Money & Capital



Global Political Economy

and Governance

Graduate Unit Outline & Guide

Autumn 2005

[Final Version 10 Dec 2005]

Bremen University

Department of Economics

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Unit Coordinator

Professor Phil O’Hara

philohara1@



Outline

Global Political Economy and Governance

Module A

Wealth, Welfare and Conflict in the Global Political Economy

Session 1 Wealth and Welfare Survey of Global Capitalism

Session 2 Terrorism and the War on Terrorism

Module B

Contradictory Dynamics of Neoliberal Globalization

Session 3(a) Globalization of Trade, Finance and Industry

Session 3(b) Neoliberalism: A Viable System of Governance?

Module C

TNCs, Balance of Payments & Chinese SSA

Session 4 TNC Profit, Investment & Growth

Session 5 Balance of Payments Constraint Growth

Session 6 A Chinese SSA?

Module D

Industry-Finance, Family-Community & Post-Neoliberal Governance

Session 7 Finance: Stability, Conflict Resolution & Performance

Session 8 Family & Community: Stability, Trust & Association

Session 9 Post-Neoliberal Governance for Long Wave Upswing?

Aims and Content of the Unit

This unit aims to enhance an understanding of advanced recent readings from the major journals and books on pressing issues of global political economy. It is also important to instil in students the importance of scholarly discussion and critical analysis of the international economy. An in-depth analysis will be placed on six modules:

(1) Crucial patterns, problems, and policies of the global political economy, including wealth and welfare production/distribution, as well as terrorism and the war on terrorism;

(2) The contradictory relationships and processes of globalization and neoliberalism, including an analysis of growth, development, social welfare and well-being.

(3) The structure and workings of transnational corporations in the global system of production, distribution and exchange.

(4) Global institutions and long-term growth: including system(s) of production and distribution; the IMF; and the WTO.

(5) The importance and functioning of finance, sociality as well as governance and policy institutions, including neoliberalism and post-neoliberal governance.

(6) Critical problems associated with the balance of payments constraint and the terms of trade: aspects of the demand-oriented approach and an analysis of cor-periphery relations.

We examine the world economy as a whole, and also various case studies and policies from Africa, Latin America, Asia, Europe, Australia and North America.

References

References will be from relatively recent journals and books (see below for more details). You will find the following references to be useful at times.

Phillip O’Hara. Growth and Development in the Global Political Economy: Social Structures of Accumulation and Modes of Regulation. London and New York: Routledge, 2006.

























Phillip O’Hara. (Ed.) Global Political Economy and the Wealth of Nations: Performance, Institutions, Problems and Policies, London and New York: Routledge, 2004.

Harry Bloch. (Ed.) Growth and Development in the Global Economy, Cheltenham UK: Edward Elgar, 2003.

Phillip O’Hara. (Ed.) Encyclopedia of Political Economy, 2 volumes, London and New York: Routledge, Paper edition 2001 (see pp. xxi-xxii for topics; in reference section of the library; also in closed reserve).

R.Barry Jones (Ed.) Routledge Encyclopedia of International Political Economy. Routledge: London and New York, 2001. 3 volumes. (In reference section of the library).

Theodore H. Cohn, Global Political Economy: Theory and Practice, New York and Amsterdam: Longman Publishers, 2000.

Peter Dicken, Global Shift: Transforming the World Economy, London: Paul Chapman Publishing, 2003. 4th Edition.

Session 1

Global Analysis of Wealth and Welfare

During the first week of lectures we examine most of the measures of wealth and welfare and undertake a review of the pattern of wealth and welfare for many nations, continents and corporations. The main question raised is: how is the world evolving – both historically and contemporaneously – in terms of the main measures that scholars and governments value. In doing this survey, we look at GDP, the technology achievement index, social and human capitals, institutional and interpersonal trust, the human development index, quality of life, the index of sustainable economic welfare, and the Gini coefficient (for inequality). This survey maps where we have been and indicates where we are going, globally and regionally speaking.

