Points of Interest

Motivating questions

Addresses subjects of Interest to...

• Classical theory
  • Ricardo
  • Smith
  • Weber
  • Marx...
• Current empirical research
  • Economic sociology
  • Political sociology
  • Organizations
  • Historical and comparative research

Relevant

Photo courtesy of Kranti

Subjects

• General concepts
• State and property
• State and money
• Labor and welfare states
• Firms
• Development
• Global economy
• Environment

Follows textbook

Bandelj and Sowers (2010)

Grading

Classroom
Paper
Exam

questions?

Introductions

Picture courtesy of Álvaro Canivell

Instructor

• Education
• Research
  • Social movements, labor
  • Social networks, quantitative methods
  • Historical case studies
• Teaching
• Contact blind@hse.ru
• Office 523, 20 Myasnitskaya ul. (appointments only)

• "Ben" or "Benjamin"
  • Informal and familiar
  • Accurate and preferred
• "Prof. Lind" or "Dr. Lind"
  • Formal and professionally familiar
  • Accurate and appropriate in U.S. culture
  • Inaccurate in Russian culture
• "Mr. Lind"
  • Formal and unfamiliar

*

Course

• Paradox
• Goal
  • Provide a thorough understanding on the relationships between the economy and the state 
• Instruction style
  • American, conversational and informal
  • Emphasis on interaction
  • De-emphasis of physical documents
• Seminar every week, split into two groups
• Language and a vow

Students

• Tell me
  • Your answers to "the three stupid questions"
  • Your name
  • Interests in both general and economic sociology
  • Last item bought
  • Career ambitions after graduation
• Record keeping
  • Complete form on following slide
    • Due by Friday, September 4
  • Required for participation grade

Syllabus Overview

Picture courtesy of Dave Wilson Cumbria

Readings

Electronic copies of the readings will be made available for you.

Seminar

• Two articles or sets of articles
• Each article or set of articles has two parts, led by different students
  • Review (10 - 15 minutes)
  • Discussion (25 minutes)
    • Relate (~5 minutes)
    • Evaluate (~5 minutes)
    • Discuss (10 - 15 minutes)

Theory and General Concepts

Picture courtesy of brunurb

Orientation

• There has always been a relationship between states and economies.
• Bad question
  • E.g., "Should the government be involved in economic affairs?"
• Good questions:
  • E.g., "What factors account for variations in social spending?"
  • Or, "Which supranational development practices increase or decrease socioeconomic inequality?"
• There is no singular relationship between states and economies.

What is the economy?

The complex of activities involving the production, distribution, exchange, and consumption of goods and services, including paid activities in the formal sector and unpaid, informal, and illegal economic activities.

-Bandelj and Sowers (2010:205)

Image courtesy of Lending Memo via Simon Cunningham

What is the Economy?

• It includes
  • Labor
  • Paid and unpaid
  • Consumption & Expenditures
  • Investment & Sales
  • Services
• Informal Economy
• Illegal Economy

What is the Informal Economy

-"Charge?"
-"Whatever your want, a million dollars or one."

Photo courtesy of Daniel Latorre

Title Text

me and my summer job as a kid....

 

yep scanned right out of the family album thats me getting ready to mow some lawns when i was a kid...

Photo courtesy of jefzila

Car Wash Fundraiser May 16th

RB Football and Tour de Force dance team fundraiser

Photo courtesy of RB Broncos

John Degnan Day Laborer Hiring Center.  Laborers on Marvin  Ave. (Brewster, New York) 

Photo courtesy of MrPrada

Informal Economy

• The existence of the informal economy exists only due to state regulation (Portes and Haller 2005).
  • Without state regulations would this work be any different than the formal economy?

Informal Economy, US $ (2000)

Source

Informal Economy, %GDP (1999/2000)

Source

What is the illegal economy?

Formal Economy

-or-

Illegal Economy?

Photo courtesy of icantcu

Photo courtesy of Giacomo Rosso

Rain Shadow Meats, in the Melrose Market, on Capitol Hill in Seattle.

