short essay (350) wards
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2.pptx“Economic globalization refers to the intensification and stretching of economic interrelations across the globe” (Steger 38)
The new agents of today’s world: global markets, transnational corporations, international economic institutions.
Economic globalization
Liberalism
Political term
Economic term
Origins in the Enlightenment
John Locke (“natural right to life, liberty, and property”)
Civil liberties, political freedom, democracy, rule of the law;
Adam Smith (18th century)
Free markets, no tariffs
Limited government role (protecting the country, protecting citizens from one another, providing public works; education, defense).
1970s development of classic economic liberal theories of Adam Smith
Distinct from Keynesianism (dominant in the interwar period)
Assumptions:
Market => self-regulating mechanism
Against government intervention in the economy (laissez-faire)
Advocates:
Milton Friedman (theorist)
Ronald Reagan, Margaret Thatcher
Neoliberalism
Between WWI and WWII – governments protected their national markets
1944 Bretton Woods Agreement => wealthy countries of the Global North => first step at integrating markets. (IMF, WB, GATT later WTO); states still had the power to control the process
1970 => neo-liberalism (liberalization of all markets, retreat of gvt. from trade);
Reagan and Thatcher => “free trade = freedom”
1989 – legitimated neoliberalism as an economic model. It became the template for the new global economy.
4
Globalization after 1989
Internationalization of trade and finance;
Rise of transnational corporations;
Creation and growing power of supranational organizations.
Arguments for deregulations and open markets (free trade):
Increases global wealth (reduces gap between Global North and Global South).
Consumer choices
Secures peace
Spreads new technologies
Allows everyone to compete equally on the global marketplace
Arguments against deregulations and open markets (free trade).
Free trade =/= fair trade
Profits are not distributed fairly within and among countries
Lowering of global labor standards
Emerging economies are vulnerable
Ecological degradation
Global South =indebted to the North
1. Internationalization of trade and finance
Driven by commercial banks speculating on Wall Street => this led to the failure of these banks and the loss of their customers’ assets.
1999- the Glass-Steagall Act (signed in 1933) which had prevented commercial banks from engaging in investment activities on Wall Street.
Huge financial institutions had to either go bankrupt or be bailed out by the governments.
Both the Bush II and Obama administration => bailout programs which shifted the debt onto the government.
The Global Financial Crisis (GFC)
Same strategy used in the EU (Britain, Greece, etc.)
Consequences: shortage of credit worldwide.
The developing economies – more severely hit.
Globally – the economies slowed down.
Some fragile governments (Greece, Spain, Portugal) entered a severe economic crisis which continues today.
GFC- continued
Table on page 55 (group work)
Size?
Locations?
Challenges to national sovereignty?
2. Rise of transnational corporations
Role of IMF and WB?
The ten points of the Washington Consensus? (p.57)
Consequences of these measures?
3. Rise of international economic institutions
Political decisions fuel and determine economic structures.
Deregulation fuels globalization => it is the result of political actions. => globalization from above
Challenges to democracy (civic apathy, the power of TNCs, shift of power away from people).
Case study Greece.
Conclusions
