10/31/11 10:50 AM Missed

10/31/11 10:50 AM Missed No lecture, watched film

10/31/11 10:50 AM Fri (16/9/11) San o o Journey of Men ppl oldest human group on planet All human types can be seen on faces of ppl and in DNA When we think of early settled tribal soc.s is from these ppl

Econ sys of tribal soc.s Lineage communal mode of prodxn o Basic econ resource land owned in common o No such thing as landless individ. No dire poverty Strong communal dimension reflected in econ structure Prodxn was for fam o Core: Immediate consumption o Surplus used for trade o Not trading soc.s o No record of extensive trade o Food, clothes, housing

Political sys.s of settled tribal soc.s Controversy o No polit institutions Simply extensions of fam o Beginning of polit instit. (Henry in latter group) Fam is just base Have all elementary structures In sense define st as institution that organizes and administrates use of force and has monopoly of violence Look at fxn of chief and governing council o most solemn task is declaration of war o resolution of disputes final say (judicial) administering justice resolve difficulty beginnings of democ o comp. of council attempt to rep populace

o council responsible to bring to chief interests, desires of political community o council constructued in certain way voices of elderly were mostly reped had to be at least 2 women, 1 young person also council had duty to say what it thought and rep voice of community o attempt to limit powers of chief council and chief balance of powers abs. Power corrupts council has auth to destool chief power not abs. Cultural Systems Belief Knowledge Religious Education Ideological Research

Sectors Sub sectors

Linguistic Lang 1 Lang 2

Arts Mass Communication Fine Arts

Cultural Sys.s Lingustics o Need languages o Lang has potential to lift us from nature We live part of lives in socio-historical realm possible by lang o Why does human lang. really set us apart v. other ways More complex Can add words to sys. To keep repping more and more of reality When you can create new meaning you can bring about sig. change Belief o What is diff bn ideology and religion Ideology set of arg.s that legitimates the order of an institution or set of institutions

Religion deal w/ origins and end of life; the big questions

Knowledge o Education passing on of est. knowledge o Research prodxn of new knowledge Arts

What are we doing in these cultural practices? Why are our practices so similar across millennia? We have to create ourselves as human beings o We have a phys inheritance body o Dont come in w/ definite soc id o Production of self is why we have culture Without culture we cannot develop the human self Cult sys.s of settled tribal soc. Dominant subsector is religious o Attempt to understand universe and place of human beings feeds off o Goal for them is to stay in harmony w/ universe Rituals keep individs and group in harmony w/ univ Greatest fear being out of touch w/ order of universe o Idea of having apples yr round would be pt of concern to these ppl o Why not stay w/in rhythms of nature o go to bed when sun goes down, rise when it comes up o disaster/problem raises question what god have I offended hence source of solution is god/religions supernatural spiritual being diff from us o creator that ascends the creation found in these soc.s notions of destiny o basic framework already outlined o extent to which you are happy extent to which in sync w/ destiny o stry too far from fundamental contours of your life unhappiness follows

o How do you know destiny? Griot oral historian Know hist of tribe Shaman religious expert Individs responsible for passing on religious heritage Guy to go to re-sync you w/ universe

10/31/11 10:50 AM NO CLASS FRIDAY (23/9/11) Transformations around 10K ago => patrimonial societies (Weber) Began in Sumar (modern day Iraq) and Egy. Patrimonial societies = classic civilizations (Mumford pp 36-56) Diff from tribal soc.s What changes in context? Causes leading to emergence of patrimonial soc.s tribals had population probs o tended to get too large o had ways of splitting so beyond certain size mode of prodxn exhausted itself too many ppl to manage well could sustain popul.s up to certain (varying) size o would then split in two (Henry social mitosis) council would appoint new chief for new group and other new leaders stayed in same gen. area if possible o patrimonial soc.s wanted ot get bigger development and technology o moving from stone tech. to bronze/iron o clearing land not problem techonology changes our sense of relation to the land stone tools slower time to clear land, less likely to cut too much and regret bronze/iron tools quick to clear lots of land, quick to regret clearing too much military conquest o spreading out o fueled by changes in tech used ot empower military o most immediate/proximate factor in birth of patrimonial soc.s o Conquer surrounding groups

o Pat soc are ethnically diverse Creating a soc. Diff from tribal soc. who were 1st and foremost ethnically homogenous o Introduces practice of slavery not present in most tribal soc.s slaves conquered in battle life spared = life owed at this pt, slaves not yet commodities captured and work for you, not common to trade (at least, no records of it) writing o in pat. soc lang develops written component

City-state: second post tribal formation (at same time as pat soc.) Develop along trade routes Rest stops became 1st urban areas countries in which rest stops devld govt charged fee for traders o charge = duty tax on long distance trade ppl of new urban areas out of agr sys. o Job take care of traders o Money earned from this bought food from agr ppl Depended on tribal soc. for food o dont grow own food Tribute paying: Economic instit of paradigmatic pat soc.s Paradigmatic pat soc.s = developed/settled Mode of prodxn has changed dramatically o Instead fo lineage communal, its tribute paying mode of economic production land not owned in common but by st. o got land through military conquering how does avg citizen get access to land o you can be landless, in fact pat soc.s known for large # of landless individs produced o have to enter set of contractual rishta w/ st

pay tribute for access to land taxes in early stages of pat soc, conquered chiefs had to pay conquering chiefs o state accumulates money this way o tributes fund expansion o expansion (war) leads to more tribute still agr. soc; surplus given to st Pat soc example: Mughal Ind o Expanded through war (invasion) o 1556-1857: late for pat soc. o piqued under Akhbar divided country into 12 subas (provinces) ruled by gov.s subdivided into districts had rulers divided into sub-districts had rulers where city-states had developed they had mayor for their municipality governing head leaders of each division of land needs bureaucratic sys to run each portion offices (burea sys.s) were mansab divided into 33 diff ranks corresponding to a certain level of tribute

10/31/11 10:50 AM Missed

10/31/11 10:50 AM Missed

10/31/11 10:50 AM Missed

10/31/11 10:50 AM Colonization - Eu pat soc.s conquer small trib soc.s Eu colonization different Tribute colonization doesnt change mode of local production o Just demands increase of loc prodxn so can pay tribute o Tribute being paid in kind o E.g. Rome Eu colonization forced rad changes in mode fo econ prodxn o In order to meet needs of Eu supplied by Ind in past Address disruption caused by retaliation of Islamic comm.. Need it to be free of Islamic influence o Changes reflect diff needs of diff Eu coutnries Spain bullion crisis mining colonies Brit agr colonies E.g. sugar: b4 Ind; then - Carib Fr agr colonies o This transformation leads to capitalism Destruction of old patrimonial order Eng most dynamic Eu colonizer Grow much faster than others; acquire greater military power o This is why became first industrial colony Prototypical case of emergence of modern capitalism Emergence of mod capitalism is tied up in Eu colonization Col Soc.s Intermediary phase bn cap soc.s and patrimonial soc.s When Amer industrializes form being a classic col soc For most of 3rd world, transition to modernity is from being col Initial impact of Eu indust create col soc oversees transitional soc.s o are so bc made to aid indust. Of the imperial cap soc.s of Eu Econ Inst of Col Soc.s Land basic resource owned by st

Est by particular individ o Went to king and got letter-patent base of founding col. o Given right to dispose of certain amt of land How do you get ppl to settle in colony o Give land (in way that goes against old pat soc. order) o Ppl get land and can own privately Pat soc.s in past state owns land o Any precious metal found under land belongs to crown (stipulation) Being set up as business ventures

Why colonize Some col set up by ppl w/ religious diffs RARE Econ motive most often why colonize US econ defined Northeast o Prodxn of temperate crops o Animal farming o Export: furs, fruit o Small manufacturing sector Where: NY, Boston, Balt No factories in manufacturing sector Cottage industry Made by craftsmen by hand, no machines o Small commercial sector Where: NY, Boston, Balt Banking/insurance South o Plantation econ o Large, producing tobacco o Export: tobacco (major crop) Why tobacco habit picked up from native amer.s Not cotton or sugar bc that crop is in carib (Brits/Fr) o Pure trade West

o Classic family farms o Produce for fam consumption (primarily) o Consciously produce for export too A putting out mode of production Controlled by merchants, links/mobile parts sys is based on private ownership of land => ppl stay where they are, have their craft, merchants go around and facilitate trade o If no merchants, no reason to produce more (thus have trade with others outside),

