Presentation on theme: "Lars Niklasson, Deputy Professor"— Presentation transcript:
1The politics and economics of international relations: An introduction to globalization Lars Niklasson, Deputy ProfessorPolitical Science, Linköping University
2What are the major challenges in the global context (politics and economics)? What are the most desirable ends for global politics? My suggestions:Handling environmental problemsDevelopment of the global south: living conditions etc.Is it ok to have cars and refrigerators in India?Developing democracy and good governance in all countries(Further development of the global north, a win-win situation?)What instruments are available to reach these ends? Will the economy/society reach the goals? How are relations between countries regulated?Global economic integration (globalization): a threat or an opportunity?Trade, finance, labor standards, knowledge productionGlobal politics (1): the regulation of the economyInternational organizations, governments, NGOs etc.Global politics (2): specific support for developmentAid, global collaboration, security arrangements etc.
3Three themes of the course 1. What is globalization?Perspectives, theoriesExplanations, old and new2. What are the effects? Is it good or bad?Economic development, jobs, quality of life, modernizationEnvironmental impact, equal opportunitiesValues: Cosmopolitanism, localness, virtues etc.3. What are the causes? (What can be done?)Structural change: technology, the economyThe role of regulation: Who decides? How?
4What is globalization? Economic integration of the world Globalized firms, exporters, global value chainsHow can we understand it?Consequences: good or bad?Causes: what can be done?Who are the winners and losers?Local firms?Workers?The uneducated?The global south?
5How can we evaluate globalization? Many policies are ends to means:Trade policyFinancial systemsWhat are the ultimate ends (values)?Economic development, reduction of povertyEnvironmental improvementQuality of life, equality, fairness, autonomy, freedom?Liberal, nationalist and critical perspectivesLocal traditions AND modern cosmopolitanism?Social science is mainly about ends to meansWhat can states, markets and communities do?How can they work the best? What kind of regulation is needed?
6Perspectives on globalization Optimists (economists) vs pessimists (sociologists)Economic theory predicts longterm gains for everyone (consequences)Sociologists see struggles for power behind the scenes (causes)Political scientists study the process of regulatory change (politics)Methods and assumptions vary
7Optimists/Economists Economic theory predicts longterm gains for everyoneWin-win situation, potential harmony of interestsConsequences more important than causes?More specific:Highly mathematical theoriesAbstract and general, ”ceteris paribus”, assumes rationalityIgnore short-term losersA smart roadmap or a utilitarian religion?A naive view of firms, markets and societies?What does it take to achieve the desired end?
8The globalizers Martin Wolf (2004): Why Globalization Works Globalization ”has brought benefits to hundreds of millions of people and helped secure the biggest ever falls in the proportion of humanity in extreme poverty. The challenge remains to spread the opportunities of globalization more widely than ever before. For that we need better states and better policies.” (page ix)
9Pessimists/Sociologists Sociologists see struggles for power behind the scenesZero-sum, fundamental conflicts are unsolvableCauses more important than consequences?More specific:Qualitative theoriesSpecific time and place, static, focus on values and struggles for powerUS firms and third world governments vs the poor peasants? (Hegemony)Focus on short-term winners and losers, ignore long-term gains (?)Markets are socially constructed: politics and powerWhat is their alternative? A naive view of the state?What does it take to achieve the desired end?
10The anti-globalizersThe International Forum on Globalization: Alternatives to Economic Globalization, 2002:Against corporate globalization: ”big firms get too much power and ruin the resources of the planet”Local economies better than exports and integrationCultural and economic diversity is neededLocal and national political power, democracy= similar to the progressive movement in the 1890s?= based on other values? Other economic theories?
