Saturday, December 12, 2009

Globalization: Urbanization

I. Urbanization
a. Relationship to globalization
i. TF – How transformationalism - and similarities between Held’s concept of transformationalism and how Davis explains the process and consequences of urbanization?
1. Basic definition of transformationalism: change in the identity of the state and the role is provides/ change in identity or state actors (using sovereignty as leverage in negotiations, negotiating policy instead of state actors having complete control over it)
a. Rosenthel – American FP going back to the mid-to late 1970s: Domestic policies are inter-related with foreign policy – a blurring of domestic and foreign policy (interdomestic policy)
i. What’s the blurring for Davis: The blurring of the rural and the urban – which is similar to the blurring of domestic and international (periurban)
1. How can the 3rd world become present in the urban core of countries?
a. Urbanization with de-industrialization (Africa)
b. Low standard of living/sleeping on the streets
2. How can the 1st world become present in the periphery areas of countries?
a. Migration of the rich to the suburbs
b. Land becomes a commodity and there becomes speculation
c. Physical capital moves from the cities to the rural areas where there are resources
2. Davis: the state fails, should protect and provide for its citizens, but the mega slums are an example of where the state might as well not exist and instead the mega slums are regulated within themselves by an organic approach. The traditional identity of the state as providing services no longer applies – in many places it cannot provide them. So in Davis – the role of the state is to (1) form alliance with transnational capital/elite networks and (2) the purpose of the state becomes, to enrich its leaders – this is in mega slum world where there are no longer services provided and instead the state becomes predatory and becomes capital accumulation for the state.
a. Most severe example: of elite forming alliances with transnational capital and forming elite networks – then not paying the police and military who end up extorting money from the citizens – CONGO – this is his example of where the state is so predatory it has abandoned the traditional patronage system with the military.
ii. Polanyi: Markets become disembedded from the society in which they represent
1. Davis makes reference to the elites in the cities becoming disembedded from the economic, social, and political lives of the local communities.
a. If one is coming from the neo-Marxist/skeptic or neo-Marxist transformationalist perspective – this would resonate.
iii. Economic Forces
1. SAP (structural adjustment programs) have exacerbated the mega slums (associated with globalization) – because domestic policies are constrained by international forces;
a. Forcing countries to open up their markets without allowing for protectionism (which is what neoliberalism is requiring) – which is the opposite of what the developed countries did.
i. Related to globalization because: creating networks
ii. How can leaders ignore their people and follow the policy prescriptions of the World Bank
b. Structural development isn’t the decline of the state in Africa –that started much earlier.
i. Neoliberalism – roll back the role of the state
ii. So in states which are required to have structural reforms, like ones that get World Bank money, they are required to roll back the role of the state in all things- including fighting poverty and instead letting NGOs take over.
iv. Political Forces
1. Consolidating companies: Big agri-business taking over subsistence farms: this is related to structural adjustment when regulations have to be loosened and then you end up with big business oligopolies over main exports of first-level agricultural resources.
II. Planet of Slums: His whole book is based on secondary sources/very little primary research
a. Ch 1 – facts and figures
b. Ch 2 – Slum – what is it?
i. Housing market is illegal/underground
ii. No government services – like water and power
iii. Difference between late 19th century definition and today – lack of moral dimension. Late 19th century said the slums were morally degenerate people.
c. Ch 3 – factors responsible for slums
i. Treason of the state – factors responsible for the slums
ii. First ½ of 20th century (pre-independence); why were slums smaller pre-1950s? Because the colonial powers wouldn’t allow the indigenous people to live in the cities, so no slums could form.
1. Racially segregated living that was strictly enforced
iii. What factors account for dramatic increase in slums after 1957
1. Independence and de-colonization
a. People were interested in moving towards the cities because that’s where the government was spending money – jobs, opportunities for education, important ethnic groups, resources – were all in the cities once the segregated barriers came down after independence.
b. Civil war causes people to move to the cities
d. Ch 4 – self-help/1908s – today
i. Why is he so critical of micro-enterprises?
1. They don’t help enough people.
2. They don’t address the structural causes of poverty, like under-development
3. Originally suggested by left-NGOs along with other reforms – but then they are co-opted by people who think that “individual responsibility” is the best way to go with micro-enterprises
ii. Makes a comment about commuting – people in Nigera commute 3 hours to get to work.
e. Ch 5 – Role of indigenous elites “governmentality”
i. Role of housing: Wide blvds allow for troop movement and good line-of-sights
1. Tear down poor areas and build up rich ones
ii. Beautification
iii. Foucault – people, when they have been out of power and come into power, embrace the norms of those they tried to overthrow
iv. Davis – “governmentality” is when the people in power by into the elite opinion and say that it is perfectly ok to have large amounts of poor people
1. The African elites internalize colonial ideas – the same types of controls and surveillance are used
2. The African elites want to be elites and so don’t see anything wrong with hoarding the resources
f. Other
i. Ecology
1. Biggest threat for death if one lives in a slum – disease (children under 5 – dysentery)
2. Second leading cause of death – Fire (lack of resources to put it out)
3. Very little violence in slums, but lots of crime.
4. Housing built near chemicals and stuff
ii. SAP Third World
1. What is the political dynamic involved in structural adjustment programs?
a. How does it affect middle class and elite in housing?
b. They qualify for subsidies for housing, and people will be hesitant to tax them.
iii. Surplus Humanity
1. What is to be done?
2. TBA
3. Resistance to slums should be studied and the places they have found should be implemented elsewhere
III. Other Aspects of Cities
a. Saski
i. How does her analysis differ from Davis?
ii. She looks at the core rather than the periphery
iii. Cities are more important because that is where all the capital is
iv. Human migration patterns
v. New finance economy is dependent on cities for creation of new products and maintenance of that system
vi. Views of land are more “city to city” and ignore the periphery
1. Shift to real estate becoming a commodity and part of the financial economy
b. Norris – Global governance and cosmopolitan citizens

Thursday, December 10, 2009

Political theory: Hegel

No one really understand Hegel - except Hegel. So here are some notes to try and help those of you who are as confused as I am about Hegel.

What’s compendium? Takes existing knowledge and organizes it – Hegel says it “has as its subject matter the entire compass of a science” (everything important).
Hegel says that there is a form to the compendium – what is a form? All the subject matter is the ideas on the subject – how you arrange it in pages is all set down in a “form” – common form is “alphabetical” but every book has a form – it’s in the Table of Contents – sometimes in time-order – sometimes by concepts (small to big; basic to complex; the idea you start on to build other things) – this is the way that someone who is a theorist/scientist might be inherently used to.
He wants to say that philosophy is the only true science – but that isn’t true because there is nothing that builds on each other and then supersedes it (like physics and math do; they progress). Philosophy doesn’t progress like science – they are opposites.

