1. Global and International Sociology: States and Markets Sociology 2, Class 2 Copyright © 2014 by Evan Schofer Do not copy or distribute without permission

2. Introductions Evan Schofer schofer@uci.edu TA: Danielle Vesia Tuesday discussion sections dvesia@uci.edu TA: Natasha Miric Wednesday discussion sections nmiric@uci.edu TA: Matt Pearce Thursday discussion sections pearcem@uci.edu

3. Announcements Section meetings start next week Hint: Pay attention to the following reading: Friedman, Thomas “The Untouchables” Advice: Keep up on the readings!!!

4. Agenda Brief review of material from Tuesday Some video & discussion Commanding Heights, Part I Crams in a lot of useful historical background on the emergence of the global economy…

5. Review: States and Markets States and markets mean:

6. States and Markets: Definitions State: The central government of a country Markets: Systems that facilitate the exchange of goods and services –Related terms: statemarket governmenteconomy public private regulation“free markets” Also, reading by Robert Reich (next week): democracycapitalism.

7. Review: States and Markets Why do we start here? –Answer: To gain insight into economic globalization One must understand the relationship of states & markets in order to understand economic globalization…

8. Review: States and Markets What is so great about markets? –A powerful system for determining: 1. What should be produced 2. Who should get it –Market prices serve as a signal to producers Incentives that generate some useful outcomes But, markets can mess up: “market failures” 1. Fail to produce some “collective goods” »E.g., roads, national defense 2. Can be unstable: Crises/recessions/etc 3. Morally problematic outcomes (in eyes of many) 4. Some problematic incentives –E.g., to pollute the environment or exploit labor.

9. States and Markets Markets need some state control to function Legal systems to prevent fraud Police to protect property And, states can fix some problems of markets States can produce collective goods that markets don’t –Example: national defense, roads States can control (“regulate”) markets to prevent bad side-effects –Example: Requiring safe products or environmental protection But, state control can have its own problems –Corruption, inefficiency, difficulty planning Big debate: how much state control is good?

10. State Control vs. “Free Markets” BIG debate over the last century: How much should states control (“regulate”) markets? State ControlFree Markets Communism “Laissez Faire” Capitalism Socialism Keynesian “Mixed Economy” “Washington Consensus” Welfare State Marxism Regulation Central Planning “Public” Services Deregulation “Liberalization” Privatization

11. Commanding Heights, part 1 The video series examines globalization: the emergence of a global free-market economy 1930-1970: Shift toward greater state planning 1970-present: Shift to free markets, global economy Key people: –John Meynard Keynes: An economist; devised ways for governments to regulate the economy And argued that capitalism works better with regulation. –Friedrich Hayek: An economist, a proponent of free markets Related: The “Austrian school”, the “Chicago School”

12. Video: Commanding Heights, part 1 Episode 1, part 1 –Background: A global economy emerged in the late 19 th century Was wiped out by World War I and the Great Depression –Following World War I Some groups (e.g., Marxist-Leninists) rejected capitalism Others to a“Keynesian” approach: regulated capitalism –But: In the 1970s, countries shifted back toward “free markets”… Which is linked to a huge acceleration of globalization.

13. Commanding Heights, part 1 Question: Why the shift to “free markets”? –Commanding Heights video argues it resulted from a “battle of ideas”… –Keynes “won out” in the 1950s; later Hayek “won out”… –Reich (“Supercapitalism”) offers a different explanation: Transition from “Not Quite Golden Age” of “Democratic Capitalism” to “Supercapitalism” Reich argues that new technologies and globalization undermined the old system of regulated capitalism –Specifically, caused companies to chafe against the old system… and ultimately dismantle it.

14. Video Begin video: Commanding Heights, part 1. Start at 4:00…