11What do they disagree about? Consequences of policy (eg. free trade)The long-term: gains for all or only for some?The south: better or worse?The environment: better or worse?= liberalism vs socialism on how markets and states workCauses of policyBy the rich, for the rich?By liberals, against organized interests, to have a dynamic society?Research methodsAbstract vs descriptive, quantitative vs qualitative
12Can we find out who is right? Values are normativeOnly a personal choice?Where do they lead? Logical testing?Facts can be investigated empiricallyHow were the policies selected? What were the motives? (process-tracing)Who decided? (different conceptions of democracy, global governance)How are the policies meant to work? (program theory)How do they work in practice? (implementation)What are the effects of the policies? (evaluation)General theories (economics)Case-studies of particular situations (political science, sociology)
13Theoretical perspectives for evaluating and explaining regulation (policies) International Political EconomyThe politics of the economy (”political economy”)National and international, a broad agendaFrom International RelationsStates as actorsNormative paradigms?Nationalism, liberalism, critical perspectivesFrom Political scienceCausal explanations: domestic and international politicsInterests, institutions, ideas(The bureaucratic politics of international organizations)Democracy as a norm: what kind is possible, feasible? (”Global governance”)(Implementation studies)
14Why do we need theories?They interpret the facts, help us see patternsCausality: why did it happen?Evaluation: good or bad?We can treat theories as hypotheses and search for falsificationWe can understand the actors’ theories/ideas/motivesTheories help us make predictionsTheories can be used to mobilize support for action (=politics)But: theories may be infused with assumptions and valuesIs rationality a simplifying assumption or a norm?Is constructivism an eye-opener or hidden marxism?
16Table 1.2 Comparing the perspectives AspectEconomic nationalistLiberalCriticalHistorical origins15th century19th centuryMajor figuresHamilton, List, StrangeSmith, Ricardo, KeohaneMarx, Lenin, CoxVariantsMercantilism, RealismFree trade, Interdepend.Marxism, feminismLevelState-centric, atomisticPluralist atomisticGlobal structureHuman natureAggressiveCooperativeMalleableUnitsStatesFirms, states, NGOs etc.Class, gender, planetView of the stateUnitary actorDiverse interstsClass interest groupsView of TNCsBeneficial/harmfulBeneficialExploitativeBehavioural dynamicState as rational actorRational actor, failureDominance, exploitationMarket relationsPotentially negativePositiveSystem structureAnarchy, conflictCooperative, interdep.Hierarchy, conflictGame metaphorZero sumPositive sumHegemonyDominant stateCooperationHegemony in state societyInternational institutionsNot significantImportantServes wealthy interests
17States versus markets: Neoliberals vs neomercantilists IssueNeoliberalparadigmNeomercantilist paradigmTrade policyTake away barriersUse barriers strategicallyKey valueCompetitionCompetitivenessKey mechanismComparative advantageSurvival of the fittestInfant industriesInnovation systemsEconomic paradigmSchumpeter, Ricardo etc.The single marketMercantilism: ListStrategic trade theoryEndogenous growth theory?
18Causal explanations (”methods”) A. Deductive (IR) vs inductive (pol sci)Start from theory or build theory from data (cases)Statistics, case studies & comparisonsTheories on a high level of abstraction or ”middle ground”
19Causal explanations, cont’d B. Pol sci: Rational abstractions (RC) vs Understanding processesThe logic of unintended outcomes (game theory) vs how did it happen?Assuming preferences vs explaining change of preferences
20Causal explanation, cont’d C. Processes: The three I’s (Political science & Sociology)Interests (winners/losers): a too quick explanation. RationalistsInstitutions (rules) shape the arena, explains variety. Liberals (?)Ideas explain variety and where interests come from. ConstructivistsIdeas: Liberalism, Nationalism and Critical perspectives!
21Focus on politics What are the drivers for change? Who are the actors? Structural change (technology, economy):Winners and losers (interests)Filtered through regulation (institutions)Paths or unintended consequencesInterpretations, ideas (often from Economics)How we think about globalizationHegemonic power? (USA)Bureaucratic power by the international organizations?Who are the actors?Firms, industry associations, NGOs, regulators, politiciansHow are winning coalitions formed within and across governments?Facts, values & rhetoric; more friends than enemiesVery complex processes behind the scenes
22The role of ideas and their actors (from chapter 13) Ideas are mental images, worldviews, ideologies, norms, identitiesConstructivists in IR and Political Science: ideas influence behaviorReality is socially constructed = dominant interpretation”Another world is possible” (World Social Forum)One step beyond rationalism: where do preferences come from?Epistemic communities: experts and policy sectors, ”iron triangles”Policy coordination and competition, coalition-buildingSeveral versions:Ideas represent interests (Gramsci, Cox), hegemony/dominanceLook for interests in dominant ideas & the missing perspectives (poststructuralism)Ideas are promoted by actors to change policiesIdeas become embedded in institutions: institutions are biased
23Old and new globalization What explains change over time?Structural factors like environment and geography (Jared Diamond)Western dominance (”the global historical approach”) over the poorWestern culture for success (”the cultural approach”) – the poor are bad”The institutional approach”: people are the same, but the institutions differInventions in warfare, production, New technologyGood governance: the rule of law, ownershipDemocracy, politics to balance the economyInvestments in human capitalInvestments to catch-upThe development of cooperation
24The world economy 1400-1800 Many powerful regions around 1400: The Middle East, China, India, Africa, The Americas, EuropeEuropean trade and finance: Italy, Flanders, The Hanseatic LeagueTrade, production, finance, shareholdingCulture and education, the renaissancePolitical stability and rule of lawSovereign territorial states, state formationEuropean domination: trade, wars, coloniesTriangular tradeChallenges: Poitiers 732, the Mongols 1241, the Turks at Vienna 1529 and 1683What was the impact? South America (Spain) vs North America (England)
25The world economy 1800-1945 The industrial revolution from ca 1750 Mechanized production, the factory system, a labor marketForeign supply and demand were necessaryWhy Britain? Why then? Scientific knowledge, liberal state, naval powerStructural forces, government action or institutions and entrepreneurs?France, Germany, the US, JapanSmith: specialization (against the East India Company)Ricardo: comparative advantage (Box 4.4)Marx: exploitationPax Britannica: similar to the present situation?The gold standard, capital flows, unilateral free trade 1846The empire, balance of power , gradually UK vs GermanyImperialism inevitable?Interwar economic failureThe League of Nations (Woodrow Wilson): utopian liberalism?
