economy, globalization, development, and urbanization
TRANSCRIPT
Economy, Globalization, Development, and Urbanization
What is Economy?
Economy is a social relation
Economic practices involve:ProductionDistributionExchangeConsumption
Understanding Economic Production
Cycle
Raw Materials
Raw Materials
Labor
Production Process
Byproduct Product
WasteNew resource or
raw material
“The Economy”
• The concept of “the economy” (as an idea, something that could be spoken about as a separate entity or realm of activity) came into being no more than 300 years ago, alongside a market-based economy predicated on:• Profit-maximization• Rational decision-making
• The economy as a “self-evident totality” is• the outcome of a particular set of economic practices and
relations focused on profit-driven practices of wealth accumulation
• Marked a shift toward thinking of economic relations as separate from other social relations
Market-based economy
Organized and regulated according to the movement of prices (the price of goods, services, etc in a market)
Conceptualizing Economy
Principles of profit-maximization and rational decision-making are taken as essential to “the economy” by classical and neoclassical economistsSome even interpret tribal cultures/economies on
the basis of rational choiceWhat is rational choice?
Self-maximization: the idea that people generally make decisions based on their own self-interest and their ability to accumulate wealth through profit
Neoclassical Economics
Sees economic relations as independent of other social relations, and bound by its own (market) logicAs such, it has power over other social relations
Remember the Tragedy of the Commons?
• Assumes– “rational economic actors” (self-interest)– fixed carrying capacity of land– no communication or trust among users
Alternative views of Economy
Polanyi argued that other forces shape economic behavior
ReciprocationRedistribution
Even market economies depend on non-market social relations
Household laborSharing/givingTrading/bartering
Other Economic Forms and Practices
Hunting-Gathering economies (based on trade, subsistence, etc)
Feudal economies (based on peasants working land and paying tribute to landlords)
Centrally-planned production
Market-oriented post-Fordism
US Economy
• It is common to talk about the United States as a capitalist country
• Criticism of democrats by republicans as socialists (as opposed to capitalists)
• But even in the US, lots of things aren't determined strictly by market forces or logic• Roads, the mail, schools, social security,
medicare/aid, military, some prisons, etc
Economic Determinism
• Marxian view: class relations determine all other social relations
• Neoclassical view: market forces shape all other social relations
Large-scale Economic Forms
Feudalism
• Based on land ownership by a ruling class (lords)
• Workers (serfs) paid tribute to lords in exchange for use of land for subsistence
Merchant Capitalism (800-1600AD)
• Rise of the merchant class•Surplus earned was reinvested in trade routes
• what is surplus?• Eventually, merchants needed another outlet
for investment• Merchants began to invest in handicrafts for
trade, which eventually overcomes profits from trade itself
Industrial Capitalism (1600-1900AD)
• Capitalists continued to invest in the means of production
• Surplus was directed toward building and maintaining ever more concentrated means of production (industrial infrastructure)
• During this time, European economic powers were engaged in colonial practices
Capitalism
During the transition from merchant capitalism to industrial capitalism, a world economic system developed, in which a “core” of countries (in Europe) coordinated economic activity, while a “periphery” provided much of the labor and raw materials
Neoliberalism
Classical Liberalism emphasized free markets and civil liberties
Neoliberalism focuses on free markets and Supply-Side Economic Theory
•reduce government spending•reduce tax rates on income from labor and capital•deregulation•control the money supply to reduce inflation
• extreme reduction in services • release of many thousands of mentally ill patients (dramatic
increase in homelessness) (in the US)• favors wealthy• increased public debt
Globalization
It's a small world after all
• Improvements in transport and communication
• Increased connectivity between distant locations
End of Geography?
• globalization as inevitable
• homogenizing the world• “A state of economic
development where geographical location no longer matters” (O'Brien 1992, Global Financial Integration)
• Local conditions and difference matter less and less
Shrinking World?