References

Phillip O’Hara, “Wealth and Welfare of Nations, Continents and Corporations”, in P.A. O’Hara (ed), Global Political Economy and the Wealth of Nations: Performance, Institutions, Problems and Policies, Routledge: London and New York, 2004, pp. 36-56.

Lawn, Philip A. (2003) “A Theoretical Foundation to Support the Index of Sustainable Economic Welfare (ISEW), Genuine Progress Indicator (GPI), and Other Related Indexes”, Ecological Economics, Vol 44, No 1, February 2003, pp. 105-118.

Desai, Meghnad; Sakiko Fukuda-Parr; Claes Johansson & Fransisco Sagasti. (2002) “Measuring the Technology Achievement of Nations and the Capacity to Participate in the Network Age”, Journal of Human Development, Vol 3, No 1, pp. 95-122

Seminar Presentation: Global Wealth and Welfare

1. Is the world going through a long wave upswing or downswing at present; and what about some of the regions (such as East Asia)?

2. Analyse the nature of and main differences between Gross Domestic Product (GDP) and the Index of Sustainable Economic Welfare (ISEW) as a measure of comparative welfare. Provide detail, examples and illustrations. [Lawn]

3. Detail the nature of and critically evaluate the Technology Achievement Index as a measure of innovative actuality and potentiality. Is it possible to make international comparisons? If so, what is the nature of these comparisons? [Desia et al]

Session 2

Terrorism in the Global Economy

The second week of lectures for module one examines the importance of the current terrorist threat – and the so-called war on terrorism – for economic issues and global/regional stability. Special reference is given to the four main dimensions of the contradictory inner dynamics of terrorism, which create it and impose costs on corporations, governments and ordinary people. These four contradictions relate to the fact that terrorism is not a great real threat to human livelihood, yet it poses major socio-economic impacts; high-level technologies promote terrorism; the struggle for US hegemony helps to mould it; and deregulation encourages it. The costs of terrorism are examined, as well as the policy options that follow from the analysis.

References

Phillip O’Hara, “The War on Terrorism, Political-Economic Contradictions and Policy Issues”, Global Political Economy and the Wealth of Nations: Performance, Institutions, Problems and Policies, Routledge: London and New York, 2004, pp. 344-66.

Phillip O’Hara, A New Global Military-Terrorism-Hegemony Social Structure of Accumulation for Long Wave Upswing?, paper presented at the European Association for Evolutionary Political Economy Conference, Bremen, Germany, Friday 11 November 2005, 2.30-4.30pm.

IMF (International Monetary Fund). (2001) World Economic Outlook, December 2001: The Global Economy After September 11. Washington DC: IMF



There are literally dozens of references on the costs (and benefits) of terrorism on the internet; check these out: eg,

Seminar Topics:

1. What is terrorism? What are the contradictions that lead to the creation of terrorist attacks and promote socioeconomic uncertainty? [Start with O’Hara]

2. Examine in some detail the nature and main dimensions of the costs of terrorism, providing examples and detailed measurements. Are there any benefits of terrorism?

3. Is there a new global military-terrorism-hegemony social structure of accumulation for long wave upswing?

4. What policy measures are necessary for dealing with terrorism in order to reduce global and regional instability and uncertainty? [Start with O’Hara, then go to others]

Session 3

Contradictory Dynamics of Neoliberal Globalisation

After some earlier trends along these lines, from the late 1970s and early 1980s, the Thatcher and Reagan revolutions questioned the welfare state as a way of regulating and moderating economic fluctuations. This led to the rise of neoliberalism, a conservative form of economic policy and governance that relies on the free market and individual initiative. Neoliberalism advocates the sale of state enterprises, less government spending, reduced taxes and moderate regulations on business. During the 1990s, and continuing into the new millennium, the ideology and practices of neoliberalism became dominant worldwide.