Photo courtesy of sea turtle

Slave Pen-Interior. Alexandria, Virginia

Photo courtesy of Loavesofbread

The Red Light District, Amsterdam

Photo courtesy of Bhupal Adhikari
 

Photo courtesy of Oldmaison

Photo and text courtesy of Coast Guard News

Harborside Health Clinic

Photo courtesy of Spot Us

Photo courtesy of Robert Neff

Cannabis Users, 2009 (%)

From the UN Drug Report (source)

Min = 0.1%, Median = 3.7%, Max = 21.5%

Trafficking of men, women, and children

Image courtesy of KVDP

Source: UN Office of Drugs and Crime

Number of people trafficked: 27 million (US State Dept 2011)

Measures of Economic Well-Being

• Common ways
  • GDP
  • GDP Growth
  • Unemployment
  • Inflation
  • Consumer spending
  • Exchange rates
  • Balance of trade
• Strengths and weaknesses to each
  • Differ in suitability
  • Different conclusions
• Social & political constructs with varying motivations
• Proceed with not caution, but awareness
  

GDP (IMF 2011)

GDP Per Capita (IMF 2011)

GDP Growth, 2007-2008 (IMF 2009)

Current Accounts Balance
(CIA World Factbook 2011)

What is the state?

What is the state?

• A form of "rational-legal" authority, says Weber
  • In contrast to traditional and charismatic authority
  • Uses impersonal rules to curb the power of elites
  • Obedience to principles, not individuals
  • Coincides with bureaucratic organizations & economic forms
• States have power through infrastructure (Mann 1984)
  • Rely upon cooperation with civil society
• Supranational organizations
  • Examples?
  • Important, yet less authoritative than sovereign states 
• "State" versus "government"

Conceptualizing Economy-State Relations

State-Economy Dualism

Economy

State

State-Economy Dualism

Economy

State

State-Economy Embeddedness

Economy

State

Civil Society

⇖⇘

⇗⇙

⇔

State-Economy Dualism: Interventionist States

• Definition

  A state which actively intervenes in the economy by imposing rules or regulations on it is seen as interventionist state engaged in market manipulation.
  

  -Bandelj and Sowers (2010)

• Types
  • Public Goods State
  • Stabilization State
  • Social Rights State 
  • Protectionist State
  • Socialist State 

Public Goods State

• Solution to the collective action/free rider problem
• Examples?

A type of interventionist state whereby the intervention of states in the economy is justified to provide public goods, commodities, and services that markets cannot produce by themselves, such as defense of basic infrastructure. - Bandelj and Sowers (2010)

Stabilization State

An interventionist state that controls economic growth and manages economic downturns to prevent serious crises. - Bandelj and Sowers (2010)

Social Rights State

Protects its citizens from market forces and assures provisions for illness, injury, and old age. - Bandelj and Sowers (2010)

• Citizenship entails social rights and well-being, in addition to civil and political rights 
• Examples?

Circles scaled by doctor visits per capita

Figure by Andrew Gelman

Protectionist State

A type of interventionist state where intervention in the economy occurs through protectionism, as seen in mercantilist states in the sixteenth to eighteenth centuries. - Bandel and Sowers (2010)

• Uses
  • Tariffs on international trade to encourage domestic economic production
  • Lessens international competition on domestic market
• Examples?

Socialist State

A type of interventionist state which can be seen as an extreme example of social rights and protectionist states. - Bandel and Sowers (2010)

Economy-State Embeddedness

Economy-State Embeddedness

• Economies are constantly being shaped by state actions
  • All developing economies have tremendous state involvement 
  • Economy-State Dualism ultimately boil down to normative debates
• It isn't "useful" to treat these institutions as discrete, independent entities
• The relationship isn't one of "restraint." States enable markets. 
• Big question:

Economy-State Embeddedness

FICTITIOUS COMMODITIES (Polanyi 1957)

• Three types
  • Money
  • Land
  • Labor
• Meanings of "Fictitious"
  • Treating these goods as produced for market sale
  • Belief that these goods can be created to meet demand
    • The state must integrate them into the market, curtailing their usage, to prevent destruction
• No assurance the regulation will be responsible

