CHAPTER 6

POLITICAL ECONOMY AND

GLOBALIZATION

POL101
 Approaches to
political economy
• State-centric: economic markets are seen as ‘not
natural’ and existing within a social context largely
shaped by state power. Associated with
protectionist policies of the 1930s (perceived as
failures).
• Classical/neoclassical: individuals (as rationally
self-interested creatures) are key economic
actors. An unregulated market economy tends
towards long-run equilibrium.
• Marxist: capitalism is a system of class
exploitation – social classes are the key economic
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actors
 Varieties of capitalism

• Capitalism is a system of generalized commodity

production in which wealth is owned privately
and economic life is organized according to
market principles. Varieties of capitalism include:

• Enterprise capitalism

• Social capitalism

• State capitalism 3
 Alternatives to capitalism

• State socialism, or communism, ultimately failed

to rival capitalism in terms of producing modern
consumer goods and delivering widespread
prosperity.
• This led to experiments in market socialism.
Examples of market socialism can be found in
Lenin’s NEP (1921-28) and, arguably, modern-
day China.
• Green economics calls for the economy to be
restructured around the principles of ecological
balance and sustainability.
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 Understanding globalization

• Globalization is a complex web of

interconnectedness that means that our lives are
increasingly shaped by decisions and actions
taken at a distance from ourselves.
• Economic globalization reflects the increase in
transnational flows of capital and goods,
destroying the idea of economic sovereignty.
• Cultural globalization is a homogenizing force,
linked to the spread of information, commodities
and images into a global flow
• Political globalization is linked to the growing
importance of international organizations.
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 Figure 6.1 Systemic
interdependencies, p.142

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 Neoliberal globalization

• Why are economic liberalism and globalization

so closely linked?
1) Intense international competition encouraged
governments to deregulate
2) Conversion of IMF and World Bank to ‘Washington
consensus’
3) Advance of neoliberal globalization coincided with three
decades of growth in the world economy

• Critics argue that it is associated with widening

inequality and social breakdown
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Terms

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Terms

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Terms

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Terms

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