Social structure of accumulation studies have tended to take a national perspective on the problem. But in the current global age we need to take a more international approach. Since national economies are becoming more open it is critical to explore public-goods functions in a wider context than the national economy. This is not to argue that globalization has destroyed national economies; indeed, the evidence suggests that the global tendency is only partial. Nevertheless, it is no longer desirable to take a purely national view of these matters. Hence the importance of a Global System of Power and Accumulation (GSPA). This module sets out the main contours of a critical aspect of this system, namely the global neoliberalism and whether it currently operates as an effective set of institutions to moderate the excesses of global capitalism.

(i) GLOBALIZATION OF CAPITAL

References

Phillip O’Hara, “Cultural Contradictions of Global Capitalism”, in P.A. O’Hara, Growth and Development in the Global Political Economy. Oxford and New York: Routledge, 2005, chapter 2.

Phillip O’Hara, “Contradictions of Neoliberal Globalization: The Importance of Ideologies and Values in Political Economy”, Journal of Interdisciplinary Economics, 2005, volume 16, pp. 341-365.

Phillip O’Hara, “Contradictory Dynamics of Neoliberal Globalization”, in B.N. Ghosh, Globalization and Conflicts, London & New Delhi: Verso Publishers, 2006.

Seminar Topics

1. Examine the nature of the narrowly economic contradictions of global capitalism, concerning GDP growth, investment, productivity, and profit.

2. Analyse the nature and significance of the social well-being and welfare and contradictions of global capitalism, especially relating to stability, environmental sustainability, trust and the like.

(ii) GLOBAL NEOLIBERALISM

References

Phillip O’Hara, “A Global Neoliberal Social Structure of Accumulation?”, in P.A. O’Hara, Growth and Development in the Global Political Economy. Oxford and New York: Routledge, 2005, chapter 3.

George Demartino. “The Promises and Perils of Global Neoliberalism”, chapter 1 of G. DeMartino, Global Economy, Global Justice. London and New York: Routledge.

Michael Howard and John King, “The Rise of Neoliberalism in Advanced Capitalist Economies: Towards a Materialist Explanation”, International Papers in Political Economy, volume 9, number 3, 2002.

Seminar Topics

1. Analyse the degree to which neoliberalism has help to turn around socioeconomic performance over the past 20-25 years, and whether it has managed to promote long wave upswing in the world economy.

2. How can we understand the nature and limitations of neoliberalism by utilising Karl Polanyi’s concept of the disembedded economy?

3. What are the other dominant contradictions of neoliberal globalisation?

Session 4

Transnational Corporations – Profit & Performance

The onset of globalisation and neoliberalism has increased the importance and power of transnational corporations (TNCs), and therefore we need to examine the latest corporate structures, process, and performance. In this module, we commence with a look at corporate performance, especially global profitability, investment and growth. Surprisingly, perhaps, we notice that during the long wave downswing of the 1970s-2000s corporate performance has deteriorated markedly. We therefore examine the nature and reasons for this TNC downswing relative to foreign direct investment, domestic investment and institutional changes that have occurred. We pay particular attention to continental factors linked to East Asia, the West, Latin America, Sub-Saharan Africa, Eastern Europe and the like. Then in the second lecture, we scrutinise the nature of the institutional structure and dynamics of TNCs, giving special attention to the transition from Fordism to Post-Fordism or the new system of production-distribution and exchange (flexible system of production). We also explore the nature of just-in-time system, total quality management and economies of scope. Lastly, we examine a structural pattern of TNCs to utilise production networks and commodity chains in order to produce and distribute commodities throughout the world.

References

**Phillip O’Hara, “A New Transnational Corporate SSA for Long Wave Upswing in the Global Economy?”, chapter 4 of P.A. O’Hara (ed), Growth and Development in the United States and Global Political Economies. Routledge: London and New York, 2005.

Manuel R. Agostin & Ricardo Mayer, “Foreign Investment in Developing Countries: Does it Crowd in Domestic Investment”, UNCTAD/OSG/DP/146, February 2000.



