Chapter 3
Globalization, Neoliberalism,
And The Nation-state
Problem 3
What is globalization,
and what does it have
to do with me?
Questions
3.1 How do we define happiness and
well-being?
3.2 Where does the wealth needed to
sustain growth come from?
3.3 What kind of economic system is
necessary to sustain growth?
3.4 What is the role of the nation-state
in sustaining growth?
Question 1: How Do We Define
Happiness and Well-Being?
• Every culture has a material symbol or activity
that defines what is needed for well-being and
happiness.
 The Trobriand Islanders engaged ritual exchange of
shell necklaces and bracelets.
 The Dogon of West Africa defined their existence
through art.
How Do We Define Happiness and WellBeing?
• For contemporary society, the key is
money. We have a “market economy.”
• Over the past 5,000 to 10,000 years,
markets have existed for people to
buy and sell goods.
▫ We buy our own food.
▫ We purchase or rent our shelter.
▫ Without money we could barely
survive.
Types of Money
• Commodity money: money that is backed by
something of worth, such as gold or silver
• Fiat money: money that is backed by nothing other
than a government decree that be accepted for the
sale of goods or services or the settlement of debt.
•
• Credit money: money that is created by loans
A Brief History of Money
• Money is a medium of exchange.
• Precious metals were used as objects of exchange
in Mesopotamia 5,000 years ago/
• The use of coins dates back to 7th century B.C.E.
▫ This was called commodity money because the
substance had value in itself.
Gross Domestic Product (GDP)
• While money is a source of individual well-being,
the GDP is a measure of national well-being.
• The GDP is the total of goods and services bought
and sold each year.
Question 2: Where Does the Wealth
Needed to Sustain Growth Come From?
• Capital Conversion: to produce something, we
convert a nonmonetary resource directly or
indirectly into money.
• The more things people must pay for, the more the
economy grows.
• Some things that we would not consider desirable,
such as a divorce, an oil spill, an illness, or a
natural disaster, are economically positive because
they result in money being spent.
The
Conversion
Of Natural,
Political,
And Social
Capital
Into Money
Political Capital
• The freedom we have to regulate our lives and
the access we have to societal leaders.
• CEOs can assign or withdraw resources at will,
open and close plants, change product lines, or
lay off workers with no recourse by persons or
communities that are affected.
Social Capital
• Connections among individuals and the norms of
reciprocity and trustworthiness that arise from
them.
• Social capital resides in solidarities, people
working together for the common good.
• Social capital can improve our lives by making
people aware of how our fates are linked while
building social networks that help people fulfill
individual goals.
Question 3: What kind of economy
system is necessary to sustain growth?
• Adam Smith believed
that by seeking money
and wealth, each person
would work toward
supplying what others
needed or demanded.
The Emergence of Neoliberalism
• Neoliberalism: the view that well-being is best
served by liberating individual entrepreneurs to
operate in a framework of strong property rights,
free markets, and free trade.
• The role of the state should be limited to
safeguarding the integrity of money and
maintaining military, police, and legal structures.
Nation-state
• One function of the nation-state is to ensure
that businesses and corporations profit and that
commodities are affordable to consumers.
• Thus, laws and regulations are written that
permit corporations to externalize costs so that
rarely, if ever, do consumers pay the real price
of things.
Market Externalization
• Market Externalities:
costs or benefits of
economic transactions that
are not included in prices;
may include the
environmental, social, or
political consequences of
market transactions
Question 4: What is the Role of the Nationstate in Sustaining Growth?
•
To promote free trade means to
remove barriers to the flow of goods
and capital between nations.
•
These barriers might include taxes
on goods from other countries that
compete with domestic industries.
•
They may also include subsidies to domestic
industries to give them an advantage over foreign
industries.
Three strategies for balancing public
demand and corporate interests:
1. Pay lip service to social, political, and
environmental concerns by emphasizing values
such as democracy and freedom, but take little
action.
2. Displace regulatory power onto unelected and
largely remote global governance institutions.
3. Free corporations and the mass media to spin
events and news to allay public fears and
interests.