• Relative distance between some places and people has become greater (income gap)
• Digital divide – not everyone has access to the technologies that “shrink the world”
• Technologies (like long distance telephony) have reinforced or produced new spatial differentiations: other examples?
• Globalization is not driven by technology, but facilitated by it
• Political forces are also at play
It makes new new relationships between people and things possible.• What does it encourage?• What does it discourage?• Do we live in a global village? What does
that mean? Why or why not?
Views of Globalization
• For: market as Great Equalizer. Globalization goes hand-in-hand with freer markets
• Against: increases inequality• Reformist: globalization as practiced
might be problematic, but might be practiced differently with different outcomes.
Anti-Globalization Movement
• Against corporate/neoliberal globalization
• Argues that neoliberal policies exacerbates poverty, destroys public goods, and degrades the environment
World Systems Theory
Core
• Capital investment• Economic management• Innovation
Periphery
• Export of agricultural products and raw materials
• Manufactured goods tend to be simpler and require high labor inputs
• Manufacturing also often faces looser restrictions (labor, environment, etc)
Semi-periphery
• Performs both functions, but for different parts of the world
• Ex: Mexico• Provides core functions, like economic
management, for Latin America (periphery)• Provides peripheral functions, like labor and
raw materials provision, for the United States (a core country)
Globalization in Historical Perspective
European Colonization
Understanding Economic Production
Cycle
Raw Materials
Raw Materials
Labor
Production Process
Byproduct Product
WasteNew resource or
raw material
Raw Materials
Raw Materials
Labor
Production Process
Economic production
under colonialism
DecolonizationFirst wave - late 1700 and early 1800s (liberation of most colonies in the Americas)
Second wave - post WWII, anti-colonial movement to "respect the right of all peoples to choose the form of government under which they will live"
Cold WarPost WWII struggle between U.S. & U.S.S.R
•Communism vs. Capitalism•regional alliances for defense
• NATO
The (old) New World Order
“We can see a new world coming into view. A world inwhich there is the very real prospect of a new world order, where the United Nations, freed from cold war stalemate, is poised to fulfill the historic vision of its Founders.”-March 6, 1991
Non-State Political Actors
World Trade OrganizationDevelops and enforces international trade regulation
International Monetary FundMonitors international monetary system, promotes free trade, and disseminates information
World BankMakes loans to various states for help economic development
Non-State Political Actors - WTO
"At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations. These documents … are essentially contracts, binding governments to keep their trade policies within agreed limits. Although negotiated and signed by governments, the goal is to help producers of goods and services, exporters, and importers conduct their business, while allowing governments to meet social and environmental objectives. The system’s overriding purpose is to help trade flow as freely as possible — so long as there are no undesirable side-effects. That partly means removing obstacles. It also means ensuring that individuals, companies and governments know what the trade rules are around the world, and giving them the confidence that there will be no sudden changes of policy. In other words, the rules have to be “transparent” and predictable."
Non-State Political Actors - WTO
"At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations. These documents … are essentially contracts, binding governments to keep their trade policies within agreed limits. Although negotiated and signed by governments, the goal is to help producers of goods and services, exporters, and importers conduct their business, while allowing governments to meet social and environmental objectives. The system’s overriding purpose is to help trade flow as freely as possible — so long as there are no undesirable side-effects. That partly means removing obstacles. It also means ensuring that individuals, companies and governments know what the trade rules are around the world, and giving them the confidence that there will be no sudden changes of policy. In other words, the rules have to be “transparent” and predictable."
Non-State Political Actors - WTO
"At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations. These documents … are essentially contracts, binding governments to keep their trade policies within agreed limits. Although negotiated and signed by governments, the goal is to help producers of goods and services, exporters, and importers conduct their business, while allowing governments to meet social and environmental objectives. The system’s overriding purpose is to help trade flow as freely as possible — so long as there are no undesirable side-effects. That partly means removing obstacles. It also means ensuring that individuals, companies and governments know what the trade rules are around the world, and giving them the confidence that there will be no sudden changes of policy. In other words, the rules have to be “transparent” and predictable."