Kenneth Rogoff and Carmen Reinhart, “FDI to Africa: The Role of Price Stability and Currency Instability”, Washington DC; IMF Working paper, August 2002.



Seminar Topics

1. Analyse the performance of TNCs in terms of profit, productivity, investment and also global growth. Why is the trend is a particular direction?

2. Examine the empirical evidence of FDI crowding out of domestic investment in Latin America, Africa and Asia (see Agostin & Mayer 2000).

3. Examine the degree of and major factors affecting FDI in Africa (see Rogoff & Reinhart 2002).

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Session 5

Balance of Payments Constraint

There is a presumption in mainstream economics that the flow of products, resources and technology across international borders should lead to the convergence of standards of living across countries. The analysis underlying this presumption is examined and the empirical evidence on whether there is convergence in standards of living across countries is assessed. We then directly address the role of openness to the global economy as an influence on the growth of national economies. Special reference is given to two critical factors – the balance of payments constraint on growth, and the terms of trade problems of centre-periphery relations.

References

H. Somnez Atesoglu, “A Demand-Oriented Explanation of Economic Growth in

Germany”, Journal of Post Keynesian Economics, Vol 19, No, Fall 1996, pp. 101-111.

Jonathan Perraton, “Balanced of Payments Constrained Growth and Developing Countries: An Examination of Thirlwall’s Hypothesis”, International Review of Applied Economics, Vol 17, No 1, January 2003, pp. 1-22.

Seminar Topics

1. Analyse the nature and workings of the Kaldor model of circular and cumulative causation, paying particular attention to the circuit, the laws, supply-demand, and the governance implications.

2. Examine the nature of the model, empirical conclusions, and economic significance/nature of Atesoglu’s analysis for Germany (see Atesoglu above).

3. Examine the nature of the model, empirical conclusions, and economic significance/nature of Perraton’s analysis for Asia & Africa (see Perraton above).

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Session 6

Chinese Social Structure of Accumulation?

References [Available on the internet – go to and put in their title]

Phillip Anthony O’Hara, A Chinese Social Structure of Accumulation for Capitalist Long Wave Upswing?

Holz, Carsten A. (2005) China’s Economic Growth 1978-2025: What We Know about China’s Economic Growth Tomorrow. Centre on China’s Transnational Relations Working Paper No. 8. Hong Kong: Hong Kong University of Science and Technology.

Fan, Emma Xiaoqin and Jesus Felipe. (2005) The Diverging Patterns of Profitability, Investment and Growth of China and India, 1980-2003. CAMA Working Paper 22/2005. Centre for Applied Macroeconomic Analysis, Australian National University: Canberra. 38pp.

Seminar Topics

1. Examine the Positive elements of the Chinese system of growth and development associated with GDP, labor productivity, investment, urban-regional, governance, global elements, etc

2. Examine the Negative elements of the Chinese system of growth and development associated with innovation, capital productivity, R&D, pollution, inequality, etc

3. Analyse changes in the rate of profit, and the reasons for the trend.

4. Overall, is China undergoing a long wave upswing through a viable SSA?

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Session 7

Financial Instability & Bubbles

The financial SSA examines global and national levels within the context of three factors: financial stability, conflict resolution between industry and finance, and performance for business and consumers. The first of these analyses whether neoliberal globalisation has promoted financial stability, in terms of speculative bubble formation and crashes. The second examines the potential contradiction between industry and finance, and pays special attention to the degree to which these areas work in harmony with other. And the third area looks at the performance of the financial system in terms of productivity, service and profit.

References

Phillip O'Hara (2006), "A New Financial Social Structure of Accumulation?”, in P.A. O’Hara, Growth and Development in the Global Political Economy: Social Structures of Accumulation and Modes of Regulation, London and New York: Routledge, ch. 8, p. 175-201.

Mathias Binswanger (2000), "Stock Returns and Real Activity: Is There Still a Connection?", Applied Financial Economics, vol 10, pp. 379-387. 