Gross Production Versus Genuine
Progress, 1950–2004
http://genuineprogress.net/genuine-progress-indicator/
1. THE STORY OF STUFF - Consumerism, Capitalism, &
Environment in America (22 MIN)
https://www.youtube.com/watch?v=3eWBg8ojno4
Published on Aug 15, 2012
The Story of Stuff - Consumerism, Capitalism, &
Environment in America [HD] [Full Video] - Consumerism,
Capitalism, Environmental Destruction, and what you can
do to make the global economy more efficient and less
wasteful!
Exercise 3. Calculating the Real Cost
of Things
• Each morning, most students in the U.S. begin
their day by brushing their teeth, washing their
face, and using the toilet facilities. Then, perhaps,
they have a glass of orange juice or a cup of coffee
with bacon and eggs, take a shower, get dressed
and drive to school where they use computers and
other materials for learning.
• But what are the hidden costs of these activities?
That is, what sort of environmental, health, and
economic costs are involved in these activities that
we don't pay for directly?
2.*** Free Trade vs. Fair Trade: 6min
https://www.youtube.com/watch?v=VNPkiJrk_Bw
• Published on Apr 18, 2014
• Wouldn't it be great if public policies benefited
the public, so everyone could prosper, and socalled "free trade agreements" valued our
precious resources rather than exploiting
people and the planet? As consumers, we have
the power to vote with our dollars, as well as
to engage in local and federal policy reform in
order to help change and transform our global
economy to protect our people and planet.
3. The myth of 'ethical' shopping: 6min
https://www.youtube.com/watch?v=dnkaCrD1CBI
Uploaded on Feb 10, 2010
Kendra Okonski debates 'ethical' shopping on BBC News.
4. The View On The Streets: ethical shopping & fair trade: 20 min
https://www.youtube.com/watch?v=VIoXP5lgaBM
Uploaded on Dec 12, 2011
In the run-up to Christmas, many charities are encouraging us to shop
ethically. By making moral choices about what you put in your shopping
trolley, these charities say, you will not only have a guilt-free shopping
experience but you will be helping millions to escape the worst excesses
of poverty. But what exactly are these ethical principles which underlie the
fair trade label and what do we really know about it? In this revealing
report, we ask the public if they buy into fair trade and the response is a
mixed bag. Many base their purchasing decisions on price and need and
plenty of people who know the score in the developing world see it as far
from fair.
Discussion Questions
1. What do you think about the role of “ethical
shopping”?
▫ For example: Is it a new ideology, a cliché or
hype, niche-marketing, or a valid concern for the
welfare of producers living in poverty?
▫ Should morality be a consideration in our daily
shopping habits?
Glossary of Key Terms
Capital conversion (p. 94) The transformation of something that has no
monetary value into something that can be bought and sold in the market.
Commodity money (p.90) Money that is backed by something of worth, such
as gold or silver.
Credit money (p. 91) Money that is created by loans.
Fiat money (p. 91) Money that is backed by nothing other than a government
decree that it be accepted for the sale of goods or services or the settlement of
debt.
Genuine progress indicator, or GPI, is a metric that has been suggested to
replace, or supplement, gross domestic product (GDP) as a measure of
economic growth. GPI is designed to take fuller account of the health of a
nation's economy by incorporating environmental and social factors which are
not measured by GDP.
Gross Domestic Product (GDP) (p.92) The total of all goods and services
bought and sold in a given year.
Market externalities (p. 121) Costs or benefits of economic transactions
that are not included in prices. These may include the environmental, social,
or political consequences of market transactions.
Neoliberalism (p. 100) An economic philosophy that argues for minimal
government involvement in the economy and greatly accelerated economic
growth. Well-being, neoliberals argued, is best served by liberating
individual entrepreneurs to operate in a framework of strong property rights,
free markets, and free trade.
Political capital (p. 96) The freedom we have to regulate our own lives and
the access we have to societal leaders and decision-makers.
Social capital (p. 98) Relations of reciprocity and trust that enable people
collectively to solve their problems.