not prevent or resolve the India–China war (1962), India–Pakistan wars or the Iran–Iraq war (1980–88).

No institutions: without a secretariat or binding decisions, NAM produced declarations more than results.

Realist view: non-alignment was a strategy of weak states, possible only because of bipolar rivalry, and lost meaning when bipolarity ended.

Defenders answer that its moral and agenda-setting influence outweighed its weak enforcement.

6. Indian Context

Nehru saw non-alignment as the external face of India's freedom: it let India accept aid from both sides while keeping control of its own choices.

India used it to mediate in Korea and Indochina and to lead Asian-African solidarity.

After the 1962 war India received Western military help, and in 1971 signed a treaty with the USSR; supporters called this pragmatic non-alignment, critics called it a tilt.

Prime Minister Modi did not attend the 2016 and 2019 NAM summits (India was represented by the Vice President), but joined the NAM Contact Group online summit on COVID-19 in May 2020.

7. Using It in the Exam

10-mark answer: define non-alignment (distinguish from neutrality), list aims, name two achievements and one limit.

20-mark answer: origin (Bandung, Belgrade), aims, achievements with examples, critiques, India's role, and an assessment of whether NAM achieved its goals.

Keywords: strategic autonomy, Panchsheel, decolonisation, anti-apartheid, NIEO, loose bipolarity.

Quotation: paraphrase Nehru: non-alignment was never neutrality; India would stand against aggression and for freedom.

Balance praise with critique; examiners expect an evaluation, not a celebration.

Link to Paper I where possible (Gandhian ethics of peace, Nehru's idea of a free foreign policy).

1. The Collapse of the Soviet Union

Stagnation: by the late 1970s the Soviet command economy grew slowly, lagged in technology and depended on oil exports; the Brezhnev years are often called the 'era of stagnation'.

Gorbachev (from March 1985) launched perestroika (economic restructuring), glasnost (openness) and demokratizatsiya (democratisation), plus 'new thinking' in foreign policy.

Abandoning the Brezhnev Doctrine: Moscow let Eastern European states choose their own path (jokingly called the 'Sinatra Doctrine'), leading to the revolutions of 1989.

Military burden: the war in Afghanistan (1979–1989) and the cost of competing with US programmes such as SDI strained resources.

Nationalities: the Baltic republics, Ukraine, Georgia and others demanded sovereignty once glasnost allowed open politics.

August 1991 coup: hardliners tried to remove Gorbachev; its failure, and Boris Yeltsin's resistance in Moscow, destroyed the authority of the Communist Party.

End: the leaders of Russia, Ukraine and Belarus signed the Belovezha Accords (8 December 1991) creating the Commonwealth of Independent States; Gorbachev resigned on 25 December 1991.

Fifteen successor states emerged; Russia took over the Soviet seat on the UN Security Council.

2. Explaining the Collapse

Economic explanation: central planning could not deliver growth or innovation; falling oil prices in the mid-1980s worsened the crisis.

Political explanation: reforms opened the system faster than they fixed it; glasnost exposed failures and released demands the party could not contain.

Realist explanation: relative decline in power forced retreat; the arms race imposed costs a weaker economy could not bear.

Constructivist explanation: new ideas among Soviet elites (common security, a 'common European home') changed how they defined interests; Alexander Wendt and others stress this ideational shift.

Nationalism: the USSR was a multinational federation held by the party; when the party weakened, national identities pulled it apart.

Debate: some credit Western pressure (Reagan's arms build-up); others argue internal decay was decisive and Western pressure only marginal.

3. Unipolarity and American Hegemony

Unipolarity: a system with one state far ahead of all others in military, economic and technological power; Charles Krauthammer called it 'The Unipolar Moment' (Foreign Affairs, 1990/91).

Hegemony: leadership that rests on both power and the acceptance of others; in Gramscian terms (applied to IR by Robert Cox, 1981) it combines coercion with consent.

