GLOBALIZATIONGLOBALIZATION

What is globalization?

A single economy Free movement of capital. Internationalization of non-

business activities. Awareness of “the other”.

What’s money?

A means of exchange. A unit of account. A store of value.

Trobriand Islanders

Economics

Oikonomia (Greek):– oikos (household)– nomos (law)– Thus it means: “Meeting the needs of the

household.” – Or, “Administering the wealth of the

household.”

History

Not new.– Mercantilism

Causes of World War II Bretton Woods (1944) End of Cold War Trading blocks

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

Fordism to post-Fordism

–Cheap LDC labor

–Cause of neo-colonialism

–Core versus periphery.

Government debt via borrowing rather than taxing

–Capital flow

–Control inflation with monetary policy

–Decline in employment

–Debt management/ austerity programs

End of the Cold War

–Multi-polar world

–Uni-polar world

–Trading blocs: NAFTA (FTAA) EU

Positives

Enhance development of global economy

Ends poverty. Creates wealth. Spreads cultural values that

foster democracy and toleration.

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.

Solutions:

Localized economies (?)–LETS –http://www.gmlets.u-net.com/

Enhance gov’t powers via cooperation:–Tobin Tax

http://www.tobintax.org.uk/

Global Financial Institutions

Topic B Cooperation

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.

BRETTON BRETTON WOODSWOODS

(1944)(1944)

International Monetary Fund

World Bank

General Agreement of Trade &Tariffs (GATT)

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.

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.

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.

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.

General Agreement on Trade and Tariffs (GATT)

Purpose:

–Regulate tradeRegulate trade.

–Encourage free trade towards development.

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.

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.