26The world economy after 1945 The Cold WarWestern alliances, multilateralism, ”embedded liberalism” (Ruggie)Realists: competition brings stability (Carr)Liberals: self-restraint by the winners is the key to peace (Ikenberry)But: there are many actors within governments (Allison on the Cuban missile crisis)The Eastern blockDecolonization in the south: French resistanceSouth East Asia: NICsThe Post Cold War EraNorth: Varieties of capitalismSouth: BRICS & Least Developed CountriesTechnological change, economy etc.After Bretton Woods: Unilateralism? Minilateralism? Weaker international organizations?
27Focus on regulation How is globalization regulated? By whom? TradeFinanceProductionLabor, genderEnvironmentDevelopmentBy whom?How does it change?
28Multi-level regulation By whom?International organizations: WTO, IMF, UNIntergovernmental or supranational?North vs south? Sector vs sector? (epistemic communities)Regional organizations: EU, Nafta, Asean etcSpecific treaties: KyotoTransnational regulation, networks/epistemic communities, private actorsRegulation implemented/transposed by statesActors:States?Politicians: domestic politics: winners vs losers? Institutions, discoursesBureaucrats: self-interested or idealists? discourses, fashionsNGOs: who is organized?
29Three possible scenarios for transnational governance: where do the ideas come from? Source: Djelic & Kleiner 2006Experts(OECD)Statist(WTO)Community (ICN)Rule makers vs rule followersSeparateCombinedProduct of governance processStandardsBinding rulesBeliefsMode, logic of rule makingExpert drivenPolitical negotiationsNegotiations,Expert inputMode, logic of rule monitoring”Expert awe”Coercion, constraintsSocialization+/-Presupposes legitimacyEfficientEasy to start
30The global governance architecture: are the policies coordinated The global governance architecture: are the policies coordinated? Yes/no!Specific regulation of each area (trade, environment etc)Fragmentation/Specialization, ”silos”Conflicting goals! Agreement impossible?Case: Clean tech (environmental protection + economic growth)Implies competing epistemic communitiesWho is invited? Only governments? NGOs?Are ministries competing or collaborating?Two-level games to win at home and abroad?Two dimensions: the sector and the levelImplies that political factors are important in globalization
31How are conflicting policies (”wicked problems”) implemented in various countries? Joint projects, if possible (such as clean tech)Separated (ignored?)Different organizations, negotiations, decisions by courts?Integrated, to be dealt with at a lower levelMultipurpose organizations, mainstreamingPolitical: Local governmentsCivil servants: multipurpose agenciesSynergies? Common values or ambitions?Decoupling or deliberation (by politicians, civil servants, the public?)Experimentalist governance?Focus on particular situationsKey person to make the decision
32What are the effects of international regulation? An empirical question! How are the new rules implemented?Are they implemented, resisted or taken advantage of?National governments pick and chooseAre the new rules similar to the old ones?Varities of capitalism: LME vs CME
33Pressures on national politicians A race to the bottom, convergence?Or room for many strategies?Still, a need to take action proactivelyGermanyFrance
34Economic development: the most valuable end of globalization? 1. What has happened?A big success? China and India vs the rest? Asia vs Africa?New labels: Third World, Global South, Emerging MarketsWhat is development? How can we measure it?GNP vs Social objectives, Human Development Index, considers distribution: Keynesianism, weak and/or corrupt elites, domestic barriersRedistribution, New International Economic Order, G77, (Cold War context)NICs: market and state? Exports and protection? Global value chainsJapanese influence, authoritarian states: Debt crisis, ”Washington Consensus”: structural adjustment, NGOsGovernance, democracy, sustainability, poverty reduction, debt relief, the rise of China and IndiaMDG 2015, greater emphasis on domestic enabling conditions, coordinationPresent interpretation: Internal and external causes are linked
