1. Chap 3 -- Economic Dimension of Globalization
Steger Chap 3
Chap 3 -- Economic Dimension of Globalization

2. Transformation of the late 20th century: Four major points/eras of this chapter
Prologue – collapse of old Imperial Capitalist System and WWII scramble for resources
Part 1: Pax American – Keynesian Economic Revolution bringing in Brenton Woods system including UN, IMF, World Bank, GATT, fixed exchange rates …
Part 2: 1970s – end of fixed exchange rates, stagflation
Part 3: 1980s --Neoliberal era, globalization and free(er) trade – WTO, NAFTA, Washington Consensus
Today: Post 2008 Crisis??? And Beijing Consensus

3. Prologue Period of “beggaring thy neighbor”
(Smoot Hawley in 8 minutes)
(Smoot Hawley in 3 minutes from CATO Institute – libertarian think tank founded by Charles Koch and others)
Milton Friedman explains role of gold in Great Depression.
How the Gold Standard “Caused” the Great Depression

4. Part 1: 1944-1971 Brenton Woods as the key event
1944 Brenton Woods International Monetary Conference
GATT/WTO Trade and Smoot Hawley, and what eventually emerges 5 minutes
Part 1: Brenton Woods as the key event – 1 minute

5. Overcome the problems of the first half of the 20th century
Three Goals
Stable International Currencies – based on Gold – but individual American citizens can’t own gold (finally fully changes in 1975)
Expand International Trade & create wealth
Promote peace & stability

6. Under the guise of the UN three organizations established to promote goals
IMF (International Monetary Fund) – create rules on currencies & guarantee its stability
World Bank – provide loans for reconstruction and development – promote growth around the world
WTO (initially GATT) – promote international trade by lowering tariffs and standardizing rules
(in the background is Pax American)

7. Examples of expected results
Working for a World Free of Poverty –World Bank  
World Development Report 2010 – World Bank

8. Part 1 Summary
Under this system currency exchange values were fixed to a modified gold standard via the US $ – agreement called “Brenton Woods System”
“Golden age of controlled Capitalism”
Western Europe fostered Welfare states
Rich People and Corporations funded much of welfare system
Trade grew

9. Phase 2: 1971-1980 Stagflation Era
Fixed exchange rates caused a massive gold outflow from the US to other countries
Slowed economy
Inflation – money worth less
Nixon Ends Bretton Woods International Monetary System

10. Defining Stagflation
Stagflation, a portmanteau of stagnation and inflation, is a term used in economics to describe a situation where the inflation rate is high, the economic growth rate slows down, and unemployment remains steadily high.
-- simple definition
New Zealand Example – comparing present to 1970s stagflation

11. Summary
Energy prices soared, growth stagnated, unemployment grew, relationship of currencies out of balance, entitlements were a drag on economies -- common person got less and less
Brenton Woods System abandoned – exchange of currencies allowed to freely float
Period of economic drift

12. Phase 3: 1980-present Neoliberal Era
Neoliberalism -- Main points of theory
Markets are self-regulating and efficient
Supply and demand balances based on price
Regulation leads to inefficiencies and eventual social stagnation, political corruption, & unresponsive state bureaucracies
Markets create sort of economic Darwinism – fittest survive

14. Concrete example of Neo Liberals
mon·e·ta·rism
 (mŏn′ĭ-tə-rĭz′əm, mŭn′-)n.1. A theory holding that economic variations within a given system, such as changing rates of inflation, are most often caused by increases or decreases in the money supply.
2. A policy that seeks to regulate an economy by altering the domestic money supply, especially by increasing it in a moderate but steady manner.

15. Reagonomics followed by Clinton Deregulation
DEFINITION of 'Reaganomics' A popular term used to refer to the economic policies of Ronald Reagan, the 40th U.S. President (1981–1989), which called for widespread tax cuts, decreased social spending, increased military spending, and the deregulation of domestic markets.
Reaganomics Definition | Investopedia
Trickle down, supply-side…

16. Significant developments of era
Collapse of Soviet Empire gave further fuel to this movement
Significant developments of era
Internationalization of trade & finance (NAFTA, EU…)
Increasing power of TNCs (trans national companies)
Enhanced role of IMF, World Bank, WTO…

17. Internationalization of Trade – Free(er) Trade
Proponents View
More choice
Greater global wealth
Secure International Peace
Spread of Technology

18. Internationalization of Trade – Free(er) Trade
Opponents View
Gap between rich and poor countries growing
Distribution inside countries also can worsen
New international financial trading not supplying capital for productive investment, gambling on future profits -- Hedge funds & “Casino Capitalism”???

19. 2. Power of TNCs
Facts
200 largest TNCs are ½ of World’s industrial output
All located in N. America (1 in Mexico), Japan, Europe, & S. Korea (China may enter soon)
Rival size of Nation States in Economic Might
Top 100 economic units 58 are countries 42 are TNCs

21. 3. Enhanced Role of International Economic Institutions
“Washington Consensus” – is it actually good or bad for the world?

22. Washington Consensus
What the Developing World Should DO

24. 5. World Turned Upside Down?

25. 5. Beyond Neoliberal Approach???

26. Davos: World Economic Forum 2014 Global Risk Report

28. Marxist Geographer David Harvey on the G20, the Financial Crisis and Neoliberalism. 4/2/09 1 of 3

29. The End of Neoliberalism
The End of Neoliberalism???James Laxer, York University, Left Leaning Political Scientist

30. Gloating view from Russia comments by Francis Fukuyama, the Bernard L
Gloating view from Russia comments by Francis Fukuyama, the Bernard L. Schwartz Professor of International Political Economy & Director of the International Development Program at the Paul H. Nitze School of Advanced International Studies, Johns Hopkins University

31. View from UK
There are two big reasons for neoliberal thinking still holding sway. First, things have not been bad enough for a paradigm shift.
By the end of the second world war, the Keynesian revolution was sufficiently developed for the Labour party to offer a comprehensive new approach to economic policymaking. Similarly, in 1979, the Conservative party was able to present the main elements of neoliberal thinking as the solution to the economic problems that blighted the economy in the 1970s. There is nothing comparable for the opponents of neoliberalism to latch on to today.
Opponents of neoliberalism need to formulate a new approach to economic policymaking, not one that tinkers at the edges of the existing model.