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(Introduction to) Political economy: summary lectures
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Full Summary of Political Economy readings UvA
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Summary 'States versus Markets' by Herman Mark Schwartz
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Creative destruction: A new industry, a new leading sector will take over meaning that othersectors go down. That’s how capitalist markets develops. (CD > Spotify)
- Economies of scale: the more you produce, the more productive you come. ‘More is
beautiful’.
- Economies of scope: if you’re good at producing one item, you can also start producing
more products.
Who pays for common goods?
• UK: initially private entrepreneurs
• Germany: Banks
• Russia: State
- The macro PE Story (Schwartz): we need global demand to avoid overproduction
- Debt crisis agriculture-based economies (Argentina, Australia, USA)
• Overproduction (at one point people won’t eat more)
• Speculation (what is the value of land now and what will it be in a year?)
- Liquidity problem (you will receive money to pay back in the near future)
• Borrowing to pay interest: even more debt
• Interest rates up: even more difficult to pay off
- Solvency problem (you won’t receive money in the near future)
• Great depression 1873-1896
___________________
Inequality fix according to Ricardo: Increase tax on land rent (because landlords will claim
more of the national income when the price of land increases)
Convergence (reduction) and divergence (reduce) of inequality
Pikkety: long-term empirical research. Inequality is the result of slow growth. R>G causes
inequality.
Whether inequality is a problem depends on whether it is considered relational of relative.
_____________
States can help overcome wicked problems like collective action problems (like climate
change)
- Solution approaches:
Authoritative: “do this or i’ll shoot you” = hierarchy
Competitive: create markets, emission rights = market
Collaborative: networks
Newell: Problem is there’s no transnational state, people/states behave self-interested (regime
theory)
________________
PE battlefields are between countries, sectors, generations, firms, and within firms.
, Gramsci: Brings ideology back as main aspect of hegemony
- Transnational capitalism: Corporations have freed themselves from government of
states. They are now transnational, and states depend on them
- Classical IR perspective: multinationals subordinated to state power
- Realistic: Both classical IR and transnational capitalism are wrong, because they see
one (corporations or states) as subordinated to the other. But we need to understand
them as actors that have relations with each other, in some cases states have the
overhand and in others corporations have the overhand.
After Bretton Woods there’s more financial crisis, did BW prevent crisis? If so, how?
- Securitization: create tradable financial products based on underlying assets (stocks;
credit card debts) – create financial product that you can trade (commodification)
based on underlying assets (like a firm)
- Derivatives: derivatives of securities – products made with these securities, get
complicated because you can create these products in many many many ways. The
derivative itself is a contract between two of more parties
Banking crisis > economic crisis > sovereign debt crisis > euro crisis > European crisis
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