35The rise and ”stall” of the Washington Consensus (from chapter 13) : embedded liberalism = state and firms: the state as problem, the market as solutionWhy? The crisis of Keynesianism + an epistemic community = Thatcher, ReaganNeoliberalism = the implementation of neoclassical economicsMarket fundamentalism, neglect of inequality and poverty?Effects?Questionable effect: The NICs: success due to the market (or developmental states)?Failures: Asian crisis 1997: premature liberalization? US crisis: EnronNo effect: Mexico, Argentina, Africa: structural adaptation but crisis or little growthWas it implemented?Internal disagreements: shock therapy or gradual changeA variety of implementation: the whole package vs pick and chooseResistance prevented full implementationRenewed focus on good governance: rule of law (=state!) How to get it?
36What has happened, cont’d Lesson learned?Asia (NICs, China, India) vs Africa: institutional factors?Integration in the global economy, value chainsMarket and Developmental statesGood governance: authoritarian statesUS support during the Cold WarWashington consensus too simple?Disliked but successful?Aid is difficultTaking over vs supporting self-sustaining processesWhere to begin? Good governance? Economic integration?
37Disagreement about causes and cures Why are some contries poor?Exploitation: colonialismBad starting position (resources, cheap labor)Bad policies for catch-up?Bad governance: colonialism?Bad support (aid)The exceptions: the NICs, China, BRIC, (Ireland)Protectionism vs opennessThe developmental stateWashington consensus
38Economic development, cont’d 2. Are the policies good or bad?Liberals: Policies have been bad, markets are key, modernization stages, the success of the NICs: exportoriented industrialization (EOI)Nationalists: Developmental policies are needed (NICs), governance is key, import substitution (ISI), Latin America, NICs too? Confucianism?Critics: Aim to control the third world, external exploitation, dependency, falling value of exports (terms of trade), vulnerable to external shocks3. Why have policies changed?Interests: North vs South? China. A variety of interests.Abdelal 2007: French socialists + EU drive the liberal agenda & regulation by international organizationsInstitutions: The World Bank, UNCTAD, WTO, G77/G20, NGOsWB: US-dominated, secrecy, bureaucratic politics?Ideas: Modernization vs dependency, NIEO vs Washington Consensus4. Where will it lead?Exploitation or development? Good governance? Will Africa change?
39The post-2015 UN development agenda (Thematic think piece, 2013) Aid for tradeExternal demand can raise incomes and living standardsSupport productive capacity and trade-related bottlenecksClimate change adaptationCoherence in policy formulation is being sought between the international rules and policies underpinning human rights standards, the trading system and environmental protection effortsRio+20: The Future We WantGreen economy, technology transfers to LDCs, exemptions from TRIPS= using the market to drive change
40Four deeper investigations: write a paper on one, attend at least two Glenn, John: Globalization. North-South perspectives, Routledge, 2007Rudra, Nita: Globalization and the Race to the bottom in developing countries. Who really gets hurt? Cambridge, 2008Walter, Andrew & Sen, Gautam: Analyzing the Global Political Economy, Princeton, 2009Williams, David: International development and global politics, Routledge, 2012
41The regulation of the environment: an end in itself and a restriction on other aims 1. What has happened? Global problems need global solutions?”The tragedy of the commons”, but what are fair rules for all?Can they have cars and refrigerators in India?Environmental problems are cause and effect of other problemsHuman-centered environmentalism vs ecologism (light-dark green)Sustainability means many things: growth as problem or solution?What should be sustained? Resources, production, living standards in the north and south?Brundtland Commission: environmental, social and economic sustainabilityA restriction and influence on other policies: ”intergenerational equity”Overconsumption and irresponsible production: North or South? China!Ecological shadowsAid projects: environmental assessments, participatory developmentTrade as problem or solution? Race to the bottom?