Non-State Political Actors - WTO
"At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations. These documents … are essentially contracts, binding governments to keep their trade policies within agreed limits. Although negotiated and signed by governments, the goal is to help producers of goods and services, exporters, and importers conduct their business, while allowing governments to meet social and environmental objectives. The system’s overriding purpose is to help trade flow as freely as possible — so long as there are no undesirable side-effects. That partly means removing obstacles. It also means ensuring that individuals, companies and governments know what the trade rules are around the world, and giving them the confidence that there will be no sudden changes of policy. In other words, the rules have to be “transparent” and predictable."
Structural Adjustment Programs
• Neo-liberal approach initiated by 2 multilateral regulatory institutions• International Monetary Fund (IMF)• World Bank
• Intended to:• reduce state interference in the global ‘Free Market’• decrease corruption
• Privatization of utilities, education, and other previously public institutions and practices
• Encourages the sale of public land to private interest
Questions
Who do Structural Adjustment Programs benefit most?
How do local people & communities manage economies & resources?
What do alternative energy/resource innovations mean to poorer places?
Recent North American Economic History-
Made possible by increasing global economic integration
U.S. has considerable influence in international fields
• United Nations, World Bank, IMF, World Trade Organization
• Tariffs, Trade Barriers, Subsidies, & Competition• develop/foster trade relations that benefit the U.S.
disproportionately
NAFTA (North American Free Trade Agreement)• unbalanced in some arenas (hierarchical) • standardized pollution & transport safety guidelines
Information Technology• Outsourcing (S./SE Asia, E. Europe, & Canada)• Will money saved on wages & infrastructure be reinvested
in U.S.?• create new jobs? When? For whom?
Reaganomics (also "Thatcherism")Supply-Side Economic Theory/Neo-liberalism
•reduce government spending•reduce tax rates on income from labor and capital•deregulation•control the money supply to reduce inflation
•extreme reduction in services • release of many thousands of mentally ill patients (dramatic
increase in homelessness)•favors wealthy•increased public debt•created the most inequality between rich and poor
Agriculture makes up a small share of GDP
•farmers remain economically and politically powerful
•In 2002 the market value of U.S. farm production amounted to more than $200 billion,• $57 billion for livestock • $40 billion for grains (corn, wheat, and soybeans)• $24 billion for poultry and eggs• $20 billion for milk and other dairy products
• U.S. 2 million farms, • 1.6 percent of farms in 2002 accounted for half of all
sales.
Manufacturing•1960s: Decline – Unions
• higher wages & better working conditions • higher costs of production
•1980s: Further Decline – South-east Migration
•1994: NAFTA• removed agricultural tariffs• lowered significantly other trade barriers • many manufacturing jobs move to Mexico
• lower wages• fewer (if any) workplace regulations
Service & Information•¾ of U.S. GDP
•Bimodal Employment– • both low-skilled/low wage & high-skilled/high
wage
•Knowledge Economy• information technology
• more mobility• digital divide
• inner-cities & rural communities left behind
Thinking Critically About Development
What is development?
How do we measure it?
Why do we measure it that way?
Who determines how we measure it?
UN & IMF suggest that every nation should
determine its own “path to development”.
Where is this place called “development”? Who
determines what/where it is?
Does the concept of development require the
peoples of the "Third World" to pursue the
goals/achievements of the First?
Is there “no alternative” to development?
• No clear or standard definition
• Often refers vaguely to "progress", "improvement", or occasionally "growth"
• There is a sense that development makes things better, but how depends of how development is being pursued
What is development?
