Neoliberal Globalization and the Liberal International Economic Order

week 2

what does Sparke define as “globalization” (lowercase)

the definition/factual point regarding global interdependency such as commodities, workers, and money

what does Sparke define as “Globalization” (uppercase)

“an instrumental term put to work in shaping as well as representing the growth of global interdependency”

AKA a DISCOURSE/ideology that becomes the buzzword we associate in politics 

an influential political discourse

- intended to described and produce a particular form of global interdependence

- Characterized by “neoliberal” economic and political views

-certain spatial and social beliefs about globalization

neoliberalism

argues for free market, and a privatization of governmental functions within the market economy; non-interventionist 

what does Chang claim about the “free market” ? 

a freedom does not mean a total absence of regulation; the free market is not based on economic terms rather CULTURAL terms, and that this a social idea. 

what does Hirsh mean regarding whether “economists were wrong”? 

for some communities that were exposed to global pressures, neoliberalism did not work for them, leading to a division of wealth and the continuation of poverty for certain groups 

what are the core tenets/principles of the LIEO?

support for widespread trade and economic integration 

support for liberal democracy 

support for international governance 

Neoliberal globalization took off when?

after the crises of the 1970s

the Liberal International Economic Order (LIEO)

calling for fairer global economic system to overcome economic disparities between the Global South and Global North 

with an AIM for free trade and the free flow of capital 

commitment to 

• political liberalism 

• economic liberalism 

• liberal internationalism 

• application of SAME rules to every state 

united nations

maintain international peace and sec.

un security council

has the BIG 5 members states that have veto power (U.S., UK, France, Russia, China) + 10 rotating members 

role for enforcing military action, sanction, and peacekeeping 

almost no resolutions get passed to differing viewpoints from countries 

un general assembly

non-binding resolutions only (toothless or just global discussion for symbolic statements)

UN human rights council AKA UNHCR

with rotating members for human rights
managed to create the universal declaration of human rights 1948

ICJ or international court of justice

- legal disputes BETWEEN countries

- legally binding but not enforcement power

international criminal court (ICC) 

- not part of the UN

- prosecutes INDIVIDUALS for crimes against humanity

- 120 members EXCEPT US, China, Russia, India

World Trade Organization (WTO)

• same rules will apply to all member states 

• liberalize international trade 

• enforce free trade rules

• tribunal where countries can sue each other to enforce rules 

International monetary fund (IMF) and the World Bank

developmental institutions that give countries money to improve themselves 

help low income countries develop 

voting power is based on a country’s contribution to the fund, therefore wealthy country has a stronger vote

the United States’ effect on the liberal international economic order (LIEO)

- under undisputed US leadership or hegemony (dominance)

- combination of coercion and consent

- US economic dollar dominance

- cultural influence

- setting rules and norms

- global military presence

- SPARKE = American military hegemony has been used repeatedly to open markets and expand pro-market form of socio-economic hegemony to other parts of the world

- used military power to bolster political and economic liberalism

- especially during the cold war and collapse of soviet union (good background and context)

key phases of LIEO

- embedded liberalism / developmentalism (1945-71)

- neoliberalism (1970s-2010s)

- new international division of labor (1960s to ongoing)

western economic paradigms (model/pattern)

• 19th cent. laissez faire liberalism; little government intervention

• 1945-71 embedded liberalism (Keynesianism); LOTS of government intervention e.g. social security

• 1970s - 2010s neo-liberalism; recommitment to the FREE Market with calls for “small” governement

New International Economic Order

post colonial attempt to achieve modified international economic rules that would recognized postcolonial differences and help repair them

• greater power in international institutions 

• promote the transfer of tech, knowledge, etc. from developed nations to developing nations 

what are the contrasting definitions of equality between the LIEO and the NIEO 

• LIEO argument

  • applying the same rules to everyone to create a level playing field and will improve economic wellbeing of all

  • believed in an ahistorical analysis (idea that there is a blank slate)

• NIEO argument

  • applying same rules to unequal parties gives stronger party the advantages and tends to reproduce and even worsen those inequalities

  • historical analysis, past shapes present

New International Division of Labor (NIDL)

• substantial movement (offshoring) of manufacturing from Global North to Global South (i.e. wealthy to lower income countries)

• increasing complex and fragmented transitional production network and supply chain

• increasing the differentiation amongst post colonial states

1970s crises and transformation

global turmoil: the Vietnam War, U.S. budget deficits, and the end of the dollar-gold standard led to floating exchange rates, while OPEC oil shocks caused inflation, stagnation, and debt crises. These shifts ended embedded liberalism in the U.S. and U.K., collapsed the NIEO movement, accelerated offshoring through the NIDL, and ushered in neoliberal globalization.

Caveat: be careful about assuming causality HERE

Discourse of Big G globalization

• “G”lobalization does not make the world flat, level, or equal

• BUT “G”lobalization influences globalization in material ways

Washington Consensus (“Globalization” Policies)!!!!!!!!!! (must explain these policies for midterm)!!!!!!!!

1. liberalize trade

2. Privatize public services

3. deregulate business and finance

4. cut public spending

5. Reduce and flatten taxes

6. encourage foreign investment

7. de unionize

8. export led development

9. reduce inflation

10. enforce property rights

Thomas Friedman’s account of Big G Globalization

• Drivers

  • economic forces and competition

  • technology

  • individuals / companies

• Geography of globalization

  • Flattening, shrinking, homogenizing, networking

• Social effects

  • greater prosperity, greater equality

  • increasing diversity

• true believer that this will help EVERYONE in the world

difference between “G”lobalization discourse and Ha-Joon Chang’s critique 

• “G”lobalization discourse: these rules create “free” markets

• Chang’s critique: these rules create certain types of markets

what does Hirsh talk about in “Economists on the Run”?

- consequences of “G”lobalization

- collapse of trade protectionism

- globalization has been bad for the middle class

- The received wisdom inhibited economists from closely evaluating the evidence of what was underway

- THE POWER of DISCOURSE, even though they had empirical evidence, they didn’t change their mind

threats to “G” / Liberal International Order

• US hegemony decline 

• Rise of China’s dominating power

• the WTO (world trade organization) and effects on poor countries

• outsourcing critique from wealthy nations

• industrial policies and trade barriers

• rightwing criticism and international institutions

• BRICS 

• geopolitical conflicts

BRICS

a bloc of 11 major emerging economies—Brazil, Russia, India, China, South Africa, Iran, Saudi Arabia, Egypt, Ethiopia, United Arab Emirates, and Indonesia—that aims to foster economic and political cooperation and challenge the Western-led world order.