SOCSCI 1105 THE CONTEMPORARY WORLD.pdf

SOCSCI 1105 THE CONTEMPORARY WORLD Week 1-2 No discussion Week 3 - August 30, 2024 Globalization is a process of increasing connection, commodification, and institutional cosmopolitanism with contradictory consequences. According to Thomas Larsso...

SOCSCI 1105 THE CONTEMPORARY WORLD Week 1-2 No discussion Week 3 - August 30, 2024 Globalization is a process of increasing connection, commodification, and institutional cosmopolitanism with contradictory consequences. According to Thomas Larsson, globalization is the process of world shrinkage, where distances get shorter, and things move closer. According to Manfred Steger, globalization is an intensification and expansion of social relations. The term "global village" (1961) was coined by Marshall McLuhan. Thomas Friedman’s Stages of Globalization: 1.0: Globalization of Countries (1492-1800s) - The world shrank from large to medium, centered on countries - driven by colonization and different energy sources (e.g., steam power, horse power). - Spain and Portuguese splits the new world, referred to as the Treaty of Tordesillas 2.0: Globalization of Companies (1800-2000s) - The world shrank from medium to small - Focusing on companies seeking markets and labor. 3.0: Globalization for Individuals (2000-present) - The world shrank from small to tiny, flattening the global economic field. - This stage enables individuals to connect, collaborate, and compete globally. Historical foundations of Globalization 1. In 1897, globalization was called "Corporate Giants", meaning large enterprises, coined by Charles Taze Russell. 2. In 1930, the term "globalize" first appeared as a noun in a publication titled Towards New Education. 3. In the 1970s, the term "globalization" was coined 4. In early 1981, Globalization was used in an economic sense. 5. It was popularized by Theodore Levitt in the late 1980s.  6. In the late 2000s, the IMF identified four basic concepts of globalization: trade and transaction, migration, investment, and technology. 7. In 2013, globalization was used to define a "borderless society." 8. 2017 - Globalization is used in academe 9. 2018 - Globalization used for all disciplines Three Phases/Origins in the History of Globalization: Archaic globalization - refers to globalizing events from the time of the earliest civilisations Three Principles of Archaic Globalization: 1. Universalizing Kingship 2. Expansion of religion 3. Medicinal understanding Proto-globalization - based on increasing trade links such as the Manila Galleon Trade and Columbian Exchange. - Columbian exchange refers to the enormous widespread exchange of commodities (animals, metals, etc...) Modern globalization - Tied to industrialization - allowed cheap production of household items using economies of scale, while rapid population growth created sustained demand for commodities.  Origins of Modern Globalization: 1. the emergence of U.S as global power 2. The fall of the Soviet Union and end of the Cold War 3. Emergence of MNCs (Multi National Corporation) Examples of Global Corporations: Multinational Corporations (MNCs): Operate in more than one country with centralized management (e.g., Microsoft, Coca-Cola, McDonald’s). Transnational Corporations (TNCs): Operate in multiple countries without a centralized management system (e.g., Nike, Amazon, Walmart). Slowbalization: A term coined by the Dutch writer Adjiedj Bakas referring to the phenomena which involves a slowing down of the pace of global integration. Contributory Factors to Slowbalisation 1. Improved or technological advancements 2. Changing consumer preferences 3. Higher tariffs 4. Environmental concerns 5. Carbon taxes Deglobalization: The reduction/diminishing of interdependence and integration, leading to reduced international trade and cross-border investments. Contributory Factors to Deglobalization 1. Continuously low unemployment in the world economy 2. Income divide problem/income inequality 3. Uncertain risks, such as the coronavirus pandemic since 2020, 4. Trade tensions between countries 5. The rise of populism Note: The contributory factors given here are different from what was given in the face-to-face lecture, as the students provided the examples themselves. The decision was made to follow the examples written within the powerpoints. Note: The definitions provided in the “Stages of Globalization” by Thomas Friedman were not discussed nor written in the lecturer’s powerpoint. Source directly borrowed from a blockmate. Note: One would see fit to use the in-built ‘footnotes’ option instead, but it ruins the format of this whole document September 13, 2024 Global economy The free movement of goods and services around the world Increasing interdependence of world economies as a result of cross border trade of commodities Concerned with globalization of production, finance, markets, technology, organization regimes, institutions, corporations and labor. Facilitators: 1. Discoveries/Inventions/technology (e.g, innovations of agriculture streamlines the process of farming) 2. Creation of MNCs/TNCs 3. Circulation of finance, ideas, culture etc.. (e.g, exportation of foreign products) 4. Free market ideology - Laissez-faire: an economic philosophy of free-market capitalism that opposes government intervention (innovation, lower cost of goods, ease of starting a business, open competition) 5. Large-scale immigration 6. More liberal laws/policies 2 kinds of economy 1. Protectionism - You are protecting your own country’s economy from foreign competition by taxing imports via tariffs (A tax imposed by one country on goods and services imported from another country) 2. Liberalization - Reduces trade barriers Important concepts to know for Global economy 1. Global Supply Chain - Covers all the steps in manufacturing and delivering a product (e.g, the designing, manufacturing, distribution of a product) 2. Global Production Network - Nexus of interconnected functions - meaning steps or series of functions/activities 3. Global Value Chain - Refers to the full range of activities (E.g, designing, manufacturing, distribution, advertisement, recycling, post production) - Pre-production down to post-production 4. Global Competition - To answer/provide all of needs of individuals - Deters monopolization(?)  - Numerous countries are competing globally for the production and marketing of various commodities such as oil, natural gas, minerals and technologies4 5. Outsourcing - Pertains to the transfer of activities, ones performed by an entity (a third-party entity?) in exchange for money ROLE OF INTERNATIONAL FINANCIAL INSTITUTIONS IN THE CREATION OF GLOBAL ECONOMY International Financial Institution (IFI) - Chartered by more than one country - Shareholders are generally national governments - International institutions and organizations are occasionally shareholders International Monetary Fund (IMF) - Originally created in 1945 as part of the Bretton Woods Agreement - Under the International Financial Institution - Attempted to encourage international financial cooperation by introducing a system of convertible currencies at fixed exchange rates. - To promote macroeconomic stability for both its member nations and the global economy. - Deals with exchange rates, balances of payments, international capital flows, and the monitoring of member states and their macroeconomic policies. Multilateral Development Banks (MDBs) - Example is the World Bank, the World Bank loans itself to countries that require funds (to balance the global economy) - Provide financing for development to developing countries through long term loans at interest rates way below market rates. General Agreement on Tariffs and Trade (GATT) GATT was a system for the liberalization of trade that came into existence in 1947, growing out of Bretton Woods. It operated until 1995. World Trade Organization (WTO) WTO operations continue to be premised on the neoliberal idea that all nations benefit from free and open trade. The organization is dedicated to reducing, and ultimately eliminating, barriers to such trade. GATT and WTO GATT focused on trade in goods, while the WTO also took on responsibility for the increasingly important trade in services. GATT was a forum for the meeting of representatives of countries, whereas the WTO is an independent organization. GATT sought to facilitate the liberalization of trade by reducing tariff barriers. GATT was eventually replaced by the WTO, which added a concern for the reduction of non‐tariff barriers. The WTO includes GATS (General Agreement on Trade in Services), TRIPS (Trade-Related Aspects of Intellectual Property Rights), and TRIMs (Trade-Related Investment Measures) to address the distorting effects of foreign investment. The WTO is a forum for international negotiations on trade, with member countries participating in successive “rounds” of discussions. Bretton Woods System - July 1944 - 44 countries gathered to agree on the standard rate of currency - Bretton Woods in New Hampshire - An agreement under which gold was the basis for the US Dollar and other currencies were pegged to the US Dollars Value Five Elements of the Bretton Woods System First Element Each participating state would establish a "'par value' for its currency expressed in terms of gold or (equivalently) in terms of the gold value of the US dollar as of July 1944." The United States pegged its currency at $35 per ounce of gold, while Nicaragua set 175 cordobas per ounce. This meant the exchange rate between the two currencies was five cordobas for one dollar. Second Element "The official monetary authority in each country (a central bank or its equivalent) would agree to exchange its own currency for those of other countries at the established exchange rates, plus or minus a one‐percent margin." Third Element The International Monetary Fund (IMF) was created to establish, stabilize, and oversee exchange rates. If a currency was destabilized, the IMF was prepared to lend member states the money needed to stabilize it. Fourth Element Member states agreed to eliminate, at least eventually, "all restrictions on the use of its currency for international trade." Fifth Element The United States agreed to make the dollar convertible into other currencies or gold at the fixed par value, effectively making the dollar a global currency. Purpose of Bretton Woods The purpose of the Bretton Woods meeting was to set up a new system of rules, regulations, and procedures for the major economies of the world to ensure their economic stability. Bretton Woods established the International Monetary Fund (IMF) and the World Bank. Note: “Five Elements of Bretton Woods” and “GATT” were not discussed by the lecturer. The definition of WTO was mentioned during Quiz 2. They are included here for future references only. Concepts (Globalization affects markets of three kinds) 1. Commodities - Goods and services 2. Labor - Manpower, workers who produce goods and services 3. Assets and debts - Bank loans, securities 4. International Trading System - Gives rules and regulations for free trade - Open, rule-based, predictable, nondiscriminatory trading and financial system as an essential goal. - The World Trade Organization (WTO) oversees this 5. Foreign Trade Policy - Network of laws 6. Foreign Trade - The exchange of capital goods and services, capitals across borders - Pertains to Gross Domestic Product Benefits of Trading Internationally 1. Adapts various goods 2. Outlet of supplies 3. Reduction of Market Fluctuations 4. Production Efficiency 5. Specialization 6. Innovation 7. Investment Challenges of Global Economy 1. Commodities = Higher prices of goods 2. Labor = Low employment rate 3. Assets = Debt crisis A Prior Epoch of Globalization One important view is that a global economic system – specifically, a global capitalist system – emerged in about 1896 and reached something of a peak by 1914. There are some interesting analogies between the growth of the global capitalist economy during that period and that which is occurring today. Global progress Global progress was spurred by developments such as the railroad and the steam ship, whereas in more recent years it has been the airplane that has played a central role. Telecommunications The telegraph greatly enhanced global communications in the early twentieth century, while it is the Internet that is doing so today. Capital flows and migration Global economic development, both then and now, depended on large‐scale flows of capital. Development in both periods entailed large‐scale immigration and a growing importance of remittances to those who remained in the homeland. Economic specialization Global economic specialization among the nations of the world became the norm, both then and now. Nations should concentrate on what they do best, focusing internally on what they excel at compared to other activities. Inequality in the global economy The global economy of a century ago (and much the same could be said today) “was not equally good for everyone and was bad for many.” Economic Development During and After WWII In the 1930s, many countries – notably fascist Italy and Germany – moved in the direction of autarky. The United States in the 1930s had a strong tendency toward isolationism, although it was not as antithetical to economic globalization as autarky, being more political than economic. Definition of Autarky Autarky: The turn inward of a nation‐state in order to become as economically self‐sufficient as possible. Note: “A Prior Epoch of Globalization” and onwards here was not discussed by the lecturer. God save us all. September 20, 2024 Global Interstate System Diplomacy - The art and science of maintaining a peaceful environment between countries and others NATION VS STATE Nation-state – A relatively modern phenomenon in human history, composed of two non-interchangeable terms: nation and state. STATE Refers to a country and its government. Described as a group of people who are more or less numerous, permanently occupying a certain area of the country. Free from outside interference. Have a strong form of governance. Majority of citizens consistently submit. ELEMENTS OF STATE 1. People – A state's population does not need to have a certain size or number to exist. 2. Territory – The actual area of the earth's surface where humans live. TERRESTRIAL DOMAIN – Refers to the "land-based" area of the territory. AERIAL TERRITORY – The area of the earth's exosphere above the land's surface. FLUVIAL TERRITORY – Refers to "bodies of water." SUBJECT TO INTERNATIONAL LAW STANDARDS FOR DETERMINING TERRITORY. 3. Government – Serves as the vehicle through which the state’s intentions are carried out or accomplished. 4. Sovereignty – The state has the right to conduct its own affairs, both domestically and internationally. Domestic/internal – Power of the state to manage its affairs. International/external – Capacity of the state to interact with other equal states. JURISDICTION The state's authority over individuals and objects on its soil. Every person residing or temporarily residing in the state’s territory is under its jurisdiction, except for foreign states, heads of state, acts of state, foreign merchants, and foreign armies. NATION According to Benedict Anderson, a nation is an "imagined community" and does not go beyond a given "official boundary." It is inherently limited and sovereign. The main privilege and concern of citizens are rights and responsibilities. NATION-STATES Nationalism facilitates the formation of a state. In the modern era, nation-states are largely created by nationalist movements. States become independent and sovereign. Sovereignty is the fundamental principle of modern state politics. The Treaty of Westphalia A set of agreements signed in 1648 to end the 30 years' war between major continental powers in Europe. Designed by the Holy Roman Empire, Spain, France, Sweden, and the Dutch Republic. Napoleon Bonaparte Also known as Napoleon I. A French military leader and emperor who controlled much of Europe in the early 19th century. Spread principles of the French Revolution: liberty, equality, and fraternity. Challenged the power of kings, nobility, and religion in Europe. Napoleonic Wars (1803-1815) Implemented the Napoleonic Code, which forbade birth privileges, encouraged freedom of religion, and established meritocracy in government service. Shocked European monarchies and the hereditary elite. Battle of Waterloo (1815) – Anglo and Prussian armies defeated Napoleon. Created the Concert of Europe. Concert of Europe An alliance between the United Kingdom, Austria, Prussia, and Russia. Aimed to prevent another war. Restored monarchical, hereditary, and religious privileges before the French Revolution and Napoleonic Wars. Sought to restore the sovereignty of states. Metternich System – Created the Concert of Europe, named after its architect Klemens von Metternich. Internationalism A desire for greater cooperation and unity among states and peoples. Has two forms: liberal internationalism and socialist internationalism. LIBERAL INTERNATIONALISM VS SOCIALIST INTERNATIONALISM Liberal Internationalism 1. Immanuel Kant First major liberal internationalist thinker, late 18th-century German philosopher. Envisioned a world government that would govern interstate relations and the system as a whole. 