Hegel is interested in making philosophy scientific.
He doesn’t want things to be arbitrary – we are going to want some kind of speculative way of determining ideas.
Will is about determination; right is about some kind of standard
Right – starts with seeming like an abstract concept – what does it need to do to have any kind of meaning? It’s abstract- has no content. So it needs to have content and context – definition –
The Will – he says is completely negative
Can free will really be free if it is bounded/determined by something external? This is what Hegel thinks that “thinking” is – and he wants to try and structure this. Will starts as choosing, then goes to choosing among desires, then choosing among the orders of desires, then whether choosing is arbitrary or a free choosing.
Who am I? An abstract concept….I externalize my internal feelings……so there is a relationship between the abstract concept and the externalization of that concept (like a tattoo of an individual’s name)
There is also a connection between the external and the individual (Hegel sometimes call this the negative)
- This is like a 2 year-old, teenager, or 18 year old child…. When the standard of right becomes “I” and not the “external” – when they want to do what they want when they are testing their boundaries …
- Home d├ęcor is all about expressing yourself in the external world – finding the individual personality in the external world – giving you content.
- So we need some kind of development where things get resolved (at least for a moment, because Hegel is saying things are only resolved for a moment because the resolution is simply the next step of the externality).
- Hegel wants you to say “no” and then move to the next step in the argument and argue with it rather than be like a 2-year old and take a “no” and have that be the end of it.
Hegel says that thinking isn’t the adding together of facts, but like the development of a plant out of a seed.
Right is what should be done – and we want to know, what is that.
So, go to will – will is what I want to do – I is the absolute abstract, capable of negating anything and can look at any external standard and negate it whenever it wants to say no – so the problem becomes the “I” because it is the absolute abstract.
Hegel is very circular – like a spiral staircase – you go back over and over the same point, but they go higher and higher in thought quality
So if I want to make choices based completely in free will – my choices are going to be arbitrary because you are not choosing based on any standards or guidelines – but is that freedom? No, because that doesn’t mean that you are choosing freely
-Choosing arbitrarily means that you are determining based completely on the externalities; you are choosing depending on what it around you when you are choosing – there is no rhyme or reason to things
- It isn’t really freedom if you are choosing without thinking (rationalization) then it is just arbitrary and animal, not thinking and freedom. It’s not freedom, its reaction.(Free will and determinacy) – there are problems with these abstract concepts – because these are formal – the way in which these appear (free will and determinacy) [by appears, he means the way it takes shape/form/external] – this shows up as a dialectic [ type of argument with many voices] of these desires
- what does it mean to be ”good” – that you desire the right thing, because you desire the right which is what is truly you
- if man is “evil” means that the immediate desires of man is bad.
- so what do you have to do to determine which of these is true – you have to determine the impulses.
SO we are not simply going to rely on the internal desires, but we are going to order them according to which grants us the most happiness (an abstract concept) –
Hegel says that in some way, everything is true, and everything is simply not right.
This is called a reflective equilibrium

Justice Consent
Aristotle Locke/Hobbes
External standard Internal standard
Right Will

Add these (or subtract them) and you get Hegel

· Abstract concept – What is it?
o No definition (content)
§ Coherent understanding of the term
o Not real (context)
o Not true: Is it not true? Can abstract be true? If truth relates to definition and reality, and abstract concepts don’t have definition and reality, then there can be no truth to it.
o Concepts are leading to ideas which have these three things.
· What about true and false concepts?
o Can there be false concepts? False ideas about this world? It’s when the idea in the head doesn’t match up with the reality – the internal doesn’t match up with the external.
o So for something to be a true concept – the idea must match up with the external world. The idea must sync with reality – it’s not a deliberate process because you cannot will reality to match with your ideas.
§ Understanding the way the world is – this can be a true concept –
§ So what does it mean for someone to “know” something – to be a true concept?
· It means, at some level that what is going on in their head and what is going on in the world are in sync.
o But you are supposed to know yourself.
· Free will is an abstract concept
o This is where we start talking about right – it is abstract
o “I” exist in and for itself: Self-conscious (for itself), being conscious (existing in): I exist and I know I exist
§ Be a subject – doing the acting
§ And an object – acted upon
· So what is a person?
o An individual will – not just a “will.”
o Someone who is self-conscious is a person because they know themselves
o If you are simply externally driven, you are a thing/object
§ You can have a good object, but a good object gets its goodness and badness externally – not from internal decisions
o A human being has a conception of itself as a person, that is connected to its conception of choosing between right and wrong
§ So what makes the difference between an 8 year old reason and an 18 year olds perception of right and wrong?
· Experience – the thing that helps the abstract concept become a concrete concept and match up with reality
o A human being has a drive
§ Going from the conceptual world to a tangible one – to exist
§ It means making plans a reality – this is the drive
§ Possession – owning things, making the dreams a reality
· What is the “stuff” of possessions – it is yourself
· What is your first possession – your body
· What is the second possession – things you grab
· What is the more adult way of possessing things – having your brain recognize that the object is yours whether it is in your hand or not
o Why is this a better form of possession? The body < mind
§ Possession: ping something of yourself into something else: Putting an idea into the marble to create a sculpture
· Because something is not a person, you can own it/possess it; bend it to your will; put yourself into it
o Kind of like, mixing your labor with the land to create ownership
o You have to produce things in the outside world – you are not real until you make something real in the external world.
· Contract is the way of knowing that other people recognize that you possess things
§ Why do people want headstones, to have kids etc: To express yourself as a person, to put your mark on the outside world – kind of like dogs peeing on trees.
· This is where we need property – the will needs to become real (section 41)
· And we do this through things – which are the opposite of a person
o Things don’t have self-consciousness
o You can mold things to your own will
· Person/Thing
o I/Objects
o Which is more real – it depends on how you are feeling
o Things are real – they have substance
o Things are merely things – what is he “mere” aspect? Why don’t you want to refer to people as things- because people are not things that you should just mold.
§ Hegel is upset that the Romans thought that people could possess children like they were things. Hegel thinks that children are people too
o Because things do not have rights, what can you do to them? Anything you want.
§ You cannot do that to a person because that would be doing something illegitimate.
§ You would be violating people’s rights/violating a person if you did whatever you wanted to do with them.
· What does it mean that a human being has the concept of “mine?”
o It means that a human can develop the concept of “mine” from being physically attached to it, to owning t with the mind to…..
o There are three ways to develop “mine”
§ (p.84) physical seizure
§ Giving it form
§ Designating ownership
§ Section 55 – from the point o view of the sense, physical seizure is the immediate way of taking possession – but it is limited in scope and temporary
· Use of things – possession
· Abstract I: seizure, use, body (you aren’t really in it yet)
o The realness is: Marking, value, mind
o This is when you penetrate matter with thoughts – taking abstraction and adding thought to make it in an external form and making it real – giving it meaning
§ Meaning is an idea
· What does it mean for something to be alienable –alienability of property
o You can take your will out of it
o Simplest meaning – you can throw it away
· Property – because it is an external thing – exists for external things
· The relationship of will to will is where freedom has its existence
· Wrong (Section 82)
o You don’t know what is right (unintentional)
o Deception
o Crime
· Why is purpose important?
o I act, so what am I responsible for?
o If I was responsible for every consequence, then that would absurd
o Your purpose defines the limits of your responsibility
o What you are intending to do
· What is intent important for?
o Welfare – what you want to achieve
o You have to have a link between the action and what the welfare is
o Intention matters
o But you cannot completely absolve things even if the intention isn’t there
o Part of the problem for morality is trying to determine what it is that you should intend, or count as intention, in actions.
· What does conscious matter for?
o Anything you like
o Believing in good and evil
o Relates to good/duty – what you should do.

Wednesday, December 9, 2009

Afghanistan and globalization: an author's perspective from 'Winter in Kabul"

These are notes on globalization and how it relates to Afghanistan based on the information provided in "Winter in Kabul." It should be noted that I don't agree with what the author presents, but rather I am presenting it to help others who might need the information.