10/31/11 10:50 AM Concerted effort to turn W hemisphere by eu to get what it used to get from Ind Free from Islamic encumberances No attempt to create new soc Attempt to get eu back to a sense of normalcy Econ reorg which is strategy for ending eu dependence on trade along Islamic trade routes o Chief: 13 Amer colonies Trisector/tripartide economy NE o Merchandising o Temperate farming Midwest o Fam farm Based on growing grains Wheat Barley Corn South o Beginnings of classic plantation econ

Manufacturing sector Along w/ temporate farming in NE was base of econ in NE Putting out mode of prodxn Merchant controlled Merchants organized pts of surplus demand for sys.s of fam prodxn o Merchants bought surplus o Sold it to ppl in need of those products o Small surplus built into NE econ Why called this merchants put out initial capital o i.e. put out raw materials for making a product commercial centers in NE main banks/insurance co.s/shipping/merchandising

Midwest fam farms Role of merchants less prominent More of classic sys o Based aroud grains o Surplus grains shipped to other 2 sectors o Transport not well developed so moving grain difficult So this form of trade less used Plantation Econ Labor force slave o Import of africans Triangular trade (Williams) Drives US econ and capital of Carib econs Begins in major cities of Eu o Liverpool o London o Lisbon o Etc. First leg of trade go to W Afr o Ghana/Nigeria fave landing spots o Ships filled w/ goods traders thought Afr.s would want Thinking of afr political elites Goods Guns for staying in power Utensils Clothes Maps Alcohol o Exchange items for afr labor How get slaves? Defeated tribes slaves taken Next, slaves taken to S/N Amer and Carib

o Majority of slaves went to N Amer Slaves exchanged for tobacco Vast majority of slaves went to the South Final Leg, sail back to Eu o Laden w/ tobacco (South) o Laden w/ sugar (Carib)

Colonies involved in triangular trade Framework for Southern econ Other two econs not really tied in Most dynamic of the three econs is S Tobacco became the leading sector of the emerging Amer econ Generates more wealth than NE or Midwest econ Dynamism is such that it generates business for NE and midwest o E.g. Shipping business for NE cotton from South o E.g. Insuring of commercial activity for NE shipping of Southern goods o E.g. If southern econ went into decline thered be dip in demand for NE shipping The three sectors of n Amer econ put together beginnigns of mercantile capitalism Ind is being eclipsed declines dramatically Colonies now supplying eu w/ what used to get from ind Transforms nature of brit, amer and carib econ Why call this (13 colonies) a colonial econ? To be econ it has to o Produce goods and services soc needs o Interact w/ nature, extracting resources to transform to meet material needs To be colonial o Carried out in distinct set of instit arrangements w/in which all of the commerce is taking place that makes this a classic colonial econ

o Same for fr and span econs too Colonial econs rules Must compliment econ of the imperial power o 13 colonies operate w/in instit context where they compliment brit econ cannot compete w/ brit econ James Stewart Mill colonies are extensions of Britain Must supply it w/ goods and services that imperial econ cant supply for self Must use currency of imperial power o Money must be exchangeable for currency as well/operate w/in rules of the currency Must trade only w/ imperial power (Monopsony) o Brit colonies trade only w/ brits, etc. for fr and spain o Had to get clearance from board of trade to trade w/ other than imperial power Rules of monopoly o Wasnt pure market econ o Old pat soc of eu organized monopoly Monarch gives permission to certain ppl to produce certain things Not an open market If didnt have that permission from monarchy (ie the state) you couldnt participate in this area of business E.g. slave trade originally given to one co. Navigation act o Specified all amer exports, if going to eng/eu, had to be traded in brit ships Shipping co.s upset by act Wanted to have right to business to transport goods Blocked by act o How brit shipping indust grew Stamp Act o Tax

o Any business transaction required receipt Receipt for purchase had to have stamp on it for it to be legal business transaction Board of Trade o Board of trade specified what colonists could and couldnt produce Took the form of acts E.g. iron act, sugar act, hat act Restricted prodxn of goods Why? Must compliment econ of imperial power These artificial restrictions made it a colonial econ o Nothing to do w/ actual prodxn o Had to do w/ how surplus produced, where it will go, and what relations of competition bn colony and imperial powre

10/31/11 10:50 AM Douglas North/Louis Hacker Readings for now According to col econ rules, carib islands most prosperous under this N amer col.s not doing well o First revolt occurred here Econ restrictions helped lead to revolutions Boston tea party o A brit citizen given monopoly of import/export of tea in col.s o Tea tax o Refusal to buy tea from guy o Rest is hist Brits cut amer off from major export markets Major markets are in carib and brit Retaliation for revolt External demand, in particular demand for tobacco, that was driving amer economy is removed o Tom Jefferson on Amer econ o Throws post-col amer economy into first major depression Had been driven by brit demand Taken winds out of sails of this econ Hamilton helping govt First stabilize amer debt o 79 mil debt from revolution o have govt assume the responsibility of debt it had been incurred by citizens form bank of America to take care of this debt create natl mint o diff states had diff approaches to currency o standrdize and nationalize coins and currency notes industrialization of usa o in order to be great nation o must move away from agr o a modern nation cant be agr nation

push for devl of commercial and indust co.s encourage close alliance bn rich and govt

Depression has ends 1793 Little to do w/ Hamiltons policies Ended bc of major war in eu o (Douglas North) 1790-93: depression yrs policies of Hamilton didnt get amer out of depression o declaration of war bn eng, fr and sp rules of war in eu if Im at war w/ you, if I see ship on water that belongs to you on water I blow it up if another nation is bringing food to your port I wont hit that ship all three combatants in war turned to usa for food this is demand that lifts amer econ out of 1790-93 depression this is stimulus to amer shipping indust o not to tobacco indust bc brit is still mad at usa o usa not forgiven just a necessary evil

Adams has easy time of it Pushes hamiltons policies Defeated by tom jeff after one term TJ (Tom Jeff) Opposed to hamiltons econ policies o Ever since TJ was Wanted agrarian farms; no to industrialization o Gentleman farmer who could make decent living from his farm o Wants nation of ind mid class farmers o Agr produced necessaries of life; indust produces frivolous luxuries of life Needs v whims Weak fed govt; strong st govt

Fear of monarchy Strong fed govt too much like monarchy do you make money out of money Didnt like commerce and indust Thought they were philistine Offended gentlemanly sensibilities Goal of admin o Resist industrialization o Build agricultural usa o Break down Hamilton policies Opened up western frontier o o How o o Brit had closed it bc of treaties made w/ native amers o Encouraged settlement of new states o To ensure everyone had enough land to make decent living from it o Had support of james Madison (active/vocal member of congress)

(1814) peace comes to eu now that war is over no need for amer o have own ships again to safely transport amer econ crashes again o had been driven by demand for shipping o second major dpression of post-col amer econ thats dependent on external demand o not internal demand of amers (1814-60) Cotton is carrier indust of economy brit industrialization goes into high gear brit textile revolution o creation of cloth and clothes is mechanized output of cotton increases dramatically o demand for more cotton than idnia can supply o so brits need amers again pd in amer econ hist when cotton is king o dynamic of amer econ moves south again

south econ generates demand feeding ne econ o the capital to transform the plantations from tobacco to cotton is from brit o the product of these plantations is going to brit o ne ships take cotton to brit o insurance comes from south o food for south imported for Midwest not growing own food anymore bc growing cotton for brit o labor on plantations still slave labor back into triangular trade

in col economies demand econ responsds to is demand from imperial power o never from internal demand not normal o way econ becoems denationalized econ devl in col econ is about ending pattern of external dependence and est rishta bn internal supply and demand looking at amer col econ we can understand struggles of modern post-col soc.s o breaking pattern of dependence is crucial Next WeekCIVIL WAR

