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POLI 212 Lecture Notes - Comparative Advantage, Hot Autumn, Economic Reconstruction

Political Science
Course Code
POLI 212
Hudson Meadwell

of 3
MARCH 19, 2012:
How post war settlements changed in the 1970s and 1980s is a function of how post
war settlements emerged initially after 1945.
France and Italy: labour exclusion
Moderation of the left comes later in both France and Italy. Moderation of the left
comes after an episode of labour militancy in both cases. In France this is “May-June
’68,” and there is an episode of widespread labour unrest in French politics in 1968
that quickly mutates into a more wide ranging attack on the institutions of the 5th
republic. There is a similar episode in Italian politics in early 1970, known as the
“hot autumn.” First, there is mobilization of the left (parties, trade unions) and this
mutates into a wider attack on Italian institutions. In both of these episodes, the
communist parties are important actors (PCF and PCR).
In both cases, there are powerful communist parties and powerful communist trade
unions. In both cases, parties of the left are excluded from political power. The one
exception is the irregular appearance of the socialist party and the coalitions that
government France in the 4th republic. In general, parties on the left do not have
political power.
Although they are both patterns of labour exclusions, there are differences in terms
of the presence and importance of the state. State planning is not important in Italy
and is much more important in France. The state much more involved in France in
setting targets for specific industries. The Italian state is weaker than the French
In Italy, the legislature dominates politics, not the political executive. State
bureaucracy is a much more important player in France than in Italy. In France,
there is a kind of modernizing political coalition that links business and state.
There is institutional continuity in Italy, and there is institutional discontinuity in
France (Italy is still under the 1st republic and is stable as a constitution in regime,
whereas France moved from the 4th to the 5th.)
In Italy, one party dominates well into the 1980s (the Christian Democratic Party),
and this party is embedded in and connected to a catholic network and can draw on
its linkages to the church and affiliated organizations. It is also able to bridge the
division between North and South in Italy. This party is also able to use patronage
politics to mobilize support, especially in the South of Italy.
Regional divisions were more important in Italy (ie. Between North and South) than
in France. The divisions were never resolved in the formation of the Italian state,
and this division becomes a reason for a new regional party to form in the North in
Other problems: Germany had too much consensus, Britain had the question of who
governs (trade unions?), and France and Italy were labour exclusion.
European politics begins to change as a consequence of generational change in the
1960s and 1970s. This generation is become politically active and were not exposed
to the World Wars or the period of economic reconstruction. The stage of economic
and political reconstruction is coming to an end as they are maturing politically. An
important actor, aside from labour, was the student.
“Old Politics” is the politics of class. The consolidation of liberal democracy
depended on class compromise and the political settlement of the class question.
Post war settlements are different kind of class compromises. Keohane calls this
“embedded liberalism.”
In between the old and new politics is a period of change during the late 1960s and
early 1970s.
Koehane argues that post war settlements are more than domestic political
bargains. He is interested in the way in which the international political economy in
changes in this economy have consequences for embedded liberalism. He argues
post war settlements are stable because they emerge in a particular economic
conjuncture. He introduces an international dimension into post-war settlements.
Esping-Anderson connects post-war settlement to the politics of the old left, post
war capitalism. He explores how changes to industrial capitalism have affected the
politicization of class. He wants to know how pre-industrial society affects class
relations and the politics of class. He argues that changes to industrial capitalism
create new winners and new losers, and he wants to understand what that means
for class politics. Will new classes emerge as a consequence from the transition for
industrial to post-industrial society. How can the left reorganize itself and stay
relevant when the class structure it is built on changes?
Norris questions how is the new right expressed politically?
Keohane (written in 1984):
Embedded liberalism is characteristic of European political economies from the
1950s to the 1970s, and from 1973-1974 on it comes under pressure. This is the
period of “Easy economic growth” in Europe, and economic reconstruction from
WW2 is coming to an end. Embedded liberalism is a particular type of political
system of regime. In terms of foreign economic policy, we think of states and
regimes that are committed to free trade and economic openness (the “liberal” part
of embedded liberalism). The “embedded” part is that domestically these
state/regimes have well developed social welfare systems (which provide a
domestic cushion of downturns in the international economy), open trade
The implicit trade off is at the domestic level between protection and a welfare state.
A welfare state might allow you to continue to maintain international economic
openness. But at what point will a state like this feel that it must resort to
protection internationally as a compliment to the welfare state. There is an implicit
tension between openness internationally and state intervention domestically (a
welfare station). This tension is not exposed until the 1970s, when the balance
shifts from good to bad in terms of what is transmitted by the open economy. It is
an argument that post war settlements had a short shelf life in European politics and
depended on a particular conjuncture.
This conjuncture depended on easy economic growth and on American hegemony in
the economy, and on the competitive comparative advantage of European
economies in the international economy. In the early 1970s, there are changes in
hat Keohane calls the terms of trade. As a consequence of the oil shock in 1973, the
cost of oil (an important raw material/input) went up. At this time, American
hegemony was in decline. Capitalism also has expanded to the periphery and there
is more industrial competition in the world economy. All of these create problems
for the political management of the economy.
This is an argument about “levels of analysis” (a term used in IR) at the international
and domestic. He is asking how states respond at the domestic level to changes at
the international level. These changes at the international economy are changes
that no single state can control (for the most part), changes where no state has
significant influence, and they are experienced by all states.
One kind of international economy is an open economy, where there are very few
barriers to trade. The point of open economies is that they transmit both good and
bad- growth and inflation. IN the 1950s and 1960s, the world economy is become
increasingly open, and so is the region economy of Europe. In these domestic
political economies, they are experiencing growth without inflation. By the mid
1970s, it is not prosperity that is being shared; it is stagflation (lower growth, higher
His argument turns on the importance of the size of domestic economies. By size, he
means the ratio between domestic GDP and total world economic activity.
One economy in the world at this point on its own does have consequences for the
world economy- the United States. It is relatively large, and it is comparatively
efficient. It is a hegemonic power. American hegemony was a support for
international openness in the world economy. The American economy supported
the international financial regime. The America economy supported and
contributed to economic reconstruction in European directly (the Marshal Plan,
etc.). By 1966, the US is a declining hegemony. It is beginning to experience
domestically a combination of inflation and recession. Koehane argues that this is in
part a consequence of participation in the Vietnam War (an episodic explanation).
He also points out that decline is a consequence of the development of competition
in some parts of the periphery of the world economy.