42The regulation of the environment, cont’d 2. Is it good or bad?Liberals: Common interests, market solutions such as clean tech, the Kuznets curve, socialist exploitation, regulations open for government failureEnvironmental economics: market failure, incentives or regulationWorld Bank: Poverty as a root causeRegulation by the market: eco-labelsEnvironmental standards: fair competition or unfair limitation on comparative advantageNationalists: Cooperation difficult, market failure, environmental standards improve competitivenessCritics: Power, inequalities, capitalist exploitationEcologists: nature in focus, limited resources. Economics irrelevant. A need to add process standards to product standards in the WTO (eco-labels?)
43The regulation of the environment, cont’d 3. Why has it happened?Interests:Environmentalism due to affluence, disasters & end of cold warVictims & NGOsInstitutions:International negotiations on climate change: US vs China, IndiaUN conferences Stockholm 1972, Rio 1992, Johannesburg 2002, Rio 2012UN Framework Convention on Climate Change, Kyoto Protocol (COP)IPCC Stern Review 2006: The economics of climate change vs scepticsGreen parties & activists normalized, co-opted, mainstreamedDomestic regulation, IOs mainstreamed, firms are proactiveIdeas: Scientists and authors form epistemic communities (with ministries, NGOs, researchers): light and dark green4. Where will it lead? Win-win solutions or conflicts?
44Globalization is about a new logic of production: transnational production 1. What has happened? A new industrial revolution?The logic of production has changed (= a structural factor)From integrated firms to networks: global value chainsPost-fordist production, break-up/networking, outsourcing, collaborationChanges in technology, transport, management, trust, consumer demandTo be near markets and inputs (cheap and skilled labor, technology, resources)Nearness, skills, infrastructure rather than low cost (East Asia vs Africa!)”Foreign Direct Investment” to get control over resources in other countries (vs portfolio investment)Market-conforming regulation: open, more uniformFair competition, no subsidies, no protection?
45Transnational production, cont’d 2. Is it good or bad?Liberals: Long-run benefits, opportunities for allTNCs bring resources, capabilities, taxes, productivity, dynamism, spillovers to local firms, better values. The success of East AsiaNationalists: Support national champions, control TNCs. Loss of autonomyCritics: Exploitation of labor and environment (TNC + third world gov’ts)Transfers in the interest of the firm, avoid paying taxes, foreign rules, political influenceNew International Economic Order 70sAn empirical question. Net effects depend on policy.Gov’t control, technological upgrading? Protect infant industries?Gov’t weak bargaining positionAttractiveness vs national interest. Changing attitudesA need for more regulation?
46Transnational production, cont’d 3. Why has it happened?Structural factors: Better transport, new technology, global finance, demandInterests: exportersExploit technological comparative advantage (Vernon) or foreign ownership (Dunning)Oligopolistic business structure (Hymer)Bigger sales & markets to invest in R&DInstitutions: USA + EU + WTO?US Policy to support investments in non-communist countriesPolicies: cold war, liberalization, Export Processing ZonesLack of strong owners for American firms, weak unions, weak state?Ideas: liberalism vs collectivism?4. Where will it lead?The competition state: focus on competitivenessDepends on what the BRICs want?
47The regulation of trade 1. What has happened? Trade and FDI explosion due to TNCsProtectionism after WWI, freer trade after WWIIReduction of tariffs and other barriers (NTB, non-tariff barriers)”Embedded liberalism” (Ruggie)Multilateralism: (ITO), GATT and WTO, UNCTADGATT principles: Non-discrimination, reciprocity, transparencyBut Multifibre AgreementLater focus on barriers beyond borders = competition policyNo agreements except Bali. Dispute Settlement Mechanism is operativeRegionalism: EU, Nafta etc (building blocs or stumbling blocks?)Bilateralism: FTAs such as TTIPUnilateralism: EU open for ”Everything but arms” from LDCs
48The regulation of trade, cont’d 2. Is it good or bad?Liberals: Growth for all, especially AsiaNationalists: Strategic protectionism to protect or to force othersCritics: Exploitation, erosion of old life styles, labor, environment, social policyKey issuesComparative advantages, win-win? (Ricardo)Labor productivity and factor endowments, origins irrelevantSpecialization and dynamic effects for growth, spread of technologyCheap inputs from abroad and a push to increase productivityPuzzling intra-industry trade and intra-firm tradeEmployment-creating vs employment-displacing effectsHealth standards (NTB) used to discriminate against importsIs modernization good or bad? Effects on the environment?