Third World Debt
• Rooted in colonialism• 1970s energy crisis• Oil shortage• High energy prices required 3rd world nations to
borrow from World Bank/IMF at high interest• Debt is difficult or impossible to pay off• Often partially forgiven in exchange for
privatization and opening markets (esp in the case of socialist states)
Reading Development Policy Critically
UN Food and Agriculture Organization (UNFAO) on
World Hunger
Undernourishment (UNFAO measure)• 1960 – 60% in developing countries• 2006 – 14% (despite population growth)
So, we're in good shape, right?
Then why all the bad press?
Contradictory Evidence?
Increased food production per capita
But this doesn't fit what we normally see. Why not?
Two Critical Methods of Analyzing World Hunger
Critique the measure and its methods
Ask what questions this approach doesn't ask
Critique the Method:Measuring World Hunger
1.How much food is there?
2.How many people are there?
3.Where is the food going?
4.How much food do people need?
5.Who is getting enough and who isn't?
Methodological Summary (FAO method)
1.Determine total food available nationally (in calories)
2.Divide by population for per capita food (by country)
3.Estimate distribution of food among population (simple measure of inequality/wealth – household surveys)
4.Determine threshold of caloric intake below which people are considered “undernourished”
Problems with the FAO's measurement
Biased toward national-level food securityDoes not properly account for poverty-related
food insecurityNormal distribution doesn't capture the situation
“on the ground”Assumes only 'light activity', even in countries
where manual labor is the norm
Critical Analysis #2:What doesn't the statistic show?
Doesn't account for micronutrient or protein intake
Doesn't account for riskAssumes a hypothetical “normal distribution” of
income inequality. Can't account for extreme cases of inequality
Omissions the FAO's measurement
Doesn't account for micronutrient or protein intake
Doesn't account for riskAssumes a hypothetical “normal distribution” of
income inequality. Can't account for extreme cases of inequality
Malnourishment
850,000,000 people without enough food3 Billion without access to proper nutrients,
(esp proteins)Many people have access to food but lack
access to nutritious food
Undernourishment (UNFAO* measure)• 1960 – 60% in developing countries• 2006 – 14% (despite population growth)
• 2006 – >50% malnourished
• Is this progress?
* United Nations Food and Agriculture Organization
Omissions in the FAO's measurement
Doesn't account for micronutrient or protein intake
Doesn't account for riskAssumes a hypothetical “normal distribution” of
income inequality. Can't account for extreme cases of inequality
Risk
Vulnerability Adaptability Resilience
What conditions produce risk?
environmental changes war/conflict economic changes
External events Social Conditions
Problems with the FAO's measurement
Doesn't account for micronutrient or protein intake
Doesn't account for riskAssumes a hypothetical “normal distribution” of
income inequality. Can't account for extreme cases of inequality
Unequal Wealth Distribution at Different
Scales
Consumption Rates by Country
Source: myfairshare.org
Unequal distribution up close:
São Paulo, Brazil
What is sustainable development?
What is Sustainable Development?