Hegemonic stability theory: Charles Kindleberger, The World in Depression (1973), and Robert Gilpin, War and Change in World Politics (1981), argued an open world economy needs a dominant power to provide public goods.

Francis Fukuyama, 'The End of History?' (1989) and The End of History and the Last Man (1992): liberal democracy had no serious ideological rival left.

Samuel Huntington, 'The Clash of Civilizations?' (1993) and the 1996 book: future conflict would run along cultural lines; in 'The Lonely Superpower' (1999) he called the system 'uni-multipolar'.

Joseph Nye, Bound to Lead (1990), introduced 'soft power': the US leads through attraction of its culture, values and institutions, not only force.

Practice: President George H. W. Bush's 'new world order' (1990), the UN-backed Gulf War (1991), NATO expansion, the Kosovo intervention (1999) and the Iraq war (2003) without Security Council authorisation.

John Ikenberry, Liberal Leviathan (2011): the US built a rules-based liberal order that others joined because it limited US power as well as using it.

French Foreign Minister Hubert Védrine described the US in the late 1990s as a 'hyperpower'.

4. Critiques and the Decline Debate

Realist critique: Kenneth Waltz warned that unbalanced power invites balancing; John Mearsheimer, The Great Delusion (2018), argued liberal hegemony led to costly failures.

Overreach: Iraq and Afghanistan, and the 2008 financial crisis, damaged US credibility and resources.

Rise of the rest: Fareed Zakaria, The Post-American World (2008), described the growth of China, India, Brazil and others.

Multiplex world: Amitav Acharya, The End of American World Order (2014), argued that order is now shaped by many actors and ideas, not by a single hegemon or a return to old multipolarity.

Russia and China challenge the order in different ways: Russia through force in Georgia (2008) and Ukraine (2014, 2022), China through economic and military rise and new institutions (AIIB, Belt and Road).

Critical view: Marxists and post-colonial writers see American hegemony as an extension of capitalist and Western dominance dressed in universal language.

5. Relevance of Non-alignment Today

Argument against: with no two blocs, there is nothing to be non-aligned from; NAM has become a talking shop.

Argument for: the core idea, autonomy of decision, matters even more in a world of uneven power, sanctions and pressure to take sides.

NAM's agenda of development, UN reform, debt relief, climate justice and opposition to unilateral action remains relevant to the Global South.

A new US–China rivalry and the Russia–Ukraine war have revived pressure to choose camps, making non-alignment-like positions common among developing states.

Nonalignment 2.0 (2012), a report by Sunil Khilnani, Rajiv Kumar, Pratap Bhanu Mehta, Shyam Saran and others, restated non-alignment as maximising India's strategic space.

Multi-alignment: S. Jaishankar, The India Way (2020), argues that India should engage all major powers and pursue its interests through issue-based partnerships.

6. Indian Context

The Soviet collapse removed India's main arms supplier and diplomatic partner and coincided with the 1991 balance-of-payments crisis.

India responded with economic reforms (1991), the Look East Policy (from 1991–92 under Narasimha Rao), and outreach to the US and Israel (full diplomatic relations 1992).

The nuclear tests of 1998, the India–US civil nuclear agreement (2005–2008) and the NSG waiver (2008) reflected autonomy within closer US ties.

India keeps a 'special and privileged strategic partnership' with Russia while joining the Quad with the US, Japan and Australia and staying in SCO and BRICS.

India's abstentions on UN resolutions on the Russia–Ukraine war are commonly cited as strategic autonomy in practice.

7. Using It in the Exam

10-mark answer: give two or three causes of the collapse, or define unipolarity with Krauthammer and one example, or state two arguments on NAM's relevance.

20-mark answer: explain the shift from bipolarity to unipolarity, assess American hegemony with theory (hegemonic stability, soft power, realist critique), then discuss non-alignment's relevance with India's practice.

Keywords: perestroika and glasnost, unipolar moment, hegemonic stability, soft power, multiplex world, strategic autonomy.

