Started on: 3/24/14 9:19 AM
C LASS N OTES FOR : P OLI S CI 2J03
McMaster University, Winter 2014
M ONDAY , M ARCH 24, 2014
Keynes VS. Hayek
- Video “Fear the boom and bust”
- There’s a debate between these t wo economics trying to explain financial crisis
- “You need to invest when the economy slows down”
- “You do not need to invest because then you will create a boom and a bust”
The way in which ideas last beyond the person that articulates them
- Ideas about ideas
o Relationship to material world?
o What is the relationship between ideas and the world that we exist in?
o Do ideas shape the world or the world shapes ideas?
o Is there a relationship between the world and ideas
o Theoretical approaches to this problem
o Epistemic communities
§ Scientific communities that have advanced expertise and these influence the
§ Ozone layer!
§ CLIMATE CHANGE
• Epistemic community, on the panel on climate change that make
recommendations about this problem
• But little action is tak en to address this problem
• It comes under political attack and challenges
• Neutrality is undermined
§ Idea that the social world is made by people
§ Those ideas shape how people behave
§ Liberal economic theory talks about “Preferences”
§ The idea that the economy is rational, people are rational, they have preferences
and go through a rational preference of identifying it.
§ Preferences are NOT given; we have to go through a process of articulating what
these preferences are. These will change over t ime!
§ Preference for equality, social justice, etc.
§ Think of the differences in development index and the human development index!
-- these two express a different form of preference. How do we construct these
§ Constructivist literature tries t o think about HOW these are created.
o Neo-gramscian, culture, interests
§ Named after Antonio Gramsci
• Who spent a decade in prison
• Idea -- some sort of relationship between ideas and interests.
• These are not free floating categories
• Ideas à Serve particular interests and these create ideas
Angie © McMaster University 1
Winter 2014 Started on: 3/24/14 9:19 AM
• Cultures are related to different kinds of ideas
• Working class culture VS. Capitalist culture
• Workers have different institutions than those who are better of!
o Post-structuralism (interpretive constructivism)
§ Their view is that there is no reality without ideas
§ Everything that we do is conditioned about our thoughts about what things are
§ If we are going down the list, we go from “types of theories where ideas have a
role” all the way down to views that ideas are absolutely central and the most
important thing in the construction of social life.
§ Range of perspectives.
o Ideas become embedded in institutions
§ We can think of this in two ways, we have different institutions that embody
§ WTO - embodies ideas of free trade
§ IMF - neo-liberal ideas
§ UNESCO - equity ideas, have different mandates and embody ideational
§ Contradictory ideas, such as American trade law.
• American trade law - developed over 150 years.
• These different laws embody different ideas about f ree trade and
§ This is why we might see CONFLICTS in different institutions
§ UNICEF à Critics IMF structural programs BECAUSE of different ideas!
IDEAS and the GLOBAL FINANCIAL CRISIS (2008)
- How did things go so wrong?
o Dominance of ideas ab out self-regulation
o These dominant said that markets should take care of themselves
§ “The primary source of regulatory effectiveness has always been private traders
being knowledgeable of their counterparties…” (Greenspan 1998”
§ That gov’t should be the LAST resort. The best way is the knowledge of private
traders regarding how the market is OPERATING.
- Why were the old ideas so dominant and so recently?
o Previous financial disasters in 1929 -- that lead to the great depression
o We were not unaware that DE -REGULTATION could lead to these outcomes
o Galbraith - there are these crashes, re-regulation, and then people forget the lessons of the
financial collapse. It takes about two generations before people forget these ideas.
o New Technology (computers) ideas (mathe matical models) solve prob