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Wandres123
re_1.zip4 realism.pptx
Relative vs Absolute Gains
U.S. Growth Chinese Growth
#1 5% 10%
#2 3% 5%
1
Realism
Zero-Sum Game
Economics → Military
Military → Economics
System protection, neocolonialism
State level – Rational, unitary, self-interested
Competition
GDP over individuals
Redistribution of wealth (among states) over creation
IOs and Hegemon
Outcome/arena for power relationships
State not weakening
2
List/Hamilton
Not against Trade, per se
List was against agricultural protection
Free Trade is beneficial if one has economic supremacy
Corn Laws to make U.S. an agricultural component of Britain
Historically U.S. was protectionist
Goal of Hegemon
Coercive Hegemon
Interested in Relative Gains
National Interest more important than public good
How will China react to U.S. hegemony?
3
Is the US in decline?
Rise of BRICs = Relative Decline
LDC mercantilist policies
Government involvement
Collective Action (e.g. G-77)
Alter System – New International Economic Order
Developmental State
State interaction in the market to promote development
Globalization/liberalism are not beyond control of the state
4
2 post-wwii systems.pptx
Post-WWII
U.S. and Briton devise system at Bretton Woods
Keynes and White—Lessons Learned:
Governmental role necessary
Moderation of Cycles
Regulation
State-Centric
Relatively egalitarian
Fear of Communism
Economic problems = Political Problems
1
Embedded Liberalism
Embed the Market back into Society
State Intervention
Focus on Unemployment and Poverty
Regulation, not Laissez-Faire
Relatively Demand Driven
Free Trade and the Market
Moderated Capitalism
State-Based Trade, little Internationalization of Production
Reduced Finance
2
Bretton Woods '45-'71
Fixed Exchange rate
U.S. Fixed to Gold
Europe Fixed to Dollar
Negotiated Exchange Rates
Done by Central Banks; Requires:
Dollars
Marshall Plan
Capital Controls
3
IMF
International Monetary Fund
Financial and Monetary
Originally designed to facilitate Bretton Woods System (Fixing/Pegging to Dollar)
Supply of Dollars
Today:
Maintain Exchange Rate
Avoid Financial Crises
Washington Consensus*
Headed By European
4
World Bank
International Bank for Reconstruction and Development
Provide Loans to Rebuild Europe
Provide Loans to LDCs
Washington Consensus
Headed by an American
5
GATT 1947
General Agreement on Tariffs and Trade
Failed attempt at International Trade Organization
Temporary agreements on Trade
No enforceable body
State-Centric Trade
Focus on reducing Tariffs
U.S. Reluctantly allowed Sterling Area
23 States attended (159 Today)
6
Problems in the Golden Age (~'70s)
Relative Decline of US
Growth of German and Japanese Competition
Eurodollar Market
Decolonization
NIEs (Newly Industrialized Economies)
Group of 77
Stagflation
Stagnation and Inflation
Failure of keynesianism
7
Collapse of Bretton Woods
Nixon (a Realist) sees the system as a cost
Unable to unilaterally alter exchange rate
Reduced Autonomy
States pegging give themselves preference (realism)
U.S. Stops assisting Pegging States
Depreciation of Dollar
Loss of Gold Reserves
1971 U.S. Terminated Gold Convertibility
Dollar Floats
Others follow suit and terminate pegs to dollar
Start of (mostly) Floating Exchange system
8
Neo-Liberalism
Begins late 70's; expands under Reagan
Diminishes Union Power
Decreases Regulation
Repeal of Glass-Steagall
Supply-side Economics
Lowest-Priced Goods
Internationalization of Production
IMF, World Bank
Export-led Growth in LDCs
9
Rise of Finance
Insurance on Trade in Floating Currencies
Speculation
Declining wages made up with Debt
Trade Deficit and Debt
Corporation Restructuring
Non-Financial Corporations Profiting from Finance
10
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