THERE IS NO ALTERNATIVE?

The rise of global capitalism

Globalisation

According to Anthony Giddens (1990, p.64), globalisation involves:

“the intensification of worldwide social relations which link distant localities in such a way that local happenings are shaped by events occurring many miles away and vice versa”

Globalisation is an evolving process, not a thing that has happened

Our progress

We have considered how global social structures are challenging local identifications Is the nation state still relevant?

We examined the development of a global media system Do we hear more voices or fewer in the global sphere?

We discussed whether we are becoming more or less similar? How does this impact your family and your cultural

identity?

From individual to collective

The predominant attitude of the young in Western societies is of increasing acceptance of individual expression – ‘be who you want to be’

This individualism has led to greater acceptance of, and rights for, minority identities and lifestyles

Conversely, the societal expression of individualism is consumerism and a resigned attitude to collective change

Over the next three weeks we will consider the social consequences of our individual actions, asking what capacity we have to enact change

1. Critically evaluate the impact of the expansion of capitalism on the

global poor

2. To what extent should developing nations be forced to reduce their

carbon emissions?

3. Using examples from contemporary London, discuss the extent to

which the ‘world city’ promotes post-national cultural identities

4. What is meant by ‘the end of history?’ Is this term still relevant in the

21st century?

1500 words, worth 70%, due Monday April 13th, 3pm

The essays

Today

An introduction to the dynamics of capitalism

Globalisation as global capitalism

The global dominance of the logic of capitalism

The rise, shame and fall of financial capitalism

Rising global and local inequality

To what extent does global capitalism work primarily for the wealthiest?

Do you feel any responsibility for

global poverty and/or climate change ?

What is economics?

Capitalism, and economics, can often seem very abstract

Economics concerns the material reproduction of our lives

Material reproduction is the ways in which we organise our lives in order to eat, drink and reproduce our societies

There is no ‘natural’ way to materially reproduce our society

The currently dominant system is ‘capitalism’

What is capital(ism)?

Capitalism is the social system in which capital is accumulated

Capital is money deployed to buy commodities in order to sell them for more money

This money can be accumulated to become more capital, which is then reinvested to make more money

This is the cycle of capitalism – a successful capitalist economy will continually expand

The cycle of capital

Money

Commodities Money II

Commodities

The corporation

Corporations, those who control capital, are privately owned, whether by individuals or by shareholders

The primary purpose of a corporation is to make profit for the owners

All business decisions should be taken with this in mind

A corporate community

Corporations now dominate our lives

Our economies require both corporate investment and continuing corporate profit

Corporations demand favourable tax and employment laws

What is good for corporations is thought to be ‘good’ for society

Corporate values have seeped into everyday parts of our lives

The professional sport business…

Is owned privately by individuals

Has a primary purpose of accumulating profit

Sport is the product to be sold to consumers

Sporting decisions become business decisions

Club culture becomes brand value

Sportspeople become employees

Do sports teams ever feel like businesses to you?

Corporate universities

As university fees have risen, students are becoming more concerned with their employment prospects

In response, universities are becoming more concerned with ‘employability’

Rather than being a ‘public good’, universities are focusing on the demands of employers

Are you concerned about finding a job after

graduation?

What about globalisation?

Globalisation and global capitalism have developed concurrently

The major trends of globalisation have matched the expansion of capitalism

Imperial trade and colonisation

The development of global economic institutions

The emergence of transnational corporations

Electronic communication and financial trading

Globalisation as global capitalism

Capitalism is naturally expansive

In order to find places to invest money, the owners of capital are always searching for new markets and new consumers

Going in search of these markets, capitalism has expanded across the world through multi-national companies and global economic reform

In turn, capitalist expansion has created a shared culture of corporate values

In The Communist Manifesto, Karl Marx argued that:

“The need of a constantly expanding

market for its products chases the bourgeoisie over the entire surface of the globe. It must nestle everywhere, settle everywhere, establish connections everywhere”

Inherently global

Instituting Capitalism

After the catastrophe of World War II, new global economic institutions were established

These institutions, the International Monetary Fund (IMF) and World Bank, were established at the ‘Bretton Woods’ conference of 1944

These institutions attempted to create global economic stability by establishing a shared economic framework

Global economic ideas

The IMF seeks to manage the world economy by ensuring a predictable economic system

Whilst it mainly seeks to advise, it also makes loans – with strong conditions that enforce economic policy upon poorer nations

Decisions are made by votes, but votes are based on financial contributions The US has 16.75% of the vote, the UK 4.29% and China has

3.65%

The United States also has veto control of the World Bank

Being transnational

The most visible aspect of global capitalism are transnational corporations

Transnational corporations do not have a specific ‘home’ location

The development of transnational corporations (TNCs) has been a significant element of globalisation as power moves beyond the reach of the nation-state

Source: The Economist, 2012

What transnational corporations

involved in your life?