I. Basics
a. 34 Provinces
b. GDP $2.3 billion/per capital $800
c. Pashtuns 42%
d. Tajiks 27%
e. Hazara, Uzbek etc – 3%
f. Sunni 80%
g. Bonn Conference 2001:
i. The transitional government is named:
a. Warlords were the ones who were able to take power- they are the mujahidin
b. Constitution in 2004
c. First presidential elections at end of 2004 – Karzai wins – kind of re-elected in October
i. Worked for Unical during the transitional government
ii. When members of the Taliban come to th State Dept in 1997, he plays a role in those negotiations
ii. Flaws: Women’s rights are pushed way down and not given, women’s rights are trampled on
h. International Security Assistance Force (2003)
i. It gets turned over to NATO
ii. Also the American Forces separate from NATO
1. Mission: Build stability and nation-building
II. In the Streets
a. Causes of conflict
i. Between families
ii. Between tribes
iii. Between ethnicities
iv. We armed them
v. Domestic:
1. Want to control the poppy trade, water, trade routes
vi. Regional forces:
1. Ideological forces (communism)
a. The conflict isn’t over whether Islam should be the religion – but whether the fundamentalist Islam should rule or not.
2. Kashmir conflict has resulted in multiple states/multiple nations in close geographical proximity – creates conflicts (India/Pakistan)
3. Control over trade routes
4. Tribalism
vii. International factors
1. Ideological: Permanently undermine communism
2. Natural resources: build a pipeline (economic interest)
3. Geopolitical: Deal with terrorist networks; Prevent Iran to become a regional hegemon in the region.
4. Military reasons: Stability; preventing the Taliban from coming back into power because the US has made an enemy out of them and they will attack the US
b. Critique of American Foreign Policy
i. Carter (1973-19): Soviet Invasion; US response: Arm and train the mujahidin against the Soviets (tens of millions); US getting information from ISI (Pakistani Intelligence) and recommend an extreme violent fundamentalist for the leader
ii. Reagan: Continuation of the same policy
iii. Soviet withdraw 1989
iv. 1989-196: Civil war; the different factions are fighting for power
v. 1992 – Transitional government; which then breaks down into civil war
vi. 1996 – Taliban comes into power
vii. Problems with this: We armed and supported a non-democratic/extremist position in the country because we relied on non-reliable sources and were too eager to prevent Iran from having power (suggesting the moderate who should be in power). The US’s distain for communism is so strong that it turns its aggression against a moderate in support of the extremists/fundamentalists
viii. Problems: The US has no ability to know the region and so cannot interpret any intel they are getting, and they are getting bad intel – the US thinks that what is good for America is good for everyone.
III. Prisons
a. Constitution
i. Sources of law: Custom, Sharia, Penal/Civil code
ii. Sources of misogyny – all the laws
iii. What hope of change? Not a lot, but they have the theoretical right to vote; so maybe other things might change
IV. Schools/Reconstruction
a. Promises and pitfalls of reconstruction
b. What is going wrong with the reconstruction of the schools in Afghanistan?
i. The people that would teach can make more money doing other jobs – so there are not enough teachers – especially at the primary level.
ii. The NGOs don’t stay long enough – the emphasis is on producing the numbers for the reports and not the goal of education- this is the commercialization of education and commercialization of nation-building
c. Anything positive?
i. Something is better than nothing
ii. Some groups are able to empower certain individuals or regions
1. Help improve language skills to become employed
2. Bring some clothes to some people
3. Help some widows who couldn’t go out to get food find food
V. Policy Recommendations
a. Troop Increase
b. Reconstruction
i. In the 1960s the women had the rights to go to school, to university, to wear what they want…..why did this happen? Because the political elite was interacting with the rest of the world…..the rest of the world influenced the political elite.
1. Can the US use its foreign aid to establish influence?
2. Yes – exchange programs to expose people to different norms
3. Make the elite attracted to trends of other countries so those trends appear in the government (like women’s rights)
ii. In order for the repressive culture to end means to find a way to cut down on fundamentalism
iii. Afghanistan will also have to develop its economy and infrastructure – get rid of the poppy trade – in order to develop their economy and gain traction away from fundamentalism
iv. Must be continuity in foreign aid so that there can be long-term support for new values and cultures in the families/culture that would support the new values.

Tuesday, December 8, 2009

Globalization: Production and Trade

Production, Trade and Globalization
Questions to answer:
How has corporate power changed throughout the nineteenth and twentieth centuries?
What are the key historical junctures in the evolution of MNCs?
What are the domestic, decisional, distributional, and structural impacts of the globalization of business?
Is corporate power eviscerating state power?
Lowering wages and exporting jobs?
Exporting human rights?
What are the key historical junctures in the evolution of the global trading system?
How have states become enmeshed in the global trading system?
According to Irwin, what are the arguments in favor of free trade? For protectionism?
Are global trade relations eviscerating state sovereignty?
What is fair trade?
Does Hamilton make a fair case?
How have fair trade strategies been implemented?
Is it a viable strategy for LDC development or is it radical chic?
It is liberal chic because it doesn’t do anything. There is no enforcement. And there is disruption at the local level if the fair trade fails because the fair trade brings in more money, and then fails. Also, it can make a place susceptible to takeover because it seems more prosperous for the neighbors to take because of the influx of fair trade market. The number of fair trade is also so small and doesn’t affect anything to do with the government and state-owned industries.

a. Evolution
i. 4 factors Held will use throughout to determine if globalization is happening:
1. Extensity
2. Intensity
3. Velocity
4. Impacts
ii. With production, how does extensity change from the first wave of globalization to post 1944 (or 1944-89 and 1989 and after):
1. Increased in extensity in post-WWII era
a. FDI is moving to E.Asian LDC’s because of surplus labor (late 60’s – mid 70’s).
b. 1944-60: US largest FDI exporter, exporting to W.Europre/Canada
i. FDR had the Marshall Plan
ii. FDR wanted FDI to be invested “Greenfield” – physical plant machinery that cannot be easily moved
iii. FDR did not want “Portfolio” investment – which was financial investment, stocks and bonds, not investing in manufacturing.
1. When Keynes is making his case for regulation of FDI, he wants restrictions on portfolio investment and limits on it, but wants almost unlimited ability to invest in Greenfield investments. Keynes wants people to invest in actual production
iv. After 1989 mergers and acquisitions are going to be huge in FDI.
v. After 1989 – FDI moves around the world, not just Europe.
c. The contemporary period differs because it is more extensive, wider spread, than past FDI periods.
2. Increased intensity in the post-war period as well. Look at GDP and the growth
3. Emergance of MNC
a. Skeptic: MNCs are driven by national agendas and are driven by national agendas and rules – they still serve the interests of their country and their country can put restrictions on them
i. Countries can control MNC by
1. Tax policy
2. Regulations
3. Licensing
a. So a skeptic would say that the MNCs are simply serving their own interests – same as they were in the earlier time periods.
b. Transformationalist: The MNCs are forming trade and production networks and can evade state control. A new global economy.
i. The networks make more and more transactions outside of the market (Held says)
1. They want monopolies and oligopolies
2. Vertical integration
3. Horizontal integration
4. Intra-firm pricing/Transfer pricing
a. 2 companies are owned by the same corporation so you don’t have the market interfering.
b. Market forces don’t determine price, the corporations do.
c. Why do MNCs like this?
i. Get away from taxes
ii. Funnel resources to places based on tax rates rather than where production is taking place
5. Intra-industry collaboration
a. A few firms in a particular industry will collaborate and agree.
ii. Not that the state has lost complete control; but the state cannot control the activity as much as they want to.
c. Hyperglobalist: The nation state doesn’t have any power anymore, MNCs go wherever labor is cheapest and do what they want – MNCs run the show. Corporations are stronger than the states themselves.

