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Slide 1: Production, Consumption & Corporation
Slide 2: History and Context     Economic collapse - WWI, Depression, WWII Almost all major economies affected Protectionism in Nation States Fear of recurrence of depression led to planning a more international economy  Focus on reducing trade barriers, creating conditions for the free-flow of money and investment, and financial stability around the world
Slide 3: 1944: The Bretton Woods System  Each state establishes a value for its currency in terms of gold - establishing an exchange rate value  An official monetary authority (for e.g.a central bank) in each country agrees to exchange its own currency for those of other countries at the rate of exchange  International Monetary Fund established to oversee and stabilize exchange rates (in 1946 forty states became IMF members and were required to deposit some gold reserves within it)
Slide 4:  IMF approved values of currencies - if the currency was destabilized the IMF could lend member states money to stabilize it.  Because of the economic power of the US at the time, the US dollar became in effect the global currency  Between 1958 - 1971 the US could not change the value of the dollar while all other countries could (but as infrequently as possible) making exchange rates stable enough to permit international trade and investment  1971, Nixon takes US off the gold standard resulting in devaluation of dollar and recession
Slide 5: World Trade Organization  Organization with a focus on trade -headquarter in Geneva Switzerland with 152 member nations  Each member has an equal vote  Regulates things like equal flow of manufactured goods or food  Premised on neo-liberal idea: all nations benefit from free trade therefore reduce barriers  Questions about whether this is equal
Slide 6: International Monetary Fund “An organization of 187 countries working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth and reduce poverty around the world…” (www.imf.org)
Slide 7: Problems?  Imposition of structural adjustments on poorer in order to lend money  Questions relating to governance: dominated by US - developed nations control more than 50% of the vote  Managing director of IMF usually comes from Western Europe  Greater transparency
Slide 8: IMF Now  Global economic meltdown mean that IMF is playing a key role in helping economies on the brink of disaster (e.g. Iceland)
Slide 9: World Bank  Provides funds to government sponsored programs in member states that are middleincome or creditworthy poorer nations (Part II countries)  Provides advice and services to such countries to encourage their productive facilities  Encourages international investment  Helps member states to improve their standard of living and labor conditions (Bradlow 2007)
Slide 10:  The World Bank is not supposed to intervene in political affairs  All member states have a say but number of votes depends on its size and importance in the world economy  Countries receiving a loan do so at very low interest rates  Borrower countries expected to pay back the world bank - so decisions about loaning depend on that ability
Slide 11: Problems?  Dominated by rich developed nations  Serves certain interests  2007 annual report caused shock:  1980’s & 90’s bank had pushed public sector in Sub-Saharan Africa neglecting agriculture  One of the poorest regions of the world almost totally dependent on agriculture  Neo-liberal assumption that agriculture would improve with privatization and market forces  Consequences for agriculture disastrous
Slide 12: Other important players in economic Globalization  Organization for Economic Cooperation and Development (OECD) - broad group of developed nations that      Gather research/statistics on economic globalization Look at the performance of nations Deal with taxation issues and evasion in a global economy Promotes flow of capital and the globalization of finance Involved in global environmental issues  Closely associated with neo-liberalism  Tries to coordinate national policy responses to issues in global economy etc.
Slide 13: European Union  EC = largest domestic market in the developed world (overtaken soon by China)  1992 - Masstricht Treaty - creation of a monetary union (European Central Bank) and the Euro  Strengthening of European parliament  More cooperation between member states
Slide 14: Multi-National & Trans-National Corporations  Are companies more important than states?  MNC’s account for about a tenth of the worlds GNP (Gross National Product)  There are lots of MNC’s but some dominate (IBM, Intel, Microsoft, Sony for e.g.)  Majority in developed world  BUT developing countries hot on heals
Slide 15: Why MNC?  Reached saturation point in domestic market  Need to be physically present in another country in order to do business  Get around extortionate tariffs by being located in that country  Access natural and human resources
Slide 16: Why Global Recession?  National economies around the world are interconnected  The more powerful the economy, the greater the impact on others and the wider spread of the crisis  US sub-prime mortgage crisis for e.g.
Slide 17:  Sub-prime lending refers to loans that are high-risk  2006 - American economy in meltdown due to rise in subprime mortgage defaults and foreclosures  Collapse of some of the biggest lenders (in UK - Northern Rock)  Near global crisis
Slide 18: Trade and Consumerism  Trade in goods and services = essential to the global economy  Most trade requires different levels from production to consumption  E.g. cotton - T-shirts  Scrap metal - car parts etc.  At each stage of the production process, ‘value’ is added (I.e. the T-shirt has greater value than the original cotton)
Slide 19:  Difference between Buyer/seller companies and Producer/seller companies  Buyer companies:  do not produce their own products  determine what industries produce and how much they produce  Buy products that are then sold under their own brand-names  Examples?
Slide 20: Case study: T-Shirts (Rivoli, P. 2005 Travels of a T-Shirt in a Global Economy, NJ, John Riley)  US government pays American textile manufacturers to use American cotton and subsidises the cotton farmers (free trade?!)  Global trade in t-shirts not free and open cap put on the number of t-shirts that could be imported to US (to prevent China cornering the market)  In a free market, China would dominate because it produces the best quality and cheapest t-shirts
Slide 21: Consumption  Demand for commodities goes beyond the needs of specific industries and their production processes  Expanding consumer society (e.g. China, India etc) - demand for same products US and Europe have  Lots of money invested therefore in creating ‘brands’ why?  Recognised and trusted throughout the world
Slide 22:  Do people define themselves by what they consume?  Does what you choose to buy say something about you as a person?  Why would you choose a ‘brand name’ over something else?  Where would you choose to buy clothes if you had lots of money?     M&S DKNY Vivienne Westwood Primark
Slide 23:  What type of people drive:  Porsches, Fords, Beetles, VW Golfs, Range Rovers?
Slide 24:  Through globalisation the process of consumption has become standardised  We know how to buy things, use credit cards, order things online etc.  What are our main consumption sites?     Shopping centre Fast-food restaurants Internet sites etc. Is consumption equal throughout the world?
Slide 25:  Hyperconsumption: Buying more than we can afford to  Hyperdebt: borrowing more than we can afford to pay What contributes to our cycles of hyperconsumption and hyperdebt?
Slide 26: 1. 2. 3. 4. 5. 6. Why is milk sold in rectangular containers, while soft drinks are sold in round ones? Why are DVD’s sold in much larger packages than CD’s even though the discs are the same size? Why do bars charge for water but give peanuts free? Why do we leave tips for some services and not for others? Why do lawyers spend more on cars and clothing than University professors on the same income? Why are car engines much smaller in Europe than in the US?
Slide 27: Next Week…  Readings:  Ritzer, G. (2004) The Globalization of Nothing  Ritzer,G. (2007) The Globalization of Nothing 2  Half of your group read one article, the other half the other - decide among yourselves before collecting the reading