Economy-State Embeddedness

Block & Evans (2005) Propositions

1. States and economies are mutually constitutive
2. States and economies exist among and interact with established institutions that affect both spheres.
   1. I.e., "Embeddedness"
3. State and economy embeddedness changes over time with institutional innovation

State-Economy Embeddedness

Economy

State

Civil Society

⇖⇘

⇗⇙

⇔

Economy-State Embeddedness

Civil Society

• Voluntary relationships & associations
• Civil society includes
  • Trade associations
  • Fraternal organizations
  • NGOs 
  • Labor unions
  • Social movement organizations
  • Religious congregations 
  • ...
  • The Public Sphere
• Characterized by reciprocity
• Government restrictions on civil society

State Influence

• Working
• Consuming
• Paying taxes
• Receiving social benefits
• Using public goods
• Real estate and financial investments

State Influence

• Producing
• Selling
• Employment
• Taxes
• Using public goods
• Investing
• Subsidiaries (domestic and international)

State Influence

• Capitalism and variants
• Socialism and variants
• Transition economies

Property

Picture courtesy of André van Rooyen

Capitalism

Socialist States

Capitalism

The Classic Theorists

Adam Smith

• Wealth of Nations (1776)
  • Didn't use word "capitalism" 
• Markets are fair
• Disliked
  • Monopolies, Tariffs, & Duties
  • Which interventionalist state does he object to?
•  State has role in
  • Infrastructure, defense, justice, protecting property rights, education, & religion (?)
  • Which interventionalist state does he favor?
• Supported progressive taxation

Adam Smith

The Invisible Hand

• Economy is one that naturally promotes self-regulation between buyers & sellers
• Governmental regulation prevents market regulation

Image courtesy of Nwoebcke

Wealth of Nations

David Ricardo

• Principles of Political Economy & Taxation (1817)
• Comparative Advantage
  • Focus on trade 
  • Relative efficiencies 
  • Specialization
• Portugal & England
  • Portugal can make wine & cloth with less labor costs than England
  • Cloth is easier to make than wine in England
  • Solution? Portugal only makes wine, England only makes cloth.
•  Implications for state on mercantilism?

Principles of Political Economy and Taxation

Karl Marx and Friedrich Engels

KARL MARX AND FRIEDRICH ENGELS

• Capitalism is defined by the means of production
  • Dialectical conflict: Owners vs. Workers
  • Also, Bankers vs. Investors; Landlords vs. Renters
• The relationship of production is built upon exploitation
  • Workers own labor power until they sell it on the market 
  • Owners of capital are those who buy labor use it for investment returns
• On the state
  • A strong state was not the ultimate goal of Marx & Engels. A communist society would be stateless.
  • The state has been a bourgeois administrative tool
  • Feudalism ⇨ Capitalism ⇨ Socialism ⇨ Communism
    • Socialism does require state involvement

Manifesto of the Communist Party

Max Weber

• State Capitalism Implications
  • Impartiality
  • Predictability
  • Ease of development & expansion of capitalism

Bureaucracy

From Max Weber

CENTRAL INSTITUTIONS OF CAPITALISM

• Competition

• Market exchange

• Private property

• Antitrust

CENTRAL INSTITUTIONS OF CAPITALISM

COMPETITION

CENTRAL INSTITUTIONS OF CAPITALISM

MARKET EXCHANGE

CENTRAL INSTITUTIONS OF CAPITALISM

PRIVATE PROPERTY

CENTRAL INSTITUTIONS OF CAPITALISM

Antitrust

Private Property (Bandelj & Sowers 2010)

Components of Private Ownership

• Control over property
  • Use and application
  • Modifications 
• Set terms of access
  • Permit some to use property
  • Prevent others from using property
• Right to transfer ownership
  • Sell
  • Give
  • Rent

Private Property (Carruthers & Ariovich 2004)

Dimensions of Property

1. Object: What can be owned?
2. Subject: Who can own?
3. Use: How can the property be used lawfully?
4. Enforcement: What are the repercussions of unlawfulness?
5. Transfer: How can ownership be changed from one party to another?

