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| World Trade Organization, founded in 1994, purpose to liberalize international trade by enforcing free trade rules, arbitrary international trade disputes and working to force new global agreements on the removal of tariffs and Non-tariff barriers. (GATT was its precursor) |
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| International Monetary Fund (IMF) charged with ensuring the stability of the world financial system and dealing with short term financing crisis experienced by countries with big balance of payments imbalances. |
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| (There Is No Alternative) claim to inevitability made by Margaret Thatcher, pro-market policies. |
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| (Multi-National Corporations) it is different from TNCs because MNCs opened their own factories in another country to gain access to that market |
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| (Transnational Corporations) companies that have the capacity to coordinate and control operations in more than one country, even if they do not own the factories and pay the foreign workers directly. |
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Foreign Direct Investment (FDI) A foreign direct investment is an investment in the form of a controlling ownership in a business in one country by an entity based in another country.
a) “Greenfield Investments” in foreign factories, foreign retailing outlets and/or foreign offices.
b) “Mergers and Acquisitions” (M&A) of foreign companies. |
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| (Mergers And Acquisitions) like Starbucks buying other coffee shops. |
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| North American Free Trade Agreement, 1992 US, Canada, Mexico made an agreement to reduce tariff on all goods entering the signatory country from other countries. GOAL: maximize sourcing efficiency |
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| (United Students Against Sweatshops) |
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| (Workers Right Consortium) |
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| Globalization as “buzzword” an instrumental term put to work in shaping as well as representing the growth of global interdependency. A term of political speech used by politicians, business people and protesters to make politically charged arguments. |
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| globalization as integration. The extension, acceleration and intensification of consequential worldwide connections (increasing global inter dependencies). |
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| are things that are bought and sold for money (goods or services). |
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| all the steps in the economic journey connecting the production of raw materials and components to the assembly and packing of commodities, to their distribution, marketing, sale, and consumption. Three crucial inputs for most commodity chains: labor, money, nature. |
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| focusing on just the product (or the image of the product) and ignoring how and where it’s made. (brand focus) |
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| is the transformation of goods, services, ideas and people to commodities (like education). |
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| The aggregate of all human physical and mental effort used in creation of goods and services. Companies need labor for two purposes: As workers who produce commodities; and as consumers who buy commodities. But the workers who make and the workers who consume no longer work and live in the same countries. (Technical Divisions of Labor Adam Smith: Splitting up work to be completed by different people with different specialized skills) |
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Critical of the globalization of corporate capitalism.
1) Global fair trade vs. free market.
2) Rebuild public services & spaces vs. privatization
3) Global protections for the environment & workers vs. deregulation
4) Investments in education and health vs. cutbacks & austerity
5) Global tax on capital movements vs. tax reductions for capital holders
6) Hold foreign investors accountable to local law vs. enticing FDI
7) Transnational worker & community solidarity vs. union busting
8) Local food security & sustainability vs. export led growth
9)Global debt relief without conditionalities vs. structural adjustment
10) Open source, shared science vs. patents and titling |
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| Sometimes referred to as ‘market fundamentalism’ or ‘laissez-faire’, it comprises a set of policies based on the idea that capitalist social relations work best when they are liberalized from government regulation. Neoliberalism makes an approach to governing capitalism that emphasizes liberalizing markets and making market forces the basis of economic coordination, social distribution, and personal motivation. |
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| Anti-Neoliberalism / Alter- globalization |
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| fair trade; protect public services; re-regulate business globally; increase public spending; tax to redistribute wealth; tax foreign exchange markets to fund; global worker solidarity; foster local food security and environmental sustainability; debt relief and local economic trading systems; and open source, shared science and free essential medicines. |
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| the “fantasy” of national self-sufficiency. |
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| after winning their national independence, many countries subsequently sought to break their dependence on foreign imports and increase the range of commodities manufactured domestically. Import substitution industrialization (ISI) is a trade and economic policy which advocates replacing foreign imports with domestic production. ISI is based on the premise that a country should attempt to reduce its foreign dependency through the local production of industrialized products. |