iii. Aspect of production that is essential for the 21st century which wasn’t important before:
a. Distributes power in the international political economy
i. Allows SME (small-medium enterprises) to have more power because they can subcontract, or be subcontractors
1. Nokia
2. United Colors of Beneton
3. Louis Viutton
b. Distributes risk
c. Makes this period in globalization unique compared to all prior periods.
b. Impacts (Held Chapters)
i. Decisional
1. Skeptics: No difference states still retain control
2. Transformationalist: States still have some control, but some of their control has been taken away
3. Hyperglobalist: States have no control
4. How does this affect state policy?
a. Demand management no longer works b/c of changes in production
i. Makes it harder for sates to follow a Keynesian economy
ii. Cannot support the national champions (France) as well because their influence has been reduced
1. Strategic trade policy
b. Unemployment policies have become harder to manage
c. Cost-benefit analysis are harder b/c the cross boarders
ii. Distributional
1. Skeptics:
2. Transformationalist:
3. Hyperglobalist:
4. Labor looses as production shifts to lower paying countries
a. Sweden is the only place where labor can still win
5. Production shifts to having different levels of production/different parts of the production of the whole – located in different countries
6. Increased demand for skilled workers
7. Unskilled labor has been hurt the most because that type of labor can move to a different place where labor is cheaper.
iii. Institutional (International Political Economy)
1. Skeptics:
2. Transformationalist:
3. Hyperglobalist:
4. More competition will be taken place
a. Particularly within the sub-contractor area
iv. Structural
1. Skeptics:
2. Transformationalist:
3. Hyperglobalist:
4. State v. market
a. Held sees a shift to the market and corporate power
5. Performance of MNCs have become decoupled from national economic performance
a. This is another piece of evidence Held could use to show that the skeptics underestimate this trend of globalization
c. Other
i. Frobel “New Int’l Division of Labor”
1. One of the first to document “deindustrialization”
a. Deindustrialization: moving industrial jobs from the industrial world to the developing nations
b. Uses German textile industry as a statistical and empirical example
2. During this period (1970s) you have:
b. Rising inflation
c. Rising unemployment
d. Low growth levels
e. Wages fall
f. Collapse of Keynesian economics
i. Clear by 1977 that they couldn’t resurrect Keynesian economics
g. FDI is going to LDCs
3. Shift of productive capacity from the developed world to the developing world
ii. Arrighi “Industrial Convergence”
1. They are responding to claim that the hierarchy has changed but there is still a hierarchy (Transformationalist perspective)
2. There has not been a convergence and there is still significant stratification and the stratification is still clear cut – North/South
3. They call into question whether development/industrialization is really good for LDCs
a. b/c it can overlook important details
b. Questioning development paradigms
4. Deindustrialization argument is a specific political choice made by developing countries – specifically the US
a. They needed to find another area they could control b/c they lost hegemonic power in the industrialization area
b. This has the affect of undermining development
c. And it was intentional in order for the US to regain hegemonic power in an area
d. Create increased competition for finance capital
5. Not explicitly clear about the competition among development paradigms
a. Chile/Argentina/Brazil/Uruguay/Mexico: all of these made significant progress in 1960s with rises in living standards, public education, GDP doubled – this suggest that they might have come up with a persuasive form of developmentatlism or neo-Keynesianism.
i. So the Nixon administration and others tried to dismantle the paradigm and stop this by redirecting flow of capital back into the US
6. When they draw the distinction between market capital and development capital – the US and others have written the rules so that the developing countries can never become developed countries (updating List and Kicking Away the Ladder)
7. Comment: application of applied theory to the issue - they use Schumpeter (creative destruction) to apply capitalism to the analysis they do.
a. Creative Destruction: You have to destroy the part of the economy that is hindering creativity in order to become creative and innovative
iii. Hirst/Thompson “Globalization, a Necessary Myth?”
1. Best known SKEPTICS
2. Why do they think production and its consequences are fundamentally unchanged from the golden era of globalization:
a. Investment is still in the FDI
b. The networks are still regional, not global
i. Reactors are fewer and thy will be more restricted in their geographical scope
c. They say that a real globalization market has never happened
i. Held says that if you can see that foreign competitors are competing with local producers/national producers within a certain industry – you see globalization
d. MNCs don’t exist
i. Look at where HQ and R&D are taking place
1. If a company is truly transnational, it wouldn’t matter where these things take place
2. However, since there are no MNC’s – this does matter, and HQ/R&D take place in their home nations.
iv. Dicken “A New Geo-economy”
1. Uses production chains to show there is a movement towards globalization
2. Shows the tension between state regulation (state hasn’t been eviscerated) but MNCs are growing in their power
a. This puts him in a Transformationalist perspective
v. Spar “Spotlight and Bottom Line.”
1. Is she too optimistic about how companies can control human rights?
2. Is she giving too much credit to MNCs watching human rights?
a. Puts a lot of emphasis on the public spotlight
b. Wanting the public glare to take care of being a conscience for the MNCs
c. But the problem is that this is more interest groups related than MNC related
3. Codes of conduct/Glare of spotlight
4. No regulatory agency for the MNCs to answer to for the human rights violations
a. She overlooks that the “fair-trade” movement might have gone as far as it can
5. She’s suggesting that under certain conditions the interests of the MNC will overlap with the human rights interest to create movement towards better human rights.
6. Is she a Transformationalist?
a. She has Transformationalist tendencies
b. She’s identifying the origins of the regulatory regime that would have to exist for MNCs to care about human rights.
a. Evolution
i. Accd to Held – why is this period different from earlier periods?
1. Technology has changed, so barriers to trade have changed
a. What are the institutions most responsible for reducing barriers to trade?
i. GATT: post-WWII/1947 – a treaty not an organization
1. Establishes the principles for a free trade system
2. By 1979 with the Tokyo agreement you reach the lowest tariffs on manufactured products
3. What were the limitations of GAAT?
a. Limited enforcement mechanisms
b. Issues GAAT did not address:
i. Agriculture
ii. What did GAAT come up with in the early 1960’s to try and appease developing countries with agriculture?
iii. GSP – generalized system of preferences: would give preferred status to some of their exports to industrial countries (India and textiles was the first one)
ii. WTO: 1995
1. Stronger enforcement mechanism
2. Still doesn’t address agriculture
b. When we reach the contemporary globalization period; tariffs are at their lowers point every
ii. Extensively: More countries than ever are involved in international trade
iii. Intensity: No longer just raw materials and final luxury products being traded international – the types and numbers of goods being traded are going to increase/services are added to trade
1. How does this affect US in terms of manufacturing?
a. Reducing for low capital gods, but they are being traded more
2. Number of goods being manufactured in US have declined, but those industries still producing are producing more and being competitive
3. Country’s GDP related to international trade is increasing
a. In US – 12% relating to exports
b. In Germany – almost double what US is
b. Impacts
i. Decisional
1. Cannot be protectionist in policy (because of WTO rules)
2. Attitudes about free trade have shifted – ideological shift
3. Everything becomes more sector specific and less class based on who is benefiting and losing from trade – becomes more difficult to build and sustain coalitions
a. Example: Labor unions in Oakland (Longhsoremen/docks)
i. They should be opposed to globalization because it reduces demand for their labor, but it has increased demand for their services at the Port, so they are okay with it.
ii. Distributional
1. Who benefits: Skilled workers
2. Who loses: Unskilled workers
a. The “retraining” argument cannot hold when white collar jobs get traded out to another country (engineering, computers etc)
b. But not those whose services (plumbers et al) whose services have to be local
iii. Institutional
1. How this has affected changes in the international economy – how they have affected different actors
a. Welfare state: the welfare state/demand management policies become more difficult with an open trading system
i. But Netherlands, Sweden, Germany have open trading and welfare states
iv. Structural
1. Biggest impact on states: demand management policies
a. National autonomy is declining over economic policies
b. What needs to be developed to make states respond to trade issues: human capital, retraining
i. Options of states have been reduced to this level
ii. TAA (1962) Trade Adjustment Assistance Act (Kennedy and Congress) – if one could prove that the job had been lost to international competition, then you could get extended benefits – and retraining.
c. Other
i. Rodrick “Advice to …”
1. What advice would he give to a developing country in terms of trade policy?
b. Comes out of a centrist tradition; not associated with the left
c. Critical of some of the major aspects of neoliberalism
ii. Leclair ‘Fair Trade”
1. Two things that can help developing countries
a. GSP: from the GAAT – helps developing countries who can export certain goods
b. STABEX: European stabilization fund
i. Developed by the European Community (Africa and the Carribean)
ii. Whenever the primary product the country exported, whenever the price of the product fell below a certain level, the country could take out $$ from the stabilization fund.
iii. By time get to 1980’s/1990’s – will rule that the GSP violates international trade standards.
iv. The EU decides to discontinue STABEX
c. The policies of the EU to the developing world has been equally as stern/exploitative as the US
2. How can fair trade address the dismantling of the 2 institutions
a. Fair trade
i. Tries to get a fair price for the producers of products
1. Not individually owned farms/corporation owned farms
2. But use cooperative; the people who live on the cooperative must have a say in how the profits are going to be used.
a. Tries to get cooperatives to make their own decisions for education and medical institutions – with the profits from the fair-trade agreements
ii. Gets a lot of the product from the producers and sells at a higher market in the developing world – brings that money back to the developing country and keep it in the country
iii. Gets a guaranteed price above the standard market price for that product (based on the C-market in NY)