49Key issues, cont’dWhat is ok to protect and support? (Mercantilists, nationalists)Infant industries, technology, agriculture, cultureUnequal exchange? Unfair start, freezing status quo, concentration of powerAre critics captured by organized losers? (= the trade policy perspective)Is the south weak in the WTO?Doha development round failedAgainst new issues, insist on implementation of old agreementsThe like-minded group, G20, G90, Cotton-4, The Cairns groupTextiles move to China?Patents/TRIPS/IPR makes medicine expensiveTRIMS/Investment protection: a necessary limit on governments?Special and differential treatment not enough?Legitimacy? A democratic deficit? Intergovernmental!Transparency, accountability, participation
50The regulation of trade, cont’d 3. Why has it happened?Hegemony? Stability and economic interdependenceUS policies to support non-communist countriesMNCs & Asia (cheap labor, stable societies) = interestsThe development of GATT and breakdown of WTO = institutionsIncreasingly difficult to reach agreementThe breakdown of Keynesianism, triumph of Monetarism = ideasDriven by EU/France (Abelal 2007)Bureaucratic politics of the WTO and EU?What is the role of NGOs? (interests vs ideas)4. Where will it lead?Are policies implemented?Increased conflicts?
51The regulation of labor 1. What has happened?From national to global division of laborGender, race and ethnic patterns vary over timeFrom mass production/Taylorism/Fordism/mass consumption…Deskilled, replacable. Today: Call centers…to flexible work organization/Diversified Quality Production/Post-fordismGreater variety of skills, the role of teams, Lean productionFrom human capital to structural capitalFollow scripts/standardized procedures/softwareGreater competition. Losers and winners (”project nomads”?)Deindustrialization, greater ”flexibility”, migration
52What has happened, cont’d The rise of China and India: wealth and cheap products, social tensionsProduction moved from other Asian countries, few Chinese brands, suppression of unionsBlue-collar jobs in China, white-collar jobs in India. To be Bangalored = outsourcedWorkers’ rights: how to regulate firms?Home state extraterritorial rulesMultilateral rules: WTO/ILO (unnecessary, profit reduction or protectionism?)Codes of conduct, campaigns, select cases, Global Compact 2000ILO created because of labor unrest 1919US labor organizations have become critical of hegemony, used to be supportersPeasants’ alliancesThe Peoples’ Global Action against Free Trade and the WTO (PGA)
53The regulation of labor, cont’d 2. Is it good or bad?Liberals: specialization (and trade) drives growth (Smith), better to be poor in a rich country, Increased wealth will lead to higher standardsNationalists: States must protect strategic sectors, various strategies/nichesCritics: Countries (and women) are depedent/locked-in, begins with European exploitation and protection.3. Why has it happened?Interests: US business vs labor & right-wing populism, NGOs, governmentsInstitutions: WTO is limited, ILO is weakIdeas: ”Globaliztion demands lower standards”4. Where will it lead? Who will put pressure on governments?
54The regulation of gender, socially constructed roles of man/woman 1. What has happened?IR and IPE are blind to gender, but gender helps understanding the economy:Economic assumptions overlook important differencesUnpaid work in the home should be made visibleDifferent rates of participation in the workforce. Insecure work, lower payFeminization of poverty: single mothers, larger burden for supporting familyGlobalization of reproductive work: prostitution, domestic services, bridesWomen work in EPZs: smaller hands, more compliantIs it better than rural work and the local culture?
55The regulation of gender, cont’d 2. Is it good or bad?Liberals: Trade creates jobs for women in manufacturing. Discrimination is a barrier to growthNationalists: The state should focus on wealth creationCritics: Gender is a key axis of power in society, discrimination3. Why has it happened?Interests: Feminism as a movement. (Equality of the sexes vs women)Institutions: UN conferences, normative commitment and institutionalization, International organizations: mainstreamedIdeas: Feminism vs equality of the sexes4. Where will it lead?To change: measure all costs (unpaid reproductive work), equal pay, child care
56The regulation of knowledge production (part of chapter 13) 1. What has happened?The knowledge economy: the importance of R&DScience and technology as drivers for innovationsUniversities important sources for ideas and skilled labor: collaboration with firmsPatents encourage diffusion of technology and protects inventor and investorShould medicine for HIV/AIDS be patented? WTO-TRIPS allows some copiesKnowledge-based services have the highest valueInformation technology has many consequencesNew organization of work: individual work and the break-up of firmsNew solutions in areas like medicineNew markets for leisure productsThe digital divide: across generations?Half-truths, bad history and wishful thinking?