2. Giuseppe Mazzini 19th-century Italian patriot, first to reconcile nationalism with liberal internationalism. Believed in a Republican Government and proposed a system of free nations cooperating to create an international system. 3. US President Woodrow Wilson. Principle of Determination – The belief that the world's nations have the right to free, sovereign government and should aim to become democracies. Influenced by Mazzini Socialist Internationalism Karl Marx – German socialist philosopher, a major critic of Mazzini. Believed that true internationalism should reject nationalism. Nationalism rooted people in domestic concerns rather than global ones. Emphasized economic equality. Divided the world into classes: Bourgeoisie (capitalist) and Proletariat (working class). Nationalism prevented the unity of workers. Followers of Marx established their own international organization. Was a short-lived union of European socialist and labor parties established in Paris in 1889. Two prominent achievements: Labor Day (May 1) and International Women's Day. GLOBAL GOVERNANCE Government vs Governance Government – An agency where the will of the people is formulated, carried out, and expressed; a system or group of people governing an organized community. Governance – Exercises political, economic, and administrative authority to manage a nation’s affairs; the process of decision-making and implementing decisions. Government – public affairs, involves decision-making.  Governance – involves a leader exercising political power for the benefit of their subjects, defining decision-making power, participation and management Global Governance Refers to various intersecting processes that create world order. Encompasses institutions, policies, norms, procedures, and initiatives through which states and citizens bring predictability, stability, and order to their responses to transnational challenges. Sources of Global Governance Treaties and organizations. International NGOs. Powerful transnational corporations. International Organizations Refers to international intergovernmental organizations made up of member-states. Powers of International Organizations Power of Classification (e.g., ISO). Power to Fix Meanings (e.g., sources of information). Power to Diffuse Norms (e.g., WHO). League of Nations An international democratic group aiming to prevent another war after WWI. The US failed to join due to opposition from its Senate. The League failed to prevent WWII, led by Axis and Allied Powers. UNITED NATIONS The most prominent international organization, founded on October 24, 1945, in San Francisco, California, USA. The term "United Nations" was coined by US President Franklin Roosevelt on January 1, 1942. Now has 193 member states (originally 51 members). Six United Nations Main Organs 1. General Assembly – The main deliberative, policy-making body and representative organ. 2. Security Council – The most powerful organ (permanent members: China, USA, France, Russia, UK). 3. Economic and Social Council – Central body for coordination, policy review, dialogue, and recommendations on social and environmental issues. 4. International Court of Justice – Principal judicial organ of the UN.  5. Trusteeship Council – Established in 1945 by the UN Charter. 6. The Secretariat – Consists of the Secretary-General and 10,000 international UN staff members. Global Interstate System World-systems are defined by the existence of a division of labor. The modern world-system has a multi-state political structure (the interstate system) and its division of labor is international. The division of labor consists of three zones according to the prevalence of profitable industries or activities: core, semi-periphery, and periphery. Division of Labor: Core Core nations are high-income nations in the world economy. This is the manufacturing base of the planet where resources funnel in to become the technology and wealth enjoyed by the Western World today. Core nations are dominant capitalist countries that exploit peripheral countries for labor and raw materials. Division of Labor: Semi-periphery Semi-periphery consists of middle-income countries, such as India and Brazil. These are considered semi-periphery due to their closer ties to the global economic core. Peripheral countries share characteristics of both core and peripheral countries. Division of Labor: Periphery Periphery refers to low-income countries whose natural resources or labor support wealthier countries, first as colonies and now by working for multinational corporations under neocolonialism. Peripheral countries are dependent on core countries for capital and have underdeveloped industry. Additional Note: The World system theory was coined by Immanuel Wallenstein