1. Marxian Political Economy Labor theory of value –Each commodity has a use value and an exchange value –The labor is the only source of value –The exchange value is determined by the amount of socially necessary labor time »It is the average skill and intensity of labor, utilizing the most advanced technology –it is inversely related to the productivity Labor power as a commodity –The exchange value of labor power is the amount of labor hours required to produce all wage goods and services

2. Capital A) Constant Capital:That means the cost of raw materials and the cost of machinery, specifically the costs of interest and depreciation in utilizing that physical capital. These are simply consumed, used up, in the production process, and their congealed labour-values are simply transmitted to the product being manufactured; but this aspect of capital, this constant capital, does not in itself create or add any value of its own to the product.

3. –B) Variable capital: As the only source of power, the variable capital as labor power not only transmits its own value, but creates an additional value called surplus-value –Marx: “The consumption is labor power is at one and the same time the production of commodities and of surplus value”. –Question: Compare and contrast neoclassical and marxist value theories. What is the source of profit (interest)?

4. Surplus value is the profit –the value of labour-power (wages) and the value which the labour-power creates in the labour process are two entirely different magnitudes/ You work for eight hours. In the first half, you produce goods sufficient to cover your exchange value (i.e. the value of all wage goods and services) In the second half of your day, you produce surplus value.

5. The rate of surplus value sr = rate of surplus value v = variable capital [wages for labor] c = constant capital C = total capital s = surplus value C' = value –C = c+v (total capital) –C’ = (c+v)+s

6. The rate of Surplus Value s r = s/v Marx on technology –Technology, advanced machinery increases labor productivity –Capitalists have a tendency to raise productivity so that labor will create more surplus (now, the worker needs only 3 hours to work for the wage goods and services, whereas the same worker can work in the remaining 5 hours for the capitalist)

7. Accumulation and falling rate of profit –Capitalist expands by purchasing more machinery and equipment in order to create more surplus out of the workers. –It is also important to increase productivity in the presence of competition –BUT: c/v will increase as a result of accumulation (machinery will replace labor –Rate of Profit: s/(c+v) tends to fall ‘s’ (surplus value) must decline in this equation, because ‘s’ may be derived only from ‘v’; and thus ‘s’ declines as ‘c’ grows larger in relation to ‘v’,

8. What is to be done? –Reduce v (exchange value of the labor power) further Reserve army of labor Global pool of workers Attack trade unions –Reduce c (cost of machinery, raw material etc.) Liberalize resource movements (but not labor) Economic Crisis Privatization, deregulation

9. Globalization Very broad definition “Widening, speeding up, and deepening of worldwide interconnectedness in all aspects of social life (economic, financial, cultural, criminal)” Three approaches to globalization 1)Hyperglobalizers: -It is a technology-driven process and inevitable (globalization rules vs. rules for globalization) -Nation-states are not anymore the centre of economic and political processes. -Worldwide integration of the markets

10. Is globalization an inevitable technology-driven process ? –Internet and data processing –Phone call from NY to London –For example: financial transactions Massive volume 24-hour trading BUT: The governments have taken decisions to liberalize their financial markets –For example: cheaper PCs Each component will be produced where the cost is at its minimum This necessitates cheap labor and free trade (i.e. significant government intervention)

11. Nation-state’s demise –From government to governance “the declining authority of states is reflected in a growing diffusion of authority to other institutions and associations (Susan Strange, 1996)” What are these institutions? (IMF, WB, WTO, EU, TNC, NGO) Are they really beyond the nation states? Governance is associated more with democracy whereas government is synonymous with power and authority. Role of government is reduced to the practice of “sound economic management”

12. Nation state’s demise –The winners are elites and knowledge workers –BUT: Governments have to manage social consequences of globalization. (How?) –Does government have a control over the economy?

13. 2) Sceptics –There is nothing new in the world economy The world economy around the 19 th century was integrated as much as today (capital flows, resource movements) The recent period is rather another wave of internationalization between major economies. –Rather than being out of control, the forces of internationalization themselves depend on the regulatory power of national governments for further liberalization. –Governments are the primary architects For liberals it is the consequence of the new world order after the second world war For others it is imperialism

14. Sceptics (continues) –North-south inequalities remain (most of the investment flows stay within North countries and a few emerging markets. –A tendency towards regionalization (trade and financial blocks) –Response to globalization: Inequality of income and opportunities leads to fundamentalism and nationalism

15. 3)Transformationalists –Globalization is changing and shaping both state and society while being changed and shaped by them It is not free of contradictions It is a long-term process. –A new social division of the world economy Inequality is no longer between countries but it can be visible within the same city –Globalization is not limiting but transforming the functions, power, and the authority of the national governments. –National economic space no longer coincides with national territorial borders –Governments can use different adjustment strategies in coordination with other institutions and participants.