57The regulation of knowledge production, cont’d 2. Is it good or bad?Liberals: Entrepreneurs drive change, productivity and competitivenessNationalists: Subsidies needed for competitivenessCritics: Privatization, deregulation, de-unionization, flexible labor markets. Job-less growth. Digital divide.3. Why has it happened?Interests: Big firms need input from the universities, which need fundingInstitutions: Mission-oriented research councils, tax-deductionsIdeas: Knowledge is a key to competitiveness and a public good4. Where will it lead? Support for new vs old firms (”lock-in”)
58The regulation of finance: the monetary system & financial markets 1. What has happened in the monetary system?Bretton Woods 1944: a need for stability and openness. KeynesIMF (balance of payments) and IBRD/World Bank (investments for rebuilding)US funds to buy American goods: the Marshall Plan, military spending, FDIOrganizations owned by the member states: voting rights etc.Mundell & Fleming dilemma (1960): You can only have two of threeCapital flows/fixed exchange rates/autonomyCurrencies fixed to the dollar, fixed to gold. Adjustments for productivityOutflow of dollars, more dollars than gold (Triffin dilemma).Japanese and European currencies undervalued: 1971 floating dollar.Led to inflation, higher interest rates, more FDI in the US + More domestic spending 80s1985 G5 Plaza accord to reduce the value of the dollar, 1987 G7 Louvre
59What has happened, cont’d A change of paradigm in the 80sMonetarism, the Washington consensus, deregulation of financeEuropean integration: the single market, the EuroEMS (ECU, ERM) to avoid stronger DM & inflation in other countries1992: Floating currencies in the UK and SwedenEMU 1992, Euro 2002, ECB, SGP 1997.OCA? No instrument for adjustment? Devaluation, transfer payments, labor mobilityDollarization in other countries. Should the Chinese currency float?The Euro crisis 2009: due to cheaper credit for the PIIGSGreek debt underreported: 15% rather than 6% of GDPSolutions: European bonds or reduced budget deficits?
60What has happened, cont’d USA and China: a risky relationshipThe US spends on imported Chinese goods (Walmart etc.)China invests in US bonds, the US can have low interest rates & large debtAmerican overspending: war in Iraq, tax cuts, housing boomChina dependent on exports for employmentThe Chinese currency is undervaluedBenefits Chinese firms and American consumersDifficult for American firms to sell to Chinese customersMore consumption, less investments in the USDifficult for the US to repay loansChinese firms are rich; China needs to invest in pensions, the environment etc
61What has happened, cont’d What has happened in the financial system? deregulation, innovation, crises”Eurocurrency market” = other currenciesNew technologies, increasing capital flowsDeregulation from 1974: open to foreigners and other sectorsNew instruments such as derivatives: reduced risks or increased betting?Sovereign wealth funds by governmentsHedge funds: betting?Pension funds, institutional investors
62What has happened, cont’d Third world debt: reinvested profits from oil, to industrialize or buy oil1979: US higher interest rates to avoid inflation, reduced demand, led to recessionThird world: Higher interest rates and more difficult to sell.Mexico 1982: Reduced demand for oil, unable to pay loans for industrializationIMF Structural Adjustment Programs: liberalization, ”Washington Consensus”NAFTA 1993 locked Mexico into liberal policiesCrises mid 90s Mexico, Thailand: A problem with the countries or the system?1999 Financial Stability Forum, G20The crisis in 2008: started in the US: bad regulation, shadow banks”Ninja loans”, risks passed on to others, hidden risksSubsidies to the banks, ”lender of last resort” = moral hazardStronger role for G20 and IMF. The dollar questioned as reserve currency
63Financial deregulation and the crisis 2008 (from chapter 13) Why crisis?Too little regulation or badly executed?Too rationalistic mathematical trading models? Bad economics?Why deregulation and more risk-taking by the banks?Galbraith: fading memory of 1929Deregulation is a powerful ideaThe financial community is a political actor for personal gainCapture: over the long-term and at key eventsBad governments or bad markets?