Vincent Vega on Comparative Property Rights

Private Property (Carruthers & Ariovich 2004)

Subject

Object

Ownership

Private Property (Carruthers & Ariovich 2004)

Subject

Object

Ownership

Who can own?

• Natural Persons
  • Age
  • Gender
  • Nationality
  • ...
• Fictive Persons
  • Examples?
  • Dimensions
  • Profit vs. Nonprofit
  • Public vs. Private

Private Property (Carruthers & Ariovich 2004)

Private Property (Carruthers & Ariovich 2004)

Subject

Object

Ownership

What can be owned?

• In no society can everything be owned
• Definitions vary over time and over polities
• Intangible property
  • Ideas or intellectual property 
  • Financial properties
  • Bonds
  • Shares
  • Trademarks
  • Patents
  • Insurance policies

Private Property (Carruthers & Ariovich 2004)

Private Property (Carruthers & Ariovich 2004)

Subject

Object

Ownership

What can be done with the object?

• Zoning
• Contracts 
• Qualifications to use
  • Taxes
  • Licenses
• Examples of limits?

Private Property (Carruthers & Ariovich 2004)

Private Property (Carruthers & Ariovich 2004)

Subject

Object

Ownership

Subject

Object

Ownership

How are property rights enforced?

• Formal methods by the state
  • Police
  • Lawsuits
• Private security
• Cultural norms
  • Shift from de facto to de jure

Private Property (Carruthers & Ariovich 2004)

Private Property (Carruthers & Ariovich 2004)

Object

Ownership

Non-Ownership

Private Property (Carruthers & Ariovich 2004)

Object

Ownership

Non-Ownership

How can property rights be transferred?

• Sales
• Gifting
• Inheritance
• Examples of limits on transfer?
• Note: Squatters

Private Property (Carruthers & Ariovich 2004)

Socialism

• Collective ownership of the production process
  • Workers have a stake in ownership
• Redistribution instead of market exchange
• Economic equality
  • Fewer differences between the rich and poor
• Central Institutions to achieve those characteristics
  • Collective property 
    • Emphasizes humanity and equality 
  • Centralized planning 
    • Remove market inefficiencies 
    • Administered through states and parties 
    • Five-year plans 
  • Full employment
    • Equality in labor market
    • Increase in production results in prosperity

Transitional Economies

History

• Soviet economies improving until 1970s
  • Foreign debt
  • "Inflexibility"
  • Oil crisis
• 1980s
  • Domestic political reforms
  • Social movements with international support
  • Fall of Berlin Wall

Transitional Economies

• Transformation philosophies
  • "Shock therapy" and "Big Bang"
  • Institution building alongside existing infrastructure
• State agency of their own transition
  • State contracts with private firms
  • Foreign direct investment
• Successes and failures
  • Generally successful, except in Russia
  • Loss of social provisions

Socialism and Income Inequality

• Gini Coefficient
  • 0 = Complete Equality, 1 = Complete Inequality
  • Expressed here as a %, ranges from 0 to 100%.
• Sources
  • World Bank Online Datasets
  • IMF Transitional Economies
• Late-1980s (1986-1988) & Late-1990s (1996-1998)
• Methods
  • T-test: Late-1980s, Late-1990s, Difference
  • Bootstrapped simulations (100,000) conf. intervals

