The Nation-state

Role of the nation-state

• Eric Wolff– 1982, “Europe & the People without History”– Core vs. periphery

• Central to development of capitalism– Guarantee ownership of means of production– Support organization and discipline of work– Provide infrastructure– Regulate conflicts between capitalist• At home and abroad• With diplomacy, or war if necessary

Role of the nation-state• Initiates economic, political, and social policies– Control money supply– legitimate use of force– Maintains social control– Provide stability &

predictability required of capitalism

Creation of the nation-state• 2 problems of early 19th Century capitalist state:

1. How to promote economic integration of those within borders?

2. How to deal with the crisis of political legitimacy ?

Creation of the nation-state• 19th century capitalist state– Diversity of languages, customs, currencies, measures

• How incorporate groups that differ culturally & who don’t associate themselves with (and are often hostile to) the nation-state?– Create common:• culture language• common history • purpose

Creating the nation-state• Important features of emerging national identity– War & struggle with outsiders• Why useful?

– Unites people against a common enemy• Feeling of superiority• Creation of the Other • Us and them concept

Creating the nation-state• France– national identity thru education

• Late 19th century French national education system– Acculturated everyone into French

• culture • language• adoption of national symbols…

• Had homogenizing effect– Effective medium for transmitting

nationalist identity to the countryside

Globalization, Development, & Economic Institutions

What is economic development?• Process of simple, low-income national

economies => modern, urban-based capitalist economies

What does it involve?

• typically involves large capital investments– infrastructure – industry – Education– financial institutions

Problems with economic development• Models of economic development have not

met the needs of the poor– Widespread poverty– Gap between rich & poor within & between

countries continues to widen

Economic Facts• GDP of the poorest 48 nations is less than the

wealth of the world's three richest people combined– a quarter of the world's countries

• Across the world:– 2 billion have no access to electricity– 3 billion have no access to sanitation– 1.3 billion have no access to clean water– 1.3 billion live on less than 1 dollar per day– 3 billion live on under two dollars a day

Bretton Woods Conference

• International monetary conference – Bretton Woods, NH (1944)– Make financial arrangements for the postwar era after

expected defeat of Germany & Japan– 44 Countries

• World Bank & International Monetary Fund– Reconstruction & Development

World Bank• 184 members• Provides – loans – grants – policy advice – technical assistance

• 2003 – Gave $18.5 billion in assistance

• US – 16.41% of votes– Also appoints president

• Who is he?

Students in Bangladesh

(GATT)• General Agreement on Tariffs and Trade – 1947, multilateral trade agreements – 23 countries

• Aims among signing nations – abolishing quotas – reducing tariff duties– massive expansion of world trade

World Trade Organization• 1995, International organization– replaced GATT– Supervises world trade– 146 countries, 1 vote each

• “help producers of goods and services, exporters, & importers conduct their business” – Encourage multilateral trade– Reduce tariffs – Lower trade barriers– Monitors members’ adherence to WTO agreements– Rules & sanctions

International Monetary Fund• 184 Member countries • Total resources: ~$316 billion• Contribution based on weight in global economy– US – 17.14% of the votes– Japan 6.15%– Germany 6.01%

Executive Board

IMF• Established in 1944– Promote international monetary cooperation– Expand int’l trade by lending money & advice to

member countries in crisis – Crisis= balance of payments need • if it cannot meet its net international payment

– An IMF loan is provided under an "arrangement“• What are these called?

Headquarters, Washington, D.C.

Structural Adjustment Policies

• Economic Requirements– Devalue currencies against the dollar– Lift import and export restrictions– Remove price controls & state subsidies– Balance budgets & not overspend– Cut social expenditures

Case study - Chile• 1st Latin American country to enact a

comprehensive market reform program– 1973• inflation rate was 600% • Coup d’état Augusto Pinochet- military dictator

– 1975• Milton Friedman visits

– “Chicago boys” became advisors to Pinochet’s govt.– Instituted “laissez-faire capitalism”– Early SAPs

• Policies improved econ situation– Most of recovery occurred after 1990

• “Miracle of Chile”– 2005 GDP $100.7 Billion– GDP per capita $11,536.60– 1st in Latin America – 27th in world– Unemployment 8.8%

• Nov. 16 ’06– Friedman praised for economics

• Dec. 3 ’06– Criticized for assoc. with Pinochet

Case study - Chile

GDP: Chile vs. Latin America

Negative results SAPs on Jamaica• Imports more expensive• Agr. sector often out-competed– Machete vs. machine– Agricultural subsidies in developed countries– “Food Aid”– Dependence on food imports– Weakens/destroys capacity to produce

• Quality of life affected– Weakening of social services (health, edu.)– Environmental degradation– Weakens labor rights

Sweatshops in Modern Times• Reason They Exist? – Cheap cost of production = Greater profits – Can sell goods at lower prices– Consumers always want low prices– Forces other companies to follow suit just to compete

• (Wal-Mart exp: 137-143)

• Why they exist in LDC’s? – Can’t do it in U.S– Corrupt/greedy local government– Lack of local government infrastructure– Huge labor pool

Violations• Huffy Bicycle Factory in Guangdong: – Forced workers into 15 hour shifts– Forced workers to work seven days a week– NO overtime pay offered

In defense of Sweatshops• Conditions were worse before

• Byproduct of global economics• Sweatshops are only means of improvement

• Improving conditions would harm LDC workers (economically)

Anti-Sweatshop Stance• Ethical responsibility– Human rights

• Not a necessary byproduct of globalization• There are other ways to improve their situation– Microcredit lending– Fair trade

• Improving situation may mean slightly higher prices– Driven by conscientious consumers

What is Fair Trade?

• Trade between two partnerships based on benefits & mutual respect– Farmers are paid fairly for their work –The products are environmentally sustainable

and conserve natural resources

• Starbucks –North America’s largest purchaser of Fair Trade

Certified coffee.

• fiscal 2005 – 11.5 million pounds of fair trade certified coffee – 10% of fair trade imported coffee

Fair Trade Coffee

Social Responsibility• Many companies have goals/mission statements and principles

that guide them to be fair to their suppliers

• Starbucks:“Starbucks and the Fair Trade movement share common goals: to

ensure that farmers receive a fair price for their coffee and to strengthen coffee farms for the future. (Starbucks.com, 2007)”

• Ben and Jerry’s“Capitalism and the wealth it produces do not create opportunity for everyone equally. We recognize that the gap between the rich and the poor is wider than at anytime since the 1920's. We strive to create economic opportunities for those who have been denied them and to advance new models of economic justice that are sustainable and replicable. (BenandJerrys.com 2007)”

Companies engaged in fair trade– Starbucks– Seattle’s Best– Dunkin’ Donuts– Ben and Jerry’s– Larabar– Sam’s Club– Whole Foods– Wild Oats