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| it was a series of protests surrounding the WTO Ministerial Conference of 1999, when members of the World Trade Organization (WTO) convened at the Washington State Convention and Trade Center in Seattle, Washington on November 30, 1999. (Seattle is considered: Competitive Global business city; Collaborative global justice city; curative global philanthropy city) |
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| private ownership of means of production and the creation of goods or services for a profit. 1. Ceaseless search for profit; 2. Ceaseless search for new markets; 3. Ceaseless search for cheaper inputs; 4. Ceaseless speed up of the production-sales circuit. |
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| How we think and talk about something. The shifted interpretation Discourse is a set of terms and arguments about the nature of reality that are tied together in a narrative that systematically shapes the reality it purports to describe. |
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| race to the bottom, enforcing neoliberalism through competition (cheap labor) used by critics of neoliberalism to describe net effect of new free trade regimes such as NAFTA. |
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| Upward harmonization examples |
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| : European Works Council Directive (EU legislation) vs. North America Agreement on Labor Cooperation (NAFTA side agreement). |
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| national mass production(in house, assembly line, just in case inventory, Taylorism, working class political mobilization), national mass consumption, government demanded management(gov. regulated fiscal & monetary policy), business labor arbitration by the government, development of welfare states, national economies ad financial regulation. *Ford paid workers enough to be consumers of his products* /Post-Fordism strategic global production (networked, subcontracting, just in time deliveries, flexibility & benchmarking, workers are deeply politically divided, uneven global consumption), minimalist government (gov. abdicates control of monetary policy), Anti-union laws & pro-business place promotion, development of workplace states, transnational economies and financial deregulation. |
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| Taylor rejected the notion, which was universal in his day and still held today, that the trades, including manufacturing, were resistant to analysis and could only be performed by craft production methods. Meaning that it would break up the production of something into small tasks, so it would be easier to train workers. |
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| producer driven commodity chains (“push production” like Boeing). Low market integration from in house. |
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| Market driven commodity chains (“pull production like Nike & Walmart). Becoming dominant due to outsourcing, off-shoring and increased inter-dependency, high market integration. |
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| Globalization has torn down barriers for business, use it promote neoliberalism, omniscient view on world, direct link to real practices. |
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| moving production abroad to exploit cheaper labor, lower taxes or lower regulatory control (horizontal integration) |
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| contacting a third party to provide components (horizontal integration) not necessarily out of the country. |
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| finding cheaper choices for labor and materials (ties with downward harmonization) TNCs do so. It’s not only “downward harmonization” but also finding cheaper processes, like automatizations and using bar codes. |
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| Duty or tax usually paid by exporters in order to move their products across a national border into a foreign market. |
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| How NAFTA and WTO legalese characterizes any policy or government regulation that is not a tariff, but has effect of limiting trade. Many of these laws are designed to protect environment, workers & consumers, but this does not stop the trade lawyers from calling them protectionist in trade terms. |
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| a type of collective bargaining agreement unique to the garment industry. Under such an agreement, the union does not represent the employees of the jobber; rather, the agreement regulates the relationship between the jobber and contractors involved in the integrated process of producing the jobber's garments. |
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| refers to a phenomenon that alters the qualities of and relationship between space and time. |
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| the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling. Central banks attempt to limit inflation, and avoid deflation, in order to keep the economy running smoothly. |
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| Credit Default Swaps (CDSs) they are like insurance for investors who has CDOs. They could also be bought by speculators that are bedding against that CDO. |
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Definition
a way that banks can bet in everything. Tools that get their value in relation to something else, tools to manage risks. So, they make some future contracts that can be exchange into the option market.
Futures: a futures contract (more colloquially, futures) is a standardized forward contract which can be easily traded between parties other than the two initial parties to the contract.
Options: a contract which gives the buyer (owner or holder of the option) the right, but not the obligation, to buy or sell an underlying asset at a specified strike price on a specified date, depending on the form of the option.