SOCIALISM AND INCOME INEQUALITY

Countries

Albania, Algeria, Argentina, Armenia, Bangladesh, Belarus, Bolivia, Botswana, Brazil, Bulgaria, Burkina Faso, Burundi, Cameroon, Chile, Colombia, Costa Rica, Cote d'Ivoire, Croatia, Czech Rep., Denmark, Djibouti, Dominican Rep., Ecuador, Egypt, El Salvador, Estonia, Gambia, Georgia, Ghana, Guatemala, Guyana, Honduras, Hong Kong, Hungary, Iran, Jamaica, Jordan, Kazakhstan, Kenya, Korea (Rep.), Kyrgyzstan, Laos, Latvia, Lesotho, Lithuania, Macedonia (FYR), Malawi, Malaysia, Mauritania, Mexico, Moldova, Mongolia, Mozambique, Nepal, New Zealand, Nicaragua, Nigeria, Pakistan, Panama, Papua New Guinea, Paraguay, Peru, Philippines, Poland, Portugal, Romania, Russia, Singapore, Slovak Republic, Slovenia, Sri Lanka, Thailand, Trinidad and Tobago, Turkey, Turkmenistan, Uganda, Ukraine, Uruguay, Uzbekistan, Venezuela, Vietnam, Yemen (Rep), Zambia 

SOCIALISM AND INCOME INEQUALITY

Hypotheses

• Late-1980s
  • Socialist Avg Gini < Other Avg Gini
• Late-1990s
  • ​Transitional Avg Gini < Other Avg Gini
• Difference between late-1980s & late-1990s
  • Transitional Avg Gini Increased > Others

SOCIALISM AND INCOME INEQUALITY

Results

• Late-1980s
  • t-value: -9.554***
  • Mean Gini's: 24.61 vs 45.40. Diff = 20.80
  • 14.60 < True Difference < 25.94 (99.9% CI)
• Late-1990s
  • t-value: -6.19***
  • Mean Gini's: 33.70 vs 44.41. Diff = 10.71
  • 6.19 < True Difference < 15.02 (99% CI)
• Difference between Late-1980s and Late-1990s
  • t-value: 3.62***
  • Differenced Mean Gini 9.03 vs 1.24. Diff = 7.79
  • 1.86 < True Difference < 13.07 (99% CI)

Money

Image courtesy of Tropenmuseum

An EXERCISE in GENEROSITY...

Money's Relevance to the State

Nations, States, and Nation-States

Money often expresses national imagery

History of Fiat Money

• Previous modes of exchange
  • Barter and payments in kind. Examples? Problems?
  • Common exchange mediums: spices, coco, shells, etc 
  • Precious metals in coins. Problems?
• Fiat money
  • Not intrinsically worth anything
  • Value corresponds to a social agreement 
• Gold standard
  • Currency used to reflect a state's gold reserves
  • Bretton Woods System replaced by floating exchange

Monetary Policy

Expansionist, "loose"

• Increases money supply
• Good when unemployment high, recessions
• Lowers interest rates
  • Encourages spending 
    

Contractionist, "tight"

• Decreases money supply
• Good when unemployment low, economy good
• Raises interest rates
  • Encourages saving

Monetary Policies

Monetary Policy

• Monetary policy has direct implications for all loans
• Which actors engage in monetary policy?
• The decision to raise or lower the federal fund rate requires "sense-making" and market interpretation
• Bad monetary policy can result in...
  • Hyperinflation, stagflation, high unemployment, inability to import or export, recession, etc

Picture courtesy of Kuba

Fiscal Policy

• Popularized by John Maynard Keynes
  • Advocated for active fiscal policy
  • Rationale: it stimulates the economy
• Main components
  • Taxing
  • Spending

Taxing

• Social contract
  • Public goods have a cost
• Cross-national variation by
  • Rates
  • Types
    • Corporate
    • Individual
    • Goods and Services/Value Added Tax (VAT)
• Who pays how much of the pie?
  • Flat, progressive, and regressive taxes
• Politicians typically campaign on changes to taxation
• What are some of the social consequences of tax policy?

Tax Revenue, as % GDP 
Heritage Foundation

Spending

• Variations on...
  • How much a government spends?
  • What does a government spend money on?
• Funding
  • Taxes
  • Spending state reserves
  • Selling assets
    • Examples? 
  • Issue bonds (loans)
• Deficit vs. Surplus

Government Spending, as % GDP 
Heritage Foundation

Spending

• Min: 8%
• Median: 31.1%
• Mean: 33.45%
• Max: 114.6%
• Standard Deviation: 14.68
  

Taxes

• Min: 0.9%
• Median: 20.2%
• Mean: 22.13%
• Max: 63.1%
• Standard Deviation: 11.50

Debtor-Creditor Relations

Contracts 

• Legally binding contracts implicate state involvement
• What happens if you don't pay your credit card bills?