10/31/11 10:50 AM Missed

10/31/11 10:50 AM Getting midterm Wed next week, due Oct 28 How amer (post colo econ) overcame (legacy of) dependence on brit for econ Instructive for a lot of current 3rd world countries Depressions 1st o o o

right after independence brits cut off amer from key markets deep recession pulled usa out: war in eu

generated demand for usa shipping demand to carry goods of eu (rules of war) nd 2 - but peace is negotiated (1814); usa econ collapses again o this pd didnt last long o pulled usa out: indust revol in Britain demand for cotton bc of indust of textile indust shift of leading sector of econ from ne to south division of labor bn major sectors of amer econ north: commercial/banking; shipping west: agr south: cotton no food; import from west no shipping; all from north south making lots of money driven by expanding triangular trade small # of planters making lots of money by 1850, world around south is changing

eclipse of southern sector eng begins to diversify sources of cotton o turns to India for more raw cotton o decline of demand for southern cotton o rebound of ind cotton negatively affects brit demand for southern cotton o usa hasnt formed rishta w/ other countries

pattern of dependence on col power continues so sensitive to slight changes discovery of gold in cali; track westward o gold becomes driving force in west econ agr/food to south is still imp but not as o decrease of southern demand of food to west strong anti-slavery movement o future of labor is challenged o doesnt look good o ppl invested in s econ wait to see how slave issue works itself out before continuing to invest by late 1850s s econ declining industrialization of ne

Key concepts/Characteristics of a Good Carrier Industry (D. North) (Definition: Carrier Industry (D. North) i.e. leading sector o Econ tends to be lead by a particular industry) o Looking at econs as social institutions Generate lots of backward linkages o Backward linkages: Inputs that carrier industries need o E.g. shipping Need wood to build them input Logging indust books if hay great demand for shipping Bc no shipping indust w/o ships; no ships w/o lumber Labor input Sails Input Textile industry makes sails Ppl who make these get money Nails/Bolts input Generate lots of forward linkages o Forward linkages: facilitate businesses that do not have direct input into the industry o E.g. shipping Insurance for cargo

Loans to build ships Creation of restaurants bc of ppl working on docks Growth v Devl o In economics, diff bn growth and devl: how many of linkages of your indust you are able to capture o A lot of econs get cash from its carrier indust but doesnt capture the linkages of its indust o Capture the majority of the backward and forward linkages devl

USA Capturing Forward Linkages (FLs) of Cotton What? Where? o Textile indust - Eng o Insurance/banking/commercial forward linkages of southern cotton is realized outside of south as well NE All forward linkages of southern cotton are being realized outside of south o Indust is generating wealth for individs in south but devl is realized in eng and NE o Southern cotton indust is generating more development in NE and Eng than in the south Read this part of D. North carefully Forward linkages tend to be more lucrative; so capture them o Southern planters had no incentive to capture them Getting lots of money Group of businessmen in NE not doing so well o Idea Why should brits get all FLs of southern cotton Revolutionary if we est. textile indust in NE Refine southern cotton and compete directly w/ brits Get a lot of that money that now goes to Britain o Didnt know how to do it Brit guarded secret Once learn techniques they made you swear oaths of loyalty not to reveal the secret o One brit Samuel Slayter betrayed secret

Moses Brown contacts Sam to come to pawtucket to set up textile indust 1st real factory set up in 1790, running in 1794 1795 there are 12 cotton mill fever

ne captures major forward linkage making cloth out of southern cotton making clothes of southern cotton implications? o BLs Machine industry developing To produce cloth from cotton need spinning machines To produce cloth from cotton need machines input Make clothes from cloth need machines input Iron industry developing Iron production need it to make machines Volume of iron demand increases

o FLs Could have imported spinning machines from Eng o Didnt do it o Wanted to capture those linkages End of cottage indust; first modern factories new industries being created based on southern cotton o why didnt it occur in the south?

10/31/11 10:50 AM Missed

10/31/11 10:50 AM Missed Friday (10/14/11) Pattern of econ dependence in post colonial Amer 3 cycles marked by decline (depression) then rising again o depression after revol; demand in shipping in eu in post col wars o depression after wars end; engs indust revolution pulls them out o depression after brit demand for cotton goes away; pulls self out of dependence (see below) econ doesnt have internal growth dynamic o col econs produce what they do not consume; consume what they do not produce disarticulation bn local dmand and local supply impact of colonization on local economies o source of external dependence in all phases going back to col phase (econ dependent on brit imports of tobacco), usa is completely inserted in the triangular trade involvement in triangular trade fuels econ

The third recession to understand when pattern of post col independence ended and how it came about Particular pattern of industrialization pursued by capitalists in ne in attempt to follow brit example in textiles, way that went about it broke the cycle They not only industrialized; they did nt just set up the factory to produce cloth from cotton Then they captured as many backward and forward linkages as possible Why took so long from 1790s to 1840s for dramatic effect to take place o 1790s brit produced best iron and steel brits produced best textiles o 1840s

tariffs placed on brit steel; americans sacrificed and bought inferior steel to stimulate steel indust tariffs placed on brit textiles; amers sacrafice and buy inferior textiles of states to stimulate textile indust

Internal trade no longer rooted in triangular trade; rooted in internal textile based trade o post civil war era driven by internal trade o amer textile industry satisfying amer demand for textiles now produces what it consumes nature of capitalist col econs and how develop dependence with patrimonial col, no transfomation of econ w/ capitalist col econ, produce diff things than before markets are disequilibrial, they do not talk to one another o has to be overcome in post col to end cycle of dependence now possible to talk of natl amer econ econ has recovered its internal growth dynamic econ can grow as response to amer demand amer demand stimulates amer production 1865-1876 pd of transition pd of conversion in which growth in amer econ becoems internally driven; beocmes natl amer econ early 1870s: 9/10 of products for usa consumption are from usa amer econ not totally free of brit dependence o need money to build the factories o brit capital finances American devl but doesnt drive econ 1899: $3.5 bil invested in amer by brits, millions to pay in interest o exports to brit imp so can pay back brit investors good to have a trade w/ imperial country so that they pay you w/ imperial currency so it can be used to buy can as 3rd world country, cant trade using own currency

have to do intl trade in imperial currency

nature of econ demand textile idunst sees as its markets the americans o lots of ppl, need lots of clothes a capitalist econ doesnt respond directly to needs; it responds to amt of dollars each individ can put up to meet their needs o if I cannot translate into dollars my felt needs then I am economically irrelevant o how much in budget of amers allocated for clothes it wasnt just, we need lots of clothes so make them it was what can you purchase

1873-1893 years of crisis leaders of textile indust overestimated extent ot which amers were prepared to pay for clothes textile indust productive capacity had outstripped purchasing power of amer how do you balance capacity to produce and capacity to consume o textile elites and industrialists solve prob by demanding America acquire an overseas empire then has places to sell surplus production o debate on this question (Lefber, Hacker) this question another reason why process of indust could have collapsed (D North) wouldnt have collapsed move militarily ot acquire empire William seawood 1860s outlined empire usa is going to need to solve econ prob that will come (did come in 1870s o plan Increase immigration from eu Need labor Import labor; takes away cheap labor

Drive up cost of labor in eu Usa would flood eu w/ cheap amer goods Build commercial empire Not classic col empire That is, markets, not territories All of lt America become markets for usa Need to be canal to link east coast and west coast quickly Need markets in Caribbean Dont touh brits or fr Kick out Portuguese and sp

Need cuba and Puerto rico as colonies Military base in DR/Haiti Take territories Take all of N amer including hawaaian islands o Prob solved by access to lt American colonies (Hacker, Lefber) Now had to protect trade bn 1921 debts payed off to brits becomes a creditor nation for first time odyssey begins in 1776 (revolt) and ends in 1921 amer econ no longer even financially dependent on british

10/31/11 10:50 AM National Amer econ Wasnt driven fundamentally bu external colonial demand First major crisis (1873- mid 1880s) o Not brought on by collapse of external demand o But insufficiency of internal demand Internal demand, now driver of econ, couldnt keep pace with growth in indust capacity o Crisis of over production Everybody in usa didnt have everything they needed Measuring demand: ability to translate needs into dollars Gap bn growth capacity and capacity to purchase new goods o Resolved: America becomes imperial power Starting in 1890s beginning of Spanish amer war Puerto rico Cuba Etc Basically, throws spain out of imperial club Territories usa controlled in its commercial empire were ex-colonies of spain Production stabilized What gb did to usa, usa now doing to its own colonies 1921 paid off debts to gb o became rising indust power o becomes creditor nation

