Download Class 2: States and Markets

International Sociology:
States and Markets
Sociology 2, Class 2
Copyright © 2010 by Evan Schofer
Do not copy or distribute without permission
Announcements
• Section meetings start next week
• You will be expected to have completed reading
assignments from weeks 1 & 2
– Except Elwood Chapters 1,2… you can take extra time to
complete that reading
• Readings via webfiles
• Most people are doing fine, but some can’t log in
• I sent an alternative link via email. Check your inbox.
• Add cards
• Class is mostly full, but I can sign a few more
• See me after class
Agenda
• Brief review
• Discuss some news items relevant to class
• Some additional video & discussion
• Commanding Heights, Part I
• Crams in a lot of useful historical background on the
emergence of the global economy…
Review: States and Markets
• States and markets mean:
Review: States and Markets:
Definitions
• State: The central government of a country
• Markets: Systems that facilitate the
exchange of goods and services
– Related terms:
state
government
public sector
regulation
• Also, “democracy”
– Reich
market
economy
private sector
capitalism
In the News… the UC
• Schwarzenegger Seeks Shift From Prisons to Schools
– Gov. Arnold Schwarzenegger proposed on Wednesday to greatly reduce the
amount of money California spends on its prisons and to funnel that sum to the
state’s higher education system instead. …Much of the prison cost savings he
envisions would come though privatizing services or prisons themselves,
anathema in a state where the union for corrections officers has held political
sway for years.
– Under the governor’s proposal, no less than 10 percent of the state’s general
fund would be allotted for higher education and no more than 7 percent would
go to the state prison system. If the administration fails to win passage in the
Legislature, it will probably seek to put the issue before voters in a ballot
initiative.
– While scores of state services have been reduced or eliminated in response to
budget deficits, Mr. Schwarzenegger is loath to leave office as the governor who
oversaw the dismantling of the most famous public university system in the
nation. “Those protests on the U.C. campuses were the tipping point,” the
governor’s chief of staff, Susan Kennedy, said in an interview after the speech.
– But a spokesman for the California Correctional Peace Officers Association,
Lance Corcoran, called the proposed privatization and “definitely a threat to
public safety in California.” Lawmakers fear the union, which is well known for
campaigning heavily against proposals it dislikes and focusing on lawmakers
who support them.
– NYT January 6, 2010
In the news: the UC
• Remarks:
– 1. Government budget decisions creates winners
and losers
• Prison guards stand to lose if prisons are privatized…
• And they have a record of effectively fighting to protect
their interests
– 2. The importance of social movements
• Social movements = groups that engage in protest or
other challenges to the state
• We will revisit the issue of social movements…
– Ex: “anti-globalization” protestors and groups like Al Qaeda
In the News: China
• Chinese Decision on Rates Seen as ‘Turning Point’
• China’s central bank raised a key interest rate slightly Thursday for the
first time in nearly five months, in what economists interpreted as the
beginning of a broader move to tighten monetary policy and forestall
inflation.
• Weekly sales of central bank bills are part of a process that economists
describe as “sterilization” of China’s extensive intervention in currency
markets. As U.S. dollars and other foreign currencies pour into China from
its trade surplus and foreign investment, the central bank prints vast sums
of renminbi and issues them to buy those dollars and other currencies.
• To prevent all those extra renminbi from feeding inflation, the central bank
then claws back the renminbi from the market through a series of
measures that include the sale of central bank bills. The goal of
sterilization is to keep inflation under control in China while keeping the
renminbi weak. That helps make China’s exports competitive overseas
and preserves jobs in China, while contributing to unemployment in
countries producing rival goods.
• China’s foreign-exchange regulators have redoubled their efforts in the
past two months to prevent inflows of so-called hot money — capital that
moves on a short notice to any country providing better returns.
In the News: China
• Remarks:
– 1. Governments try to adjust their economies to
gain advantage
• Maximizing economic growth and trade competitiveness
– 2. In a global economy, these efforts involve
complex activities… like manipulating the value of
one’s currency
• We’ll unpack this in coming weeks
• This creates winners & losers… and has produced some
degree of tension between China and other countries…
Commanding Heights, part 1
• The video series examines the emergence of
the global free-market economy
• Part 1 looks more specifically at the shift away from
government planning of the economy
• Key people:
– Hayek: An economist, a proponent of free
markets
• Related: The “Austrian school”, the “Chicago School”
– Keynes: An economist who devised ways for
governments to regulate the economy
• And argued that capitalism works better with regulation.
Video: Commanding Heights, part 1
• Review: Chapters 1-3
– A global economy emerged in the late 19th century
• Was wiped out by World War I and the Great Depression
– Some groups (e.g., Marxist-Leninists) rejected
capitalism entirely
• Revolutions resulted in communist rule – eventually
encompassing nearly 1/3 of the globe
– Today’s video:
• In the 1930s & 40s, capitalist countries moved in a
Keynesian direction… strong regulation of the economy
• In the 1970s, countries shifted back toward “free
markets”…
– Which is linked to a re-emergence of a global economy.
Video: Commanding Heights, part 1
• Some concepts that come up…
•
•
•
•
•
Hyperinflation
Market bubble / crash
Bank Runs
Mixed economy
Welfare state