DEBTOR-CREDITOR RELATIONS

Financialization

DEBTOR-CREDITOR RELATIONS

Financialization

• Making profit from lending and borrowing practices
• In US, finance sector has overtaken manufacturing
• Causes
  • Deregulation
  • High interest rates
  • Foreign capital investment
• Maybe biggest cause behind Recession of 2007

Financialization

• Finance: Domestic credit provided by financial sector (% of GDP)
  • "Domestic credit provided by the financial sector includes all credit to various sectors on a gross basis, with the exception of credit to the central government, which is net. The financial sector includes monetary authorities and deposit money banks, as well as other financial corporations where data are available (including corporations that do not accept transferable deposits but do incur such liabilities as time and savings deposits). Examples of other financial corporations are finance and leasing companies, money lenders, insurance corporations, pension funds, and foreign exchange companies."
• Manufacturing: Manufacturing, value added (% of GDP)
  • "Manufacturing refers to industries belonging to ISIC divisions 15-37. Value added is the net output of a sector after adding up all outputs and subtracting intermediate inputs. It is calculated without making deductions for depreciation of fabricated assets or depletion and degradation of natural resources. The origin of value added is determined by the International Standard Industrial Classification (ISIC), revision 3. Note: For VAB countries, gross value added at factor cost is used as the denominator."
• Cross-case comparison
  • U.S., Russia, France, China

Welfare States and Public Goods

% American English books containing "welfare state"

Search Correlates

"policy" (#1, r=0.9023), "support of" (#7, r=0.8700), "critical" (#9, r=0.8681)...
"psychological" (#13, r=0.8639), "mentally" (#31, r=0.8565), "culture" (#38, r=0.8528)

Welfare States

• Bad, boring question
  • "Should the state provide welfare to its citizens?"
• Good questions
  • "How much do states provide in welfare?"
  • “What accounts for the variations in spending?”
    

Labor

Firms

Conceptualizing the Firm

• (Institutional) Economics
  • Firms lower market transaction costs
    • Transaction costs defined as...

• Sociologists
  • Firms are social groupings defined by
    • Goals
    • Rules, regulations, restrictions on conduct
    • Legal entity
      

Firm Size

• States can change affect the size of firms
  • "Too big to fail"
• Perrow (2002) on firm size
  • Strong states -> small firms
  • Weak states -> big firms
  • System of checks and balances

Firm Organization and Isomorphism

Dimaggio and Powell (1983)

• Why are firms so similar
  • Decrease in heterogeneity
  • Increase in homogeneity
• Mechanisms
  • Normative isomorphism
  • Mimetic isomorphism
  • Coercive isomorphism
• Example: sex discrimination and maternity leave

States impose regulations on competition & firm relationships

• Roman Empire and grain supplies
  
• European Community competition laws & US antitrust
  • Antitrust

• Sherman Antitrust Act (1890)
  • Protects consumers against rising costs.  Prevents monopolies & "conspiracies" that affect market prices.
  • Gave rise to the corporate organizational form

States impose regulations on competition & firm relationships

Variations

• Would be considered cartels in the US
  • Chaebol (Korea)
  • Grupos economicos (Latin America)
  • Keiretsu (Japan)
• State-owned businesses
  • Russia
  • China

Interlocks

• Many industries and states have laws against interlocks (especially within industry), but enforcement varies
• Elite theory and political implications

Corporations

• Specific organizational form
• Have the same rights & responsibilities as natural persons (you & me)
• Arose due to historic legislation (Roy 1997)
  • Corporations could own other corporations through stock
  • Autonomy of directors with respect to shareholders
  • Limited liability
• Hire lobbyists to influence policy

Corporations and Lobbying

source: www.opensecrets.org/lobby/

Business Regulations and Consumer Protection

Business Regulations & Consumer Protection

• State intervene on businesses with regard to
  • Liability (e.g., negligence, damages, payment of debts)
  • Privacy (breaches in disclosing personal information)
  • Unfair business practices
    • Fraud (deception such that one gains at another's expense)
    • Misrepresentation (false statements)
    • Unconscionability (consumer cannot know all facts)
• Consumer rights
  • States create special departments to ensure consumer safety
  • Some examples...

