Lecture notes
world economic context
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Notes in English on the world economic environment UB. All topics, total of 22 p. NOTE: 9,2
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TOPIC 1: CAPITALIST ECONOMY AND THE WORLD CAPITALISTS SYSTEMHow does it work and what are its main contradictions?
The structural method in economy is divided in: the reality which is objective (it exist) and the structured body. Those
elements are interconnected, it means that only are understandable if considering them in the whole context. So we
are going to study the world economy as a whole structured.
The economy is configured by an objective reality, theoretical concepts and instruments (territory, religion, social
class, gender or sex, age, historical moment…) to analyses humanity. The process is abstract because it’s not touchable
but if we want to know about a specific place we have to use a progressive concretion.
All of them are capitalism economy (all common) but then we are going to developed some of them.
- The economy of USA is liberal capitalism
- The economy of Germany is social capitalism
- The economy of Japan is bureaucratic capitalism
They have common ideas, the capitalism is developed inside.
- Economy of Chile: primary exports (middle income)
- Economy of Burundi: primary exports (low income)
- Economy of Malasya manufacture goods exports
They are focused in international market with different income and material.
SOCIOECONOMIC STRUCTURES
The societies subsistence is based on:
- the relationships among different groups or social classes: all of them are interconnected
➢ Production relations: decide who produced what
➢ Distribution relations: When the salary goes down the capitalist people are richer (income inequality).
➢ Consumption relations:
- the relationships with instruments and work objects
➢ Material (or physical) and intellectual resources: productive forces
ECONOMIC SCTRUCTURE
There is an economic interconexions and productive forces with a certain extent of development which results in mode
of production a theoretical model very abstract. It includes the most global, relevant, deep and stable aspects of the
development of a society and its way of acting. It expresses the way a society produces, distribute and consumes
(economy basis).
M’ > M = economics growth and capital is accumulated
The capital money is minor at the beginning which have to increase in the end of process. The better way of doing is
by a productive valorization, invest money in some commodities C’ different from the begging which will have more
value at the final and cost more money. From the financial profit we obtain the financial markets with the objective
to invest or make the consumer buy. Markets says that everything has a prices so someone have to be the owner.
▪ C = raw materials, means of production technology, labor power (capacity of working). The last aspect is fix,
you can’t move because it’s very difficult move to another country to work although everyday capitalist is
globalize so this aspect is not growing. The people don’t move, the companies yes.
▪ Production= the materials are added a value from the beginning. The process has a cost structure you need
to follow to get profits or wages relationships.
▪ C’ = consumption and production goods
,CAPITALIST MODE OF PRODUCTION
- M – C – C’ – M’: in capitalism you sell to be able to buy and return to sell to get more money. M < M’
- C – M – C’= another markets are you sell another buy in order to get another commodities.
Each capitalist will try to maximize:
▪ You have to invest and resources as many progress and productivities you can.
▪ The competitiveness among different capitalist not only in terms of markets but also in resources.
▪ The objective is profitability, pay the les possibly for everything (relation capital/labor)
CONTRADICTIONS AND EFFECTS
The are some contradictions like for example between the production capacity and consumption, productivity versus
profitability (sometimes is very difficult to produce as much as your expectations are) and efficiency versus
effectiveness (eficacia/eficiencia)
The effects of this contradictions related to capitalist dynamics are like a non-harmonious development (economic
cycles and crises), capital concentration (physical or material process, bigger companies) and capital centralization
(economic and social process, bigger companies it’s difficult to have a single owner that’s why there are a few) and
outer expansion (some companies need to produce and buy in other countries for the lower prices).
The historical formation of the Global Capitalist System
Ways to enlarge the capital accumulation framework (estructura)
The objective is trying to fulfill different needs. How? Solving the problem of overproduction and the diminishing
tendency of capital profitability; and capitalist reproduction needs.