Stockhammer, Engelbert. (2004) “Financialisation and the Slowdown of Accumulation”, Cambridge Journal of Economics, Volume 28, Number 5, pp. 719-741.

Philip Arestis, P. Demetriades and K. Luintel (2001), “Financial Development and Economic Growth: The Role of Stock Markets”, Journal of Money, Credit and Banking, March, pp. 16-41.

Michel Aglietta, “Shareholder Value and Corporate Governance”, Economy and Society, February, pp. 146-159.

Seminar Topics

(a) Analyse the paper by Binswanger (2001) concerning Granger causality, correlation and so on within the context of the possible development of a “Financial SSA”..

(b) Detail the conclusions of Stockhammer (2004) for Germany, UK, France & US in some detail.

(c) Examine the paper by Arestis et al (2001) about the relationship between recent stockmarket trends and economic growth in relation to the issues about a possible new “Financial SSA”.

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Session 8

Family-Community Relations

The family-community SSA similarly examines national and global trends concerning family formation and community development, within the framework of three main factors: social stability, trust and association, plus inequality and divergence. Social stability examines trends relating to the creation of durable relationships within the family. Trust and association explores trends concerning whether people trust each other and whether they are associating more in relations of friendship and harmony. Lastly we examine the role of inequality and class, and whether recent trends are supporting growth and development.

References

Phillip O'Hara (2004), "A New Family-Community Social Structure of Accumulation for Long Wave Upswing?", Forum for Social Economics, vol 34, no 2, December. (Chapter 9 of Book 4)..

Zak, P.J. and S. Knack. (2001) “Trust and Growth.” The Economic Journal, vol 111, 470: 295-321.

Ciscel, D.H. and J.A. Heath. (2001) “To Market, to Market: Imperial Capitalism’s Destruction of Social Capital and the Family.” Review of Radical Political Economics, 33, 4, 401-414.

Seminar Topics

(a) Examine the three main empirical areas associated with (a) family relations of (in)stability, (b) community relations of trust, and (c) ethnic, class & gender relations of inequality.

(b) What do the empirical studies indicate about the extent to which familial instability, lack of trust and social inequality impact on economic performance.

(c) Examine the paper by Zak and Knack (2001) in relation to how trust impacts on economic performance (in detail).

Session 9

Post-Neoliberal Governance?

Finally, we look in some detail at the question of a post-neoliberal system of governance. A framework is examined that analyses the major systems of the social economy, and likely policy measure that are likely to promote long wqave upswing. Special reference is given to policies links to industrial development, productive government activities, finance and industry, international relations plus family and community.

References

Phillip O'Hara (2006), “Governance Policies for Long Wave Upswing”, in P.A. O’Hara, Growth and Development in the Global Political Economy: Social Structures of Accumulation and Modes of Regulation, London & New York: Routledge, pp. 255-280. 

Angelo Reati & Jan Toporowski (2004), “Which Economic Policy for the Fifth Long-Wave? Drawing Implications from Some Recent Contributions on Long-Term Growth”, Cambridge Journal of Economics, December.

Joseph Stiglitz (2002), Development Policies in a World of Globalization, presented at the seminar “New International Trends for Economic Development” at the Social Development Bank (BNDES), Rio Janeiro, September 12-13, 2002.

Joseph Stiglitz (2001), Information and the Change in the Paradigm in Economics, Nobel Prize Lecture, December 8, 2001.

Yujiro Hayami (2003), From the Washington Consensus to the Post-Washington Consensus: Recent Changes in the Paradigm of International Development Assistance. Foundation for Advanced Studies on International Development, December.

Seminar Topics

(a) Detail the record of neoliberal governance in terms of empirical socioeconomic performance over the past several decades.

(b) What possible policies of a post-neoliberal nature can be applied to the first few decades of the 21st century?

(c) Examine the paper by Joseph Stiglitz (2002) within the framework of a possible new long wave upswing.

END OF UNIT OUTLINE

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