Class Notes (839,394)
Canada (511,324)
POL201Y1 (221)
Lecture 9

Lecture 9.docx

6 Pages
120 Views

Department
Political Science
Course Code
POL201Y1
Professor
Robert Brym

This preview shows pages 1 and half of page 2. Sign up to view the full 6 pages of the document.
Description
Lecture 9 – The Washington Consensus Nov 5th [email protected] Modernization, ISI, EOI all strategies for (economic) development Neoliberalism a strategy of development Left right and neoliberalism Liberalism - Neoliberalism o Coined 1938 o Restatement of Smith theories o Market behaves rationally if left alone - Importance of individual freedom - Practically lead to different types of solutions - Classic liberalism o Freedom is pretexting condition o John Locke o John Stuart Mills - Modern liberalisms o Freedom needs to be produced o And unequally distributed o Wealthy more freedom than the poor o Freedom needed to be created (through government intervention o Pluralism and affirmative action support o Freedom not natural - Implying a limit on the sphere of - Limiting the extent to which government can interfere with lives of individuals o Limit the state - Negative freedom o Freedom from Neoliberalism - Adam Smith o Individuals can both structure moral and economic life without the state o State the strongest when individuals fee to follow own initiative o Lazier faire o Human beings acting in own self interest would create productive markets o Wealth of nations  Market would naturally regulate itself and produce more than restricted markets o Governments  Take on tasks that could not be driven by the profit motive  Rule of law - John Maynard Keynes o Private sector decisions sometimes lead to inefficient macroeconomic outcomes o Needed to be active polices responses on part of the government or public sector o Active monetary policy Lecture 9 – The Washington Consensus Nov 5 th o Market is not rational  Needs government intervention to stabilize market o Discredited for - Global financial crisis o 2008 o Massive deregulation because neoliberalism is hegemonic o 2008 Keynesism  What should governments do to avoid world economic catastrophe  Government needed to intervene (how fast and when)  Instituted to fix problems that were produced by the market - Post neoliberal world What Washington Means by Policy Reform – John Williamson - 40s and 50s global economic boom - The green revolution  1948  Refers to research and development in agricultural that revolutionized food production through technological change  Increase production so that food supplies could keep up with population growth  Negative: decrease in agricultural products  Because of over supply  Price drops  Lead to declining terms of trade between core and periphery  Agricultural producers forced out of the market because could not compete with larger producers  Now consuming food that have been genetically chemically and hormonally altered  Decolonization through 50s and 60s  Newly developing countries implement strategy of ISI development  70s created cartel OPEC  Cartel of oil producing countries  many countries go bankrupt and in debt  forced to IMF for bail out  81 OPEC falls apart and also go bankrupt o Also turn to IMF (international monetary fund) and world bank  Most development countries forced to turned to IMF and world bank for loans  Forced to accept and sign structural adjustment programs o Demised independence to develop own fiscal and economic policies o Countries go bankrupt in 70s and 80s  Forced to turn to IMF and world banks for loans  They impose structural adjustments (neoliberal programs) o Two conditions of programs  Forced to undertake political and economic reform to qualify for loans  Economic policies are called the Washington consensus Washington Consensus Lecture 9 – The Washington Consensus Nov 5 th - Set of policies that are agreed upon by US government and IMF and World Bank headed in Washington DC - Fiscal discipline o Other countries should normally have a balanced budget o Run short term deficit to generate investment in infrastructure that would jump start economy  Good returns o Run short term deficits to stimulate economic if heading into recession  Poor money into economy  A lot of public work  Idea is to get capital following  Inject capital o Limit expenditure and balance budget (in general) - Public expenditure priorities o Many developing countries turn to IMF because of their fiscal deficit  In debt (spend more than they make)  Reduce by  Increase taxed and reduce expenditure o Washington opposed to raising taxes  Moving money from private sector to public sector  Favor reducing expenditures o Cut subsidies  According to Neo liberals subsidies supports basic needs  Often generates food crisis  Pushes sector of population under poverty line  Acceptable: capital investments (health and education – productive, public goods) - IMF dictating o Tax reform  Tax base should be broad as country can make it  Shouldn’t have high marginal tax rates o Interest rates  Should be market determined and encourage investment and savings  Stimulate economy but avoid capital flight o Exchange rate  Determined by market forces or level that is consistent by macroeconomic objective o Trade policy; import liberalization  Trade liberalization  First thing have to do  Reduce barriers to international trade  Allow access to i
More Less
Unlock Document

Only pages 1 and half of page 2 are available for preview. Some parts have been intentionally blurred.

Unlock Document
You're Reading a Preview

Unlock to view full version

Unlock Document

Log In


OR

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


OR

By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.


Submit