Lecture 3 - Organised Global Capitalism Flashcards
What is Capitalism
An economic and political system in which a country’s trade and industry are controlled by private owners for profit, rather than by the state.
When was organised capitalism (years)
1900s to mid-1970s
What is organised global capitalisation
‘Organization’ of production, labour and consumption - Capitalism – factories at the centre of everything, ‘all under one roof’ processes of production
What was the era also called
‘Golden Age’ of Fordism – system eventually collapsed after this
What set boundaries of organised global capitalism
Keynesianism
What did Keynesianism do
Set boundaries of organised global capitalism
What sector currently drives the economy and what was it in the past
The service sector drives the economy, used to be about manufacturing tangible commodities and goods
Who was F W Taylor (1856-1915)
One of the first people to study rationalisation of the process of production, and economies, and efficiencies
Who studies the study rationalisation of economies
F W Taylor (1856-1815)
What is taylorism
The study of Taylors work / theories are called
What did Taylor find out about the rationalisation of economies
- Time and motion analysis – tiny changes in efficiencies at a small scale, can scale up and lead to larger efficiencies at a manufacturing and productive scale
- Standardisation & a de-skilled labour process
- Re-integration of the production process
- Time & motion analysis of production
- Technical division of labour
Who was Henry Ford
One of the most important figures in economic history – was a business owner not an academic
But put the theories of people such as Taylor into practise
What did Henry Ford do
Founded Ford Motor Company in 1903
Features of Ford Cars (Henry Ford)
All cars were similar / same looking, homogenous (drove down the costs of the product = increase affordability)
Ford Cars in America 1918 (Henry Ford)
By 1918 50% of all cars in the USA were ‘Model-T’s
How did Henry Ford treat his workers
He was anti-trade union, welfare capitalist, but paid a sufficient amount to his workers, creation of thousands of jobs:
-Saw this ^ as being key, paid his workers $5 per working day, with 8 hour days, shortening the working day
Henry Ford contribution to economy
- River Rouge Plant, Dearborn Michigan
- 16million square feet of factory floorspace
- Employed over 100,000 people in the 1930s
- The finest example of vertically integrated production
- Coke and iron ore went in one end, cars came out of the other
Characteristics of Fordism: the production process
- Economies of scale
- Mass production of homogeneous products
- Uniformity and standardisation
- Large buffer stocks - just in case production
- Cost reduction through wage control
Characteristics of Fordism: labour
- Single task performance
- Payment per rate job
- High job specification
- Bureaucratic labour hierarchy
- Discipline through pacing the assembly-line
Characteristics of Fordism: space
- Functional spatial hierarchy
- Spatial division of labour
- Consumption organised through urbanisation
Characteristics of Fordism: state
- Collective bargainning
- Socialisation of the welfare state
Characteristics of Fordism: ideology
- Mass consumption
- Modernism
Importance of Fordism
- Enabled commodities to be produced en masse and to a guaranteed standard
- Production of goods could occur ‘under one roof’ rather than being spatially dispersed (eg: vertically integrated)
- Production/labour was fragmented and de-skilled
- Mass production in this fashion enabled mass consumption
Global implications of Fordism
- Mass production diffused across the globe but became concentrated in certain cores (e.g. major cities such as Birmingham/Detroit/etc)
- Products became cheaper opening up new markets for product sale and distribution
- The nation state was vital in managing industrial policy and making a country competitive with other nations
- Social relations transformed markedly – power of the working classes and trade unions increased
What could mass production not exist without
Mass consumption (and vice versa)
What meant that people had a large amount of disposable income
High levels of industrial employment and welfare statism (e.g. NHS, social security)
What drove down prices of goods
Efficiencies of mass production drove prices down rendering goods affordable
How does consumption affect the economy
Consumption becomes vital to economic development and growth globally.
What did an approach to economics promoted by John Maynard Keynes (1883-1946) recognise
-Markets are not self regulating but need managing
-That capitalism was (necessarily) subject to cyclical crises
-That government should stimulate aggregate demand (for goods and services) – such as free healthcase, social housing etc.