64Table 1.1 Interpretations of the Asian financial crisis LiberalNationalistCriticalCausesState capitalism,Lack of transparencyOverrapid liberalizationLack of regulationPower of financial interests, systemic flawsKey issie(s)Corruption,lack of liberal practicesClash of Anglo-American vs Asian valuesHuman suffering due to financial collapseLessonsIncrease transparency and good practice in developing countriesLimit financial speculation through state policiesReform international financial system, defend national system
65The regulation of finance, cont’d 2. Is it good or bad?Liberals: Long-run growth, fiscal discipline reduces excess spending, makes it more difficult for governments to avoid fundamental problemsNationalists: Loss of autonomy/democracyCritics: Need to slow down (Tobin tax), Instability, inequality, costs shifted to taxpayers/the public3. Why has it happened?Hegemony? The role of the US (Bretton Woods, Washington Consensus)Bureaucratic politics at IMF?Interests: Investors, US, EUInstitutions: unable to handle crisesIdeas: Monetarism, political integration4. Where will it lead? Regulation increases moral hazard?
66The regulation of security (hegemony): more important than the economy? 1. What has happened?US economic policy to further foreign policy goals at some times (high politics)From Cold War bipolarity and military-industrial complex, to new perspectivesFrom states to individuals, from military to social issues, states are problemsEpistemic communities!Humanitarian intervention and intervention in domestic conflict, R2PFailed states, local warlords funded by valuable resources such as ”conflict minerals” for computers etc.Global terrorism: marginalized fanatics with economic needs? (”human security”)Clash of civilizations? War on terror: impacts?Economic statecraft: Aid (carrots, conditionality) and sanctions (sticks)Impact is dependent on the context and the clarity of the motives. Humanitarian effects.Economic sanctions: Is it best to isolate or to boost interdependence?Transnational crime: Latin America, EuropePandemics, viruses such as HIV/AIDS: WHO
67The regulation of security, cont’d 2. Is it good or bad?Liberals: Militarists & pacifists, economic interdependence and trade make peaceNationalists: Industrial strength important for military strength. Defence procurementCritics: Economic interests and power politics. Structural violence.3. Why has it happened?Interests: The military-industrial complex? Economy? Fanatics?Institutions: NATO weak? WHO? Difficult to fund developmental aid?Ideas: Traditional security vs human security4. Where will it lead? Rebuilding of Iraq, Afghanistan?
68The regulation of global governance, the system of world order 1. What has happened?The whithering of states? Still the only legitimate representative of the people? NGOs, International organizationsFrom welfare to competition state, from national to international economyAttractiveness to TNCsThe ”national security state”From US hegemony to the BRICSMajor rules and organizations only change after wars. The post-WWII orderGovernance/regimes: Multi-level, multi-actorStates create international organizations, which force states to comply (WTO, IMF) or influence them (ILO, OECD). WTO vs ILO (States in a Prisoners’ Dilemma)Structural power: by whom? TNCs, business organizations? NGOs, Global civil society? ”Uncivil groups”, ”the covert world”. A variety of interests in each category!Transnational networks too! (”private authority”) The UN Global compact 2000
69The regulation of global governance, cont’d 2. Is it good or bad?Liberals: Some global regulation is needed to protect the rule of lawNationalists: Intergovernmental arrangements are acceptableCritics: Global democracy is desirable but not feasible3. Why has it happened?Interests: Firms and politicians take initiatives, NGOsInstitutions: Intergovernmental organizations only change by consensusIdeas: Democracy can only be national vs must be global
70The regulation of global governance, cont’d 4. Where will it lead? Challenges:Development and growth:Material and social investments needed. Power and resources to the poor.Environmental impact? Lack of coordination. The role of financial crisesEquality and justice (fairness or redistribution?):Better or worse with globalization? (Asia vs Africa?) Winners and losers: right-wing populismThe fair trade movement: resource prices and labor standards”Make poverty history”: against northern protectionism etc.Democracy and regulation:Are the IMF and other IOs undermining national democracy? (Why national debts?)Should IOs be reorganized? More open to stakeholders?Coleman & Porter (2000): Six criteria to judge the degree of democracy surrounding a regime/organization: transparency, openness to direct participation, quality of discourse, representation, effectiveness and fairnessIs supranational democray better than intergovernmental?Is overlapping regulation good or bad? Lack of accountability vs pressures on governments
71Conclusions What have we learned? Where will it lead? The three paradigms help us understand positionsConflict or win-win situation? Development + environment + the north?Where will it lead?Structural change will continueInternational and domestic politicsInterests: winners vs losers? A variety of background characteristicsIdeas: liberals, nationalists and criticsInstitutions: structures the conflict!Epistemic communities build coalitions based on a story/interpretation