Swaps: A swap is a derivative in which two counterparties exchange cash flows of one party's financial instrument for those of the other party's financial instrument. |
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| Collateralized Debt Obligations (CDOs) is a combination of all kinds of loans/debts creating complex derivatives that are sold to investors. It is profitable because of interests. |
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| it is the ratio between borrowed money and the banks own money. The more the banks borrowed the higher is their leverage. |
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| they are paid by the investment banks to evaluate the CDOs. |
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| Glass-Steagall Legislation, 1932/1933 |
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| a law passed after the Great Depression, which prevented banks with consumer deposits from engaging in risky investment-banking activities. |
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| Commodity Futures Modernization Act, 2000 |
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| Banned the regulation of derivatives. It clarified the law so that most over-the-counter (OTC) derivatives transactions between "sophisticated parties" would not be regulated as "futures" under the Commodity Exchange Act of 1936 (CEA) or as "securities" under the federal securities laws. |
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| it is an incentive that has an unintended and undesirable result which is contrary to the interests of the incentive makers. Perverse incentives are a type of negative unintended consequence or cobra effect. |
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| United Nations Monetary and Financial Conference, Bretton Woods, July 1944 |
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| Allied powers organized this meeting to plan the postwar global economy. The Plan: Dollar fixed in value at $35 per oz of gold (becoming global currency); Free Trade but capital controls on international finance; International Finance meant to serve development plans of production capitalists; IMF to provide Special Drawing Rights (SDR) loans to cover balance of payments deficits; World Bank (International Bank for Reconstruction and Development) to rebuild post-war world. |
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| World Bank / IBRD (International Bank for Reconstruction and Development) |
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| The World Bank is an international financial institution that provides loans[2] to developing countries for capital programs. It comprises two institutions: the International Bank for Reconstruction and Development (IBRD), and the International Development Association (IDA). It was created at the 1944 Bretton Woods Conference. |
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| Structural Adjustment Plans (SAPs) the main way neoliberalism has been imposed by the world bank and the IMF on poor countries. Consist of neoliberal reforms and packaged and presented as the conditionalities for new loans or debt rescheduling. The major purpose of SAPs is to help a country repay its debts by earning more hard currency. |
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| it is the use of conditions attached to the provision of benefits such as loan, debt relief or bilateral aid. Two main purposes/effects SAPs on poor countries are: 1)Force indebted countries to adopt policies that promote Privatization and Liberalized Trade; and 2) Require poor indebted countries to repay loans in dollars, ensuring export and foreign trade remain at the center of their economy at the expenses of “local production for local consumption”. Some common measures under SAPs: remove price supports and import protections, cut back on food subsidies, cut jobs and wages for workers in the government, privatization… |
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| Milton Friedman started the Chicago School arguments against fiscal debt and deficit-spending as response to recession by claiming that “inflation is always and everywhere a monetary phenomenon.” |
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| he defended the liberalism. |
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| it was an early 1990s name for neoliberalism that usefully underlined the connections between free-market reforms and the controlling interests of the government of the US and Washington DC-based international financial institutions (including IMF and World Bank). It was created by the WB President to symbolize the dominance of neoliberal-thinking in key development institutions by the late 1980s. |
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| One of Friedman's theses states that individual countries must sacrifice some degree of economic sovereignty to global institutions (such as capital markets and multinational corporations), a situation he has termed the "golden straitjacket". |
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| situation where a country, individual, company, or region can produce goods at a lower cost than a competitor. |
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| gives TNCs rights to sue national and local governments for any laws or policies that are “tantamount to nationalization or expropriation” (MTBE Ban case) laws that are in their way to make business or any kind of profit. |
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| Fable of the blind men and the elephant |
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| Ex. of countries’ inability to work cooperatively, need to be aware of disciplinary limits and need to draw on lessons from different disciplines. |
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| Three myths of globalization |
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| New (Problem: history), inevitable (Problem: logical and political paradoxe), leveler (Problem: interdependency comes with inequality) form discourse that shapes common sense. |
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| Ten commandments of neoliberalism |
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Definition
1) Trade Liberalism “adopt free trade” (opening up national to foreign markets trade; generally involging removal of tariffs and No trade barriers).
