Week 7 - Global Economy

Capitalism - Material-economic

Marx - relation of production - capital vs labour

Weber - urge to accumulate wealth for sake of it

Capitalism - Social-cultural

Smith - gentlemanly capitalism and moral leadership

Rand - social system based on individual rights e.g. P.P

Appleby - cultural system - entrepreneurial economy

3 forms - 1 - Social Capitalism

Embedded liberalism

Post 1945 western social democracies

mixed market - state economies - combine market benefits and politics of social solidarity

state spending to stimulate growth - slower more stable long-term investment

higher taxes - well-funded welfare system - equality

3 forms - 2 - Enterprise Capitalism

neoliberalism

late C20th

individualism - self-regulating free market

short term profit maximalisation and high return

low tax/low state ownership/low welfare

social fragmentation and inequality

3 forms - 3 - State Capitalism

some communist states - no single model

high state control

abolish free enterprises

wealth distribution and collective ownership

lack political freedoms and tensions between economic liberalism

Susan Strange on Capitalism

necessitates state for ‘public good’

varies in each state due to management

‘The Retreat of the State’ - growing asymmetry of states economic power - state authority ‘weakened’ due to ‘global economy’/’technological change’ - ‘fundamental responsibilities of states’ being ignored e.g. clean air/water etc.

Capitalism - liberal/illiberal

emerges from global exchange - relationship west disproportionately benefitted from - cheap/slave labour and colonialism - peripheral states - exploitation

wealthy white male benefits and economic liberalism built on back of illiberalism/empire

constraints needed to ensure equality

Liberal modes - Social Capitalism

‘embedded liberalism’

Keynesianism - Bretton Woods institutions - state involvement/spending - infrastructure

Liberal modes - Enterprise Capitalism

‘Global liberal’

Bretton Woods determine economic structure - huge economic growth for the west but mixed elsewhere = suspicion

Liberal modes - State Capitalism

Statist poverty reduction

statist approach e.g. import substitution - industrialisation - ‘dependency theory’ (wealthy "core" nations develop by exploiting poorer "periphery" nations)

reorganise economy before redistribution

prone to prioritising GDP growth/corruption/authoritarian control

Illiberal modes - Oligarchy

power held by small group

Aristotle - politics of wealth defence

Winters (2011) - 4 types

• Warring - violent corruption early 90’s Russia

• Ruling - direct governance - late 90’s Russia

• Sultanistic - one strong autocrat - Putin

• Civil - attained peacefully-financially/legally - Trump/Musk

Illiberal modes - Kleptocracy

Rule by thieves

Acemoglu, Robinson, Verdier (2004) - state run for benefit/power/resources of individual/small group

Winters (2011) - Sultanistic oligarchies may become kleptocracies

e.g. Putin’s Russia (Dawisha 2013)

Neoliberalism and Globalisation

Encourages: trade/privatisation/deindustrialisation of west and globalisation of labour e.g. to Asia

Von Hayek - ‘The Road to Serfdom’ - 1944

• Global economic ideas good/bad emerge from neo-classical economics

Neoliberalism and Politics

global implementation - Reagan and Thatcher change western political economies -economise public and private life

Neoliberalism and ‘trickle down’ effect

privatisation and market = poverty reduction - wealth inevitably ‘trickle down’ to under-marketised system

global success - reduced # people in poverty by 1 billion - (Ewans and Thomas 2019) - but happened mostly India/China large states w protected internal markets

Neoliberalism and inequality

Cammack 2019 - Driven by 3 factors

• neoliberal reforms - 70’s/80’s - monetarism/reducing inflation

• financialisation and enterprise capitalism in post-colonial states (capital+debt)

• open and competitive global economy

Neoliberalism susceptible to crisis due to ‘footloose capital’ - money flows in and out

Neoliberalism and Global South

Washington Consensus - IMF/WB etc. promotes poverty reduction - privatisation -liberalisation - open markets

against protectionism - state support - industrialisation

tie financial suppport to liberalisation

however the success stories e.g. Asia/China involved state support and protection