• As many as 80 different definitions (Fowke and Prasad 1996)
• Best known from UN WCED Brundtland Report• “development that meets the needs of the
present without compromising the ability of future generations to meet their own needs”
• “Environmental Paradox”• Mismatch between what the world can supply
and what we demand
Three Pillars of Sustainable Development
(Triple Bottom Line)
Approach I:Extend the Resource Base
• Better efficiency• Use of renewables• Replacing depleted resources with other
resources that can be used for the same purpose
• Mitigating effects of depletion
• In short, adapting the planet to fit our needs
Approach II:Reduce Pressure on Resources
• Consume less
• Shape our own behavior to suit the environment's limits
Approach I:
• No need to rethink nature (human centered)• People are separate from nature• Nature is a resource to be used by people• We have a right to dominate nature
• or the meaning and value of development/economic progress
• Assumes we can find the solution to any environmental problem that arises
Examples of Approach I
• Ecological Modernization• Efficient use of resources is the solution to the
environmental paradox
• Environmental Justice• Environmental ills resulting from economic
development must be equitably distributed
Approach II: Changing Demands Placed on Earth
• Sees approach I as “sustaining development” rather than sustaining the environment
• Assumes that nature has its own rights and is not just there to serve people's interests
• Often includes critiques of economic development• Need to redefine wealth and progress in other
terms
Examples of Approach II
Deep ecology• Argues that the rights of nature to exist are not
being respected
Examples of Sustainable Development Efforts
• Microfinance• Ecotourism• Debt-for-Nature• Fair Trade
Ecotourism
Preserving Naturein the Third World:
Debt-for-nature swaps
• Conservation groups buy a country's debt in the form of reduced bonds
• Debt is 'forgiven' in exchange for a commitment to preserve forests, etc
Debt-for-nature problems
• Doesn't overcome the underlying in security of Third World Nations
• Accounts for a tiny portion of debt (book example: $650,000 paid off. $1 trillion is owed)
Fair Trade
• Enterprise Initiatives• Standards determined by a company and used to
track their own production and progress
• Labeling Initiatives• Independent boards determine standards and
evaluate companies/practices
Urbanization
Historical Development of Cities
What first gave rise to cities?• Agricultural revolution probably took
between 4 and 5 thousand years• Hunting/gathering requires large territory
and produces little food• Agriculture uses comparatively little land
and produces surplus
• Farming produced enough food so that people could pursue other occupations (division of labor)
• Allowed for the differentiation of classes, as well as the development of governments, armies, and religious institutions
Characteristics of cities
• The earliest cities (7,500 to 10,000 years ago) didn’t last
• Not until ~3,000 B.C. did “permanent” cities begin to develop
• Division of labor and a ruling elite• Culturally and socially productive• Formalized system of rights and taxation
that supported building of public structures
Graphic of the places around the world where agriculture developed independently
Characteristics of Cities (con’t)
• In early cities, control of food and other resources is highly centralized
• Most likely, cities did not come first. Rather, power structures, in which powerful individuals were able to extract surplus from others, developed first, which enabled the building of cities in order to reinforce that power structure.
• Often religion-based, connecting economy, religion, and government
Characteristics of Cities (con’t)
While cities formed the center of power structures, their power extended into the countryside.
What do cities afford to residents?
• Protection from enemies• Bring together merchants and buyers
(serve as marketplaces)• Large workforce for producing more
complicated products• Opportunities for social interaction
(diversity)
Industrial Towns
• Began to be shaped according to economic activities rather than religious or administrative ones
Social Structure of Industrial Capitalism
• Feudal lords had lost power, replaced by capitalists
• Peasants and artisans were now the working class
Living Conditions in Early Industrialism
• Long working hours (65+)• Work and home became different places• Alternatives to working: prison (vagrancy)
or starvation• Low wages• Water and sewer almost non-existent• Air and noise pollution• Factories emptied waste into nearly bodies
of water
Key Points about Industrial Capitalism
• Cities organized to facilitate production, not health or happiness
• Increasing polarization of wealth
• Commoditized urban space
Urban Growth in Europe1800-1890
Population
City 1800 1890London 864,845 4,232,118
Paris 547,756 2,447,957
Berlin 201,138 1,578,794
Vienna 232,000 798,719
Glasgow 81,048 782,445
Budapest 61,000 491,938
Madrid 156,670 470,283
Lisbon 350,000 370,661
Causes of Population Growth in early Capitalism
• Decrease in death rate (esp infant mortality rate) due to better sanitation, medical advances, etc
• Urban growth due to migration• poor rural people farming on “common” lands in
England were forced to move when lands were privatized for use in raising sheep for commercial consumption
Rise of the Corporate City
• ~1950s, a trend began that privileged profit over the manufacture of goods
• Companies now produce (or put their names on) many different kinds of products, rather than just one
• Buying a company can be more profitable than competing with it
Characteristics of the Corporate City
• Spatially dispersed economic activity• Office space and retail instead of
manufacturing (though that still exists)• Suburban sprawl• Wealthy and middle class moving out to
the suburbs• Changing downtowns
World Urbanization
• Urban populations have been increasing gradually since the development of agriculture
• In 1900, only 13 cities had populations greater than 1 million.