How did usa go from being rising, indust, debt-free nation to today (14 trillion dollars in debt, and occupying wall st)? What changes took place? Great Depression (1929) Second crisis of natl econ This one diff from 1870s bc it was global o Also involved eu o Couldnt turn to eu to help pull us out o Made it so intense John Maynard Keynes (brit economist)

o Fundamental instability in capitalist markets, in savings and investment o Rishta bn savings and investment isnt really market rishta Too many facotrs intervened to simply rely on supply and demand Govts had to intervene o Creates model of market econ his great achievement Requires measures of state regulation West turns Keynesian o Over objection of minority of economists o 1945-1970 western econ experience greatest pd of growth in their history driven by auto indust Whats good for GM is good for the country

Factors of economic trouble in 1970s Auto industry in trouble 1973 o Uses OPAC oil OPAC opposed Amer policies in mid east Used oil as weapon, drove up price o Basic commodities price goes up, other prices go up Car price goes up Increasing cost of production Asian markets give west serious economic competition o Jap autos and consumer electronics (TV, radios, etc.) Vietnam war Deindustrialization Bc of competitive situation, inability to compete Amer co.s find it more profitable to put businesses overseas o Flight of amer idnust sector overseas Amer still making money, its just happening overseas Started in 1970s, peaking 1980s Creates vaccum o Cant cont to deindustrialization w/o asking, what will replace industry?

o Able to locate the immediate set of factors why we are in such debt As hole in econ grew w/ deindustrialization, attempts to fill it Dot com co.s o High promises bc of rise of internet o Thousands o Able to get large sums of money bc seen as future of American indust o 2001 dot com bubble burst o amazon only one that delivered, finally turned a profit about 2006 Alternative energy source o high tech combined w/ energy to break dependence on foreign oil o WorldCom, Enron o The New Economy i.e. supposed ot replace now exploited industrial sector o that phase is over given intl sys co.s a bunch of frauds Financialization o Finance sector would lead way o When financial sector is dominant, what does it produce? Non-productive economy First time such a sector leads the econ o How does it make money Makes money by getting everybody into debt Encourages borrowing, and charge fee for money borrowed (interest) o 2008 collapsed bc focused on financing housing sector

Yet to find a genuine alternative to industry (Henry) Therefore we are in this crisis o How do you export your industry w/o alt in place o Consume more than we produce

Theories of old will not get us through the past

Amer economic review article

10/31/11 10:50 AM No Class

10/31/11 10:50 AM See blue notebook

10/31/11 10:50 AM Arthur Lewis Defined economic devl field; need to know his article Began by looking at condition of labor in carib o To be econ devl unionization of carib labor Work force so close to slavery, if adam smith right then there is no viable labor force Disastrous from econ and soc standpt To approximate necessary conditions for functioning labor market o Labor in the West Indies influenced by Fabian socialists by improving status of labor and increasing wages (redistributing income and improving their lot) wouldnt solve econ probs of carib o needed to also enlarge economic pie

Popul to land rations if look at countries around world popul to land ratios over certain amt, becomes impossible to solve prob of poverty popul to land ratios in carib were such that agri could no longer feed and cloteh ppl w/o majority giving up sth rising ratios convinced lewis only way to end poverty in carib is to make case for industrialization brits thought carib industrialization absurd even after brit warships had ot be sent to make peace sent a commission Moyne Commission o after thorough study of region o recommended it remain plantation econ, and idea of industrialization shouldnt be attempted o published 1940 o showed how strongly committed brit policy makers and business comm. Was to idea of carib remaining plantation econ lewis knew what he was up against o felt time for change had come

o inspired by way ne overthrew hegemony of plantation owners in south o comes up w/ theory of industrialization Theory of Unltd supplies of labor Former theories (Economists land labor capitol: primary factors of production) o Classic economists land, labor were in unltd supply Goal is to create more cap since its ltd Focus was on capitol o Neo-classical economists; Keynsian Labor is now ltd factor in advanced econs bc of its rising cost Capitol ahd grown so much from tiem of smith and marx that in early decades of 1900s, capitol no longer seen as ltd factor of prodxn Lewis o Carib econs have unltd supply of labor o To apply neo-classical/Keynes economics as formulated to carribean (and most other third world countries) would be highy problematic Wouldnt reflect realities of these econs (and other third world econs) but those of developed econs o Fundamental economic assumps that you make for analyzing an already industrialized society cant be applied to preindustrialized societies Unltd for Lewis means - Large popul relative to land and capitol whose marginal productivity is negligible, zero or negative o Def of marginal productivity extra output of product produced when you add one un of labor, holding everything else constant E.g. 10 workers make 100 shoes; add 1 worker, make 105 shoes; so on marginal productivity is subject to law of diminishgin returns

e.g. lets say add 1 worker (to make 11) and make 125 shoes; add another worker, expecting increase of 25, then produce maybe 140; add another, expecting about 20-25 increase, then produce about 150 this is operating of law of diminishgin returns if keep adding laborers, get ot pt where we can add labor and increase in output is 0 or even negative o Lewis - means I can extract labor, put it elsewhere, and by removing it from where it is now, I wouldnt be hurting existing businesses, in fact I could be helping them You can take a lot of ppl off of land and still produce what youre producing Identifies who constitutes group who can be moved Really have a large amt of disguised unemployment o Isnt real employment o they are working but not really contributing to output 6 groups o Farmers Ppl employed in agr not contributing to output of farms E.g. Ppl there just to keep brother company From economic standpt its not solving anything o Casual laborers Ppl who do odd jobs E.g. how potholes are filled in carrib Sb to bring rocks Sb to bring water around to group Sb in charge of lunch Nice, cosy group; most time spent talking Jobs that could easily be done by 2 men and is done by 6 o Petty traders Little kiosks all over the place; booths designed for one person; >3-4 ppl working there

Lewis - Clearly radio could keep sb company and kisok could run by one person Looking at these as economic units not social units o Wives and daughters Lewis had probs w/ women not working in a developing societies Saw it as aristocratic lifestyle in which women didnt work In this pd of industrialization, women had ot work to contribute to modernization of soc o Reserve army of labor (Marx influenced) Amer econ moves at maximum efficiency w/ 4% unemployment level But is econ for efficiency or providing for the ppl This time in carrib unemp @ 20% As an employer ppl so afraid of beign fired bc of large pool of unemp ppl that employer can abuse their power o Population increase Set up indust factories for those from the 6 groups Workers come from subsistence situations o If offer jobs in factory w/ increase in wage then offer incentive o Wage will be compettive internationally Can turn it into industrial labor force o Depending on how you take them off farm and into factories, it will determine how competitive internationally this labor force will be

Side note: secular trend in prices for economists = long term trend

(taught by Patrick Heller)

10/31/11 10:50 AM

Whats wrng with modernization theory Intro o Modernization theory deeply influenced American policy o Dependency theory is one body of systematic theory that comes out of the global south Fernando Enrique cardosa pres of brazil Credited w/ turning it around Wrote the book on dependency theory Value soc puts on formation of capitol o Grew in opposition to communism in USSR o Capital accumulation o Have growth and sustained growth by creating surpluses (excess wealth) and dont just consume it but you reinvest capital o Rest of world needs capital accumulation So well (govts) lend them (world bank, etc) aid and foreign direct investment If infuse enough then you can stimulate capital accumulation and then Weber (misinterpretation) protestant work ethic o To be modern you have to be protestant Commanded by god to accumulate, work and not spend Opposed to hedonistic lifestyles Prove in eyes of God youre worthy Perfect ethos for modern capitalism o We need export values of Protestantism and, therefore, American society If reproduce western values in developing world can trigger modernization o Weber meant at specific time pd and area of world If rest of world wants to be modern like usa and eu then has to replicate econ, polit, and soc systems Persistence iand even growth of gap bn core and periphery Gap is still enormous Linear and a-historical o Everyone believed it to be inevitable

o No sense of history As if it didnt exist Obvious amnesia eu models created greatest tragedies in our history (World wars and holocaust) o No theory of conflict o No internal dynamics Euro centric o Cant account for varied pathways o As if the global south didnt exist, as if they are a clean slate for us to come in and change everything o Maybe we need also a theory of internal dynamics