Picture courtesy of M.Minderhoud

Picture courtesy of Mdd6496

Picture courtesy of Marshall Astor

Picture courtesy of Thester11

Image courtesy of jhayman

Research and Technology

• Governments have an interest in developing research and technology
  • Innovations are considered to be crucial in job creation
  • Strengthening human capital is part of national development
• Ways states stimulate research and development
  • Increase funding and scope of higher education
    • Build schools
    • Hire more faculty
    • Enroll students
  • Scientific research in the defense industry
  • Grants
  • Patents and enforcement of (some) intellectual property rights

Research and Technology

Downsides

• Overspecialization and the problem of prediction
• Involvement in of the state in academic research
• Ambiguous connection between technology and production

Transactions and Territory

Globalization

Trade routes ~870 CE used by Radhanite Jewish merchants

Image courtesy of Briangotts

Trade Protectionism

Mercantilism

A political economic system that promotes exports while protecting domestic industry through tariffs and other barriers to import. -- Bandelj and Sowers (2010)

• State advocates a positive trade balance
• Typically associated with the 16th through 18th centuries

Who have been advocates for trade protectionism?

David Ricardo?

Adam Smith?

Alexander Hamilton?

U.S.  Secretary of the Treasury, 1789 - 1795

Regional and Global Governance Institutions

Image courtesy of Mirandole

Image courtesy of Nicoguaro

Image courtesy of Hayden120 and NuclearVacuum

Image courtesy of Gunawan Kartapranata

ASEAN

Regional and Global Governance Institutions

• Regional: NAFTA, EU, Mercosur, ASEAN, Eurasian Customs Union
• Global: GATT -> WTO.  Limited protectionism
  • Non-discrimination
  • Reciprocity
  • Market access
  • Fair competition

Alternative trading organizations (ATO)

• Nongovernmental organizations
• Seek to bring goods from developing countries to global markets
• Promote sustainability & reduce poverty
• Part marketing, part message/awareness
• Part of Fair Trade movement

Image courtesy of Brian Dewey

Image courtesy of Colleen Greene

Foreign Direct Investment (FDI)

• A firm in one country establishes or acquires a company in another country -- Multinational Corporations (MNC)
• Consequences
  • Uneven development (dependency theory)
  • Countries may relax labor standards to attract
  • Raises stock prices
    • Leads to economic growth and more employment
    • Empirically questionable
• "Race to the bottom"
  • In order to compete for FDI, states may lower regulations 
    • Empirically questionable; mixed findings
    • Probably lowers taxes
• State investments attract FDI

The State and FDI (Bandelj [2002])

• What determines Foreign Direct Investment?
• Dramatic growth in FDI in 1990s Central and Eastern Europe
  • Why did some countries receive more FDI than others?

Neoliberalism

Neoliberalism

• Economic & political philosophy that likes ♥LOVES♥ free markets
• Origins in 1970s & 1980s
  • Likely due to  oil shocks resulting from OPEC's decisions 
  • Began in US and UK.  Keynesian policies cut. Then diffused.
• Washington Consensus
  • US approaches multilateral agreements like an investor. Mentions its desirable reforms (i.e., neoliberalism). If refused, US delegates cease negotiations
  • Typical recommendations
    • Cut social services, fewer regulations
    • More imports, less Import-Substitution Industrialization
    • Mixed success (sometimes failure)

Neoliberalism

• Resistance
  • Labor unions
  • Leftist political regimes
  • Recall welfare state & decommodification discussions
• Commitment
  • Neoliberalism can never be fully implemented
  • Politicians have an incentive to adopt the policy
    • Diffuses responsibility of a poor economy
    • Reduces political liability
  • Limited evidence in favor of neoliberalism, maybe unwise

Salience of Nation-States in the Global Era

Image courtesy of Bobby P.