-That government should promote equilibrium
-That government should strive toward full employment
Who believed in the state and regulation
Keynes (1883-1946)
What did Keynes believe in
Regulation and the State
What did Keynes believe the state should control
- Wages
- Competition
- Money
- The state
- International
What is the gold standard
Where the value of major currencies is fixed to the price of gold
What is it called where the value of major currencies is attached to the price of gold
The gold standard
When was the gold standard
1870-1914
What kind of exchange rate was the gold standard
Fixed
Effect of the gold standard
Required states to adjust automatically to financial disciplines – quick at adjusting to fiscal activities – would be ‘punished’ by community if set a fixed XR
Reality of the gold standard
- Great in theory but inflexible
- World War 1 and the Wall Street Crash changed things massively
- Conditions changed but the system didn’t…
Who organised the Bretton Woods system
Keynes
When was the Bretton Woods system
1945-1973
What is the Bretton woods system
Fixed national currencies to the USD, which was in turn fixed to the price of gold
What was it called when national currencies were fixed to the price of gold
The Bretton woods system
What does global trade imply
Implies a world-wide market but NOT that each country actively trades with each other
When did truly global markets emerge
Under the Gold Standard for primary products
What are indicators of global trade ultimately
Questions of extensity and intensity
What is extensity as an indicator of global trade
Extensity refers to the regular intercontinental flows and networks of trade. Data can be used to assess whether trade is globalising (becoming more spatially extensive) or regionalising (becoming more concentrated between certain nations in certain regions)
What is intensity as an indicator of global trade
Intensity refers to the magnitude of global trading activity. We can use a simple ratio of global trade to global output
When did trade increase
After the collapse of Fordism (organised capitalism) + increased trade liberalisation
Who is a big agricultural trader
China is the biggest agricultural producer
Who is the biggest service trader
Finance services have dramatically increased in time – UK is a prime exporter of these services
Prime importers are USA
Who has little trade within the service sector
S America, Russia and Africa have little trade within the service sector
When did protectionism become rife
1929
What happened in 1929
Protectionism became rife - fractured economic landscape as a result
The inter-war years
- States raised tariff barriers to prevent cheap imports
- This massively impacted on international trade
What did Bretton Woods and Gatt recognise
The need for a multi-lateral global trading order
Prior to this, trade negotiations were carried out between two countries (bi-lateral)
Who recognised the need for a multi-lateral global trading order
Bretton Woods and Gatt
Global Integration Mirrored by Regional Integration
- 1949 – 1990: COMECON (Socialist States)
- 1957: European Economic Community (EEC)
- 1967: Association of South East Asian Nations (ASEAN)
- 1992: North American Free Trade Association (NAFTA)
TNC/MNC definition
A corporation that invests its capital resources in more than one country to engage in their ordinary business of extracting, producing and/or selling materials, goods and services (Schoenberger 2009)
What is a TNC not automatically
A global firm
First TNC
Probably the Dutch East India Company
What do TNCs want
Profit
What is transnationalising driven by
A desire to increase R, decrease C or ideally to do both in pursuit of >P
The macro level: expansion of the circuits of capital
- Part of the natural capitalist expansion
- Emphasises the interconnected role of finance, commodity and production
- Appropriation of surplus value
- Transnationalisation allows this to accelerate
How does a firm turn into a TNC
- Export overseas
- Get foreign license
- Establish overseas market sales outlet
- Establish production overseas
What is market orientated production
Horizontal expansion across national boundaries
Designed to service a (new) market with a product
What is asset orientated production
The assets needed for a firm to produce and sell in a foreign country are not evenly distributed
What has to be considered when setting up a factor abroad
- Labour knowledge and skills
- Wage costs
- Labour productivity
- Labour controllability
- Infrastructure
Why did China take off in the 1950s
Major government investment in technology and science improved skills, efficiency and capital mobility
What did GATT do
Make the global marketplace more permeable
What made the global marketplace more permeable
GATT
Why was there a rising demand for consumer goods in NICs
Rising wage levels