It didnt work Gap bn south and north would close o Idea capital will go where it is needed Dependency and devl Be like us and youll be like us wasnt working Modernization = convergence theory o Gains to trade and comparative adv Gains to trade more trade, better off Adam smith More trade, more complex More we can specialize, more specialize more productive What happened: stagnation Primary commodities agr goods trade for manufactured goods Declining ratio of exchange o No convergence of economies Dependency theory = polarization o Global capitalism >>> underdevl o Def: dependency refers to an asymmetrical, structural rishta bn nations in which the pattern of econ devl in dependent nations (periphery) is shaped by interests and dynamics generated in the dominant (core) capitalist nations

Doesnt lift all boats Lifts some at expnse of others Pattern, dynamic and logic of devl is a fxn of the interest of the west and that rishta is one of dependency o Dependency theory predicts polarization Global division of labor Periphery agr, core manu Low diversication, high Labor unskilled, skilled Capitol goods (like robots to create) no, yes Tech imported, research and devl Consumption luxury (tiny elite, brokers bn global econ and the locals), mass consumption (more true in 50s and 60s than now, everyone ahd pretty decent level of income)

Dependency theory: key concepts Continuity of colonialism o No longer rule o Through other means market forces Accumulation on a world scale o Global phenomenon o In 60s no one said this; what mattered was local accumulation o Now nothing is made in only one country E.g. car parts made all over even though assembled in one place o Have to think of world capitalist sys now Devl = interpendence but highly uneq (global division of labor) The world is not flat Flat - Everyone is on the same playing field, same opportunities o Modernization o Everyone is better off bc of internet, etc Structures of dependency

o Market dependence Periphery creates commodities Prices set in core o Uneq exchange Declining terms of trade bn commodities and manufactured goods o Fin dependence Banking industries Currency of global north dollars used in intl trade o Technological dependence OECD coutnries 99% of patents in world from US o Foreign direct investment o Core dominated global governance Wto, world bank, imf, TRIPS First world Biased Leaders and decision makers are all from global north (GN) Bc of this prospects for devl in devling world is not likely

What is wrong w/ dependency theory Facts o Global prodxn 50 percent manufacturing from LDC 65% of LDC exports manufactured goods (13x in 4 decades) o east asia, Ind, Brazil developing high end and high value being exported o revival of third world nationalism in 50s and 60s theorys probs o linear and deterministic inevitably get polarization no agents, politics, and actors o no interla dynamics: what about classes and states Dependent Devl

FH Cardoso and Falleto o Structural historical approach World asymmetrical, but devl is possible Men make hist but not under conditions of their own choosing o Internal and external articulated Class struggle and alliances matter (formation of natl bourg, Evans triple alliance) Devl state State is imp State needs to step in Political paralysis make it harder to be a competitive capitalist econ

10/31/11 10:50 AM Antiga and economic crisis Tourist economy o From USA, Canada and Eu o USA and EU in econ trouble >>> vacations decrease Drop in tourism Collapse of external demand Two largest banks and largest insurance co.s o On pt of collapse o Taken over by equivalent of fed reserve Created a holding co. Co. is framework in which these three are o Ppl lost a lot of money which theyd invested Econ in tailspin o Cant pay mortgage, foreclosure Common factor in Antiguan and US econ o Both invest heavily in FL real estate Ant: FL real estate looks better than Ant real estate

Modernization theory Weber o Suggested imp variable of capital accumulation Not just capital formation Its the value a soc places on capital formation o Diff societies putting diff values on capital formation Diff in attitudes that the protestant and cath comm. Placed on work, wealth, and wealth accumulation Stats show that protestants more prosperous than caths in Eu Studied theologies of two to understand why What they say about work, wealth, money, econ activity Caths Set of norms that ltd/restricted econ activity Did not encourage wealth creation/success in material world Otherworldly asceticism

o Sb who avoids material world o Too much involvement in material will hinder progress in spiritual Primary concern: salvation o To what extent one is in harmony w/ way of God o To the extent that worldly activity threatened your state of grace then you are prepared to reject it o Limit involvement w/ everyday world Protestantism Protestant Reformation new concept Calvinist o predestination rigorously and systematically devl in Calvinism from before the foundations of world were laid o predestination doctrine created anxiety salvation is most imp thing in life and only a select few have been designated am I among the saved or am I not? Isnt there some way that I can have an indication of whether I will enter heaven or not o Anxiety produced was too burdensome Lutheran o Luther eased the predestination anxiety of protestants o Success in your chosen calling was the only clue you have

Does not have to be a spiritual calling Must have sense of what it is you feel called to do Not successful God is frowning on you, not among the saved Successful among the saved More of positive value on material success o Mateial success is proxy/metaphor for your state of grace o Deeper meaning of your success is a

spiritual one Protestantism puts highly valuable status on material gain o compares classic lit of Protestantism and lit of early capitalist era Sth similar in their rhetoric The Spirit of Capitalist Benjamin Franklin series of quotes from Ben commodification of time o fitted into framework of capitalism o even when youre relaxing you have to include the cost of that time could be working money is of the prolific and self-generating kind o reproduces itself o if you dont understand that money can get together and have sex and reproduce then you dont understand money!!! Sees in Franklin this worldly asceticism Attitudes towards pleasure and the body is similar to the caths Quotes Baxter a lot

Even if you have millions, you must keep working Not working to make money, youre working to ascertain your state of grace Can never justify stopping work Giving up only clue to state of grace if you quit o This was attitude protestants brought to capital formation Its the religious signifivance that the early prot capitalists placed on capital formation that lead to their great success These days there is no asceticism grounding search for success o Our interest societies bring diff values on capital accumulation the value Protestants base on capital accumulation went on to study worlds religions in addition to process of capital formation, the value one places on it is crucial to the success of said capital formation Two transformations Parsonian (Talcott Parsons) o First classic formulation of modernization theory o Weber Cultural specificity - Sth specific of all cutlures Didnt think cultural values were transferable Each cult. Specific Each unique Didnt want to suggest by encouraging other coutnries to develop prot work ethic would lead to devl o Thought weber wrong on cultural specificity Devl of rest of world ahd to follow European ex. Ahd to come up = of Prot work ethic to succeed in economic devl Find way to give a positive valuation to the process of capital formation

o Find a way to universalize European experience How to get other countries of diff cultures Major sociological challenge to economic devl contribution

10/31/11 10:50 AM Weber

Protestant work ethic Value that diff cultures place upon capital accumulation Important way sociologists can contribute to debate on economic devl By taking how it devled in prot. Eu, its not transferrable to other societies

Parsons To transfer prot work ethic into 5 pattern vairables Have dichotomous structure o Modern (right side): universalism, achievement, functionally specific, affective neutraility, self orientation Wants to strip it of the specifics Whats universal, what can I extract Opposite of what he sees in pre-modern soc.s o Pre-modern: Particularism, ascription, functionally diffused, affectivity, collectivity orientation Process of diffusion by which a soc moves from pre-modern to modern set of values on capital formation Diffusion aka demonstration effect Living in a country to see how it is done then taking it back to their own country Triggers modernization process complete overlooking of history of colonization o diffusion argues primary contact bn developed and developing societies was diffusion o as though never been contact previously o reason why modernization theory was replaced by dependency theory Probs w/ theory as theory is tested empirically, probs emerge Why these particular five pattern vairables

o o Berk o o

Some say need fewer Some say more Herswitz Reduction in number of patent variables Doesnt think affectivity and affective neutrality works In the field doesnt seem much diff bn devl and developing soc.s on these values Ppl seem to be very emotionally involved in what theyre doing o Reformulation in patent variables Only four And when it comes to last (orientation) he switches the order Modern collective pre-modern self o ambivalent and contradictory results reformulate or understand why

Attempts to rescue modernization theory Esther Boserup o modernization theory of womens role in devl was confined to west o doesnt rep accurately role of women in afr devl o wanted to keep it w/in frame of modernization o trying to reformulate to give broader Raul Prebisch (from Arg) Industrialization of latin amer 1949 1972 it was his day group of economists find his book and base argument off of it o Calseo Furtado, Anibal Pinto, Florestan Fernandes, Fernando Enriques Cardosa, Osvaldo Sunkel (CAFFO) o They create dependency theory o Built on prebischs work come up w/ new way of analyzing ristha bn various groups

Main argument o Way world devl in post-col pd, now that eu empires are being dismantled bc of indep movement in the post-war pd we need new conception of the global economy o Modern formulation of globalization is first within dependency theory Gobal context explains why some countries are developing well and why others arent o Center-periphery model

Center-periphery model Out with old, in w/ newkinda o Old style eu col is over o Age of classid empirial empires that began w/ colonization of carrib and amers is over o Sth new emerging o At same time, continuities of classic col empire pd and postwar pd Powerful during col era, still powerful in postwar pd Dont want to say nothing has changed, though New terms o Centers Dont call them mother countries or empirial powers, lets call them centers No colonies but control areas of the world If certain kind of govt gets est, they intervene Countries are indep but are in spheres of interest of these former imperial powers o Periphrials All of the centers have peripheries Colonies => peripheries o Made up of cneters and peripherials Empire and col v center and periph Periph: formally, politically indep; col: not indep But periphs are economically dependent What are trading patterns?