Quotation: Fukuyama (1989) wrote of 'the end of history as such', meaning the end of mankind's ideological evolution and the spread of Western liberal democracy.

Use the distinction between non-alignment as a movement and as a policy principle to give a balanced conclusion.

Avoid claiming the world is simply multipolar now; present it as contested, with a strong US, a rising China and other centres of power.

1. Core Ideas and Origins

Why Bretton Woods: the Great Depression, competitive devaluations and trade wars of the 1930s were seen as causes of the Second World War; planners wanted a stable, open world economy.

Conference: delegates of 44 Allied nations met at Bretton Woods, New Hampshire, in July 1944; India, still a colony, sent a delegation that included Sir Jeremy Raisman and R. K. Shanmukham Chetty.

Keynes versus White: John Maynard Keynes (Britain) proposed an International Clearing Union with its own currency (bancor) that would put pressure on surplus countries too; Harry Dexter White (US) proposed a smaller fund, and the US plan largely prevailed.

Gold-dollar standard: the dollar was fixed to gold at 35 US dollars an ounce, and other currencies were pegged to the dollar with adjustment allowed for a 'fundamental disequilibrium'.

IMF: provides short-term finance for balance-of-payments problems and oversees exchange-rate policies; voting is weighted by quotas, giving the US a veto over major decisions that need an 85 percent majority.

IBRD (World Bank): first financed post-war reconstruction in Europe, then development lending; by convention the Bank's head is American and the IMF's head European.

Embedded liberalism: John Ruggie (1982) used this term for the post-war compromise: open trade abroad combined with welfare states and capital controls at home.

2. From the ITO to GATT and the Rounds

The Havana Charter (1948) for an International Trade Organization was never ratified by the US Congress, so the ITO did not come into being.

The General Agreement on Tariffs and Trade, signed in 1947 by 23 countries including India, came into force on 1 January 1948 as a provisional arrangement that lasted 47 years.

Core principles: most-favoured-nation treatment (non-discrimination), national treatment, tariff bindings and reciprocity.

Early rounds (Geneva 1947, Annecy 1949, Torquay 1950–51, Geneva 1956, Dillon 1960–61) cut tariffs on manufactured goods.

Kennedy Round (1964–67) made large across-the-board tariff cuts and an anti-dumping code; Tokyo Round (1973–79) addressed non-tariff barriers through plurilateral codes.

Part IV of GATT (1965) on trade and development and the Generalised System of Preferences (agreed at UNCTAD II, New Delhi, 1968) gave limited special treatment to developing countries.

Uruguay Round (1986–94) brought agriculture, textiles, services and intellectual property into the system and ended with the Marrakesh Agreement (April 1994).

3. Collapse of Fixed Rates and the Neo-liberal Turn

Triffin dilemma: Robert Triffin, Gold and the Dollar Crisis (1960), showed that the world needed growing dollar reserves, but more dollars abroad undermined confidence in their gold value.

Nixon shock (15 August 1971): the US ended the convertibility of the dollar into gold; the Smithsonian Agreement (December 1971) failed, and major currencies floated from 1973.

The Jamaica Accords (1976) formally accepted floating exchange rates.

Debt crisis: after Mexico's default threat in 1982, the IMF and World Bank lent to indebted developing countries on conditions of structural adjustment: fiscal cuts, privatisation, trade and price liberalisation.

Washington Consensus: John Williamson (1989) summarised ten reforms favoured by Washington institutions, including fiscal discipline, trade liberalisation, privatisation and deregulation.

Susan Strange, Casino Capitalism (1986), warned that deregulated finance made the world economy unstable and driven by speculation.

4. The World Trade Organization

The WTO began on 1 January 1995 as a full international organisation with a legal personality, based in Geneva; India is a founding member.

Agreements: GATT 1994 for goods, GATS for services, TRIPS for intellectual property, the Agreement on Agriculture, TRIMs on investment measures, and sanitary and phytosanitary rules.

