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Lecture 3

Week 3 - January 20, 21 & 23 -- Rise of Neoliberalism

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Labour Studies
John Barkans

LABR ST 2G03 – LECTURE – January 20, 21, 23, 2014 LECTURE – JAN 20 – S.K. sent REJECTION OF THE NEW MODEL OF CAPITALISM AND THE RISE OF NEOLIBERALISM - 3 major agreements that get achieved 1. A set of rules regarding international trade to loosen restrictions on trade to make trade more free  Lower tariffs and restrictions placed on imports to make it easier to trade coming out of the ww2 2. A new monetary regime, attempt to build a more stable monetary system Agreements on currencies are needed   US dollar was fixed at a set rate with the value of gold, it could be exchanged for gold  Other countries’ currencies were pegged to the fixed gold value of the dollar  Creates fixed exchange rates  International Monetary Fund - if you wanted to get away from the fixed values you had to go through IMF • IMF would only do so if there was a fundamental problem System of capital controls, financial oppression   The nation states were given a lot of control over the movement of funds 3. Creation of institutions to enforce or regulate the new international and financial regime  The "Bretton Woods Trio" • Creation of institutions to overlook trade and the new monetary regime • Trio consisted of: o IMF Worlds banker in emergencies   Lender of last resort to help global demand o The International Bank of Reconstruction and Development (now known as world bank)  Prevent recessions by lending money for reconstruction and infrastructure projects for countries that are experiencing difficulties o The General Agreement of Tariffs and Trade (G.A.T.T) (now known as the World Trade Organization W.T.O)  Created to try to promote international trade by liberalizing trade through lowering tariffs  To prevent the previous policies that lead them to depression  Try to resolve any disputes over trade that arise between countries Helps create a new international division of labor   Impacts on global labor - new international division of labor • Colonial division of labor o Core: production of manufactured goods o Periphery : raw materials, agricultural goods o 2 distinct phases in development of the N.I.D.L  Import substitution industrialization (I.S.I) • Major expansion in 1950s, governments begin setting up state manufacturing facilities  Export led industrialization • Associated with newly industrialized countries • Develop industries in order to export • Labor intensive industries (small electronics) • Comparative advantage (lot of available cheap labour) LECTURE – JAN 21 NEOLIBERALISM… continued - Crash o Why? Unregulated markets  Financial markets  Euro currencies  Accumulation of mass sums of private capital o Profitability crisis  Tensions between businesses and workers increased over control or the share  Therefore efforts to curtail the power of labour and redirect the money flowing to labour back to capital o Real shift in dominant ideology  Neoliberalism arises  Neoliberalism: a “new” kind of liberalism o Rejection of the New model Capitalism  Friedrich von Hayek, Milton Friedman vs. Karl Polanyi, John M. Keynes  Classic economic liberalism from Adam Smith, David Ricardo • Adam Smith: “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest” o Free market and competition and acting in our interests is the ticket for everyone to improve their living standards, etc. o Free market is the best way to develop societies • Neoliberalism became the dominant philosophy  Endangered by 1929 market crash  Economic crisis of 1970’s revived the theory - Milton Friedman o Economic freedom is just as important as o Most efficient system is one that allows markets to be unregulated, free, and open to run business; alternative being state centralized, controlled o Arguments to support this:  1. Most efficient way to organize the economies of societies
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