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POL101Y1 Lecture Notes - Finance Capitalism, Mercantilism, Sustainable Development

Political Science
Course Code
Joseph Wong

of 3
Human development
Equitable development
Sustainable development
Political development
Focus on aggregate economic growth
How to explain?
"The pursuit of individual advantage is admirably connected with the universal good of the
whole." David Ricardo, 1817
Individual labour and doing what you're best at doing
All about specialization
A Theoretical Conversation: (I) the Cosmopolitical view
List is angry of the English mercantilism
Hamilton: "The disparity, in the one or the other, or in both, must necessarily be so
considerable as to forbid a successful rivalship, without the extraordinary aid and protection of
A Theoretical Conversation: (II) the mercantilist view
"Imperialism is 'the substitution of capitalist monopolies for capitalist free competition….
Monopoly is exactly the opposite of free competition, does not abolish the latter, but exists
over it and alongside of it, and thereby gives rise to a number of very acute, intense
antagonisms, frictions and conflict." V.I. Lenin, 1916
Its about finance capitalism
A Theoretical Conversation: (III) the Leninist view
Inspired by Marxist/Leninist tradition
Immanuel Wallerstein
A systemic view of global capitalism
Ideological era that privileged free trade
Dominant idea is free trade
Multinational corporations are highly exploitative and mobile
Liberal ideological hegemony
Monopolistic producers (MNCs)
A huge, single purchaser
Monopsonistic purchasers (the north)
What are colonizers leaving behind?
They are leaving economies undeveloped--without any infrastructures, people with no
Leaving nothing behind in these areas called Third World countries
Colonial legacy
World Systems Theory
Dominant "core" versus dependent "periphery"
Structural dependency
You are dependent on what you can do and make
On mono, low-value exports
You are dependent on your customers
On global north
It can't be changed or fixed
"Structure" of Global Capitalism
Cosmopolitical view--not about dominance
Mercantilist view--preventing dominance
Marxist/Leninist view--has to be about dominance
The implications of global capitalism
Post-colonial moment
The appeal of World Systems Theory
Lecture by Professor Wong
Outliers or Models? Dependent Development
12:16 PM
Post-colonial moment
Underdevelopment as empirical reality
Soviet alternative and self reliance
Development as global "project"--Brandt Commission
Taiwan 9.8%
South Korea 9.6%
Singapore 10.1%
Malaysia 7.3%
Thailand 7.2%
Average CDP growth rates (1965-1980)
But then something curious happens…
Getting Richer
GNP per capita, 1970 and 1995 (US dollars)
Japan 1940 39640
Singapore 1050 26730
Taiwan 389 12439
Rapid economic growth
Growth with relative equity
Industrial upgrading and diversification
Export-led economic development
Taiwan is one of the largest research nation for high technology development with South Korea
The East Asian Miracle
Cheap skilled labour
Stable foreign exchange rates
Low tax rates
Open to foreign direct investment
Up the export value chain
Getting the prices RIGHT
Government subsidies
Government investment
Disciplined labour
Import substitution tariffs
Manipulate the market--the visible hand of government--picking and making "winners"
Infant industry protection--growing globally competitive firms
Getting the prices WRONG
Leverage existing strengths
Industrial Technology Research Institute
Government purchase foreign technology
Government investment in R&D
Government investment in firm
CASE: Taiwan Semiconductor Manufacturing Corporation (TSMC)
Spun out of Hyundai construction
International partnerships
Innovate engine design
Protect domestic market (1970s)
International standards to export (1980s)
CASE: Hyundai "Pony"
Logic: pick market winners
State leadership: make market winners
Create comparative advantage
Picking and Making Winners
Global economic growth
American hegemonic interests
Why East Asia? (I) the international context
Bureaucratic hierarchy
(II) the developmental state
Bureaucratic hierarchy
Bureaucratic meritocracy
State autonomy (yet embedded)
Leverage over industry--reward/punish--state capacity
Benevolent dictatorship
Confucian ethic
Maybe they wanted to do was to grow
Economic nationalism
(III) people
Market regarding
Dependent developer
Outlier or model?
The developmental state as...