globalization. what is globalization? n a single economy n free movement of capital. n...
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GLOBALIZATIONGLOBALIZATION
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What is globalization?
A single economy Free movement of capital. Internationalization of non-
business activities. Awareness of “the other”.
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What’s money?
A means of exchange. A unit of account. A store of value.
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Trobriand Islanders
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Economics
Oikonomia (Greek):– oikos (household)– nomos (law)– Thus it means: “Meeting the needs of the
household.” – Or, “Administering the wealth of the
household.”
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History
Not new.– Mercantilism
Causes of World War II Bretton Woods (1944) End of Cold War Trading blocks
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Causes for global economic integration Capital has more power than
governments.
–US dollars in the 1960s (Vietnam War)
–End of gold standard
–Fixed exchange to floating exchange (Demand)
–OPEC dollars
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Fordism to post-Fordism
–Cheap LDC labor
–Cause of neo-colonialism
–Core versus periphery.
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Government debt via borrowing rather than taxing
–Capital flow
–Control inflation with monetary policy
–Decline in employment
–Debt management/ austerity programs
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End of the Cold War
–Multi-polar world
–Uni-polar world
–Trading blocs: NAFTA (FTAA) EU
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Positives
Enhance development of global economy
Ends poverty. Creates wealth. Spreads cultural values that
foster democracy and toleration.
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Negatives
Furthers the concentration of wealth into the core and further from the periphery.
Undermines democracy Creates forces for revolution and
suffering the world over.
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Solutions:
Localized economies (?)–LETS –http://www.gmlets.u-net.com/
Enhance gov’t powers via cooperation:–Tobin Tax
http://www.tobintax.org.uk/
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Global Financial Institutions
Topic B Cooperation
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Bretton Woods Agreement
Bretton Woods, New Hampshire. Forty-four allied nations. Recognized that economic problems
contributed to WWII. Sought to avoid the reoccurrence. Today, these bodies are, in no small
way, responsible for GLOBALIZATION.
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BRETTON BRETTON WOODSWOODS
(1944)(1944)
International Monetary Fund
World Bank
General Agreement of Trade &Tariffs (GATT)
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International Monetary Fund Purpose:
– provide stability of world’s currenciescurrencies
– exchange rates (were fixed) How:
– US $US $ is bases for conversion into gold. No longer the case (1971).
– Allowed for easy currency exchange and helped trade.
– USSR not a member.
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Where located:located:– Washington, D.C.Washington, D.C.
Problems:– Power over Third World debtor nations.– SAPsSAPs– Protects western lending institutions
while punishing nations that fail to pay back loans, most of which are made up of high interest.
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World Bank Purpose:
–Reconstruction and developmentReconstruction and development.–Lends money to developing projects,
or–Guarantees loans to countries.
How:–Member nations provide funds or seed
money.
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Problems:–Like the IMF dominated by USdominated by US.–Loans made for bad ideas, to human
rights abusers, and to projects that damage the environment.
–Project fails: nations still must pay back loan.
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General Agreement on Trade and Tariffs (GATT)
Purpose:
–Regulate tradeRegulate trade.
–Encourage free trade towards development.
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How:
–Encouraging the lowering of lowering of tariffstariffs to increase access to increase access to marketsmarkets.
–Monitors trading practices and disciplines violators,i.e. dumping.
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Problems:– Forces accessForces access to markets; therefore,
the already powerful will dominate the new global order.
– Encourages specializationEncourages specialization: global monopolies.
– WWorld TTrade OOrganization (replaced it) is the enforcer.
– Anti-environmental regulations, anti-union, anti-social programs.
– Loss of jobs associated with policies.