Lecture 12 - Power in the Global Economy Flashcards
(18 cards)
What economic conditions gave rise to neoliberalism in the 1980s?
Neoliberalism emerged as a response to the 1970s crisis of stagflation—high inflation combined with economic stagnation. It promoted market deregulation, free trade, privatization, and fiscal/monetary discipline as solutions (Harvey, 2005).
How did globalization accelerate under neoliberalism?
Globalization intensified with neoliberal policies that emphasized market expansion, trade liberalization, and capital mobility. Structural Adjustment Programmes (SAPs) were imposed on the Global South as loan conditions by the IMF and World Bank.
What is the New International Division of Labour (NIDL)?
NIDL describes the relocation of deskilled manufacturing to low-wage countries (e.g. Nike’s shift to China/Indonesia), with skilled labor remaining in the North and precarious, low-paid labor rising in the South.
What does Susan Strange mean by the “Retreat of the State”?
Strange argues that global financial markets and transnational corporations gained power over national governments, reducing states’ economic autonomy through investment strikes and speculative attacks.
How do transnational corporations exert power over states?
TNCs decide where to invest and produce, compelling states to adopt business-friendly policies to attract capital—e.g. “race to the bottom” in labor/environmental regulations.
Can global financial markets discipline states?
Yes. Markets react to policies through bond ratings or currency speculation. For instance, George Soros’ 1992 shorting of the British pound forced the UK to exit the ERM.
What counters the idea that states have lost power due to globalization?
States remain critical in maintaining infrastructure, education, and legal systems—foundations of global market operations. They also act as key enforcers of capitalist discipline.
What is meant by the “Return of the State”?
Post-2008 financial crisis and COVID-19 recovery showed state reassertion—e.g. bailouts of banks, nationalization efforts, and large fiscal stimulus packages.
Give an example of state-led globalization.
China’s Belt and Road Initiative is a state-driven project expanding infrastructure and trade routes globally, showing strategic geopolitical use of state economic power.
What roles do institutions like the IMF and World Bank play in global power dynamics?
They enforce neoliberal reforms through conditional lending (SAPs), often reducing sovereign economic control in recipient countries—especially in the Global South.
What is meant by “supranational leviathans”?
This term refers to global institutions that operate above the state level, exerting policy influence on economic management—e.g. WTO disputes overriding national legislation.
Are these institutions democratic?
Often not. Voting power is skewed toward richer nations—e.g. the US has veto power at the IMF. This raises questions about representation and equity in global governance.
How do ideas shape power in the global economy?
Dominant ideologies like neoliberalism frame what is considered economically “rational,” legitimizing market-driven reforms and austerity even when socially damaging.
What is the idea of austerity, and how is it applied?
Austerity promotes cuts to public spending to balance budgets. Post-2008, countries like Greece were required to implement austerity to receive EU/IMF bailouts, worsening social outcomes.
Give an example of ideological influence through leadership
Margaret Thatcher in the UK championed neoliberalism—privatizing industries and breaking unions—which reshaped not just British policy but global norms.
How does capitalism structure power relations?
Power lies in capital’s control over labor—workers must sell labor to survive, reproducing class domination. This creates structural inequality.
What is the disciplining power of capitalism according to Marx?
Competition forces capitalists to exploit labor to survive, creating a system where market pressure disciplines both firms and states. States must ensure competitiveness or risk economic decline.
Can political control be reclaimed under capitalism?
Not fully. As long as capitalism dictates social organization, economic control will remain in the hands of capital, undermining efforts at democratic economic governance.