Sunday, December 6, 2009

Political theory: Notes on the meaning of Guizot

Lecture 18 (p. 359) – wants to know about the division of legislative power.
- The philosophical school and the “other” school of thought
- Guizot has a “these people are stupid,” attitude towards what others are doing in history and philosophical
o What is it the philosophical school lacks that history has?
§ History has facts.
§ Guizot likes facts because what happened always happened, and the knowledge doesn’t change about the facts.
§ But facts by themselves are meaningless because you need a frame of reference to understand the facts.
§ Philisophical school is correct in using the Right as its end but also as its starting point
- What is Guizot’s problem with Rousseau?
o Rousseau is almost right
o Rousseau says that everyone has certain rights that cannot be restricted and that cannot be taken away
o Rousseau then says that the whole point of having certain rights that cannot be restricted means that people always give their consent to being governed.
o Guizot says - this is almost right
o He says that some people believe in representation, and since you voted for people who represent you, you have to accept everything they do –
§ Is this a good idea? No. Why? Just because you delegated things to someone, doesn’t mean that you have to like what they are doing – you need to hold them accountable.
§ Guizot says there are two things about representation: either the person who is elected is the slave to the electorate; or the electorate is the slave to the representative.
§ These won’t work – and so there is a problem with this because it takes away the will of someone.
§ Chapter 6, 7, and 8 of Part 1 – wants to divide things up
· Says that classifying things according to their external forms (government by the many, the few or the one) is error because sovereignty always belongs to some of the people, but not all of the people.
· P. 52 – ‘The classification which I am about to present……do not belong to our imperfect nature.” What is good for society isn’t always the thing that is done, because sometimes you may not do it because you don’t want to, or may not know what it is. So how do you make this thing into a principle of government? So that people put the needs of the society above the needs of the one?
o Pg. 53 – “Representative Government is….”
o Guizot says that having one republic is best – so England is the best example.
o There was no getting together in the woods to discern a social contract; instead something else happens
- Guizot’s history of England doesn’t start with the history of England – it starts with William the Conquerer who founded England and had the Tories (authority and tradition) and the Wicks (liberty); Tory – all power was vested in the King by God, and so even though the king has been letting things go, we should give him power.
- William doesn’t get all the power when he conquers - You had 2 people who were barbarians, but who had institutions that lasted for 100’s of years (the Normans)
- There is a division among aristocrats – some of them become rich and powerful and surround the king; some of them stay on their local turf because they are weaker.
- History is not the history of everyone, it is the history of actors (people who influence society on the political stage) – and most people are not actors because they don’t have freedom (politically or economically) and they are not doing anything. Free people require economic interests – if you are weak, you cannot resist.
- The barons – the rich aristocrats – want the kings to sign charters because the kings are abusing the barons. And the barons get the kings to sign the charters because they steal their sons, etc…..then when the barons leave the king ignores the charters…then the barons come back and get him to sign another charter….then the king ignores it…
- This history shows (for Guizot) that England went from a balanced power to an absolute king, then to trying to fix the problem…………so you can see from above, that there needs to be power to force the king to enforce the charters instead of doing things in an ad hoc fashion.
- People who are really poor have no power. Cities collapsed (like London) after the invasion and they became poorer so they had no power to stand up to the king or anyone else.
- But then the cities started growing more powerful – and the barons and the kings wanted them as their ally.
- If you have too powerful of an ally, you might become the subservient person rather than the dominant party in the alliance.
- So the king invited the barons, those who no longer attended court, and those representatives of the cities to advise him
- This is the history of the three part government in England
- The government of England has to be established based on the facts of the situation, and cannot be simply established in the forrest.
- Guizot says that everyone is not free to use their will (Children, mentally insane, mentally retarded) – parents don’t have free reign over their children, but there are responsibilities that arise out of things other than love.
- But in the history of England, it shows that there needs to be insitutitons to support and enforce the charters and those institutions need to be filled with people who have the inclination to be there and so that people cannot simply take power over others because they want to or rule based on their will.
- The determination is never final – you will not get representative government in a place where people do not have to prove themselves again in the future.
o Guizot is interested in publicity, elections because it requires everyone in power to go out and prove they are worthy of being in power again
o It is a constant deliberation and re-deliberation about whether the people in power are right and whether the laws are right
o It is never a final determination
o The search for the true Right is one that is continually going on
o It is the only way you can do it when people don’t know the law and have the willingness to follow the law all the time – because people are ignorant and not angels.
- So what does Britain do that almost makes them have a deliberative democracy?
o They have divided powers (Ch. 18 Part 2)
§ The 3 parts Britain has are a result of history – the great inequality of economics and power – House of Lords, House of Commons and the Kings
o Power doesn’t have to be divided that way, but it does have to be divided enough to have a 3-sided conflict to keep things in balance
o The other thing you need are decent rules of election
§ We are going to draw these from Britain’s fact, but they will show philosophical rules of Right
§ Britain ends up with election almost randomly: See his list of facts
§ Object of election is to obtain the most capable and best men in the country
· There is no real publicity when something is too big
· The community has to be small enough that you know the truth of who you are voting for and what is going on
o England discovers this by accident – counties and cities developed so small “the force of events”
o England lucked out

o So what does history offer, he says it become practical? What does that mean?
o The study of history never grows old – the old facts have new things discovered in them that were never revealed until now
o He says that history sn’t jus a random study of facts
§ He studies representative government because he wants to do something with it
§ And because all of Europe is developing representative government and so this is something history must be striving towards something/ that history is progressing.
§ Surprising idea – Europe has been tring to establish an idea of representation that works. England’s history is the history of moving from the tribal to the incredible inequality to move towards limits on absolute power of the king (charters/meetings etc),
· All of Europe is trying to do this, and everywhere is stinking except for England.
· So there must be something about England that is exceptional

Friday, December 4, 2009

Political theory and Guizot; Representation

Guizot is writing at a time when all of Europe is trying to develop representative government. Some places are failing, and some are failing miserably. During this time, Guizot sees that England almost has a real representative government. He wonders what it is about England that is enabling it to succeed in a representative government when the other countries in Europe are failing. In order to complete this study, Guizot looks at two things: representation and why the history of a political government is important to understand it.
Guizot wants to discover the meaning of the word “representation” as applied to the government of a community. He rejects the notion that “representation” can have a definition that is separate from the facts which surround the desire to define it. In this case, Guizot wants to define representation based in the surroundings of a representative system of government – The creation of Parliament in the English system.
Guizot says that the definition of representation, actually a doctrine of representation, is philosophical. He says that the doctrine starts from the principle that “Truth, reason, and justice – in one word, the divine law – alone possess rightful power (p295).” Guizot goes on to state that the way a society perceives this divine law, based on all the history it has gone through, creates “just ideas” within a society. These just ideas accompany loyal wills. However, just ideas and loyal wills are dispersed throughout society unequally. The distribution is based on the attributes of the individual. Each individual will have part of the just idea and loyal will within them.
Therefore, the concern of the society should be to collect all the fragments of just ideas and loyal wills and bring them into a whole and constitute a government. For Guizot, this is representation. It is the means to arrive at a government which will be legitimate. In order for this government to be legitimate it must subject itself to the reason of the individuals (meaning the decision of the individuals who have part of the just ideas and loyal will within them), over and over again. The process is never complete, but continues for as long as the government continues to be legitimate.
Guizot believes that representation cannot be understood in a country without also understanding the history of a country. Remember that Guizot believes in representation as a doctrine, a process – not simply some ideal. Earlier in his book Guizot stated that all fact, all history, is important to understand what comes next and that nothing happens in a vacuum. This means that, for Guizot, the formation of a representative government in a country cannot be understood without understanding the facts and the history in the country. Unlike Rousseau and others, Guizot does not place the start of a government, even a representative government, in the middle of a forest without any preconceived ideas or needs. Instead, Guizot starts from the notion that each man is not completely open to their own will, but instead recognizes that there are several laws – he calls them divine laws – that must be obeyed regardless. Guizot classifies these laws a truth, justice and morality.
For Guizot, representation is examined, for its definition, when it came into being – at the establishment of the English Parliament. For Guizot, the circumstances surrounding the establishment of the English Parliament – the abuse of charters by the king – helps shape the form of representation that England ends up with, and can offer clues as to how others can get it as close to “correct” as England has done.
England has a history of having small towns/localities. Therefore, when the House of Commons, one of the three parts of the English representative government and the lower house in the English Parliament, came into being, it brought with it the “small town” representatives. There are advantages to having a small area which a person must represent. Guizot states that the representatives of the people must consistently justify themselves and that election, publicity and responsibility (the three institutions which allow individuals to reason whether the people they have chosen as representatives should still remain their representatives) are easier to achieve in a smaller population and geographical area. The small towns of England have this in their advantage. In small towns, so the stereotype goes, people know each other, talk to each other and can trust/verify the activities of other members of the town. If a small town’s representative was to do something against what the small town wanted, publicity would easily bring it to the attention of the town members. Bringing things to the attention of the town members increases in difficulty as the town grows. California’s system of having only 40 state senators for the whole population is opposite of Guizot’s ideal situation. The larger the area, the harder it is to have open elections, responsibility, and the harder it is to publicize information about the representative and what they are doing. For Guizot, size matters.
England maintained this history of having small groups of people choose their own representatives from the first time they were asked to send representatives to the King. The King asked for representatives from the cities, the small closely-knit communities, to advise him along with the barons when it seemed as if the cities might gain too much power. By bringing in local representatives to advise him, along with the traditional nobility advisors, the King founded the basis for the three-part division of power in England: The monarch, the House of Lords and the House of Commons.
This three-part division of power arose in England because of the great inequalities of economics and power among the nobility and the commoners, and even among the various factions of nobility. For Guizot it is this three-sided balance of power, and how it came about, that makes England the example for representative government. Although Guizot does acknowledge that representative government doesn’t have to be structured exactly like England, but that there should be three sides to the power struggle so that one side cannot overwhelm the others. Whether a representative government ends up like England or with another system will largely, according to Guizot, be based in the historical influence of the actual country.
Guizot uses the history of England to say that representation is a continuing process. For Guizot, this process, representation, isn’t simply an ideal; it is a constantly occurring justification of the legitimacy of the government and is aimed at bringing together everyone in the interests of just ideals. England happened upon many of these things by chance, simply because its history influenced events; like the King inviting representatives from the city (precursor to the House of Commons) to advise him. Facts in context make history, and since England is the closest thing to a true representative government Guizot can observe, Guizot uses England’s facts, its history, to explain the doctrine of representation and the relationship of representation to history and representative government.

