What is Globalization?

Key Theoretical QuestionsHow equitable is the global integration of

populations into globalization?What institutions play a role in regulating

globalization?How does globalization reshape race and

gender relations?How does globalization impact health

outcomes?

Historical FramingColonialism framed institutions that protected

private property abroad. The unequal economic relationship centered on:

Violenceresource bondage (extraction of raw materials)

in colonized countries for export.Production of primary commodities in

industrialized metropolitan centersReinforcement of race and gender inequalities

Cecil Rhodes‘We must find new lands, from which we can

easily obtain raw materials and at the same time exploit the cheap slave labor that is available from the natives of the colonies. The colonies [will] also provide a dumping ground for the surplus goods produced in our factories.’

Keynesianism & Interventionist State

Debt to Growth Economic ModelGovernment stimulates the economy (i.e.

education, health care, job training, roads, dams).

Government investment increases demandPrivate investment increases production to

meet growing demand.Increased production and demand will result

in more workers with more money in their pockets for the purchase of commodities.

Increased circulation of money (in the form of wages) can be taxed to pay back government debt.

Bretton Woods Conference (1944):

The International Monetary Fund (IMF), The International Bank for Reconstructionand Aid (The World Bank), and the General Agreement on Tariffs and Trade (GATT)

The International Monetary Fund (IMF)Facilitate trade.high employment and real income.regulate ‘fixed’ exchange rates (as a check

against devaluation of currencies)Supply emergency loans to countries

Recommendations made by Maynard Keynes at Bretton Woods ConferenceEstablish a world ‘reserve currency’ Set up an International Clearing Union to

provide unconditional loans to countries experiencing balance-0f-payment problems, with no strings attached.

IMF & Structural Inequalities Quota system benefitted powerful economiesQuota system determines how many votes a

member country has in IMFQuota determines how much foreign

exchange a member country has access toIMF could attach conditions on loans to

debtor countries

The International Bank for Reconstruction and Aid (The World Bank)Spearheaded effort to rebuild the economies

of nations devastated by WWIIProvided loans for infrastructure: power

plants, dams, roads, airports, ports, agricultural development, education systems

By 1950, redirected loans to newly-independent post-colonial countries.

Capitalist Crisis of Overproduction

Organization of Petroleum Exporting Countries (OPEC) Oil Embargo of 1973Saudis invested “petrodollars” in New York

investment banksPetrodollars financed Foreign Direct

Investment (FDI) to Third World countriesConditions accompanied loans that

guaranteed higher rates of return than in the domestic US market

Case Study: Mexico 1970s - 1982Following OPEC Oil crisis, Mexico began to

produce oil for exportTo subsidize high capital cost of equipment,

international credit & financial markets are “liberalized” (lack of governmental regulation) and FDI enters Mexico

1979 Volcker Shock – US Federal Reserve increased rate of interest by 20%

Debt/credit trap left Third World and Eastern European governments with $700 billon in debt

Violence & Terror as Economic Shock TreatmentOverthrow of Brazilian President Goulart by

military coup in 1964-65Chile’s democratically elected President

Salvador Allende is overthrown by organized military coup financed by the CIA (Sept. 11, 1973)

Overthrow of Argentinean President Isabel Perón in 1976 (30,000 disappeared)

Milton Freidman & Chicago School“Only a crisis—actual or perceived—produces

real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable”

How has the Third World experience Economic Shock Treatment?Tax cuts for wealthyFree tradeCuts to social spendingDeregulation of state governing bodiesPrivatization of state assets (i.e.

transportation, telecommunications, social housing, education, etc.)

Withdrawal of welfare provisionCovert and overt repression

The Neoliberal State: Economic Shock Treatment Comes HomeKeynesianism blamed for stagnationLabor targeted blamed for inefficiency and pressured

to decrease wages or “downsized”Increased unemployment and decreased demand for

goodsIncreased incarceration of marginalized groups (poor

whites, inner-city people of color)State power is used to bail out or avert financial

failures by private capitalIn event of conflict between integrity of financial

system & well-being of population, the neoliberal state will choose the former