PSC 1001; Intro to Political Economy
PSC 1001; Intro to Political Economy PSC 1001
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This 4 page Class Notes was uploaded by Eleanor Parry on Wednesday February 24, 2016. The Class Notes belongs to PSC 1001 at George Washington University taught by Dr. Christopher Mitchell in Spring 2016. Since its upload, it has received 17 views. For similar materials see Intro to Comparative Politics in Political Science at George Washington University.
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Date Created: 02/24/16
What is Political Economy? • How politics shape economy • How the Economy shapes politics • Politics and Economics Understood as an inseparable whole Politics can Shape Economics • Determining the kind of economic system ◦ Communist v capitalist ◦ Development policies ◦ Varieties of Capitalism • Creating the conditions for growth ◦ Macro-level stability and rule of law ◦ Micro level policies • State policies shape levels of equality Economic Shaping Political Popularity and Legitamcy • In Democracies: ◦ Economic growth the best predictor of whether an incumbent party wins reelection • In Autocracies: ◦ Economic growth can legitimate weak regimes ‣ Latin American Military Regimes ◦ Economic malaise can undermine regimes Economics Determine Patterns of Conflict • Class Conflict ◦ Matters more with greater inequality ◦ Matters more with lower mobility • Conflict between industries ◦ Main Street vs Wall Street ◦ Protrude vs protectionist sectors • Exacerbating other conflicts ◦ Ideological, ethnic conflicts more intense when theres less to go around ◦ Recession prompts embrace enhance of radicalism What is Capitalism? • Private Control of the means of production ◦ Capital and Labor • Vs Socialism ◦ State/Public control • vs Feudalism ◦ No public/private separation • Free markets for capital and for labor ◦ Individuals invest buy and sell freely ◦ Individuals sell their labor freely The Invisible Hand • Law of Supply and Demand drives market ◦ Self correcting for over/under supply • Organizing Principe of Capitalism is Efficiency ◦ Produces more from same raw materials ◦ More efficient survey, less efficient perish ◦ Markets theoretically self regulating ◦ Frequently harsh for losers A Couple of Key Points • State plays an essential role in all economic systems ◦ Even free markets need a state ◦ In absence of a state, state like forms appear - Mafia and protection rackets • No pure forms exist in the world Minimum Requirements from the State in any Economic System • Enforce Rule of Law ◦ Define and enforce property rights ◦ Enforce Contracts • Provide Undersupplied public goods ◦ Security ◦ Infrastructure ◦ Education ◦ Currency ◦ Lender of Last Resort Liberal Capitalism • Minimal nightwatchman state role • Marked by competition between actors ◦ Interfirm competition ◦ Conflicts between labor and ownership • Little cooperation among actors Strengths and Weaknesses of Liberal Capitalism • Strengths ◦ Most innovative form of capitalism ◦ Best at rapid short term growth ◦ Minimal state role depoliticizes the economy ◦ Simplest model to organize • Weakness ◦ Most prone to crises ◦ Worst at longterm planning ◦ Bad at development Corporatism/Organized Capitalism • Corporatism DOES NOT MEAN Rule by Corporations • Cooperative relationships among private actors ◦ Based on peak associations ◦ Cooperation between firms ◦ Cooperation between firms and labor • States play coordinated rule Corporatism • The State ◦ Labor ◦ Capital ◦ Agriculture Democratic Corporatism • The State ◦ Labor ◦ Capital ◦ Agriculture • Bottom up Authoritarian Corporatism • The State ◦ Labor ◦ Capital ◦ Agriculture • Top down Strengths and Weakness of Corporatism/Organized Capitalism • Strengths ◦ Most adaptable form of capitalism ◦ Best at maintaining social peace ◦ Better at long term planning ◦ Better at creating high-soiled workforce • Weaknesses ◦ Hard to implement ◦ Hard in larger more diverse economies Liberal and Corporatist Capitalism • Liberal better at innovation • Corporatist better at adaption and Refinement ◦ New products from liberal economies ◦ High end products from corporatist economies ◦ Automobiles, computers, its • Liberal better at grot • Corporatist better at Stability ◦ Liberal have higher peaks and valleys ◦ Liberal do better in good times ◦ Corporatist do better in bad times Statist Capitalism • State plays an active role in the economy • State bank based financial system • Labor firm relations may be conflictual • France to 1980s • China from 1980s Strengths and Weaknesses of Statism • Strengths ◦ Good at directed development ◦ Better at maintaining social peace than liberal ◦ Politicized economic policy good for non market goals • Weaknesses ◦ Hard to pressure politically connected to adapt ◦ Encourages investment based on political strength not economic viability ◦ Less efficient than liberal, corporatist models
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