Globalization and Economy Lesson 8

Is Globalization an economic matter? New forms of technology are the backbone of globalization… they drive social transformations Intensification and stretching of economic interrelations Is economy the major globalizing force? Is Globalization an economic matter?

Bretton Woods New International Economic Order: Bretton Woods Reversing protectionist policies Expand international trade Stabilize money exchange system (US Dollar Gold value) Limiting political and economic agendas of single states Bretton Woods

3 pillars of the new order Three new international economic organizations: 1) International Monetary Fund (IMF) 2) International Bank for Reconstruction and Development (later World Bank) 3) General Agreement and Tariffs and Trade (GATT) later World Trade Organization (WTO) 3 pillars of the new order

Neoliberal revolution Golden age of state controlled capitalism: rising wages, social security, investments, political compromise It breaks down in the early 1970s: USA abandon the gold based fixed rate to increase competitiveness Neoliberal switch: political forces around the world act to globalize the liberalization of economy and leave state interventionism Neoliberal revolution

Economic globalization Collapse of the Communist system (1989-1991): further globalization of the neoliberal model A) Internationalization of trade and finance (New Economy, speculations and Automaton) B) Power of transnational corporations (TNC and globalization from above and resistance) C) Enhanced role of transnational institutions (IMF, WB, WTO and the “Washington consensus” and structural adjustment programs) Economic globalization