Global Issues Unit 5: Foundations Of The International Political Economy

In a socialist system:

The state owns & controls key means of production

Marxists believe:

Capitalist systems are exploitative & empower the rich (“to be rich is to be born rich”) 

Under colonialism:

1) A dominant country generally controlled the political + economic lives of foreign peoples

2) Significant wealth + resources typically flowed out of the colonies¸ with relatively little capital coming back

3) Colonies provided cheap labor + resources¸ + served as markets for the colonizer’s goods

Mercantilism includes:

States controlling trade, generally protecting home markets (decreasing imports) while seeking to sell products abroad (increasing exports)

Mercantilists (economic nationalists) believe:

Gov’ts should regulate trade to advance national interests + power

Colonies: 

1. Were often restructured by the dominant country to extract raw materials

2. Provided captive markets for the colonizer’s exports

European colonial economic policies can be described as:

Mercantilist

Which region did slaves come out of during the Triangular Trade?

Africa

Which region did manufactured goods¸ rum¸ guns¸ & cloth come out of during the Triangular Trade?

Europe

Which region did primary products such as sugar¸ tobacco¸ & cotton come out of during the Triangular Trade?

Americas

How many people were forcibly removed from Africa as slaves during the 300+ yrs. of Triangular Trade?

10–15 million

A founding thinker for classical liberalism is:

Adam Smith

Karl Marx:

1. Witnessed the harsh working conditions + searing poverty of millions of workers during the industrial revolution.

2. Believed that gov’ts in capitalist countries could not be trusted because the state would always defend wealthy interests.

Friedrich List + Alexander Hamilton pointed out:

It was easy for Great Britain to call for open markets + free trade after the country had used mercantilism to build a powerful economy.

Which country scores lowest on all the GEOS macro-dimensions in the radar chart of countries that practice some form of socialism (“state ownership of key means of production”)?

Venezuela

Who does this quote belong too: “It is true that labor produces wonderful things for the rich—but for the worker it produces privation.”

Marx

Who does this quote belong too: “The sovereign has only 3 duties to attend to; 3 duties of great importance¸ indeed¸ but plain and intelligible to common understandings.”

Smith

Who does this quote belong too: “The ideas of economists and political philosophers¸ both when they are right and when they are wrong¸ are more powerful than is commonly understood¸ Indeed¸ the world is ruled by little else.”

Keynes

What are the 5 key political economic events at the beginning of the 20^th century?

1. World War I, which devastated Europe + parts of the Middle East, Africa, + Asia, leaving some 9 million dead.

2. The bloody Bolshevik Revolution, which saw Vladimir Lenin come to power in the Soviet Union. 

3. The demise of China’s Qing dynasty + the onset of the Chinese Civil War between communists + nationalists. 

4. Workers protests for justice, rights, + protections in the Americas

5. The Great Depression

What 3 duties did Adam Smith see for the state?

1) Defense

2) Rule of Law

3) Public Works

Liberalism: 

1. Has a classical meaning tied to open markets, free trade, + the pursuit of individual self-interest.

2. Is a term that has been used in the U.S. to refer to a preference for a more active state role in managing volatility in the economy.

The more contemporary liberal (Keynesian) world economic order sought by the U.S. + other Western countries after WWII was based on:

Open markets, freer trade, + some limited governmental management

While associated with the liberal tradition, Keynes argued that:

During economic downturns + crises, gov’ts should intervene to stimulate employment + overall (aggregate) demand

“Contemporary liberalism” (often associate economically with the ideas of John Maynard Keynes):

Is tied to the idea that classical liberalism is volatile + prone to recessions + depressions, so states should try to manage capitalism + maintain “aggregate demand”

Examples of significant economic downturns where states worked to manage capitalism + maintain “aggregate demand” include: 

1) The Great Depression

2) The COVID-19 pandemic 

3) The Great Recession

Which IGO was established through the Uruguay Round of the General Agreement on Tariffs and Trade (GATT):

World Trade Organization (WTO) An intergovernmental organization that regulates international trade.

The World Bank is considered which type of actor?

International governmental organization (IGO) that provides financial and technical assistance to developing countries.

The World Bank and the IMF were established through which post–World War II agreement?

The Bretton Woods Agreement = created to promote international monetary cooperation and prevent economic crises.

The primary role of IMF loans is to:

Help stabilize a country’s economy when the country has severe short-term budgetary imbalances

In the post-WWII era, the Scandinavian countries:

Have generally pursued democratic socialism, with state ownership of some industries + more generous safety nets

Neoliberalism:

Criticized post-WWII Keynesian policies, instead promoting less government intervention in the economy.

Which New Deal role was putting young men to work in such areas as conservation + improving national parks?

The Civilian Conservation Corps (CCC)

Which New Deal role funded large projects such as dams¸ bridges¸ + schools?

The Public Works Administration (PWA)

Which New Deal role was aimed to regulate industrial production and foster fair competition?

The National Industrial Recovery Act(NIRA) enacted in 1933

Which New Deal role was to guaranteed the right of workers to organize + bargain collectively?

The National Labor Relations Act (Wagner Act) of 1935

Which New Deal role created a system of old-age + disability insurance?

The Social Security Act

Which New Deal role has brought electricity to rural areas?

The Rural Electrification Administration

The stimulus spending during the “Great Recession” in the U.S. was based on the ideas of:

John Maynard Keynes

What international organization did John Maynard Keynes help create in the aftermath of the Great Depression?

The IMF

Keynes biographer (Robert Skidelsky) sums up Keynes with 3 ideas, including

1) Markets are inherently volatile

2) Large-scale unemployment can develop in volatile markets

3) Nothing can stop a downward spiral + growing unemployment in a depressed economy unless the government steps in with public spending to replace a lack of private spending

According to Keynes (as discussed by his biographer Robert Skidelsky), volatile markets can punish:

Millions in society, for the mistakes of a few, causing social unrest

The “animal spirits” are:

Confidence + optimism in the economy, which sparks economic growth

What is Keynes’ approach to stimulating a depressed economy?

More government spending to increase aggregate demand

According to this week’s reading of “who are the LDCs”, which statement below is INCORRECT?

25 of the bottom 32 countries in infrastructure are in Latin America

One of the 1st and most common ways to measure development is:

Income per capita

According to the most recent estimates (as seen in “Who are the LDCs”) :

1. 9% of the world’s population live on less than $2.15 a day, down from nearly 43.4% in 1982

2. Most of the gains in lifting people out of poverty have been in 2 countries, China and India, especially China

3. Gains in lifting people out of poverty worldwide reversed in the short term because of COVID-19

According to “Who are the LDCs” Which of the following is TRUE?

1. In 2019, the bottom 1/2 of the world’s population held less than 1% of the world’s total wealth, while the top 1% held 45%. 

2. In 2000, the bottom 1/2 of the world’s population held less than 1% of the world’s total wealth, while the top 1% held 34%. 

3. The richest 1% of the world’s population received nearly 2/3rds of all new wealth created globally since 2020. 

The UNDP’s Human Development Index (HDI) is based on which 3 factors:

1. Life expectancy

2. Educational attainment

3. Per capita income