Bacud, Emmanuel J.

Polit Sci 6 (10:30-11:30 MWF)

Prof. Milo Severino N. Distor, Faculty-in-charge
Report in Political Science: THE ECONOMY IN GLOBAL AGE
I.) POLITICAL ECONOMY AS A METHODOLOGY OF HISTORICAL-POLITICAL ANALYSIS
Economy, a socio-political reality is condition in which human beings coordinate their wants and desires
( motives ), given the decision-making mechanics, social customs and political system of the society. In relation
to this, Political economy simply deals with the relationship between economic conditions and the political
activities we performed in a particular society. According to Gilpin (1977), political economy is not only a
branch of statecraft but as a study in which moral (normative) judgments are made on particular issues; hence,
there is always politics in economics. Political economy combined a sense of the descriptive and the
prescriptive.
Applying the nature of 21st century political condition. Political economy is a study of social relations,
particularly the power relations, that mutually constitute the production, distribution and consumption of state
resources. As political thinkers, we can utilized political economy as a microscope to magnify the pillars of
economic systems in an structured manner and to extract its political aspects as far as power is concerned.
Table 1: Difference of Political Economy from Economics
Political Economy
Economics
*more all-encompassing, not rigid in scope, relates *very rigid, formulation of universal laws through
political, social and economic dimension of human mathematical
equation=>
radical
empiricism,
race
Economics, itself (scarce resources and unlimited
*critical approach; socio-political inequalities, policy- needs and wants of man)- result of Industrial
making activities
Revolution
20th century- Political economy has been revived; * the more quantifiable a discipline is, the more it is
recent rise of state concern for public welfare reliable=> textbook economics by Kuhn,
( Eatwell, Milgate and Newman, 1987 )
*Proponents: Alfred Marshall, William Jevons (19th
Political Economy as a social science.
century)
*Unit of analysis: Decision of man ( given his *exercise of utilitarianism; industrial activities of
political and economic status)
individual man
* Economics as pure science (though some that it is
still a social science)
*Unit of Analysis: Capital ( Resource-allocation)
Central Characteristics of Political Economy:
1.) Considering Social change and history- It means examining dynamic social forces responsible for
societal growth and change. Unlike Economics, Political economy reconsidered history as a foundation
of analysis in order to scrutinize the real flow of human struggles.
2.) Manifesting social totality- This means that political economy spans the range of problems that today
tend to be situated in the compartments of several academic discipline.
According to John Stewart Mills, Political economy is one means of understanding the social as whole. Political
economy is not just an approach but it is a guide to understand the relationships that prevail among numerous
approaches of social life.
3.) Moral Philosophy- Political economy is intertwined with social values and with the conceptions of
social practices. The goal is to clarify and make explicit the moral positions of economic and political
perspectives, particularly because moral viewpoints are often masked in these perspectives.
4.) Praxis- This means practical reasoning this accentuates what is more reliable explanation to believe
in. Praxis is important to both epistemological and substantive premise of political economy. Praxis
guides a theory of knowledge to view knowing as the ongoing product of theory and practice. Reality,
according to the notion of praxis, is what is practical, observable yet innate to human existence.

Global Political Economy:

According to:
Realist View- economic nationalism or mercantilism; Through mercantilism, states are the most significant
economic actor since economic relations are fueled by political power.
Liberalist View- rational-choice approach, Individuals as utility maximizers are the key actors of economic
activities.
Critical views- Capitalism as a system of class exploitation treats social classes as most significant key actors
of economic process.
Class allegiance is more powerful than national loyalties.
II.) CAPITALISM AND NEOLIBERALISM (pages 84-110, Heywood)
Recall: Political History ( Historical Materialism by Marx and Engels)
SIX SUCCESSIVE STAGES OF SOCIETY
STAGE 1: PRIMITIVE COMMUNISM
* as seen in tribal societies exhibiting cooperation and
communism toward properties such as land, etc.
STAGE 2: SLAVE SOCIETY
*it developed when tribes became centralized in terms
of city-states, aristocratic rule vividly observed
STAGE 3: FEUDALISM
* When the nobles had full control of land (as a means
of production) then these were partially distributed to
the knights in return of military service
STAGE 4: CAPITALISM
*The capitalists are the ruling class and they create,
employ or manipulate the labor of the working class
(rigid social stratification)
STAGE 5: SOCIALISM (Dictatorship of the * The working class gains consciousness then
Proletariat)
overthrow the capitalist and take control over the
production
STAGE 6: COMMUNISM
* Where a classless and stateless (without state as a
governing entity for reosurce allocation) has evolved.
No more stratification because all people has the right
to access the means of production and utilized them
for communal welfare.
*The 21st century political scenario (Globally)?
GLOBAL CAPITALISM- (Heywood, 2011) wideranged industrialization; hence increasing use
(strategy) of division of labor.
This phenomenon results to industrial capitalism
(export of capital from Europe to North America,
South America and Asia
*World as a MARKET ( aggregation of all economic
activities
Types of Capitalism:
1.) Enterprise Capitalism- it is also known as the pure capitalism by the Anglo-American world.
Enterprise capitalism has been incorporated by advance marketization (-the extension of market
relationships based on commercial exchange and material self-interest, across the economy and
society ).
Core ideas: *the central feature is the faith in the untrammeled workings of market competition (free market
principles or the laissez-faire), *market is a self-regulating mechanism, *national businesses must be profitdriven, since trade unions are usually weak, reflecting the fear of strong labor organization (hindrance for profit
maximization), *the emphasis is on growth and enterprise
Disadvantage: Material inequalities, social fragmentation