There are different ways depending on the capital form they involve:
1. Commodities: M – C – M’ Means P and Labor F
Foreign trade
2. Money: M – C – M’
International financial flows, foreign direct investment
3. Productive Capital: buy, sell, produce over the world M – C – M’
Transnational production
Where did capitalism start? THE WORLD CAPITALISM SYSTEM FORMATION
The world capitalism system formation start with inner structural changes, first in production (way of production
things, homogeneous wave possible costumers only choose basic aspects), then markets (big international shops
around the world) and finally the land (the economic power could come by other countries)
The economic basis of capitalization starts in the European societies and Japan during a long period of time but not in
the same way or the same level because it depends on the resources availabilities, the economic structures and on
the cultural, religious… characteristics (non-economic aspects).
Europe and Japan as the center of the system adapt to the periphery the process of capitalism. There were some phases:
1. COLONIALISM (until 1870): there was an internationalization of capital commodity that suppose new markets
for metropolis manufactures and raw materials. Through wars and territorial annexations the commodities
were send it from metropolis to the colonies and the money and raw materials from the colonies to
metropolis. (Uneven trade)
, 2. IMPERIALISM (1870 – 1945): there was an internalization of money capital between 1870 and 1918 because
the world was completely distributed among the imperialism power. The way was take the money (M) from
metropolis to colonies and getting the benefits (M’). Imperialism allowed the universalization of capitalism
and made possible the world capitalist System.
3. CAPITALIST GLOBALIZATION (effectively from the 60s): there was an internationalization of productive capital
by the transnational companies. They proportionate commodity capital and money capital. The world
domestic market changes and with them the globalization of economic basis of the system, that means a new
international work distribution and a segmentation of the productive process.
SYSTEM STRUCTURE
The structure of a basic capitalism was a center who dominate a periphery which depend of it.
The capitalism development could be by 2 ways:
On the one way autonomous (center), that means a self-centered development: sectorial coordination and internal
market, industrial interconnection, technological diffusion, endogenous progress, endogenous absorption of added
value and productive diversification. As a result of that the socioeconomic development get a social welfare,
institutional modernization, state functionality and endogenous regulation capacity.
On the other way induced (periphery), that means extraverted: sectorial dislocations or non-coordination, industrial
disconnection, blocked productivity, added value leak and productive specialization. The result of that was a
dual/underdevelopment economies with poverty, institutional backwardness, a stat disfuncionalities and exogenous
regulation.
SEMIPERIPHERY: Is it C o P? WHAT IS ITS ARTICULATION CAPACITY?
The center had a self-centered capitalism, an endogenous articulation between production capacity (as result of
productivity improvements spread over all sectors) and consumption capacity by paying enough to different
productive factors including work, which allows endogenous added value absorption.
The periphery had an extraverted capitalism, an endogenous disarticulation as a result of the difficulties of an
endogenous added value absorption because the production capacity (related to foreign market needs) and the
consumption capacity which is limited because it’s competitively is based on low salaries and prices.
Semipheriphery although has certain sectors/regions articulation, it’s not a national level (there’s no domestic market),
therefore it’s not center, although they might generate some self-centered accumulation process in their territory.
TOPIC 2 EVOLUTION OF THE WORLD ECONOMY
THE EVOLUTION OF THE WORLD CAPITALIST ECONOMY: FROM THE POSTWAR EXPANSION TO THE NEOLIBERALISM ERA
EVOLUTION OF THE WORLD ECONOMY
The evolution of the world capitalist economy: from the postwar expansion to the neoliberalism era.
1945-1973: golden age of economic expansion
▪ Post war economic growth
▪ Changes in the productive system
→ Fordism & the new ways of organizing work processes
→ The new competition regime
→ The production internationalization: the Transnational Companies and the Foreign Direct Investment (FDI)
→ Generalized indebtedness
1. Increasing of purchasing power + Consumer credit = Changes in consumption composition (sophistication)
2. Proliferation of financial institutions (of all kinds) = Great growth of loans and credit supply
3. shortening product cycle = Credit to companies = New investments
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