Lecture 5

Question 1

2 ways to explain global economy as an international system

Answer 1

Market dynamics among sovereign but interdependent states and other actors in a
semi-regulated system.
* Structural dynamics within a capitalist world system.

Question 2

Market dynamics among sovereign but interdependent states and other actors

Answer 2

A global market in which states seek to manage their interdependence and
private actors make choices based on prices and regulations at state and
international levels.
* Assumes the possibility of joint gains

Question 3

Structural dynamics within a capitalist world system

Answer 3

Key elements:
* Focus on structural pressures… not on the choices of states, IOs, other actors.
* Focus on conflicts of interest between social classes and between global core and
periphery… not on ‘joint gains’.
* Various versions, some drawing on analyses of Karl Marx, some not

Question 4

Early theorists of capitalism as national and int. system

Answer 4

Marx, Hobson, Gramsci and Lenin

Question 5

Karl Marx 1867

Answer 5

• Politics are shaped by the mode of production (how wealth is created), which
  changes over time: slave -> feudal -> capitalist -> socialist -> communist
  ‘Historical Materialist’ analysis of society:
• mode of production (‘the base’)  identity and interests of social classes,
  dominated by a ruling class
• interests of ruling class  government, religion, morality, ideas (‘superstructure’)
  Slave Feudal Capitalist
  Ruling class Nobility Lo

Question 6

Marx History and expectation

Answer 6

Theory of history:
* Contradictions in mode of production  class struggle  social change.
* Capitalism converts labour ‘surplus’ into profits  impoverishment of
workers  reduced demand for products  loss of profits -> economic crisis.
* Expectation:
Revolt by working classes will lead to revolution & end of capitalism.

Question 7

Hobson 1902

Answer 7

• Capitalism produces great concentrations of wealth.
• Capitalist elites manipulate the power of the state to advance their own interests.
• When a capitalist society’s production capacity is greater than consumer demand,
  elites (the owners of capital) have two options:
• Redistribution: increase demand at home by redistributing wealth to the poor
• Imperialism: acquire foreign lands for profitable investment opportunities.
• Not a ‘Marxist’ – not focused on historical materialism, class struggle, revolution, etc

Question 8

Lenin 1917

Answer 8

Combined ideas of Marx and Hobson
* Capitalism will eventually end in communist revolution, but this hasn’t happened
(yet) because capitalist states pursue imperialism.
* Dynamics of imperialism: Monopoly capitalism  falling profits  capitalists
seek new investment opportunities and markets abroad  imperial competition
between capitalist states  war.

Question 9

Gramsci 1929-1935

Answer 9

• Agreed w/ Marx on importance of capitalism and bourgeois ruling class.
• Rejected Marx’s economic determinism & Lenin’s expectation of upcoming
  communist revolution.
• Emphasised cultural hegemony: ruling class uses ideas & ideology to sustain
  capitalism and maintain power.
• Social change requires counter-hegemony: the promotion of alternative, critical
  values & norms.

Question 10

Capitalism and global inequality

Answer 10

Shift focus from dynamics of capitalist states to the distribution of wealth and (under)development
around the world.

Question 11

Dependent development

Answer 11

Prebisch 1950. Contradicts David Ricardo’s theory of mutual development via ‘gains from trade’:
* In contemporary world system, periphery exports raw materials to centre, while centre
exports finished products to periphery.
* Over time, two factors  concentration of wealth in the centre:
* ‘Declining terms of trade’ – raw materials get cheaper, finished products get more
expensive.
* Centre is powerful so retains profits; periphery is weak so easily exploited.
* Result: centre gets richer while periphery gets ‘dependent development

Question 12

Imperialism and under development

Answer 12

Rodney 1972. * Imperialism is an integrated global system in which wealthy capitalist states
dominate and exploit less-powerful regions of the world.
* Key dynamic: under-development
= global capitalism restructures the societies and infrastructure of less-powerful
countries and regions in order to exploit their resources for the benefit of
more-powerful countries and regions
* Africa developed Europe while Europe under-developed Africa.

Question 13

Infrastructure of underdevelopment

Answer 13

Africa’s railways at independence in the early 1960s.
Except for South Africa, all railways run to coastal ports –
good for exporting raw materials but bad for developing integrated markets.

Question 14

Modern world system

Answer 14

Wallerstein 1974-2011. The ‘modern world system’ (since 16th century) is a global capitalist economy
characterised by a division of labour that systematically benefits certain economies
and states more than others.
Economic exchange on unequal terms  redistribution and concentration of wealth
in ‘core’ economies  uneven political development.
* Core: advanced technologies, strong states
* Semi-periphery: middle tech, semi-strong states
* Periphery: raw materials, weak states
Capitalist elites control the policies of core states, while
capitalist elites in periphery share interests with core states and societies.

Question 15

Mobility within global capitalist system

Answer 15

Golub 2013. In 1970s, poor countries challenged the rules of the world economy, proposed a ‘New
International Economic Order’ (NIEO) that would mandate redistribution from North to
South.
* They failed, due to resistance by North and divisions in South.
Since 1990s, parts of ‘Global South’ has used global capitalist system to gain wealth and
challenge the structure of ‘haves’ and ‘have nots’.
* Some states in Global South have become much wealthier and gained global influence – G20 is
now as important as G7.
But capitalism and global inequality remain

Question 16

How global capitalist economy works

Answer 16

Phillips 2017. Global economy is dominated by transnational corporations (TNCs) working through global
value chains (GVCs).
* Functional fragmentation: Trade is dominated by the exchange of intermediate goods
& services, not the exchange of finished products.
* Geographic fragmentation: Lead firms out-source/off-shore to specialized production
units in multiple countries.
* 1 of 5 jobs worldwide is linked to production in GVCs.
* GVCs are “the world economy’s backbone and central nervous system” (World Bank, 2010)

Question 17

Interaction of 3 power asymetries drives global inequality

Answer 17

Phillips 2017. * Market power: Oligopoly of lead firms + competition among suppliers  low wages & job
insecurity for workers, high profits for TNCs.
* Social power: Expansion of global labour supply & weakening of social protections 
workers have less bargaining power to improve their conditions.
* Political power: TNCs press governments to reduce social & environmental protections and
to deregulate cross-border movement of capital.

Question 18

Capitalism and global governance

Answer 18

• Shift focus from economic (under)development to global governance.

Question 19

Transnational capitalist class supports and benefits from an imperial global state

Answer 19

Chimni 2004. A transnational capitalist class bridges first world and third world.
* First world states have established a network of international institutions (a
decentralised “imperial global state”) that benefits the transnational capitalist
class and disadvantages dominated, marginalised classes in first and third worlds.
 These institutions legitimate particular policies, reduce the policy autonomy of
sovereign states, resist the democratization of global decision-making

Question 20

Global governance serves global capitalism

Answer 20

Cammack 2003. * Uses 2 concepts from Marx
* Capitalist accumulation: Capitalism functions through the extraction of profits, which
requires low wages, which requires a reserve labour pool (i.e. people who reasonably
healthy and skilled but willing to accept low wages if other workers quit or are fired).
* Relative autonomy of institutions: Int’l institutions serve capitalism, but not particular
capitalist states or particular groups of capitalists.
* World Bank & IMF promote and sustain the conditions of global capitalism:
* IMF oversight of national budgets ensures manageability of sovereign debt,
repayment of loans to public & private lenders.
* WB’s ‘anti-poverty’ agenda ensures minimally healthy and educated workforce.