2) privatize public services
3) deregulate business and finance “cut red tape”
4) cut public spending (Austerity = policy of deficit-cutting by lowering spending via a reduction in the amount of benefits and public services provided)
5) reduce and flatten taxes “be business friendly”
6) encourage foreign investment
7) de-unionize
8) export led development – “trade not aid”
9) reduce inflation – “price stability and savings protection” (structural adjustment = policies implemented by the IMF for obtaining lower interest rates on existing loans)
10) enforce property rights – “patent protection” “titling” |
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| 5 sub-types of commodity chains |
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Definition
| in-house model, captive supplier model, modular model, Network/Relational model, and Marketized model. |
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| In-house commodity chain model |
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| (Vertical Model) Vertical integration of production, distribution, and sales all within the same company. |
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| Captive supplier commodity chain model |
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| (Vertical Model) create supply links with component makers who produce only for them. Involves market mediation. Captive firm. Dependency = risk of volurability to bankruptcy. |
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| Modular commodity chain model |
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Definition
| (Horizontal Model) Breaking up of production for complete products into more simple modules. Way to combine market mediation with complexity handling capabilities of in house and captive supplier. |
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| Network/Relational commodity chain model |
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Definition
| (Horizontal Model) More correspondence between buyers and producers. Market mediation/messages superseded by relational ties. |
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| Marketized commodity chain model |
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| (Horizontal Model) “flexible network” the most market-mediated approach to commodity chain management. Most coordinated thru market mechanisms and price signals from consumers to individual producers. |
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| Net effects of global commodity changes |
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Definition
| Time-space shrinkage; creation of increasingly global markets; Global management (Vertical vs. Horizontal integrations) |
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Definition
| (US-Asia-Europe) they have 70-80% of the world’s trade. |
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| Changes from Fordism to Post-Fordism |
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Definition
Factors that prompted the transition from Fordism to post-Fordism in the US in 1970s/80s: increasing foreign competition in manufacturing; the end of the Cold War; Increasing focus on foreign markets. With Post-Fordism the inequality has increased.
The division of labor from liberal Keynesianism to neoliberalism:
Fordism *National Mass Production in-house, assembly lines, just-in case inventories, Taylorism, Working- class political mobilization;
*Government demand management gov. regulate fiscal and monetary policy, gold standard and global currencies pegged to USD.
*Business-Labor arbitration by government
*Development of Welfare States
*National economies and financial regulation
Post-Fordism *Strategic Global Production Networked and market-mediated, subcontracting, just-in-time deliveries, Flexibility & benchmarking, workers deeply divided politically;
*Minimalist gov.: Limited monetarist interventions, Gov. abdicate control of monetary policy.
*Anti-Union Laws; pro-business place promotion.
