POLS 374 Foundations of Global Politics People and Economy Lecture October 6, 2005 People and Economy Lecture October 6, 2005

People and Economy  Key Point  Production is at the heart of every social system and of the institutions and political arrangements that enable that system to operate in a particular way.  Key Point  Production is at the heart of every social system and of the institutions and political arrangements that enable that system to operate in a particular way.

People and Economy  MODE OF PRODUCTION ----> SOCIAL ORGANIZATION ----> REPRODUCTION OF SOCIAL ORDER ----> MAINTENANCE OF DOMINANT MODE OF PRODUCTION

People and Economy  Capitalism: Solved the problem of production, but created a new problem of consumption.

People and Economy  MODE OF PRODUCTION  Usually associated with Marxist analysis, but can be applied more generally to describe contrasting forms of economic organization and their social impacts. In this regard, a mode of production generally entails three things …  MODE OF PRODUCTION  Usually associated with Marxist analysis, but can be applied more generally to describe contrasting forms of economic organization and their social impacts. In this regard, a mode of production generally entails three things …

People and Economy Mode of Production: Features  Material basis that is dominant in an economy, including technology and the ways in which things are made (i.e., the means of production)  The relations of production, which involve authority relationships between those who decide what and how much will be produced and those who to the actual work.  Social relations, which are the forms and patterns of relations among the members of society dominated by a particular mode of production  Material basis that is dominant in an economy, including technology and the ways in which things are made (i.e., the means of production)  The relations of production, which involve authority relationships between those who decide what and how much will be produced and those who to the actual work.  Social relations, which are the forms and patterns of relations among the members of society dominated by a particular mode of production

People and Economy  In sum, when we look at any society (whether historical or contemporary), there will be a relatively easy-to-see economic and social organization.  The authors assume that the basic nature of this organization is fundamental to understanding how that society works and why it works in the ways that it does  To put it simply, the mode of production tell us a great deal about the basic organization of society  In sum, when we look at any society (whether historical or contemporary), there will be a relatively easy-to-see economic and social organization.  The authors assume that the basic nature of this organization is fundamental to understanding how that society works and why it works in the ways that it does  To put it simply, the mode of production tell us a great deal about the basic organization of society

People and Economy  Marx believed that the mode of production determined virtually everything in society.  Thus, in the capitalist mode of production, society was divided into capitalists (those who owned capital) and workers (those who did not own capital). To Marx, this was an inherently unequal, exploitative, and hostile relationship.  Marx believed that the mode of production determined virtually everything in society.  Thus, in the capitalist mode of production, society was divided into capitalists (those who owned capital) and workers (those who did not own capital). To Marx, this was an inherently unequal, exploitative, and hostile relationship.

People and Economy  Authors believe the mode of production is important, but do not believe that it is a fundamentally important—or deterministic—as Marx did.

People and Economy  CAPITALIST MODE OF PRODUCTION--KEY FEATURES:  Divison of labor and specialization  Commodification of all goods and services: “Everything has a price”  Private Property  CAPITALIST MODE OF PRODUCTION--KEY FEATURES:  Divison of labor and specialization  Commodification of all goods and services: “Everything has a price”  Private Property

People and Economy  CAPITALIST MODE OF PRODUCTION--UNIQUE FEATURES:  Profit and Accumulation are the motive forces within capitalism  CAPITALIST MODE OF PRODUCTION--UNIQUE FEATURES:  Profit and Accumulation are the motive forces within capitalism

People and Economy  The drive for profits has a number of important implications, one of the most important of which is simply: Competition  The drive for profits has a number of important implications, one of the most important of which is simply: Competition

People and Economy  THE TRIBUTARY MODE AND THE KIN-ORDERED MODE.  Just a few words on each …  THE TRIBUTARY MODE AND THE KIN-ORDERED MODE.  Just a few words on each …

People and Economy  W hy is it important to know something about these three modes of production?  Tells us that, while capitalism is an obviously dominant and important mode of production, it is not the only game in town; historically, alternative modes of production have existed, and, therefore, alternatives to capitalism (as we know it) are possible in the future.  Second, tells us that, even while capitalism is dominant, it co-exists with other modes, especially the kin-ordered mode … this is neither good nor bad, but it is important in that, again, it allows us to imagine realistic alternatives  W hy is it important to know something about these three modes of production?  Tells us that, while capitalism is an obviously dominant and important mode of production, it is not the only game in town; historically, alternative modes of production have existed, and, therefore, alternatives to capitalism (as we know it) are possible in the future.  Second, tells us that, even while capitalism is dominant, it co-exists with other modes, especially the kin-ordered mode … this is neither good nor bad, but it is important in that, again, it allows us to imagine realistic alternatives

People and Economy  Origins of the global economic system  Q: How did capitalism become what it is today?  Origins of the global economic system  Q: How did capitalism become what it is today?

People and Economy  Origins of the global economic system  Begin with an understanding of one of the most important technological and organizational innovations of the time … FORDISM  Origins of the global economic system  Begin with an understanding of one of the most important technological and organizational innovations of the time … FORDISM

People and Economy  Fordism was a revolution in production – but it was not one without its own in-built contradictions. The most important of which was simply and ironically that it was too efficient and good. That is, it gave capitalists the ability to produce far, far more than they could actually sell.  But why was this a problem?  Fordism was a revolution in production – but it was not one without its own in-built contradictions. The most important of which was simply and ironically that it was too efficient and good. That is, it gave capitalists the ability to produce far, far more than they could actually sell.  But why was this a problem?

People and Economy  Simple equation: Too much production + too little demand = depression  Simple equation: Too much production + too little demand = depression

People and Economy  Reviving Capitalism in five easy steps:  W ar and/or military buildup  New means of production  Reorganization of the relations of production (e.g., offshoring, transnationalization of production, weakening of labor)  Planned obsolescence and similar strategies  Differential production (i.e., producing “niche” luxury goods)  Reviving Capitalism in five easy steps:  W ar and/or military buildup  New means of production  Reorganization of the relations of production (e.g., offshoring, transnationalization of production, weakening of labor)  Planned obsolescence and similar strategies  Differential production (i.e., producing “niche” luxury goods)

People and Economy  Reviving Capitalism: The Neoliberal Solution  Basic practices and principles of neoliberalism as follows:  Investment should be based on a country’s comparative advantages in the context of an international division of labor. Such advantages include low labor costs and taxation, limited social and environmental regulation, domestic political and economic stability, and well-developed infrastructure  Governments must not imposed undue restrictions on investment or forbid investors to send profits abroad  Government spending must be constrained to maintain the value of the currency. This means reductions in expenditures on health, education, and welfare and increases in spending that facilitate investment and production  Governments can impose only those restrictions on imports and exports permitted by international agreements  Reviving Capitalism: The Neoliberal Solution  Basic practices and principles of neoliberalism as follows:  Investment should be based on a country’s comparative advantages in the context of an international division of labor. Such advantages include low labor costs and taxation, limited social and environmental regulation, domestic political and economic stability, and well-developed infrastructure  Governments must not imposed undue restrictions on investment or forbid investors to send profits abroad  Government spending must be constrained to maintain the value of the currency. This means reductions in expenditures on health, education, and welfare and increases in spending that facilitate investment and production  Governments can impose only those restrictions on imports and exports permitted by international agreements