Diff than pd of classic empire? Argues yes there are imp diffs Dependency theory is attempt to retheorize rishta bn center and periph, bn center and center and bn periph and periph

Caribbean Dependency Theory

10/31/11 10:50 AM

Rise of depnedncy theory Bc of collapse of modernization theory around issue of colonization and the dichotomous construction Return to raul previsch => radical reconceptualization of the theoretical terrain of economic devl o Shift back to capital formation Dependency theory breaks w/ cultural orientation that modernization theory est Place emph on capital formation o Introduce center-periphery model Center-periphery model Rethinking meaning of economic devl in the post-WWII era in which so may countries, ex-colonies had become indep nationstates Question: what diff does polit indep make o What diff bn ristha bn old imperial power and its colonies and the new centers and their peripherials o How much of diff we see? o Why bother change the names? Significance? Terms of trade Sig diff bn terms of trade bn colony-imperial power and centerperiphery Justification for name change Worsening bn center and periphery Only way to close widening gap is for periphery to industrialize o Idff from Lewiss argument (for indust of periphery on basis of inability ot agr to lift countries out of poverty; land-popul ratios) o Addressing same prob from diff perspectives Def: cost of imports compared to price paid for exports o Decrese moving against you; not favoring you E.g. Relation to Caribbean o Used to be sugar bowl of Eu o Way to measure terms of trade

How many tons of sugar does it take to purchase some of the key things you need to import Tons of sugar it takes to purchase tractor o Previsch over time takes more and more tons fo sugar to buy same tractor Terms of trade moving against you Able to show statistically that Lt amer and Carib had to export increasingly more agr goods to purchase same quant of indust goods If cont to export agr goods for indust goods, terms of trade always against you o Increasingly neg balances of trade E.g. trade deficit devl bn US and Jap o US sending agr goods to Jap while Jap giving US indust goods o US have neg balance of trade Wanted to demonstrate sth new was going on in global econ and could only see it if you look at the economy globally o More center industrialized and periph agr we have terms of trade prob

Counter terms of trade prob Periph must indust Theorists fo Dependency Theory New turn is not coming from west o From Lt amer Devl of Lt amer spreads to Carib and on to afr Afr dependency theorists o Samir Amin (complete this and Evans reading) New gen of dependency theorists o Lloyd Best o Norman Jiroan o Clive Thomas o George Beckford o Peter Evans

One of earliest intros of dependency theory into amer sociology o Andre Gundar-Frank Diff bn colony-imperial and center-periph rishte Divisions bn theorists o Thomas, GF - no big diff More continuity than changes Diffs were cosmetic, superifical o Evans, Enrique sig diff Evans: ex of first attempt to theorize what was new and diff Evans Dependent Devl o Not dependent growth, why? o Title sig? In Carrib, was implementing Lewis model Lewis model failed Not so much modernization theory failure since carrib didnt get into mod theory ISI theory Lt Amer (primarily Brazil) Import-Substituting Industrialization Strategy of industrialization Lots of Lt amer countries couldnt implement bc they didnt have the bourg. class/number of capitalsts capable of assuming strategy A lot fo those countries should have been implementing lewis model Brazil o Sig no. of areas, there were no.s and types of capitalists needed to pursue o Id number of areas in which brazil was importing things (e.g. womens hats) o Ppl felt that they could make the products Amin: ex of theorize nothing was really diff

During pd of war, when imports from eu were being interrupted bc of danger of transport, this opp for brazilian bourg Things normally imported they started manufacturing Targeted ocnsumer items they knew brazilian mid class had been purchasing from abroad ISI is industrialization targeted to local buyer; Lewis everthing is targeted at export market Not aimed at the mass market; aimed at upper and upper-middle classes By early 60s, this exhausts itself o Industrial capacity outpaced the capacity of middle class brazilians consumed o Devl came to halt Collapse of ISI is key trigger in Lt amer to dependency theory o Wanted to know why model collapsed

Bureaucratic Authroitarian st in Lt amer Rsponse to collapse of ISI Strong, technocratic, bureac., stimes militant New model export oriented o Adopting slightly modified version of Lewis model Classic Lewis o Entreprenureal activity beign done almost exclusively by foreginors o Importing foreign capital o Bourg not internationally competitive Compet in local areas Not lack of entrep class as in carrib There but not up to par Basis of evanss concept of triple alliance Triple Alliance (Evans) Makes diff bn imperial-colony and center-periph Capital accumulation w/in alliance o Alliance bn 3 recongnized enterprenurial actors

Foreign capital dominant actor by far Brazilian st Incipient brazilian bourg came into being during pd of ISI o Profits are dist three ways FCs are going to get lions share Brazil State is second Brazil Bourg is third o Each actor has specific role FC responsible primarily for latest tech, raising capital and markets They have market contacts in USA and EU where most of product will go Going to be competitive Keep cost of labor down (Lewis prob of exploitation) Able to do it bc these are authoritarian regime o Brazil hist unions disbanded at this time and Access to high technology State runs interference in high risk areas Able to do bc can tax If its highly risky and lose, tax more nad they make it out Has options that private co.s dont Owns energy co.s Reduced costs of energy Braz Private sector Detailed knowledge of business environment Foreignor and want to know terrain Brazilian partner, take through intricacies of brazilian business St and foreign capital (no private sector) in lewis model o Not seen as credible partners o This is whats new

Caribbean Dependency Theory

10/31/11 10:50 AM Brazil classic ex of triple alliance Trip alliance new way of doing business for developing economists Triple alliance Option for Brazil bc being a large econ, had potential to develop bourg class and doing ISI strengthened that possibility Foreign capital, brazilian st and brazilian bourg had distinctive roles to play o Foreign capital brought capital, tech, markets o Brazil st lead in risky operations or regulated risky operations (if lose profits, have tax they can draw on) o Brazil bourg knowledge of local business terrain, specifics of doing business in brazil The three share in the profits Process of capital accumulation divided in three ways o 1 foreign cap o 2 Brazil st o 3 Brazil bourg the main pt each are involved in a cycle of capital accumulation o cheap labor, support of state, external market that helps peters chapters describes impact of this model on brazilian econ o ended plantation phse of brazilian econ ISI dint do that Under ISI brazil continued to be a plantation econ Exports Percentage of GDP w/ transition tto triple alliance and w/ its functioning for 10-15 yrs we see the transformation indust sector transformed industrial good export increases dramatically o increases rather than decreases external dependency process of dependence deepens as devl expands paradox of triple allaicne produces devl which didnt occur under imperial-colony phase

never would have gotten industrializationo f brazilian econ occurs in center-periph framework new things possible which werent possible during imperial-colony phase justifies pravischs introduction of new terms, in other words, they stand for sth diff

Samir Amin Read him carefully o Writing for economists not sociologists o But his work is part of sociology Argues when look at col and periph econs these arent classic premod econs o Not tribal or patrimonial o Arent traditional/patrimonial or modern o Theyre transitional, peripherial capitalist economies Periperial capitalist o Not colonial economy o Diff from central capitlist econs o Six basic characterisitics Extroverted econ Economy driven by external demand Looks outward mult modes of production can have tribal modes still around and tribute paying mode and pockets of capitalism can have diff modes of prodxn operating simultaneously never soc.s in which exclusive mode of prodxn in capitalist, always partially introduced diff rates of productivity bn various sectors of econ unevenness marginal productivity is never uniform disarticulated bc of diff modes of prodxn and unevenness

not integrated few backward and forward linkages connecting, that is, not well captured financial sector dominatd by foreign capital rishta bn savings and investment, etc, is mediated through presence of foreign banks unequal patterns of specialization forced into instituting these patterns thing need ot understand most about Amins work to grasp the distinctness of his contribution to dependency theory

