Chapter 2

Economic Class, Development, Systemsand Globalization 

 

Comparative Politics: Structures and Choices 2eComparative Politics: Structures and Choices 2e

By Lowell BarringtonBy Lowell Barrington

Learning Objectives

Define key terms such as class, economic development, and globalization.

Describe the social and cultural changes that accompany economic development.

Discuss globalization, its role in economic development, and whether it helps or hurts the poor around the world.

Learning Objectives (cont’d)

Describe the class structures, level of economic development, role of the government in the economy, and degree of globalization in the Topic in Countries cases.

Explain the arguments that globalization (1) strengthens states, (2) weakens states, or (3) has mixed effects.

Class – many definitions□ an individual’s wealth and/or income□ occupation, status, property ownership,

and the resulting relationships people have□ a large group of individuals with

comparable social and economic attributes and, as a result, broadly similar lifestyles and future life chances

■Mode and Means of Production

Class and Class Structure

Class□ Working class□ Middle class (old and new)□ Upperclass□ Underclass

■Measuring Class and Poverty■Class Structure

Class and Class Structure

If class structure is related to inequality, how can some countries, including the United States, have such a large middle class and yet such high levels of wealth concentration?

Class Consciousness and Its Decline Individuals become aware of their location in a

particular class, Develop a sense of solidarity, and Deem important the relationship between their

class and other classes.

Class and Class Structure

In the United States, to what extent is a person’s class determined at birth by the class of the family? To what extent is class the result of effort? How representative is the United States on this point compared with other countries around the world?

Economic Development

Economic Growth and Prosperity GDP, GDP per capita, and GDP per capita-PPP Human Development Index (HDI)

Types of Countries Based on Economic Development Economically developed countries (EDCs) Lesser developed countries (LDCs) Least developed of the lesser developed countries

(LLDCs) Newly industrialized countries (NICs)

CITS and Emerging Markets Countries in transition (CITs)

The post-Communist states Some see them as justifying their own

development category

Emerging markets The LDCs and CITs most desirable to foreign

investors Include the “Topic in Country” cases of Brazil,

Russia, India, China and South Africa (BRICS)

Economic Development

The “Resource Curse” The tendency for developing countries to focus on

extracting only certain valuable resources while ignoring broader economic development

Seen in many oil producing countries, including Nigeria

The Economic System: Government Involvement in the Economy Free Market Capitalism

Capitalism - based on private ownership of property with business and economic activity taking place within the market

Free-market capitalism - minimal government regulation of the economy and little social welfare spending

Socialism Opposite of ideal free-market capitalism

The Economic System: Government Involvement in the Economy Mixed Systems

Labor-led capitalism Welfare state

State-led capitalism Private ownership and individual decision making Mercantilism

Economic Globalization Foreign direct investment (FDI)

■ The United Kingdom□ Visible class differences, more identify as

working class than in the United States□ Highly developed economically, most

prosperous TIC case□ Largely capitalist with significant social welfare

protections□ Less economically globalized (esp. less global

trade) than one would think

■ Germany□ Large middle class, different class structures

between its east and west □ Comparatively late and rapid industrialization;

impressive post-WWII growth□ Social market economy (SME) – capitalist with

a conservative corporatist welfare state□ Like UK, trade is limited and concentrated with

other European Union states

■ India□ Large lower class underclass; significant

inequality; middle class small compared to those of EDCs but continuing to grow

□ Variable growth since independent, but recent growth rates are impressive

□ Privatization is controversial, special economic zones spawn debate

□ Low levels of economic globalization, but command of English among many in the population makes increased globalization likely but there are political constraints

■ Mexico□ Visible middle class; sharp divisions between

wealthiest and poorest□ Emerging market; success tied to oil prices; north

more prosperous than south□ Economy has a moderate level of government

involvement. Drug violence in country limits growth.

□ Levels of globalization have improved since NAFTA

■ The “Race to the Bottom”□ Weak state theories contend that globalization limits

states’ abilities to tax, spend, and regulate□ Result is a “race to the bottom” to attract

multinational corporations■ Mixed results in the case of Mexico and its

adoption of NAFTA in 1994

■ Brazil□ Emerging middle class, but severe economic

inequality□ Rapid economic growth post-WWII, then

downturn; debt crisis in the 1980s□ Massive public debt ties Brazil to the IMF and its

policies, widespread corruption exists□ Significant trade barriers limit economic

globalization

■ Nigeria□ Vast majority of population lives in extreme

poverty, very small middle class□ Per capita, one of the poorest countries in the

world; vulnerable to oil price fluctuations□ Economy is free-market, but far from ideal□ Economically globalized because of oil-related

FDI, but political instability impacts its economy

■ Nigeria and Dependency Theory□ Dependency theory is a challenge to

modernization theory □ It contends that LDCs are kept poor by EDCs

through LDCs’ dependence on EDCs□ Predicts continuation of poverty, corruption,

and fragile democracy (at best) in LDCs■Appears to work well in explaining the case of Nigeria

■ Russia□ Small middle class; small but visible upper

class (“new Russians”) since 1990s□ Economic collapse in late Soviet and early post-

Soviet periods, dependent on high price of oil for GDP growth

□ Economy is fragile and dependant on oil profits□ Capitalism operates along with state power,

political shakedowns are common□ Limited globalization; inefficient industry hindered

by corruption and weak “rule of law”

■ China□ Noticeable economic inequality; urban areas

much wealthier than rural; small but growing middle class

□ Significant growth since 1970s; per capita statistics well behind those of EDCs

□ Retains state intervention in the economy□ Relatively high levels of economic globalization;

has yet to encourage “political globalization”

■ Modernization Theory□ Modernization theory contends that economic

development follows stages, LDCs can use EDCs as a model, and economic development has social and political consequences.

□ Theory is supported by development in the NICs in recent decades

■ Theory predicts future consequences, including democratization, for China

Modernization Theory

Emerges from two idea sources Weber’s idea of “traditional versus modern” Spencer’s idea of “Social evolution” in which societies evolve in stages of

increasing complexity Combined into a theory of the stages of growth

All societies alike in the traditional stage and would come through the same set of changes that had led the west to the modern stage.

Rostow articulates the theory of economic takeoff – in which self sustained growth involved 5 stages of development from traditional to modern: Traditional – agricultural, non technological Pre-conditions for take-off – external demand for raw materials initiates

economic change; commercial agriculture develops; technology emerges; social structures begin to change; individual social mobility begins to occur; national identity developed (idea of shared economic interest)

Take-off – leading manufacturing sectors increase rationalization and scale of operations for domestic and export markets; secondary producers expand (textiles are usually first).

Drive to maturity – industrial base diversification, transportation infrastructure expansion, social structure investment.

Modern – urban industrialized – age of mass consumption. The industrial base dominates the primary sector (ag), consumers able to afford high value goods (cars), consumers have additional income beyond what is necessary for needs.

■ Iran□ Middle class, particularly in urban areas; large and

class-conscious working class and underclass□ High birthrate not matched by economic

development; struggles due to Iran-Iraq War in 1980s

□ Government is reducing its role in regulation, but economic reform is slow, investment in the energy sector is needed

□ Scored lowest in globalization of the 72 countries ranked by A.T. Kearney