*Development of Welfare States
*Transnational economies and deregulation. |
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| Three phases of global development capitalism |
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Definition
| Liberal Imperialism, Liberal Keynesian (Welfare-state liberalism), and Neoliberalism |
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Definition
| 1820s to 1920s, economic liberalization leads to limited trade liberalization, Imperial co’s (Hudson’s Bay, East Indian) & resource co’s (BP, Dole), access & expand goods markets in countries with imperial spheres of influence & control through networks of imperial control. imperial trading companies; resource companies. Why? to access resources and expand markets for finished goods. Where? Countries within imperial spheres of influence and control. How? Networks of imperial control. |
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| Liberal Keynesian (Welfare state liberalism) |
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Definition
| 1930s to 1960s, political liberalization leads to economic autarchy, MNCs (Ford, IBM, Coke) & commercial banks (Citibank), to access foreign markets enclosed by tariff/non-tariff areas by marketing products in areas, in countries with large markets accessible under Cold War conditions, used mainly “in-house” and “captive supplier” commodity chains. Multinational corporations, MNCs; Commercial Banks. Why? to access foreign markets enclosed by tariff and non-tariff barriers by making products IN those markets areas. Where? Countries with large markets accessible under Cold War conditions. How? MNCs use mainly “in-house” and “captive supplier” commodity chains. And FDI/Greenfield investment |
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Definition
| 1970s to now, return to economic liberalism leads to global free trade, TNCs (Nike, Walmart, BP, ICI, Ford, IBM, Dole, Unilever, Coke, Citibank…), to increase profits by accessing global markets and by seeking out cheapest inputs of labor, raw material, financing, and infrastructure (countries, regions & cities that promote themselves as open markets with either cheap labor and/or business friendly sociopolitical regimes (EPZs)), TNCs sometimes use “in-house” and “captive suppliers” but also combine these or replace them using various mixes of ‘modular’, ‘relational network’, and fully ‘marketized’ commodity chains. TNCs. Why? To increase profits by: accessing markets globally and seeking out cheapest inputs of labor, raw materials, financing, and infrastructure. Where? Countries, regions, and cities that promote themselves as open markets with either cheap labor and/or business-friendly socio-political regimes (like EPZs – export-processing zones). How? TNCs continue to sometimes use “in-house” and “captive suppliers”, but also combine or replace them using various mixes of “modular”, “relational”, and “marketized” commodity chains. FDI/Greenfield Investment and FDI/M&A (more market-driven chains) |
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Term
| Trade deficit and current account deficit |
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Definition
(export goods and services minus import goods and services) The trade deficit is the largest component of the current account deficit and refers to a nation's balance of trade, or the relationship between the goods and services its imports and those it exports. A nation has a trade deficit if the total value of goods and services it imports is greater than the total value of those it exports. If the total value of a nation's exports exceeds the total value of imports, the nation has a trade surplus.
The current account deficit is a broader measure that includes the trade deficit and is itself part of a broader measure, the balance of payments. The balance of payments is the sum of all transactions between a nation and all of its international trading partners. In addition to the trade deficit, the current account deficit includes factor income and financial transfers. |
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Definition
| Dollar fixed in value at #35 per ounce of gold (becoming global currency = “peg”) |
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| Why foreign governments buy US debt? |
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Definition
| To protect themselves against speculative attacks on their own currency. To maintain the value of their own dollar-denominated assets. To keep their own currency relative low vis-à-vis the dollar. [Increase of dollar denominated debt and Vested interest in seeing dollar retain its value] |
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| Causes of 2008 financial crises |
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Definition
| The precipitating factor was a high default rate in the subprime home mortgage sector. As part of the housing and credit booms, the number of financial agreements called mortgage-backed securities (MBS) and collateralized debt obligations (CDO), which derived their value from mortgage payments and housing prices, greatly increased. Such financial innovation enabled institutions and investors around the world to invest in the U.S. housing market. As housing prices declined, major global financial institutions that had borrowed and invested heavily in subprime MBS reported significant losses. |
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| Outcomes of Bretton Woods |
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Definition
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| Re-regulative effects of trade agreements |
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Definition
Competition(trade agreements ensure competition between borders and in two fields: Between firms, and between places – it forces places to change their laws to attract business)
harmonization altering laws to be in line with economic agreements. Example: WTO provisions.
, monopolization intellectual property protection in trade agreement (book, movie…). Example: WTO TRIPS Agreement |
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Term
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Definition
1. The economic system depends on growth (in order to have more profit).
2. Capitalists are constantly searching for new markets (to expand and sell more).
3. Capitalists are always seeking ways to cut costs by finding cheaper inputs (in order to survive competition).
4. Capitalists are driven by competition to speed up the production and sales processes. |
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Definition
| it is a means of exchange, the linking tie in any commodity chain. It is a measure of value. |
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Definition
| is the difference between the interest rates on interbank loans and on short-term U.S. |
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| Many nations have already paid back the equivalent of their original debt (principal), but compound interest has made repayment virtually impossible. |
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