Dispute Settlement Understanding: panels and a standing Appellate Body give binding rulings, a major step beyond GATT's weak procedures.

Appellate Body crisis: since December 2019 it has been unable to hear appeals because the US blocked new appointments; some members use an interim arbitration arrangement (MPIA) instead.

Doha Development Round (2001) promised to put development at the centre but stalled over agriculture, industrial tariffs and services.

Later ministerials: Bali (2013) agreed the Trade Facilitation Agreement and an interim peace clause on public food stockholding; Nairobi (2015) agreed to end agricultural export subsidies; Geneva (2022) reached an agreement on harmful fisheries subsidies.

Decisions are by consensus, which protects small members but makes agreement slow among more than 160 members.

5. Debates and Critiques

Liberal view: rules-based trade and finance promoted growth and peace; Robert Keohane, After Hegemony (1984), argued institutions can sustain cooperation even as US dominance declines.

Realist and hegemonic view: Bretton Woods reflected US power; Kindleberger and Gilpin saw it as public goods supplied by a hegemon.

Dependency and Third World critique: weighted voting, conditionality and rules on agriculture and patents favoured rich countries.

Joseph Stiglitz, Globalization and Its Discontents (2002), criticised the IMF for applying one-size-fits-all austerity in the East Asian crisis (1997–98).

Governance reform: the 2010 IMF quota reform, which took effect only in 2016, gave modestly more voice to emerging economies such as China and India.

New institutions: the BRICS New Development Bank (agreed 2014) and the Asian Infrastructure Investment Bank (2016) partly reflect frustration with slow reform.

6. Indian Context

India is a founding member of the IMF, World Bank, GATT and WTO.

In the 1991 balance-of-payments crisis India pledged gold and took IMF support, followed by liberalisation, privatisation and globalisation reforms.

At the WTO India defends food security (public stockholding for its food programme), resists binding rules on new issues beyond the Doha mandate, and supports special and differential treatment.

India uses TRIPS flexibilities: the Doha Declaration on TRIPS and Public Health (2001) affirmed the right to protect public health; India issued its first compulsory licence in 2012 (Natco, for Bayer's cancer drug), and in Novartis v Union of India (2013) the Supreme Court upheld Section 3(d) of the Patents Act against evergreening.

India and South Africa proposed a TRIPS waiver for COVID-19 vaccines in October 2020; a narrower decision was adopted in 2022.

India pushes for IMF quota reform and a stronger voice for the Global South, a theme of its G20 presidency (2023).

7. Using It in the Exam

10-mark answer: explain one stage (Bretton Woods, GATT, WTO) with dates, its core principle and one critique.

20-mark answer: trace the evolution from 1944 to 1995 in phases, explain why changes happened (Triffin dilemma, debt crisis, neo-liberalism), evaluate fairness to developing states, and end with India's stand and reform needs.

Keywords: embedded liberalism, most-favoured-nation, conditionality, Washington Consensus, dispute settlement, special and differential treatment.

Quotation: paraphrase Ruggie: the post-war order was a compromise of open markets abroad and social protection at home (embedded liberalism).

Bring in the WTO's present crisis (Appellate Body, stalled Doha) to show awareness of current affairs.

Do not confuse the GATT (an agreement) with the WTO (an organisation), a common slip.

1. Socialist Economies

Command economy: the state owns the means of production and a central plan sets output, prices and investment, as in the Soviet Five-Year Plans begun in 1928.

Socialist states aimed at rapid industrialisation, full employment and equality, and rejected market price signals as the main guide to production.

After 1945 the Soviet model spread to Eastern Europe, China, North Korea, Vietnam and Cuba, with local variants such as Yugoslav worker self-management.

Strengths claimed: fast heavy industrialisation, mass literacy and social security.

Weaknesses: shortages, poor quality, low innovation and what János Kornai called the 'soft budget constraint' (Economics of Shortage, 1980): loss-making firms were always bailed out.