David Ricardo Classical economic theorist o Building on adam smith o Develops theory of trade Comparative Advantage (how it works) Smith o How division of labor increases output o Why we have brit econ growing rate outpacing all otehrs key thing way brit industrial factories make use of division of labor Comparative adv o Explains how trade contributes to growth and devl o Ex trade in wine and cloth bn eng and Portugal What if por has greater comp adv for prodxn of both wine and cloth Comp adv for wine, though, is greater than of cloth Not all comp adv are equal One can be greater than another Quantifies two comp adv.s Would be to pors adv, if to trade w/ eng, to forget about cloth, and to export wine alone In long run, greater impact on growth and devl o Specialize in that which you have a strong comparative adv

Amins prob w/ Ricardo How generalizable is Rics comp adv theory o Was it specific to rishte bn eng and por To indo-european trade Can we really extend this globally o Doesnt think so Statistical data o If large diff bn in GDP bn two countries (e.g. eng and por) then it shows country w/ smaller GDP would benefit more Size of GDP has to be considered o If theyre diffs in relative importance to GDP bn (e.g.) wine and cloth to econs of the countries, bigger adv is gained by country who is radign more imp econ If wine is bigger contributer to my GDP than it is to GDP of my trade partner, then I will gain more Conditions of comp adv were historically specific, if tried to apply now could lose big Not as generally applicable as ricardo suggested

Amin asks does theory of comp adv explain terms of neg trade bn center and periph? Links theory so far w/ that of previsch Answer: NO Rishta bn center-periph violates conditions and assumps that underlay ricardos theory o Center-periph assumes mobility of capital Bc cener is investing in perioph Capital is mobile Cant assume capital is static o Rate of techonological change isnt a constant Progress and rate of change linked to technology in west is such that it determines patterns of specialization in the peripherial Bc of hegemonic rishat bn center and periph, what periph chooses to specialize in is in large part determined by center

Wont be equal benefits to both parties Only if patterns of specialization were done under more ideal conditions (that approzimated ricardos condition more closely) can we get comp adv o Element of choice and entering into mutally beneficial trade relations arent met in rishta bn center and periph Rather than trade being factor contributing to growth and devl, becomes factor in underdevl o Trade and underdevl go togther Surplus being extracted from periphery Another form of exploitation and imperialism Contributes to devl in center and underdevl in periphery

10/31/11 10:50 AM Dec 7 4pm final is due (final given out on Nov 30) (Amin) Critique and reappropration of ricardos comp adv theory Links it w/ prvischs theory of terms of trade Explain why trade leads to devl in some countries and underdevl in others unequal exchange Argues unequal exchange is phenomenon that continues fundamentally imperial-colonial and center-periph Only where you have an incipient bourg (e.g. brazil and ind) and even if you have that that country is locked in a sys of unequal exchange o Existing trading relations lock you in o Comp adv and trade doesnt hold If comp adv was operative then trade should lead to devl in both countries (Ricardo)

Considers hist of terms of trade bn center-periph 1800-1880: pd for which statistical data of terms of trade can be found o stats suggest terms of trade favor col economies (imp-col) indust revol in west just beginning, created demand for agri and mineral products (inputs) from col economies relative importance of trade to countrys econ or country to which exporting affects terms of trade during this pd, trade w/ colonies exteremly imp to imperial econs persistence of monopoly made this case????? traded more w/ colonies than w/ other western countries relevant importance of trade with colonies was extremely high lower cost of production in industrial goods when industrial revolution progresses ppl in periph could purchase more of industrially produced cotton textiles terms of trade moving in their favor

takes less of exports to purchase same amt of imports as before pd after 1880 dramatic change o from center-periph both benefiting, terms of trade become neg for periph o three factors explain this shft in pattern of trade in central countries trade w/ each other more than w/ periphs most of engs trade is w/ other eu paises dominant trade of indust goods is amongst self relative importance of trade w/ periph decreases decling percentage of total trade terms of trade increasingly negative from 70-20% of trade w/ periph for eng patterns of oligopoly oligopoly in any given area of enterprise have a small no. of co.s that dominate prodxn for market econ to work, need hundreds of co.s who dont know each other price leading price est by co.s discussing set price range bc no. of players so small, can exert sig measure of control over prices even though you have technological revolutions take place in west, should reduce price, bc there are so few co.s and some measure of control is est (particularly 1880-1945) center dictates to periphs what new ocmp adv are after 1945 begin to get indust of periph but are these countries choosing areas of specialization based upon what they determine to be their comp adv pattern of indust thats similar to agricultural specialization

e.g. carrib specialization in sugar not sth carrib producers felt was their comp adv, it was an externally proposed demand from the center trade not based upon ideal conditions of comp adv unequal trade unequal patterns of specialization lead to devl in center and underdevl in periph devl and underdevl are simultaneous phenomenon produced by process of unequal returns of trade

how to equalize ocnditions of trade (amin) not economic question o already know how it should be o more of political prob (amin) why no immediate econ solution, requires political change drive to industrialization from pt of view of periph lead to devl in brazil more extensive scale than ISI in SE asia esp, wider variety of indust goods being produced overseas classic pd of agri=periph and indust=center, this pattern has been broken trade is progressively in industrial goods o to solve prob of poverty (lewis) o to increase pos terms of trade after 1860s lots of mining o industries using mod tech previsch and lewis called it (amin) more and more of indust sector of central paises being exported to periph in a way that retains unequal exchange o indust sector of adv paises locatd primarily overseas (amin) one case in which this exportation of indust sector to periph could break pattern of unequal exchange CHINA

o reason why its being studies so closely, turned tables on west so ch is benefiting more from its trade relations w/ west The Case of China (amin) everyone cant be china o so how to generalize so ppl can see how to break out from dependency o one solution: polit solution socialism only by est diff set of relations bn center-periph could you end unequal exchange only by removing capitalist framework and replacing it w/ socialist socialism v capitalism o socialist econ attempt made to suspend market as primary organizing mechanism of econ o capitalist market fundamental mechanism of allocation and dist market allocates resources what it determines you should get is considered fair hist of allocating resources that from human standpt in a way that produces extermes (super rich and super poor) Karl Marx o Come up w/ alt to extremes of capitalism o Proletariat didnt stand chance under capitalist sys o Prob is market Come up w/ diff mechanism of allocation and dist to solve prob Idea of central planning is born o Attempt to replace market w/ centrally planned econ o Centrally planned econ econ in which try to determine by a plan how many resources soc needs try to determine price at which goods to be sold and wages/salaries of producers

o desired outcome more egalitarian soc o by introducing central planning can eliminate pattern of progressive inequality implementation of socialist ideas o USSR, Vietnam, Cuba, Ch classic soc countries o Scandanavian coutnries, eng before thatcher mix of capitalism and socialism (aka welfare st) (mixed econ) Market is governed Keynes becomes basis o US the most capitalist st of all coutnries Least influenced by socialism Welfare st est by New Deal (Pres FDR) is as far as US moved in socialist direction Since 1980 repubs have fought to dismantle welfare st What happened to socialism o Since 1979 case after case ppl abandon idea that can centrally plan an econ Always certain probs Main prob shortages (Node reading)

10/31/11 10:50 AM Final and the end of class Wednesday 30th things will wrap up; due on 7th of december Cant cover neo-liberalism and neo-keynsianism or second reading of lewis Nove, Henry and Evans books are the ones to read Ending pattern of declining terms of trade bn center-periph can only be corrected by breaking out of capitalist world sys The rishta itself needs to be changed Not fundamentally an economic prob but a political prob New basis Socialist Many dependency theorists advocated socialism Recommended these policies of delinking (from the capitalist sys) breaking out of est periph-center rishta Trying to est periph econs on socialist basis Cardoza, Clive Thomas, Amin, Andre Gona-frank strong advocates Some advocated nationalization If nationalize key sectors of periph econ this also could fundamentally change center-periph rishta Would affect power balance bn center-periph Govts attempting to implement dependency theory Peru Valasco Regime Ghana Regime Michael Manly Regime Jamaica Bishop Regime Granada Either extensive processes of nationalization or socialization Some chose revolutionary route to become socialist Socialism Try to overcome certain characterisitics of capitalism o Patterns of boom and bust o Inequality o Tendencies to overproduction