Wednesday, December 2, 2009

Notes on Bentham

· He doesn’t like social contract theory
o There never was a social contract/false premise
o Social contract: You should obey because you consented
· Instead, replace it with utilitarianism/happiness principle
o Government should be for the greatest happiness of the greatest number of people
o You should obey because government is working towards something
o The advantage of this principle is not that utilitarian principle every happened, but rather that it is the right reason for government to be doing –
§ It only makes sense that people would be part of government only if they got something from it, not if it was harming them (kind-of; it makes sense in the same way that everyone was in the woods and consented to government).
· We’ve been told by three authors in a row that Britain is the model for government – but Bentham disagrees –
· Judicial review (p.99)
o The mode of opposition is a legal one – judicial review
o Give the power to annul acts to the judges, and you give part of the supreme power to a set of men who haven’t been chosen –
o Bentham doesn’t like judicial review – and he doesn’t like common law
· Why does Bentham say that we obey laws?
o Habit
§ We aren’t always perfectly obedient to the sovereign
§ But the whole existence of being obedient to the government is out of habit
§ Governments go in and out of habit – sometimes more people are in the habit of obeying habit, and sometimes less people are in the habit of obeying the government
§ Why do people obey governments that are bad for them?
· Because they have been doing it that way – habit
· It is the only way they have known existence
§ Habit is the main reason for leadership
o Not fear of punishment, because if it was punishment, then that implies that we have a duty
· Blackstone – social contract is the reason that people obey
o Bentham says that he’s unsure about what Blackstone really is
§ Doesn’t think you should be able to ask “what ought to be”
§ Isn’t concerned about “what ought to be” unless the law is “what ought to be.”
§ You should just follow the law
§ He’s an expositer of the laws who tells you what the laws are, and that they are good
· Because you have an obligation to the law – because they are the laws
· Censorial – what ought to be
o This is the way Bentham thinks that law should be
o This is the philosophy of jurisprudence that Bentham thinks should be in place
· Why does Britain stink?
o Because its not utilitarian
o Because people’s habits are stuck following the social contract
§ Because habits come from what people read and hear – which is just the social contract theory which says obey obey obey
· Why doesn’t social contract theory satisfy Bentham?
o Because social contract theory says you can only revolt when you have a right to revolt
o Bentham thinks this would have to be sooooo bad, that it would never happen
o Utilitarianism will never happen
o He thinks that as the government treats you poorly, you have less obligation to the government.
o It doesn’t add anything to your obligations – It says you have to obey because it is right – but there are no other rules
· The words make it seem like there is a government
o But there is no clear cut distinction between when there is a government and when there is no government
o So why would you obey the laws? What happens if everyone disobeys the laws? Doesn’t everyone disobey the laws at some point?
· Bentham wants to claim that utilitarianism is better than common law
o P.96: It is the principle of utility that guides…
o P.104-105: The total big argument: I cannot see this as merely a dispute over words…
§ Difference that is argued in the utilitarian theory is “happy or less happy” - which is a factual argument rather than simply “yes/no” argument based on theory.
§ What are the two principles: The first type of argument is based on opinion; based on what is determining what is “right” –
· This is the reason he dislikes common law – because the judges are doing what they think is “right”
· Bentham says that people who make the decisions based on whether things are “right” or “wrong” – that relate to the divine law – are speaking on opinion and it is difficult to get a consensus
§ The second type of argument is that based on fact – while it may not settle all arguments, the argument about the effect, rather than on opinion, will lead to more consensus
· But in order to do this in utilitarian theory you have to define what happiness is: and it can be harder to quantify the happiness and make it factual so that the argument can move onto the effects of the factual happiness.
· Bentham wants to say that happiness is quantifiable
· Laws shouldn’t be made to do what is right; laws should be made to suit the happiness of the most people.
o Arguing for laws that are about the “eternal right” aren’t valuable and tend to be absolutist in their position
§ The absolutist position is a bad one because even if it makes sense now, it might abridge happiness in the future, and then you would be obligated to obey it.
· You want to use words that everyone can understand
o Avoid Latin because people don’t know what they heard
o Hates Blackstone because he doesn’t use common words but instead uses words that people don’t understand
· Utilitarian principle is based on pleasure and pain
o Does it cause more pleasure?
o Does it cause more pain?
· A free government has the same limitless power as a despotic gov’t (p.97)
o What is he arguing against?
§ The American government is a limited government; that’s not what Bentham is saying. For him, government is limitless and can do anything in it wants to make the people happy
§ But a free government doesn’t have less power
· It has a different distribution of power
o In a despotism – the power is in single hands
o In a free government – the power is distributed among many
§ There is a free press in a free government
· So that everyone can communicate their discontent
§ Government, even a free government, has to have limitless power…
· But if you structure it in certain ways, you can manage to keep the government free and more utilitarian (happiness oriented)
· Hume had an essay that asked whether the British government was more monarchical or democratic – and said that it was democratic and you needed something to pull it back to the king
· Bentham says that isn’t true – the House of Commons doesn’t represent the commons, it represents the King, the rich - but not the commons.
· You want a government that looks out for the common god – the utilitarian principle (happiness)
o The only alternative is one that says “my wants are more important, screw the happiness of others.”
o But that is what Britain doesn’t have – there are no other legit principles in the interest of the people except the utilitarian principle
o What you really want is a society where people are forced to follow the utilitarian principle
§ Bentham thinks the US solved this problem.
§ Bentham says that the US is better than Britain because everyone is elected and everyone is responsive to the people
· No one is simply placed in office based on their birth
· The power is separated

· Notes from professor – Bentham says that there never were agreements in England, but the truth is that there were – the charters made by the King (who frequently ignored them) – hence what the revolutions were about.

o Bentham really forgets that agreements not being kept can be a factual disagreement.