Reforms: Hungary's New Economic Mechanism (1968), China's reform and opening under Deng Xiaoping (from 1978) and Gorbachev's perestroika tried to add market elements.

2. The CMEA (Comecon)

Founded: January 1949 in Moscow by the USSR, Bulgaria, Czechoslovakia, Hungary, Poland and Romania, largely as a Soviet answer to the Marshall Plan (1947), which Moscow had barred its allies from joining.

Later members: Albania (1949, inactive from the early 1960s), East Germany (1950), Mongolia (1962), Cuba (1972) and Vietnam (1978); Yugoslavia had a special associate arrangement from 1964.

Aims: economic cooperation, exchange of experience and coordination of national plans among socialist states.

Socialist international division of labour: each member was to specialise; in 1962 Khrushchev pushed for supranational planning, but Romania resisted because it would have kept it largely agricultural.

Comprehensive Programme (1971) sought deeper 'socialist economic integration' through joint plans and investment projects.

Instruments: the International Bank for Economic Co-operation (1963) and the 'transferable rouble', an accounting unit for clearing trade; trade was mostly bilateral barter at negotiated prices.

Energy link: the USSR supplied oil and gas to Eastern Europe, often below world prices after the 1973 oil shock, in exchange for manufactured goods.

Problems: no real market or convertible currency, dominance of the USSR, weak technology and low trade with the wider world.

Dissolution: after the 1989 revolutions members moved to world prices and hard currency in 1991, and the CMEA was formally dissolved in June 1991.

Comparison with the EEC: the EEC integrated markets under common law; the CMEA coordinated state plans without supranational authority or a common market.

3. The Third World Critique of the World Economy

Prebisch–Singer thesis (1950): Raúl Prebisch and Hans Singer argued that the terms of trade of primary commodity exporters tend to decline against manufactured goods, so free trade keeps the periphery poor.

Structuralism: Prebisch, at the UN Economic Commission for Latin America, recommended import-substituting industrialisation.

Dependency theory: Andre Gunder Frank, 'The Development of Underdevelopment' (1966), argued that the periphery was underdeveloped by its incorporation into world capitalism; Samir Amin and Walter Rodney (How Europe Underdeveloped Africa, 1972) developed similar views.

Dependent development: Fernando Henrique Cardoso and Enzo Faletto (1969, English 1979) argued that some development is possible within dependency, but on terms set by core capital.

World-systems theory: Immanuel Wallerstein, The Modern World-System (1974), divided the world into core, semi-periphery and periphery linked by unequal exchange.

Neo-colonialism: Kwame Nkrumah, Neo-Colonialism: The Last Stage of Imperialism (1965), argued that formal independence hid continued economic control.

4. The Demand for a New International Economic Order

UNCTAD (1964): created at Geneva with Prebisch as first Secretary-General; the Group of 77 developing countries formed at the same time to bargain collectively.

UNCTAD II, New Delhi (1968) endorsed the Generalised System of Preferences; the UN set the target of 0.7 percent of GNI as official development aid in 1970.

Oil power: the OPEC price rises and Arab oil embargo of 1973 convinced developing countries that commodity power could force change.

Sixth Special Session of the UN General Assembly (May 1974) adopted the Declaration on the Establishment of a NIEO and a Programme of Action (Resolutions 3201 and 3202).

Charter of Economic Rights and Duties of States (December 1974): affirmed permanent sovereignty over natural resources, including the right to nationalise.

NIEO demands: stable and fair commodity prices (Integrated Programme for Commodities, UNCTAD IV, Nairobi 1976), a Common Fund, debt relief, technology transfer, control of multinational corporations, more aid and a greater voice in the IMF and World Bank.

Brandt Commission, North–South: A Programme for Survival (1980), argued that the North and South shared an interest in development; the Cancún North–South summit (1981) produced little.

5. Why the NIEO Failed and Its Legacy

Northern governments, especially the US and Britain under Reagan and Thatcher, rejected redistribution and turned to free-market policies.

