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Political Economy of Globalization

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Political Economy of Globalization Political Economy of Globalization - Prof Martin Rhodes - This course seeks to provide an in-depth understanding of globalization and its differential impact across advanced and developing countries. Globalization is an ‘essentially contested’ concept, one with strong normative content. Often used lazily by the media, to avoid blame by politicians and for personal aggrandizement by public intellectuals, it must be handled with care. The current financial crisis makes matters more complex still. Our task is to develop a sophisticated understanding of globalization and of its consequences for public policy. We will focus on trade, cross-border investment and capital flows, their domestic impacts and consequences for national policy autonomy. These dimensions of globalization can facilitate growth, generate wealth and create employment. But they can be costly as well as beneficial, create ‘losers’ as well as ‘winners’, and arguably also diminish the control that nations have over their own destinies and economic outcomes. As we know from recent years, they can also help generate serious economic crisis. With ongoing global market liberalization, these dimensions of globalization all impact nations differently, depending on the timing, nature and duration of their insertion into the global economy, and the character of their comparative economic and institutional advantage. By the end of the course we will have a thorough appreciation of how, and with what effect, nations have ‘globalized’ over several time periods – the first under the Gold Standard from the mid- 19 th century to the 1930s, the second under Bretton Woods from the late-1940s to the mid- 1970s, and, our main focus of analysis, from the mid-1970s to the present day, This course will be taught over ten two-hour sessions between Monday 10 and Friday 14 November 2014. Students will be expected to have read the articles assigned before each class. In each session I will introduce the topic for 45 minutes or so, and the rest of the session will be in the form of a seminar. For the seminar part of the session, one or more students may be asked to prepare a short presentation. Those readings marked ** are required reading. Other readings on the list will be useful for your final essay. 20% of your grade will be based on class participation; 80% will be based on your final essay paper, which will be due after the end of your classes in December, date still to be arranged. In addition to the articles listed, there are two books for the course: • Martin Wolf, Fixing Global Finance , paperback, Johns Hopkins University Press, 2010 • Barry Eichengreen, Globalizing Capital: A History of the International Monetary System , 2nd edition, paperback, Princeton University Press 2008. And please read Frieden, J. (2006), ‘Will Global Capitalism Fail Again?’, Bruegel Essay and Lecture Series, Brussels * as preliminary background. 2 Class sessions: 1. Monday 10 November: Overview and Historical Background Session I: Globalization and State Autonomy: An ‘Essentially Contested’ Subject This is an introductory and survey session, reviewing themes and material that will be studied in much greater depth in subsequent sessions. There are two critical questions that frame out subsequent discussions: The nature of state autonomy under globalization and the purported role of globalization as a force for policy convergence (Cerny argues it is disappearing fast; Freeman, Hall and Soskice, Drezner and Garrett provide alternative nuanced picture of why national policy autonomy persists). Reading: • Cerny, P. G. (1995), ‘Globalization and the Changing Logic of Collective Action’, International Organization , 49, 4, pp. 595-625.** • Drezner, D. W. (2001), ‘Globalization and Policy Convergence’, International Studies Review , 3, 1, pp. 53-78. • Freeman, R. (2000), ‘Single Peaked vs. Diversified Capitalism: The Relation between Economic Institutions and Outcomes’, National Bureau of Economic Research, Working Paper 6775.** • Garrett, G. (1998), ‘Global Markets and National Politics: Collision Course or Virtuous Circle’, International Organization , 52, 4, pp. 787-824. • Hall, P. A. and D. Soskice (2001), ‘An Introduction to Varieties of Capitalism’, in P. A. Hall and D. Soskice (eds.), Varieties of Capitalism: The Institutional Foundations of Comparative Advantage , Oxford: Oxford University Press, pp. 1-68.** Session II: Globalization in Historical Perspective This session examines the history of globalization and contrasts its two distinct ‘waves’ in the 19 th and 20 th/21 st centuries. There are several issues that we need to comprehend: How and why globalization today differs from globalization a century ago (Baldwin and Martin, Bordo et al.); and the nature of globalization under the Gold Standard and the latter’s demise (Eichengreen, Kindleberger). Reading: • Baldwin, R. E. and P. Martin (1999), ‘Two Waves of Globalization: Superficial Similarities, Fundamental Differences’, National Bureau of Economic Research Working Paper 6904.