Monday, November 30, 2009

Notes from Held's book on globalization of finance

Held Ch. 4
Shifting Patterns of Global Finance
4.1: Indicators of Financial Globalization and Financial Enmeshment
· Openness of national financial markets: level of legal restrictions on international financial transactions
· Enmeshment: extent of national financial engagement in global financial activity
o Measured by: turnover of overseas assets on national markets, involvement of both foreign financial institutions in domestic financial markets and domestic financial institutions in overseas financial markets and national shares of various global financial flows
· Integration: precise economic sense of the extent to which the process of, and the returns to, assets are equalized between different national financial markets
· Best indicator of financial globalization as a historical process: extent to which there is a convergence between returns to, or process of, similar financial assets
· Extensity: measured by geographical reach
· Intensity: magnitude of global financial flows
· Velocity: related to changing infrastructure, like communications technology
· Impacts: it has always impacted but the kinds (decisional, institutional, distributional and structural) can vary among eras; mediated by national economic conditions
4.1.1: The structure of the argument
· Global finance embraces:
o Flows of credit
o Investment
o money
· Seeks to identify the key attributes of various eras
· Technical terms:
o International capital flows: cross-border flows of assets and loans differentiated into several types:
§ FDI: ownership of or investment in overseas enterprises in which the investor plays a direct managerial role
§ International bank lending: loans to foreign creditors in domestic or foreign currency
§ International bonds: credit instruments issued by or to overseas creditors which include a promise to pay a specified amount of money on a fixed date and to pay interest periodically at stated intervals – bonds are marketable securities denominated in standard units
§ Portfolio investment: investment in corporate shares or longterm bonds held simply for their return with the investor playing no managerial role
§ International equities: shares in companies issued to foreigners
§ New financial instruments: derivatives, options, swaps
§ Development assistance: official government-to-government aid flows
§ International monetary flows: buying and selling of foreign currency
o Gross capital flows: measure total capital flows out of an economy or alternatively flows inwards
o Net capital flows: measure gross outward flows minus gross inward flows – net flows indicate whether an economy is accumulating claims on the rest of the world or visa-versa.
4.2: Early patterns of global financial activity
· 12th century: Precious metals used by international traders
· 14th century: Organized international finance: Florentine merchant banks
· 16th century: Europe imported large quantities of precious metals used to finance purchases in Asia (Europe and Asia became intertwined
· 16th century: Antwerp developed as financial center b/c of liberal financial policies
o Growth of international finance fueled by 2 things:
§ Growing trade networks fueled demand for cross-border financial systems to prevent danger of transporting money across lands
§ Difficulties faced by states to finance wars created pressure and opportunity for organized finance
· Example: Bank of England created to finance England’s war with France
· 18th century: demand for international finance led to sophisticated markets
o Communications took about a week
o But intensity of trading makes it a cohesive whole
· Although extensive, the reach was limited to the reach of imperial systems
4.3: The classic Gold Standard period: 1870-1914
· Developments n communication and infrastructure means that international markets became enmeshed with national markets
· Skeptics: this period is the benchmark for financial globalization because it was during this time that the scale of net flows was the greatest and adherence to the Gold Standard meant that countries had to subsume their domestic economic policies to the international rules.
· Transformationalist: this is misleading and untrue
4.3.1: International capital: the extensity, intensity and stratification of financial flows
· Remember that Held is saying transformationalists believe the skeptic position is misleading
· Exact capital flows across countries is hard to measure, but the general sense is that it increased
· This period had capital flows changing from European-centric to having a distinctive interregional or intercontinental character
· Charts are in book to show capital flows and where they went/how much was invested
· A liberal financial market: little to no regulation on international transactions during this time; especially on global bond market (privately organized)
· There was an intercontinental reach but it was concentrated and stratified
· Infrastructure changes made it possible to have global markets more effectively: intercontinental telegraphs, encouraged the institutionalization and formalization of international monetary arrangements (classical Gold Standard)
4.3.2: International money: the operation of the classical Gold Standard
· Values of major currencies were fixed to gold
· Established formally in 1878 (Paris International Monetary Conference – 1867)
· Initially, participation confined to leading European economies, N.A. and Australia
· Membership required that countries both convert their currency to gold on demand and did not restrict international gold flows.
o Some say this was an open and automatically adjusting system
o Critics say – not so, but it was open
· P. 196: The operation of the Gold Standard – in theory

Saturday, November 28, 2009

Globalization and Finance: Held, Castells, and Gilpin

Finance is another aspect of the world that is examined when globalization is studied. Just like the Multi-national Corporation and union analyses, the analysis of finance will use Held’s measurement system.
The discussion of finance involves the comparison of financial flows over time. This is necessitated by the skeptic position which claims the world is less “globalized” now than in the golden era. In order to determine if the analysis of financial globalization supports the skeptic position, or supports one or more of the other positions, it is necessary to look at finance over time.
The skeptic position argues that the benchmark for a truly globalized financial system is the Gold Standard era, before World War I, and that the world today is not as globalized as the world then (Held 192). For the skeptics, the Gold Standard Era required that states subsume their domestic policies to the international rules of the Gold Standard system (Held 192). Today, according to the skeptics, the nation-state has not been undermined by the forces of globalization, that nation-states do not have to subordinate domestic economies and economic policies to the international system, and that although the role of the nation-state has declined, in some ways, in economics, it has increased in others (Gilpin 349).
Extensity and intensity are the first two criteria examined when analyzing globalization. For the skeptics, the extensity and intensity were greatest in the late 1800s: the markets were truly supreme and the nation-state had little power over economic affairs (Gilpin 350). In order to be a member of the Gold Standard system, a country had to convert their currency into gold on demand and not restrict international gold flows (Held 195). For skeptics, this is the ideal of a globalized financial system; the nation-state being subject to the market. During the late 1800s the extensity allowed the international flow of finance to reach all over the globe; there was a global capital market, multinational banks, and a flow of money between countries, although the flow was highly uneven (Held 198). Additionally, the intensity, the net capital flows around the world, has not been reached at a similar level since that time (Held 198). Since, as skeptics argue, this is not the case today, then globalization is less than it was in the late 1800s (Gilpin 351).
Transformationalists do not dispute that the extensity and intensity of globalization during the golden era were phenomenal, but instead state that the extensity and intensity still relied on domestic policy and a few countries, notably Britain, dominated the system (Held 198). It was centered in Europe, which made it regional rather than global in reach (Held 198). Compare that to today where almost all nation-states participate in the international financial markets either through international bonds, currency trading and setting interest rates (Held 222).
The intensity of the current market, for transformationalist, is much larger today. There is lending between banks- both in national and foreign currency – international bonds, stock markets, derivatives, and international money markets (Held 209). With all of these types of international financial flows, they are more global in nature and less regional. Europe does not dominate the flow of capital (Held 207) and more money flows to developing countries than it ever did in the golden era (Held 211). The various ways that capital and investment can flow without regard for national borders is unprecedented in the current time (Held 223).
Velocity is one area that is undisputed between the various viewpoints. Skeptics, transformationalists, and hyperglobalists all agree that velocity is faster today than it has ever been before (Held 223). This is because of the infrastructure and technological developments in the world. There was no internet to connect the world 24 hours a day, 7 days a week in the late 1800s. There is the Internet today. This allows for instantaneous communication around the globe in the financial markets. When this is compared to the trans-Atlantic cable that allowed for international telegraphs, there is simply no comparison. The velocity is much faster today than in any other period (Gilpin 352).
However, the presence of technology and communication between people is not the same as having a globalized financial system.
The area where there is the most difference between skeptics, hyperglobalists and transformationalists is on the impacts of globalization. For a skeptic, globalization would mean that nation-states must subordinate their national economic policies to the international finance market (Held 6). However, the skeptic maintains that in the world today, nation-states are just as important as the international financial markets and that the international financial markets only operate with the consent of the state, which means there is not globalization (Held 6, Gilpin 354). Skeptics also maintain that the ideal state of globalization, the golden era where the nation-state was required to subsume national economic policy to the requirements of the Gold Standard, is simply not met today (Gilpin 349).
A transformationalist would argue that the international market blurs the line between the nation-state and the international world, and that the international financial market forces nation-states to change the way they pursue their goals (Held 7). A hyperglobalist would argue that the international financial markets are eliminating the need for nation-states; that the nation-state is becoming obsolete in the face of international financial markets (Held 12).
How does the international financial market impact domestic policy and the decisions of nation-states?
Nation-states have to manage macroeconomic policy which consists of fiscal policy and monetary policy (Gilpin 354, Held 228). The nation-state has access to the international fiscal markets for borrowing and financing its debt (Held 229). The nation-state must also consider issues of interest rates and capital mobility when managing macroeconomic policy (Held 229). However, simply because a nation-state must consider these does not mean the nation-state is in decline, or that that nation-state is forced by the market to change their policies (Gilpin 355). Instead, the nation-state must make trade-offs, as it cannot have fixed interest rates, autonomy in macroeconomic policy, and international capital mobility (Gilpin 354).
For skeptics, if the world was truly globalized, then the state would not be able to affect its economic policy and would have to surrender to the global system (Held 192). However, the Federal Reserve still maintains a large control over the United States economic policy, the European Economic Monetary Union maintains control over its interest rates, and Chins has imposed controls on capital movement (Gilpin 355). If this were truly a globalized financial system, these domestic controls would not be possible because the domestic policy would have to be subordinate to the international policy and the nation-state would not be able to make the choices they do – like the EEMU, China and the Fed. Rather, the presence of the international financial system has made macroeconomic policy more complex (Gilpin 357), but has not negated the importance of the nation-state.
Castells, a hyperglobalist, admits that most of a nation-states’ economy is based on the domestic sector, but claims that the globalized core – the financial markets – creates a global economy that influences and diminishes the nation-state (311). In the financial markets, money can move instantaneously and at any time of day or night because of the Internet (Castells 312). However, this is an argument about velocity, not about impacts. The impact of the international financial markets cannot be seen merely in the presence of technology – that is infrastructure- but must be seen in how the nation-state is making, or not making, its own decisions. The lack of information from hyperglobalists about the impacts of the transactions, rather than merely showing that there is more velocity in the transactions, supports the skeptic position that globalization is being exaggerated.
Transformationalists also under-emphasize the impacts of financial globalization on the decisions of nation-states. In order for the transformationalist perspective to be the one with the most support, they would have to show that the globalization of international financial markets is changing the way that states think about sovereignty and the way states make decisions.
Although the presence of international markets has changed the way that nation-states do business, it is still the nation-states doing the business (Held 229). It is the German Bundesbank that determines the inflation rate, monetary supply and economic policy of Germany and although international markets have made this more complex, they have not taken that authority away from the German nation-state (Held 229). Financial liberalization has given nation-states more options regarding their finances, like borrowing from investors who might impose terms and conditions on the borrowing, but it is still the nation-state making the choices (Held 229). What this might signal is a shifting in the way a state thinks of itself. Instead of thinking that everything the nation-state does must be paid for by the nation-state, the nation-state might be willing to enter the international bond market and accept a reduction of its ability to make decisions in the future (Held 230). However, it is still the nation-state that must make the initial choice to reduce their abilities, and not all nation-states make this choice. This means that the nation-state is still the primary actor.
The strongest argument against the skeptic position is the way that risk is distributed throughout the system (Held 233). If the markets are truly globalized, then the risk of the market will be globalized as well. What happens when one market crashes in a globalized system? All markets crash. This is what happened in 1982, and in 2007-08 (Held 233, New York Times). The risk of the system was spread among the world and was not confined to one area, or one nation-state (Held 234).
The hyperglobalist and transformationalist positions simply do not have enough evidence to support them. While these positions claim that the state is declining in importance, the state, even in their proffered evidence, does not seem to decline in importance. Markets, such as stock markets and futures markets, are nationally based. Nation-states make decisions to seek out loans with certain terms and conditions. Nation-states still set domestic economic policy. While the nation-state may take into account certain international financial issues, it is unclear that the nation-state is declining in importance or in their decision-making power. This leaves the skeptic position, that globalization is being exaggerated, as the strongest position.

