What is Globalization?

1. What is Globalization?

2. Key Theoretical Questions • How 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?

3. Historical Framing • Colonialism framed institutions that protected private property abroad. The unequal economic relationship centered on: • Violence • resource bondage (extraction of raw materials) in colonized countries for export. • Production of primary commodities in industrialized metropolitan centers • Reinforcement of race and gender inequalities

4. 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.’

5. Keynesianism & Interventionist State

6. Debt to Growth Economic Model • Government stimulates the economy (i.e. education, health care, job training, roads, dams). • Government investment increases demand • Private 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.

7. Bretton Woods Conference (1944): The International Monetary Fund (IMF), The International Bank for Reconstruction and Aid (The World Bank), and the General Agreement on Tariffs and Trade (GATT)

8. 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

9. Recommendations made by Maynard Keynes at Bretton Woods Conference • Establish 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.

10. IMF & Structural Inequalities • Quota system benefitted powerful economies • Quota system determines how many votes a member country has in IMF • Quota determines how much foreign exchange a member country has access to • IMF could attach conditions on loans to debtor countries

11. The International Bank for Reconstruction and Aid (The World Bank) • Spearheaded effort to rebuild the economies of nations devastated by WWII • Provided loans for infrastructure: power plants, dams, roads, airports, ports, agricultural development, education systems • By 1950, redirected loans to newly-independent post-colonial countries.

12. Capitalist Crisis of Overproduction

13. Organization of Petroleum Exporting Countries (OPEC) Oil Embargo of 1973 • Saudis invested “petrodollars” in New York investment banks • Petrodollars financed Foreign Direct Investment (FDI) to Third World countries • Conditions accompanied loans that guaranteed higher rates of return than in the domestic US market

14. Case Study: Mexico 1970s - 1982 • Following OPEC Oil crisis, Mexico began to produce oil for export • To 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

15. Violence & Terror as Economic Shock Treatment • Overthrow of Brazilian President Goulart by military coup in 1964-65 • Chile’s democratically elected President Salvador Allende is overthrown by organized military coup financed by the CIA (Sept. 11, 1973) • Overthrow of Argentinean President Isabel Perónin 1976 (30,000 disappeared)

16. 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”

17. How has the Third World experience Economic Shock Treatment? • Tax cuts for wealthy • Free trade • Cuts to social spending • Deregulation of state governing bodies • Privatization of state assets (i.e. transportation, telecommunications, social housing, education, etc.) • Withdrawal of welfare provision • Covert and overt repression

18. The Neoliberal State: Economic Shock Treatment Comes Home • Keynesianism blamed for stagnation • Labor targeted blamed for inefficiency and pressured to decrease wages or “downsized” • Increased unemployment and decreased demand for goods • Increased incarceration of marginalized groups (poor whites, inner-city people of color) • State power is used to bail out or avert financial failures by private capital • In event of conflict between integrity of financial system & well-being of population, the neoliberal state will choose the former