• Employs ~2.2 million people 
• Revenue: $485.651 billion

• Population: ~5.9 million people
• GDP: $230.685 billion

• Employs ~572,800 people 
• Revenue: $244 billion

• Population: ~329,100 people
• GDP: $14.488 billion

• Employs ~1.3 million people 
• Revenue: $131.8 billion

• Population: ~4.6 million people
• GDP: $250.286 billion

• Employs ~489,000 people 
• Revenue: $305 billion

• Population: ~4.6 million people
• GDP: $165.987 billion

Image courtesy of Shmuel Spiegelman

Image courtesy of kakidai

Image courtesy of timsdad

Image courtesy of Gérard Ducher

SALIENCE OF NATION-STATES IN THE GLOBAL ERA

• Challenges to dominance
  • Role of the State vis-à-vis multinational corporations
  • Role of nation-states vis-à-vis cities (Sassen's "global cities")
  • Neoliberalism
  • Markets can & do make demands on states (Fligstein 1996)
• BUT, let's be reasonable
  • States have been quite strong since World War II
  • States do regulate the economy
  • States have the final say on policies
  • The same powerful countries before the rise in globalization remain powerful

The State and Environment

Image courtesy of Жучкова Екатерина

Image courtesy of Erik Christensen

International Whaling Commission

Image courtesy of Lokal_Profil

International Whaling Commission

Number of member states over time

Source: IWC

Image courtesy of Pelle

Valley of the Drums

Environment and Fictitious Commodities

Macrostructural Theories on the State and the Environment

• Treadmill of Production
  • Since 1950s, production has increased
  • Production ⇧, Demand for Resource Extraction ⇧
  • Production ⇧, Byproduct waste ⇧
  • Technology ⇧, (Production ⇧ & Labor Power ⇩)
• Ecological Modernization
  • Normative and cultural pressures
  • Technology is improving such that environmental degradation is no longer cheaper
    • Clean practices can be efficient
  • Environmentally friendly practices are good business

Percent Change in CO2 Emissions, 2008-2009

Source: Energy Information Admin

Paradox of Ecological Exploitation

• Relationship between firms growth and political capacity
• Firms vs. local communities
  • "Not In My Backyard" (NIMBY)
  • Class inequalities
    • Suburban situations
      • React before a firm locates
      • Can be effective
      • Do not work at hazardous worksite
    • Urban situations
      • React after a firm locates
      • More hazard-prone
      • Often work at hazardous worksite
      • Technical and political obstacles
      • Limited help from national organizations

Environment & the State

THREE PERSPECTIVES

Economic Model

• Profit
• Decisions lie upon the firms and property owners
  • The role of private property
  • Concepts to consider
    • What are the dimensions of property rights?
    • How does the state legislate the environment vis-a-vis property rights?

Economic model: A Caricature

"Industrial Hellscape" by Vermin Inc

Managed Scarcity

• Economic production and environmental degradation have an inherent relationship
  • Does the state value economic profit or social goals?
• States restrict the economy accordingly
  • Jobs that can and cannot be performed
  • Chemicals and materials that can and cannot be used
  • The conditions and locations of economic activities
• State agencies act as regulators
  • Contestation
    • Scientific
    • Legal
• Example: Cap-and-trade

Managed Scarcity At Work

Ecological

• Protect ecosystem and biodiversity
• Normative
• Deep ecology
  • Humankind is only one species of millions
  • Domination of an ecosystem is an illegitimate enterprise
• Includes
  • Sustainability perspectives
  • Newly branded "ecoterrorists"
    

Ecological Models: A Caricature

Case Study: Recycling

• European model
  • Encourage returnable, reusable containers
  • Make manufacturers responsible for solid waste
• U.S. model
  • Profit-driven
  • Indirect state subsidies
  • Recycling has become an industry
• Russian model
  • ?

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