The 1982 debt crisis weakened the South's bargaining power and shifted the agenda to structural adjustment.

The South was divided: oil exporters, newly industrialising East Asian economies and the least developed had different interests.

Commodity power proved limited outside oil; the Common Fund for Commodities came into force only in 1989 with modest resources.

Legacy: special and differential treatment at the WTO, the right to development (UN Declaration 1986), climate justice and 'common but differentiated responsibilities' all echo NIEO ideas.

Critics such as Peter Bauer argued that aid and redistribution would not develop poor countries, and that domestic policy mattered more than world structure.

6. Indian Context

India's planned mixed economy borrowed from Soviet planning (the Mahalanobis model of the Second Five-Year Plan, 1956) without joining the socialist bloc.

India traded with the USSR under rupee–rouble arrangements from the 1950s, paying in rupees for Soviet machinery and arms; the Bhilai steel plant was built with Soviet help.

India was a leading voice in UNCTAD and the G-77, hosted UNCTAD II (1968) and supported the NIEO.

Manmohan Singh served as Secretary-General of the South Commission (1987–1990), chaired by Julius Nyerere, which produced The Challenge to the South (1990).

Today India presents itself as a voice of the Global South: it held Voice of the Global South Summits from January 2023 and backed the African Union's admission to the G20 (September 2023).

7. Using It in the Exam

10-mark answer: define the CMEA or the NIEO, give its aims and one reason for its failure.

20-mark answer: explain the intellectual basis (Prebisch–Singer, dependency), list NIEO demands, assess why it failed, and show its legacy in WTO, climate and Global South debates, with India's role.

Keywords: terms of trade, core and periphery, permanent sovereignty over natural resources, G-77, socialist division of labour, transferable rouble.

Quotation: Frank's phrase 'the development of underdevelopment' sums up dependency theory.

Compare the CMEA with the EEC to show understanding of different models of integration.

Avoid treating the NIEO as only history; link it to present demands for reform of global institutions.

1. Meaning and Dimensions

Definition: Anthony Giddens, The Consequences of Modernity (1990), described globalisation as the intensification of worldwide social relations that link distant places, so that local events are shaped by events far away.

Economic: rising trade, foreign direct investment, global value chains in which a product is made in many countries, and integrated financial markets.

Technological: container shipping, the internet and cheap communication cut the cost of distance; Manuel Castells called the result a 'network society' (The Rise of the Network Society, 1996).

Political: growth of international institutions, global governance and transnational civil society.

Cultural: flows of media, consumer brands and ideas; Arjun Appadurai, Modernity at Large (1996), described them as five 'scapes' (ethnoscapes, mediascapes, technoscapes, financescapes, ideoscapes).

Glocalisation: Roland Robertson stressed that global products and ideas are adapted to local settings, so globalisation does not mean simple uniformity.

Waves: historians identify a first wave before 1914, a collapse between the wars, and a new wave from the 1970s that accelerated after 1991.

Drivers after 1980: neo-liberal policies, the end of the Cold War, China's opening, WTO rules and the information revolution.

2. Three Schools of Thought

David Held, Anthony McGrew and others, Global Transformations (1999), sorted the debate into three positions.

Hyperglobalists: globalisation is new and creates a borderless world in which markets override states; Kenichi Ohmae, The Borderless World (1990) and The End of the Nation State (1995).

Sceptics: Paul Hirst and Grahame Thompson, Globalization in Question (1996), argued the world economy was about as open before 1914, most trade is regional, and states remain in control.

Transformationalists: Held and McGrew argued globalisation is real and historically new but uneven; it transforms state power rather than ending it.

Thomas Friedman, The Lexus and the Olive Tree (1999), said states must put on a 'golden straitjacket' of market-friendly policies; The World Is Flat (2005) argued technology levels the field.

Jagdish Bhagwati, In Defense of Globalization (2004): trade-led growth reduces poverty; problems need better policy, not less openness.

