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Summary Global Political Economy - Keyterms
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Global Political Economy - Keyterms
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1. Global political economyFrom lecture 7: rejects neoclassical assumptions, considers the world economy in terms of dynamics
and effects, and not separate from IR. It draws from multiple theoretical traditions and considers
itself post-disciplinary in many aspects.
The world market is historically grounded, focuses on path dependence (ie historical institutions
shape future decisions, e.g. the experience of colonialism), attentive to agency and states’ unique
roles, but poses limits of state-centered analysis by emphasizing increasingly transnational features.
The approach is multi-scalar: regional, current dynamics as well as traditional, top-down ones.
2. Residualist understanding of poverty (Selwyn)
“from Bernstein’s (1992) understanding of capitalism VS poverty: ‘exclusion’ from ‘the market’ is
the main cause of poverty. Assumes ‘inclusion’ brings economic growth and development, and
improves the incomes and livelihoods of all participants. Example of a residualist perspective: UN
Millennium project director Jeffrey Sachs’ defends proliferation of sweatshop labour across global
south: ‘rich-world protestors should support increased numbers of such jobs; sweatshops are the
first rung on the ladder out of extreme poverty’ (Sachs 2005). Ignores that capitalism generates both
wealth and poverty, and claims to be the only viable solution. Being excluded from capitalism
creates more inequality than capitalism itself → a neoliberal understanding that Selwyn criticises:
“Within such explanatory frameworks poor countries and their populations are held to be poor not
because of the nature of the capitalist world system, but because of their effective exclusion from
it.”(Selwyn, 1)
3. Joseph Stiglitz: neo-Keynesianist, used to be chief of the World Bank until Washington consensus.
Mismanagement of globalisation: Poverty is increasing, middle class shrinking, growing inequality,
the top 1% gained the most in US → national income went up because of those at the top getting
richer, at the expense of unskilled workers.
Globalization also alienates communities through outsourcing: high tiers of a company often do not
live near low tiers. Made it worse for large masses, that should now be empowered and global
governance restructured to not only benefit financial and corporate interests.
Also, globalization on distribution of power: periphery countries depend on the goodwill of core. The
burden to offsetting this is made harder by globalisation reducing their power.
How globalization is different for developing countries: 1. Developed countries set the rules and
developing countries often must participate, since they are often indebted 2. Developing countries
have less ability to financially set off the negative effects of globalization. Possible solution:
1. Doubling down on the Washington Consensus
2. The new protectionism
3. Fair globalization with shared prosperity
“Inequality is a choice”
Children cannot choose family, nor whether they are born into poverty. Countries
could implement policies to offer equal opportunities to reduce inequality.
Case study: South Korea went from 1/10 people with college degree to world’s highest university
completion rates.
,4. Inequality
“conclusion from theories and evidence: neither too little nor too much inequality is good. If this
occurs, it may hamper economic growth and create social problems” Chang
Too little: Lack of incentives (Free market philosophy: ineq. is inevitable, trickle-down+investment)
Too much: investment -> instability, no mobility, wasted potential of poor
“Many consider poverty and inequality a result of different abilities. But, as we have seen, these
things are subject to human intervention. Redistribution of income and, in the longer run, stable
economic development, as has been shown by China” Chang “To allow poor individuals to
get out of poverty through their own efforts, we need to provide more equal childhood conditions
(through better welfare provision and education), improve job access for poor people and prevent
the rich and the powerful from rigging markets.”
Facts by Chang: accumulating wealth is more difficult than earning income. The inequality created
between levels of wealth and levels of income is much vaster for wealth. In the US, this is a major
concern because many elites are able to gain ever bigger wealth without contributing.
Global inequality declined because of development in East Asia. but (income) inequality within
countries has increased. Piketty says that those who live off wealth gain more than those living off
income. Calls for global tax and greater democracy
From lecture 9:
Measures for inequality: expenditure/consumption inequality (income inequality). Gini and Palma
ratio measure the distribution of income. Wealth and asset inequality: rate of return on capital
exceeds growth of income. Useful locally and globally: ubiquitous feature of social life, fundamental
feature of the world economy.
Perspectives on inequality
Liberalism/neoclassical: competitive markets regulate inequality through encouraging competition
Critical political economy: Inequality is a product of capitalism
statist/developmentalist political economy: states can shape how inequality plays out
gendered/feminist political economy: patriarchy responsible for inequality
The ethical judgement that we make of inequality depends on if or not we think it good or bad for
economic performance and growth. Not just a concerning for the poor -> Global inequality is about
life chances in the world economy
5. Growth: expansion of output, for example through natural resources. Can result from conomic
growth but does not have to. Case study: Equatorial Guinea is tiny country with highest GDP growth
in 2010 because of new found oil, which American owned oil companies claim
→ Economic growth not the same as economic development
1. intensive growth: transforming the way things are produced → sustained increase of outputs
2. extensive growth: adding factors which leads to growth, e.g. adding more people to the process.
From lecture 9:
- Once everything was about growth: industrialization, size of market, productive capabilities,
national development. This is how capitalism is growth addicted: creation of value & capital
accumulation as basis for profits, minimization and externalization of costs. This has brought
poverty down but inequality up.
- GDP is a measure of growth but we should be agnostic about growth = growth matters but
but has been uneven and not always created wellbeing, which is more important than GDP.
, 6. Welfare
Three worlds of welfare (Esping-Andersen)
- Liberal
o US, Australia, Canada
o Benefits only for low income people → stratified
o Stigmatisation of different layers
o Push for increased market reliance
- Conservatives
o Austria, France, Italy
o States capable of replacing market as source of welfare, but often insurance based
o Traditional class structures maintained (church), traditional family values
o state steps in when family’s ability to support is exhausted
- Social democratic
o Scandinavia
o Everyone receives generously, with difference according to income
o State assumes role of welfare provider
o State is motivated by the prospect of full employment
o high equality, decommodification of welfare services
How to measure welfare outcomes:
- Fulfillment of basic needs
- Development of capabilities
- Protection from adversity
- Implies degrees of security/ protection
- Freedom of press, elections and in livelihood
- HDI: life expectancy, education, income. Concept of going beyond basic functioning
- Capabilities + autonomy = freedom
9. Globalized production
Lecture 10:
Global production chains existed before today’s globalised world did. Ex: pre-industrial VOC in
Indonesia (16th century).
What is new is the magnitude of production and the degree of fragmentation (= many different
suppliers all over the world). The questions we asked ourselves because of globalization were:
1. What countries produce the products?
2. Which countries have raw materials?
3. Which communities benefit, and which don’t?
10. Inclusive growth: promotion of an agenda of shared growth, and opportunities that improve
living standards while reducing inequalities in income, health outcomes, and education.
Inclusive growth in East Asia can be seen as a Polanyian double movement: push for marketisation
and commodification of all aspects of life and then the creation of social protection that embeds the
society into the market. Economies are always embedded in the societies in which they exist, and
not absolutely self-regulating.
11. Hockey Stick: curve that describes the dramatic increase in global output & income after
technological change, like world income and population in the last 2000 years: not much happened
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