• None of the top 13 are in Europe and only New York and Los Angeles are in a developed country.
• By 2007, there were 300 such cities.
28
Table 22.02
Table 22.01
Causes of Urban Growth
• "Natural" Increase through reproduction• Fueled by improved food supplies and better
sanitation• Immigration
• Caused by push factors forcing people out of the country, and pull factors drawing them into cities
Push Factors• Fleeing
overcrowding in rural areas•Declining productivity of rural areas (fewer jobs)
• Fleeing social, political, economic instability
Push Factors• Jobs• (Relative Freedom
from gender and ethnic/racial oppression
• Entertainment• Social mobility and
access to power• Urban 'gravity' - the
larger the city, the greater the pull (and the growth)
Urban Challenges
Urban Challenges
• Traffic and Congestion• Air Pollution• Sewer Systems and Water Pollution
• Only 35% of urban residents in "developing" world have satisfactory sanitation.
• One third do not have safe drinking water.
Sewage in Jakarta, Indonesia
Current Urban Problems
Housing• At least 1 billion people live in slums (legal but
inadequate multifamily tenements) of central cities and in shantytowns (settlements created when people build their own homes on the outskirts of cities).
• Sometimes people simply occupy land that they neither own nor rent, creating squatter towns which can have thousands of residents.
• Around 100 million people have no home at all.
Shantytown
Current Urban Problems ("Developed" World)
Rapid growth of cities that accompanied industrialization has mostly slowed or reversed
• Many of the environmental problems have been reduced, but not overcome.
• Many of the major polluters have moved to developing countries.
• In U.S., businesses have moved west and south, where wages are lower.
• Automobiles and computers enable workers to live outside cities or in suburbs (but Europe and North America still considered 75+% urban)
But this has created new problems
Urban Sprawl
• In the US, the bulk of new housing is in large tract developments that extend beyond city edges to less expensive land• Consumes about 200,000 ha of U.S. agricultural
land annually• Planning authority is often divided among many
small local jurisdictions, and there is no way to regulate growth.
Urban Sprawl
• New sites must build roads, water, sewers, schools, etc.
• In Atlanta, the population grew 32% between 1990 and 2000, but the land area it occupied grew 305%.
Urban Sprawl
• Distance from work = need a car
• Average U.S. driver spends the equivalent of one 8 hr day/week behind the wheel
• In some areas, it is estimated that one-third of all land is devoted to automobile infrastructure
• Traffic congestion costs U.S. $78 billion annually in wasted fuel and time
Urban Sprawl
• Pop decline in the city → no tax base → neglected infrastructure.
• Poor left behind → few jobs, can't commute• 1/3 of Americans too young, too old, or too
poor to drive. Car oriented development causes isolation.
• Sprawl promotes sedentary lifestyle.
Population DensityRelative to Distance
from CBD
Green Urbanism
• New development is often on farmland or forest.
• Green urbanism redevelops existing cities to be ecologically sound.• Focus on in-fill and brownfield development• Build high density, low-rise, mixed income housing
near city centers• Provide incentives for alternative transportation• Encourage ecological building techniques
“New Urbanism” Movement
• Recapture small town feel in big city• Organize city into modules of 30,000 to 50,000 people• Determine in advance where development will take
place• Locate everyday services more conveniently• Increase jobs in a community by locating offices and
commercial centers near suburbs• Encourage walking and low-speed vehicles• Promote diversity in housing designs• Create housing “superblocks”
Rockville, MD Town Square competition
Rockville, MD Town Square competition
Not for public use
Rockville, MD Town Square competition
Not for public useOpen forbusiness
(by contract)