Monday, October 5, 2009

What is Aristotle's definition of a democracy?

Aristotle conceives all things, including governments, in terms of telos; an end, a purpose, the way a thing is supposed to be. For Aristotle, if something achieves its telos then it is virtuous. Aristotle believes that the telos of a government, a constitution, should be the good life – it should lead to the happy and good life of its citizens. The city-state - which is the government structure that Aristotle knows, is observing, and makes his theory from – comes into being for the sake of life, but exists for the sake of the good life. The city-state’s telos is the good life of its citizens.

When Aristotle is defining different types of governments that could govern citizens, he divides them two ways: by virtuous or non-virtuous leaders and by economic class. For Aristotle, a democracy is the rule of the poor and the rule of the majority. When making his decision on virtuous or non-virtuous, Aristotle says that a rule of the majority must be non-virtuous in practice because it is too difficult to find a majority who can be virtuous. This means that the rule of the majority, the rule of the poor under a democracy does not help the city-state achieve its telos – the good life for its citizens. Therefore, Aristotle believes that a democracy is not a good form of rule because a rule of the majority, the rule of the poor does not achieve the telos of the city-state.

One reason a democracy does not achieve the telos of the city-state, and therefore cannot be a virtuous form of government, is because a democracy is based in a bad definition of freedom – according to Aristotle. “Democracies define freedom badly….everyone lives as he wants and toward whatever end he happens to crave.” For Aristotle, this is a non-virtuous end. A virtuous government would, instead of having everyone live as he wants and towards whatever end he wants, have the government (whatever form that happened to be) rule for the common good. The common good, for Aristotle, is the telos of the city-state: providing the good life for its citizens.

Another reason that a democracy is not a virtuous form of government is rooted in a democracy’s concept of equality. For Aristotle, a good government/virtuous government is one that is ruled aristocratically; meaning on the basis of merit. However, in a democracy as Aristotle defines it, ruling is done on the basis of numerical equality. This means that everyone has a share in the ruling of the city-state. Aristotle points out that if everyone is equal in ruling, either none should rule another or where there must be common rule (as there must in a city-state), no one has more rights than another. For Aristotle, this leads to a non-virtuous form of government, a democracy, because if the decisions are made by people who do not have the telos of the city-state at the core of their actions, then the telos of the city-state will never be reached, and the government will not be virtuous. Aristotle states that whenever large groups of people get together to make decisions it is inevitable that their personal bias will appear, and the decisions will not be made for the virtue of the city-state. This chain of reasoning leads Aristotle to believe that a democracy’s concept of equality is part of the problem with a democracy being non-virtuous.

Aristotle believes that someone who is virtuous in ruling must be able to put the common good above their individual good. However, for Aristotle, the poor are concerned with getting more wealth, which means they are putting their individual good above the common good while they are engaged in ruling. The city-state is composed of more than the poor citizen; the city-state also has wealthy citizens. For a person to govern in a virtuous manner, they must be able to put the common good – the good of the city-state – above their individual good. For Aristotle, the people who can do this are a select few, and so a rule by majority must, of necessity, include those who are non-virtuous in their governance. When the poor govern, as they do in a democracy, then the good of the city-state becomes the good of the poor, which is not the good of the city-state as a whole, and so does not reach the telos of the city-state.

Aristotle states that there are certain characteristics of a democracy and they are: eligibility of all citizens for office, offices that are chose by lot, no repeat terms in office, short terms of office, a popular jury, and a popular assembly with great authority. In a democracy, all offices are paid. When all citizens are eligible for office, when offices are chosen by lot, and when there is a popular assembly with great authority, it is guaranteed that there will be non-virtuous people involved in governing. These characteristics of a democracy tie back to the belief of equality – numerical equality. Aristotle believes in aristocracy – rule by merit. The rule based on numerical equality is in direct conflict with Aristotle’s belief in rule by merit. In a democracy, with the characteristics above, a non-virtuous person has an opportunity at rule, regardless of merit. This leads to a city-state that cannot attain its telos and therefore is, by definition, a non-virtuous form of governance.

For Aristotle, a democracy is a failure. It is a majority rule where the majority is poor and non-virtuous. This means that whomever is in office, and all have equal access to office because of democracy’s concept of equality, may not act in the best interests of the city-state. When the city-state fails to reach its telos, providing the good life for its citizens, then the government of the city-state is non-virtuous, as are the people in the government. Since the city-state fails to achieve its telos under a democracy, Aristotle believes democracy to be a failure.