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Lecture 6

GOVN 444 Lecture 6: Unit 6
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by OneClass933557 , Spring 2016
8 Pages
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Spring 2016

Department
Governance
Course Code
GOVN 444
Professor
Dr Sel
Lecture
6

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Unit 6: Challenges of “Development” in the Twenty-First Century
Inequality, iCapitalism, and Climate Change
Learning Objectives:
1. Reassess the broad contours of the global economy in the twenty-first
century.
2. Analyze the economic and political drivers of international trade and global
output.
3. Understand the scale of private finance in international and domestic
spheres.
4. Assess the impact of the increasing involvement of private finance on
development issues.
5. Examine continuities and change in global development policies and
processes.
6. Discuss examples of alternative approaches to development.
Study Questions:
1. What are the characteristics of the global economy in the twenty-first
century that set it apart from the previous century?
The world is richer than ever before in human history. Trade is
expanding due to economic globalization; production costs are
declining due to restructuring, outsourcing, and downsizing; and
output is growing globally. At the same time, we are also witnessing
a rise in unemployment, homelessness, and marginalization.
Economic growth appears to be followed by political and economic
exclusions of large sections of populations, in all parts of the world.
In this scenario, the conventional vocabulary of rich/poor countries,
North/South dichotomies are even less appropriate than before since
the dividing lines have moved from being between countries to
being within countries.
Thomas Piketty (2014) mapped the mechanics of the global
economy with a sweeping theory of economic history in his
bestselling book Capital in the Twenty-First Century. He described
how, through a combination of forces malign (war and political
upheaval) and benign (increased education), inequality waned from
the 1930s to the 1970s. In the neoliberal era though, inequality has
risen sharply back toward levels not seen since the Industrial
Revolution. Historically, inequality has tended to flow in cycles; one
explanation of these cycles is in Kuznets waves. In the pre-industrial
period, these waves were governed by Malthusian dynamics:
inequality would rise as countries enjoyed a spell of good fortune
and high incomes, then fall as war or famine dragged average
income back to subsistence level.
According to Branko Milanovich (2016), with industrialization the
forces creating Kuznets waves changed: to technology, openness,
and policy. In the past few decades, however, while output and
productivity have indeed grown, trade policies have also led to
decreasing wages, particularly in the OECD countries. Cheap
technology made in foreign economies undermines the bargaining
power of workers directly, making it easier for firms to replace
people with machines or to relocate their operations. Workers’
declining economic power is compounded by lost political power as
the very rich use their fortunes to influence candidates and elections.
Both Piketty and Branko expect OECD inequality to keep rising, in
the US especially, before eventually declining. Rich economies seem
to be stagnating as the very rich struggle to find places to earn even
higher returns on their piles of wealth. The US has fallen into the
grips of an undemocratic plutocracy that is dependent on an
expanding security state (Gilens & Page 2014). Although still below
American levels, inequality has been rising in Canada at a rate faster
than in any of the other OECD countries: while in Europe right-wing
nativism and “economic austerity” are on the rise. At the same time
though, Piketty and Milanovic both predict that emerging economies
will probably continue on their path toward higher incomes,
although it is not guaranteed since they remain vulnerable to
political crisis, environmental degradation, as well as climate
change.
What are some examples of continuities and change in global
development policies and processes?
In previous units, we considered the failure of the Washington Consensus
in promoting sustainable development goals, and the use of “development”
as a tool of power and control for most of the twentieth century. In the
“digital/knowledge economy” of the twenty-first century, what has
changed, and has not changed?
For one thing, the task of turning people into consumers and producers, as
highlighted in the first reading for this unit, has become easier in the
digital/knowledge economy. Domestic labour is increasingly transformed
into “consumption work” (Huws 2015, p. 42), commercializing and
commodifying ever more elements of private individual sphere, further
strengthening the hold of Biopolitics across the globe. Secondly, the
increasing concentration of capital since the 1970s, and the retreat of the
developmental role of the state under the neoliberal framework, have given
rise to periods of frenetic growth and economic instability, followed by
“austerity”.
The net beneficiaries of both these trends are transnational corporations.
The size and power of private corporations has grown significantly due to
their ability to access a global reserve army of labour by out-shoring or
migration, manipulate globally mobile capital, and reduce the ability of
governments to break up monopolies or tax corporations. Consequently,
more than half of the world’s largest economic entities are now
corporations
No longer confined to the US alone, through their lobbyists in the national
and international governance bodies, transnational corporations have driven
down regulatory restrictions (environmental, labour, financial, and others)
into national markets and the conversion of public services into private for-
profit enterprises. Consequently, sectors that were considered national in
scopesuch as utilities (telecommunications, energy, water, postal

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Description
Unit 6: Challenges of Development in the TwentyFirst Century Inequality, iCapitalism, and Climate Change Learning Objectives: 1. Reassess the broad contours of the global economy in the twentyfirst century. 2. Analyze the economic and political drivers of international trade and global output. 3. Understand the scale of private finance in international and domestic spheres. 4. Assess the impact of the increasing involvement of private finance on development issues. 5. Examine continuities and change in global development policies and processes. 6. Discuss examples of alternative approaches to development. Study Questions: 1. What are the characteristics of the global economy in the twentyfirst century that set it apart from the previous century? The world is richer than ever before in human history. Trade is expanding due to economic globalization; production costs are declining due to restructuring, outsourcing, and downsizing; and output is growing globally. At the same time, we are also witnessing a rise in unemployment, homelessness, and marginalization. Economic growth appears to be followed by political and economic exclusions of large sections of populations, in all parts of the world. In this scenario, the conventional vocabulary of richpoor countries, NorthSouth dichotomies are even less appropriate than before since the dividing lines have moved from being between countries to being within countries. Thomas Piketty (2014) mapped the mechanics of the global economy with a sweeping theory of economic history in his bestselling book Capital in the TwentyFirst Century. He described how, through a combination of forces malign (war and political
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