** • Bordo, Michael D, B. Eichengreen and D. A. Irwin (1999), ‘Is Globalization Today Really Different than Globalization a Hundred Years Ago?’, National Bureau of Economic Research Working paper 7195. • Eichengreen, B. (2008), Globalizing Capital: A History of the International Monetary System , 2nd edition, Princeton University Press, ch.2 (‘The Gold Standard’) and ch. 3 (‘Interwar Instability’). ** • Kindleberger, C. P. (1951), ‘Group Behavior and International Trade’, Journal of Political Economy , 59, 1, pp. 30-46. 3 2. Tuesday 11 November: International Monetary Relations and the Liberalization of Finance Session III: Dimensions of Globalization I – Bretton Woods and its Demise This session looks first at the re-establishment of the international capitalist system after WW2 under ‘embedded liberalism’ (Ruggie; Horowitz), then seeks to explain the demise of the Bretton Woods system in the 1970s (Eichengreen ch. 4), and contrasts the nature of US postwar international hegemony with that of Great Britain in the 19 th Century (Silver and Arrighi), as a precursor to our analysis in the next session of financial liberalization and global integration from the 1980s on. Reading: • Eichengreen, B. (2008), Globalizing Capital: A History of the International Monetary System , 2nd edition, Princeton University Press, ch.4 (‘The Bretton Woods System’).** • Horowitz, S. (2004), ‘Restarting Globalization after World War II: Structure, Coalitions and the Cold War’, Comparative Political Studies , 37, 2, pp. 127-151. ** • Ruggie, J. (1982), ‘International Regimes, Transactions, and Change: Embedded Liberalism in the Postwar Economic Order’, International Organization , 36:2, 379-415. • Silver, B. J. and G. Arrighi (2003), ‘Polany’s ‘Double Movement’: The Belle Époque of British and U.S. Hegemony Compared’, Politics & Society , 31, 2, pp. 325-355. ** Session IV: Dimensions of Globalization II – Financial Globalization and its Consequences In this session, we explore several different dimensions of financial globalization. The impact of capital mobility on stability and the exercise of power in the global economy (Eichengreen, Obstfeld); its consequences for economic management in the developed and developing countries (Goodman and Pauly, Haggard and Maxfield); and the background to the 2008-12 international financial crisis (Wolf) which we deal with in greater detail in session VII. Reading: • Eichengreen, B. (2008), Globalizing Capital: A History of the International Monetary System , 2nd edition, Princeton University Press, ch. 5 (‘After Bretton Woods’).** • Goodman, J. B. and L. W. Pauly (1993), ‘The Obsolescence of Capital Controls: Economic Management in an Age of Global Markets’, World Politics , 46, 1, pp. 50-82. • Haggard, S. and S. Maxfield (1996), ‘The Political Economy of Financial Internationalization in the Developing World’, International Organization , 50, 1, pp. 35-68. • Obstfeld, M. (1998), ‘The Global Capital Market: Benefactor or Menace?’, Journal of Economic Perspectives , 12, pp. 9-30. • Wolf, M. (2010), ch. 2 ‘Blessings and Perils of Liberal Finance’, ch. 4 ‘From Crises to Imbalances’ and ch. 5 ‘Calm before a Storm’, in M. Wolf, Fixing Global Finance , John Hopkins University Press. ** 4 3. Wednesday 12 November: Developing Countries, MNCs and Global Trade Flows Session V: Globalization and the Dilemmas for Developing Countries Asia, Latin America and Africa have been located in a hierarchy of development, ranging from successful through to disastrous. This session considers how these region’s development strategies account for successful or unsuccessful globalization, centered on: the contrasts between the Asian and the Latin American models of ‘import-substitution’ industrialization’ (Haggard, Kohli, Narula, Schneider); problems of LDC development and the debate concerning their causes, focusing on Africa (Humphreys and Bates); and the special case of ‘resource curse’ countries (Karl). Reading: • Haggard, S. (1986), ‘Newly Industrializing Countries in the International System’, World Politics , 38, 2, pp. 343-370. • Kohli, A. (2009), ‘Nationalist Versus Dependent Capitalist Development’, Studies in Comparative International Development , 44, pp. 386-410.** • Humphreys, M. and R. Bates (2005), ‘Political Institutions and Economic Policies: Lessons from Africa’, British Journal of Political Science , 35, pp. 403-428. • Karl, T. (1999), ‘The Perils of the Petro-State: Reflections on the Paradox of Plenty’, Journal of International Affairs , 53, 1, pp. 31-48.**
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