Central attempt to liberate working class o Change position from designated exploited group to dominant class o Invert capitalist order

Chinese Cultural Revolution Trying to overcome all of hierarchies/inequalities of capitalist societies Distinctions bn town-coutnry, indust-agr trying to erase o As student have to go to country side and work w/ peasants o To erase soc status diffs that come w/ educated v uneducated Probs of Socialist Economies focusing on economic probs, though there are a no. of polit probs goal: attempt to contain and, ideally, eliminate the market o suspending of market inequ sprang from operating of market a lot of hierarchies created by capitalism has root in way market dist rewards o in place of market, the Plan (central planning) very difficult for all commodities have to estimate supply and demand for economy to fxn efficiently then have to determine price Millions of commodities to plan for Shortages o Certain amt of inaccuracy built into the sys bc of grouping Cant plan price of individ commods => groups them Prob: e.g. demand for socks is not just demand for socks; there is diff demand for diff kinds and colors of socks Certain amt of inaccuracy built into the sys bc of grouping Getting no.s right was just about impossible in a centrally planned econ

 Leads to shortages o shortages Not to be confused w/ scarcity This is demand for product exceeds supply Exact opp of prob of overproduction in capitalist soc.s Prob of systemic underproduction of certain goods Consumers and factory managers who have legit claims on resources are unable to obtain them even though they have the money o Never got price right If dont adjust price accordingly to demand, it complicates prodxn Cant just have supply and demand disequilibrated and not adjust price at which you are going to sell the goods even in a socialist econ o Good intentions dont alwas work out economically speaking Planning couldnt be done w/ necessary precision Departmentalism o To organize anything, you have to have a division of labor To run govt, need ministry of agr, foreign affairs, industry, etc. Within various ministries you have various depts. Within depts are offices o Departmentalism bureaucrats protecting their turf Even htough pt of socialism is about the whole Bureaucrats will be about protecting just their division At te end of the yr, I want my dept to look good o Commitment to socialism disappeared at a bureaucratic level o So, hay slow growth => unrest

China One of most dramatic turns at this experiment of socialism went into economic crisis Leads to reintroduction of market o As failures of central planning, more reintroducing of market 1976: Peng Xiaoping

o Socialist o Said crisis of underprodxn in ch Ppl cant eat Our revolution is in crisis o First to reintroduce market in china Market reintroduction hard to describe o Market socialism/state capitalism o most co.s are state owned enterprises o partner w/ capitalist countries co.s o unprecedented mix of capitalism and socialism no one knows where it will go or how it will end represents possibility no one anticipated

10/31/11 10:50 AM Probs of central planning in countries attempting socialism Probs generated by shortages lead to reintro of market in varying degrees While socialist countries going through crises and reintro, 1978 great recession in west o move of capitalists to keynsianism o corresponding move from priciples of pure market (capitalists) and move toward more market both sys on deep crisis o whats going to happen in post crisis pd o how will these societies look? o How will global econ look? Countries in the analysis Going thru diff processes of change fvery illustrative of things weve studied and imp for future direction of global econ countries o Us econ state capitalism o Ch econ market socialism o Jap econ state capitalism (diff from western) o Ind econ state capitalism (diff from west and jap) o Russ econ declining indust power becoming a classic externally dpendent country (dpendent on oil and gas) rapidly approaching me econ: based on export of two primary classic case of de-devlopment if cont on this track, it will look like me and lt amer countries o Brazilian econ Leaving classic image of Lt amer economy Endinga pattern of col externality

Internal rearticulation of supply and demand Primary reason why its growing Lessening its dependence on external markets New attempt at local rearticulation Based on mass model selling to every braz Diff from ISI sell to bourg Sorta doing what USA did w/ brit in 1870s o Antigan econ Going through new round of dependent devl No signs of breaking colonial extroversion, but adjusting w/in it US econ Stuck o Crisis of 2008 repped 3rd failed attempt to launch new amer econ o Since 1980s us econ has gone through fundamental transition Transtion deindustrialization (1980s) o Us would export completely indust base o This base had been so painfully acquired in 1870s o Econ conditions had changed so dramatically that that base was seen as obsolete and (in labor terms) too costly o What drove deindust Asian competition - Jap, SK, Hong Kong, Taiwan consumer electronics, motor cars, textiles Producing indust products overseas At same time of deindustrialization o Based on application of connecting new information and communication technology to services and energy Pioneering new ways of doing business o Vision for high tech econ that would replace indust econ Three attemtps to launch this econ o .Com co.s thousands wall street investing like crazy, assumed theyd be future

2001 dot com bubble burst most co.s fail took amazon years to turn profit time taking to iron out kinks in enew econ is taking a lot longer than ppl thought time factor is causing amer econ to be stuck old econ exported rapidly, new econ coming in slowly temporal disjuncture at which us is caught at the moment o combine high tech and energy enron, worldcom, cisco going to end amers dependence on foreign oil by finding new ways to sell, extract energy w/ new tech bc of promise of these new co.s, wall st invests heavily o wall st financialization make financial sector the leading sector of amer econ forget about prodxn housing, for example before, when got mortgage, got from bank (contract bn you and bank) mortgages in financialization were now commodities that can be sold bank sells mortgage o bank doesnt own mortgage securitizing of financial products o if standardize processes for getting loans (everywhere you apply, form is same) then economists can attach probablities of risk to loans o they thought they could calculate risk involved in holding any part of your mortgage

o way of financing ownership changed drastically wall st wanted to finadialize prisons, too, education (public schools, state univ), soc security, medicare power of investors increased dramatically shareholder revolt result: if you have co. your profits determined more by your value on stock market than by increases in your phys output once again, declining imp of prodxn co.s werent really producing anything

what they were doing was manipulating the figures you were legally required to report to shareholders value of stock rises with increasing stock value, go out and purchase smoke and mirrors 2008 wall st came crashing down is there going to be a fourth attempt? o Difficult to say o Amer ppl and elected reps are so divided o Ideological gridlock Obama wanted to redo energy model o Green energy o Combo of energy and high tech would be basis of new amer econ o But wall st want another chance at financialization model Struggle is bn new high tech energy model or second run at financialization o Its not that there are no ideas, its that majority of americans need to get behind one idea and have a congress that is not paralyzed by the polarities that exist in amer at moment Amer needs new model of economic growth and devl o Country so paralyzed by options

China econ

In 1930s, China was still a semi-colonia country penetrated in part by brits and fr 1940s, nationalist and socialist uprisings to expel europeans o 49 mao victory mao socializes ch econ o suspends market by making it illegal for private individs to organize businesses over a certain size o businesses over a certain size were for the st o oil, steel, housing, etc. st owned enterprises (SOEs) SOEs dominate ch econ o Banks couldnt legally lend an individ to create a business o Legal foundations of econ structured in such a way that banks can only lend to SOEs o As a result, rapid growth and Indust in 1950s and 60s Rearticulation of local supply and demand By 1970, due to probs of shortages, growth slows o Econ began to register negative rates of growth o Led to friction in ruling ch commie party Bn mao on one hand Zhou Enlai on other Was pragmatic, not charismatic as mao Part of cultural revolution of china Intensification of Maoism Enlais supporters put under house arrest o What to do w/ slowing growth in time when popul is growing and ppl are expecting continuous growth 76 mao died o powerful maoists (Gang of 4), not chosen as new leader o Deng becomes leader mao recognized on death bed that Deng Xiaoping was a great leader Deng was one of those put under house arrest as enlai supporter Deng ideological opp of mao, but good leadership capabilites o Capacity to lead takes precedence over ideology

76 - Deng made reviving econ growth no. 1 priority o Strategy reintroduce market, open opps for private enterprise Began w/ privatizing agr Bc first thing wanted to stop was shortages of food Collective farming coming up short, ideology has to go Decollectivize agr Made it legal to create farms that were quite large Created special zones where it was legal for ch citizens and foreign businessmen to engage in private production Socialist econ in areas on southern coast o Convinced st bitten off more than can chew Shortages due to st enterprises had more on hands than capable of dealing with We can cont to plan but we cant do it all o This was experiment One country, two sys.s o Results From 70s to mid80s growth rate of 10% Bc of increase in rate of growth, deng tried second experiment in 92 Expanded areas open to private enterprise Moment when amer corp.s began to come into ch on larger scale

10/31/11 10:50 AM