Joseph Stiglitz, Globalization and Its Discontents (2002): globalisation is badly managed by institutions that serve financial interests.

Dani Rodrik, The Globalization Paradox (2011): the 'trilemma' that a country cannot have deep economic integration, national sovereignty and democratic politics all at once.

3. Globalisation and the State

Retreat of the state: Susan Strange, The Retreat of the State (1996), argued that markets and firms now hold power that states once had.

Competition state: Philip Cerny argued that states change from welfare providers into actors that compete to attract capital.

Race to the bottom: critics fear that competition for investment lowers labour, tax and environmental standards; others find little evidence of a general race.

Resilient state: the 2008 bailouts, COVID-19 responses and industrial policy show that states remain central economic actors.

Sovereignty: WTO rules, credit ratings and capital mobility limit policy choices, but states choose to sign these rules and can change them.

Global governance: the G20 (leaders' level since 2008) emerged as a forum to manage the world economy, giving emerging economies a seat.

4. Critiques and Resistance

Inequality: gains have been uneven; Branko Milanovic's 'elephant curve' (Global Inequality, 2016) showed large gains for Asia's middle classes and the global top, and stagnation for lower-middle classes in rich countries.

Anti-globalisation movement: protests at the WTO meeting in Seattle (1999) and the World Social Forum, first held in Porto Alegre (2001) and in Mumbai (2004), under the slogan 'another world is possible'.

Marxist critique: globalisation is the expansion of capitalism; David Harvey described 'accumulation by dispossession' (The New Imperialism, 2003).

Cultural critique: fears of homogenisation (sometimes called McDonaldisation, after George Ritzer) and of identity backlash.

Environmental critique: long supply chains and consumption growth add to emissions and resource stress.

Populist backlash: Brexit (2016 referendum) and protectionist turns in the US reflected anger in regions hurt by trade and automation.

5. From Hyperglobalisation to Slowbalisation

After the 2008 crisis, world trade grew more slowly relative to output, a trend often called 'slowbalisation'.

The US–China trade war (from 2018), technology export controls, COVID-19 and the Russia–Ukraine war exposed risks of concentrated supply chains.

New strategies include 'friend-shoring', 'China plus one' and the push for resilient supply chains in semiconductors, medicines and critical minerals.

Globalisation is changing shape rather than ending: services, data flows and digital trade keep growing.

Regional and plurilateral deals (RCEP, CPTPP) and bilateral FTAs now matter more than global WTO rounds.

6. Indian Context

India opened its economy in 1991 through liberalisation, privatisation and globalisation (LPG) reforms after the balance-of-payments crisis.

Gains include fast growth, a large IT and services export sector, and India being the world's largest recipient of remittances.

Concerns include agrarian distress, jobless growth in parts of manufacturing, and dependence on imports from China for electronics and pharmaceutical ingredients.

India withdrew from RCEP negotiations in November 2019, citing unresolved concerns about trade deficits and protection for farmers and small industry.

India's newer approach mixes openness with self-reliance: Atmanirbhar Bharat (2020), Production Linked Incentive schemes, and trade agreements with the UAE (2022), Australia (2022), the EFTA states (2024) and the United Kingdom (2025).

India argues for 'human-centric globalisation' and a voice for the Global South in rule-making, themes of its G20 presidency (2023).

7. Using It in the Exam

10-mark answer: define globalisation (Giddens), give two dimensions and one critique, or explain one school (hyperglobalist, sceptic, transformationalist).

20-mark answer: definition, the three schools, impact on the state, critiques, recent slowbalisation, and India's experience, ending with a balanced view.

Keywords: time-space compression, global value chains, competition state, trilemma, glocalisation, slowbalisation.

Quotation: paraphrase Rodrik's trilemma: democracy, national sovereignty and hyperglobalisation cannot all be had together.

Link to Paper I where useful: neo-liberal theories of the state and Marxist critiques of capitalism.

Avoid declaring that globalisation is dead; describe how it is being reshaped.