Thinkers: Adam Smith, David Ricardo (classical economist)

Friedrich von Hayek, Milton Friedman (Neoliberalist)
Model state: USA
2.) Social Capitalism- it highlights on long-term investment rather than short-term profitability. It is known
as the Rhine-Alphine capitalism.
Core ideas: Social Market (union of disciplines of market competition and the need for social cohesion and
solidarity, concept of competitive advantage), *Trade unions usually enjoy representation through work
councils, *Comprehensive and well-funded welfare provisions that provide workers and other vulnerable
groups with social guarantees
Model State: Germany, Central and Western Europe (Austria, Benelux Countries, Sweden, France
Disadvantage: It is rigid ( a heavy stress on consultation, negotiation and consensus), *Led to market
inflexibility
3.) State Capitalism- It is used to describe capitalist economies in which state plays a crucial directive role.
This is a non-liberalist market society. It is also known as collective capitalism (emphasis on cooperative long-term relationships)
*Liberal market economies- coordinate their activities on the basis of competitive market arrangement,
coordinated market economies
*Non-liberal market economies- states through its has a dominant role in any economic activities.
Core ideas: Relational market (interlocking relationship that ensure close relationship between industry and
finance), *Firms provide social core of life in state capitalism
Model state: USSR under Stalin, Russia (1990), Peoples Republic of China, Japan (1945)
Disadvantage: This is only applicable for strong states (resource+military+technology+determined policies)
III.) TRIUMPH OF NEOLIBERALISM (1990s political scenario)
*Neoliberalism (neoclassical liberalism or hyper-liberal globlaizing capitalism by Robert Cox 1987)- its
central theme is the idea that the economy works best when left alone by the government, reflecting a belief in
free market economics and atomistic individualism. This entails market fundamentalism (an absolute faith in
market) vs Keynesianism ( a theory developed by J.M. Keynes , a policy of economic management associated
with regulating aggregate demand to achieve full employment ).
Problem: Stagflation (economic stagnation + rising unemployment + high inflation )
Market is good but state is bad. It is believed that there must be a manifestation of privatization of low public
spending, deregulation, tax cuts and reduced welfare provisions.
Model States: Chile ( revolution against Salvador Allende ) under General Pinochet, Brazil, Argentina, USA
and UK (Reaganism and Thatcherism) with Canada, Australia, New Zealand
Trend: Global economic governance and Economic Globalization , Eastern European Revolutions 1989-1991
aiming to have free-market capitalism in Russia, Hungary and Poland, *Intensified International Competition
through government inward investment and preventing transnational competition., Rise of the New World
Economy (page 90-91)
Implications:
A.) Market reforms and economic liberalization
B.) The Process of Financialization- the reconstruction of the finances of business, public bodies and
individual citizens to allow them borrow money and raise their spending
C.) Turbo Capitalism ( fastening economic condition through financialization)
D.) Deeper integration of domestic economies into global economy
Critiques:
A.) Democratic deficit that is generated by internationalization of state (the tendency of the state to respond
to the dictates of global economy)
B.) Environmental degradation
C.) Neoliberalism is Disaster Capitalism (Naomi Klein), (cite page 108, 2007-09 Global Financial Crisis)

IV.) ECONOMIC GLOBALIZATION

Economic globalization is the process through which national economies have to greater, extent or lesser extent
been absorbed into single global economy.
Globalization is a shift from a world of distinct national economies to global economy in which production is
internationalized and financial capital flows freely and instantly between countries.
( as compared with Internationalization- only a shallow integration)
Immediate Causes:
A.) Imperialism- the development of transborder and transnational economic structures
B.) Scramble of European States for colonies in Africa and Asia
C.) Proto-globalization- foundation of transnational economic organization on the back of expansionist
political projects.
D.) Triumph of Capitalist Ideology ( Pro-globalization corresponds to civilized society; but antiglobalization=> barbarian)
Two Major Phases of Globalization:
1.) End of World War II until early 1970s- characterized by arrangement of international financial system
(Bretton Woods System), Prevent to the return of beggar-thy-neighbor-policy (protectionism)(contributed to the depression of 1930 Great Depression) and Marshall Plan (which provided US
financial aid to Europe)
2.) Revival of Mercantilism and Consumerism
*Mercantilism- An economic philosophy, most influential in Europe from 15 th to late 17th century, which
emphasizes the states role in managing international trade and guaranteeing prosperity
*Consumerism- A psychological and cultural phenomenon whereby personal happiness is equated with the
consumption of material possession.
THE GLOBAL INTERCONNECTEDNESS:
Factors:
1.) International trade
2.) Transnational production
3.)Global division of Labor
4.)Globalized financial system
V.) Transnational Corporations as Global Political Actors
Transnational corporations are companies that control economic activity in two or more countries. TNC exert
enormous economic power and political influence. In fact, they account at least 50% of world manufacturing
production and over 70% of the world trade.
Examples of Transnational Companies:
General Motors
Wal-Mart
Exxon Mobil
Sanofi-Aventis
Time Warner
Sony
*Debate (page 101)
VI.) GLOBAL CAPITALISM IN CRISIS
Explaining booms and lumps: Economic fluctuation is the result of war; Deflation: a reduction in the general
level of prices, linked to a reduction in the level of economic activity in the economy.

*Global capitalism is subjected to trade cycle (business cycle).

*The Modern Crises and Contagions (p. 104)