GLST 201: Week 8 Economics

Capitalism

Capitalism: economic system based on the private ownership of the means (tools and property) of production and the right to earn profit from the products produced by the labor employed in production. Monetization (money)

• Key aspect to capitalism is… Property

  • Property: system of rights and privileges that gives authority over resources and activities on the premise to utilize and exploit

    • property gain is not a universal right; always a limit on property ownership

Mercantilism: economic policy that promotes the aggressive pursuit of exploits and the simultaneous protection of domestic markets to acquire and expand wealth and power

Tariff: tax imposed on the importation of goods, as a means to reduce or dissuade imports by making them uncompetitive in domestic markets

Economic Liberalism

Laissez-faire: economic and political ideology that supports a market economic based on individual freedom to make transactions

Comparative advantage: idea that countries should produce and export goods that they can produce at a lower price than other countries

Timeline and History of Liberalism:

• The British Empire emerged as a global financial center due to liberalism

  • Exploitation of colonies

  • Mass-produce commodities like textiles

  • Declined after WW1

• Interwar Years (aka Great Depression)

  • British economy collapses

  • Lack of leadership (no hegemony)

    • German economic collapse

    • Japan economic expansion

  • Intensifies political rivalries and a less integrated global economy which causes…

    • Isolationism

    • Protectionism

    • Rise of Nationalism and Fascism

• 2nd World War

  • Mobilization for Total War

    • State manages economy management

    • Responsible for welfare of citizens

  • Devastation of the War

  • But mobilization creates superpowers

Keynesian Economics

Macroeconomic: theory and model of new total economic spending strongly influence economic output. Spending in the economy is erratic and prone to fluctuate, leading to recessions and inflation. The risk may be migrated by the government policies and actions

• Government intervention in the macroeconomic includes…

  • Regulation

  • Fiscal and Monetary policies

  • Stimulus

  • Government projects

Bretton Woods System: liberal US-led global economics order created for post-war reconstructions based on monetary management and reciprocal free-trade (Foreign Country Currency to US $ to Gold Standard)

• Death of the Bretton Wood System

  • Countries recovered from WW2

  • Elimination of the gold standard

  • Countries failed to liberalize trade

  • New global trade powers (Japan!)

  • Floating Currency

  • European Union

  • Cold War cools down

Examples of Keynesian Economics

• World Trade Organization: regulates and facilitates open free market international trade

  • Disputes Resolution

  • Eliminates tariffs, etc.

  • Trade agreement framework

• The World Bank: provides loans and grants to low-income countries for capital projects

  • Conditional loans

  • Opens Economy

  • Deregulation

• International Monetary Fund: provides fixed capital loans to stabilize imbalances in countries

  • Emergency debt relief

  • Conditional loans

  • Opens Economy

  • Deregulation

Neoliberalism

Neoliberalism: free market oriented economic policies that eliminate government regulation of the economy, trade barriers, and government influence over the economy and strongly encourage privatization, government austerity, and lowering taxes

• Some of these influences/attributes include:

  • Complete deregulation

  • Anti-intervention

  • Anti-politicization

  • Private sector

• Bretton Woods Institutions turned into Neoliberal Institutions

Criticisms of Neoliberalism:

• Destroys protections (health, safety, and social)

• Eliminates social programs

• Reduces state services

• Exacerbates inequality

Communism

Communism: social, political, and economic philosophy premised on the creation of a socioeconomic order based upon common ownership of the means of production and the elimination of class distinctions

Attributes in Communism include:

• Classless society

• Egalitarianism

• Eliminates Socioeconomics

Examples of Communism Governments/Institutions:

Soviet Union (1917-1922)

• Collectivization: process of converting private property into collectively owned public property

  • Began in the 1920s-1930s

    • Persecution of landlords

    • Rural communes (shared lands)

    • The Great Famine

• Rapid Industrialization

  • Began in the 1930s

    • Expropriating rural resources

    • Expand industrial urban centers

• Gulags and forcible resettlement

People’s Republic of China (1946-present)

• Collectivization (1950s)

• Great Leap Forward

  • Rapid Industrialization

  • The Great Famine

• Cultural Revolution

  • Elimination of class enemies

  • Eliminate old corrupting capitalist culture

Command Economy: economy in which production and distribution of resources are determined by a central government and not abstract market forces

• Attributes of Command Economy includes…

  • Determined by state interests, NOT individual wants

  • Unresponsive to change in demands

  • Common economic system in communism

  • Five Year Plan: state produce economy plan done 5 years intervals, deciding how resources will be prioritized and invested to ensure growth, and the needs of citizens are met

Community Heights: state control of essential and strategic sectors of the economy in order to ensure equitable access and security (Example India)

• Attributes of Community Heights includes…

  • Public Utilities

  • Natural Resources

  • Foreign Trade Assets

  • Subsistence Essentials