The power of the TNC

TNC’s bring Foreign Direct Investment (FDI) to national economies, which compete for these funds

These companies have come to dominate capitalism and drive globalisation

Whilst this can distribute wealth globally, many TNCs have become immensely wealthy and powerful

Corporate control

Researchers at the University of Zurich found that there are 43,060 transnational corporations

Of this 1,318 companies dominant the global market

147 of these companies, mostly banks, control 40% of the wealth

These companies are intensely interconnected, often owning parts of other companies and leaving the system vulnerable to collapse

http://arxiv.org/PS_cache/arxiv/pdf/1107/1107.5728v2.pdf

Problematic control

Because of this power they are often able to dictate political conditions in host countries

Countries are finding it increasingly difficult to gather tax from transnational corporations In 2012 Starbucks made a loss of £30million in the UK,

despite doing £414 million in sales

The size of these corporations has also lead to wealth accumulating in an increasingly narrow range of individuals

Material reproduction within a particular locality is conducted by and for the benefit of those with no stake in that locality

The rise of finance capital

Since the 1990s the global economy has become increasingly ‘financialised’

Rather than being orientated around trade of goods and services, advanced economies are dominated by the complex trading of currency

The ‘crisis of accumulation’ of the 1970s meant that capital had to find new ways to make money

Instead of using money to buy commodities, the financial economy uses money to buy money

Source: Spiegel, 2011

You are a banker too!

Any money you have in the bank is a loan to the bank

Banks invest this money into financial markets

They are only required to maintain a small amount of deposits

They make a profit by gaining more from your money than they pay in interest

Are you mad at yourself?

The shame of financial capital

Any commodity can be traded within the financial economy

This includes basic items like food – trading in cereals and rice can greatly increase prices, particularly in famines when supply is low

People might be dying, but profits are rising

http://money.cnn.com/2010/08/05/news/economy/wheat_prices/

The fall of financial capital

Beginning in 2007, a crisis developed in the global banking system from which we have not recovered

Whilst the causes of the crisis are complex, banks had taken such high risks with their debt that when one institution could not pay, others also collapsed

The collapse of the financial sector spread throughout the economy, leaving us wallowing in debt and having to make ‘difficult decisions’

Despite all of this, almost no bankers have been jailed and tax dodging continues

There really is no alternative

Former Prime Minister Margaret Thatcher famously said, ‘There is no alternative’

Whilst the financial crisis showed the weakness of capitalism, it has also made it stronger than ever

Governments were forced to bail out banks to stop the ‘real’ economy from total collapse

Troubled economies are unable to act if it is not supported by the market

Inequality is rising – but there doesn’t seem to be anything we can do about it

https://www.youtube.com/watch?v=uWSxzjyMNpU

The consequences of inequality

Inequality tends to produce greater tension between people, creating crime and decreasing social cohesion

There are also strong effects on health and life expectancies, including factors like obesity and teenage birth rates

Overall societal well-being tends to fall in societies with very high inequality

Why would higher inequality increase the homicide rate?

The global elite

If anything has become globalised it has been an elite class

Both capital, and capitalists, are able to move freely around the world, often owning multiple homes around the world

These bankers, investors and other elites have begun to live in a world quite divorced from the other 99%

Everything can be sourced privately in a ‘bubble’ cut off from regular social reality

This global elite is a noticeable feature of London life

DIY Summary

How has global capitalism impacted upon globalisation?

Critical reflection

Any questions?

Next Week

WEEK 8 THE FLAT EARTH HYPOTHESIS: DEVELOPMENT, INEQUALITY AND POVERTY

Core readings: Chapter One, Friedman, T. (2005) The World is Flat: A Brief History of the 21st Century. New York: Farrar, Straus and Giroux.

Millennium Development Goals: http://www.un.org/millenniumgoals/