FINAL EXAM REVIEW: BISINESS AND GOVERNMENT
Terms and concepts
Public policy: “Whatever governments choose to do or not to do. “ (Thomas Dye)
The non-decisions can be just as important as taking action. This is essentially the
government controlling aspects that shape a society e.g. health, education,
infrastructure, environment, welfare, urban development, the economy and social
security. Example of public policy would be taxation. The government calls for
certain percent of citizens income to help contribute to our needs and demands how
they chose to allocate and spend tax money is an outcome of public policy.
Policy cycle (rational model):
1. Agenda Setting. Government identifies and recognizes a problem. They have
to decide the seriousness if it’s a problem. How does the government
prioritize these problems?
2. Policy Formulation. Policy makers propose a situation from the set agenda.
This process involves research or exploring different options for addressing
3. Policy Adoption. Politicians decide on a solution. Critical stage because
politicians can be held accountable for their decisions. This is when the
media can comment and publicize their opinions. They need to analyze the
costs and benefits, advantages and disadvantages.
4. Policy Implementation.
5. Policy Evaluation. Governments now monitor the policy to determine
whether it was a success. Is it efficient?
Public choice model: This relates styles of thinking to political science. Public
policy is about politicians looking for votes. Decision makers are self-interested and
maximize utilities. They will pass policies that will get them vote, to gain income and
improve their position. This is significant because it is often criticized because
people are motivated by self-interests. How do you measure a person’s values or
ideologies commitment though? This model cannot explain this.
Classical Liberalism: falls upon the belief that individuals who act economically out
of self-interest eventually help society as a whole. Classic liberalists believe that the
free market promotes prosperity and leads to well being of every body. This is
ideology was developed by key theorists such as Adam smith, John Locke and
Thomas Jefferson. It is significant because it is an ideology that has shaped the
political economy and ultimately birthed neo-liberalism.
Adam Smith: supports this theory. He believes that people are producing goods out
of self-interest and are benefitting others. “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.” He is significant because he is not only a key ideologist for
classical liberalism but he also developed what is known as the invisible hand, the unobservable market force that helps the demand and supply of goods in a free
market to reach equilibrium automatically is the invisible hand.
Neo-liberalism and its characteristics:
▪ It uses old concept liberalism and attaches a new meaning to it. Good
examples of neo- liberalists are Ronald Regan, Margret Thatcher and George
Bush. It comes from the UK and Austria.
▪ It is important to neo-liberalists that individuals have freedoms and
government should only provide security and education.
▪ Some associate neo-liberalism with global inequality and environmental
▪ Proponents believe that Neo-liberalism promotes democracy, freedom, free
trade and global cohesion.
▪ The political tension in the 1970’s seemed to create the reemergence of neo-
liberalism and caused Keynesian economics to fall.
Milton Friedman and the school of economics
▪ Amongst the most prominent economists
▪ He was initially a Keynesian economists believed in some form of
intervention in the 1940’s, he later rejected this discipline and promoted
▪ He believed that the government should adjust policies in response to
citizens economic activity
▪ He believed that a free market is best for solving social issues such as
▪ Friedman’s economic philosophy: when the government taxes highly it
creates an incentive for individuals to not be responsible with their money.
▪ Critiqued the taxation system and believed that people who make a certain
amount of money maybe less, should not be taxed at all.
▪ He argued that the social services that government provided would make
individuals dependent on the government.
▪ Friedman argued that the government has a weak impact on the economy. He
believed that individuals could rationalize themselves during economic
Neo-liberalism and globalization:
Concepts include deregulation of trade policies, removing trade barriers in other
countries, Promoting capitalism, allowing flow of labour and goods into other
nations. Critiques say the neo-liberalists have lost the resources to govern
themselves because of free policies that they created. They also say that it’s the
governments that are putting in place the new interdependence e.g. IMF, WTO and
World Bank. Significance of this is that neo-liberalism is a political ideology that has
a strong influence on the global market and it is often criticized for
1. Leads to one-sided free trade agreements
2. Deregulation of goods, services and labour
3. SAPS- structural adjustment programs. Keynesianism: John Maynard Keynes developed Keynesian economics and his
theory basically states that during economic hardship the government must spend
more and as a result people will earn more. The theory urges that the state should
spend on welfare and social assistance programs. This is significant because it was
an economic theory that was set to aid the great depression in the 1930’s.
Globalization debate: cons of globalization
▪ Market failures
▪ Negative impact on Environment
▪ Labour exploitation
▪ Corporate greed
▪ Exploitation of resources
▪ Growing wage gap
▪ Exclusion and exploitation of the developing world
▪ Security is threatened
Neo-liberal and Keynesian justification
▪ Neoliberal policies allowed for the 2008 recession to happen: deregulation of
▪ Keynesian economics calls for heavier regulation and protects against the off
shoring of jobs, whereas, neo-liberal policies can lead to job insecurity with
in a nation.
▪ Neo-liberals call for global trade and in most cases this leads to labour
exploitation. Wages are lowered significantly on order to drive up profits.
Format and concepts part 2
1. Planned economy: an economy that gives the government total control over
the allocation of resources. This means that govt. has control over prices,
distribution, production, manufacturing and regulation. China is an example
of a modern day planned economy. This form of economy arose and only
happens in communist regimes.
2. Crisis of welfare state: Welfare states exist to enhance the welfare of people
who are (a) weak and vulnerable, largely by providing social care, (b) are
poor, largely through redistributive income transfers, (c) or are neither
vulnerable nor poor, by providing medical insurance and education. The
Crisis of the Welfare State
3. * Role of ideology and the corporate sector in undermining the welfare state.
4. * Canada’s mixed economy and its success until 1973.
5. * Oil crisis happened when Saudi Arabia didn’t want to supply to America
cause they supported Israel.
6. * Unsustainable expenditures: In 1930 average expenditure on social
insurance programs had been less than 3% of GDP. By 1950 it was 5 percent,
and 1900 20 percent. 7. * Stagflation: rising unemployment and inflation (simultaneously).
Keynesians don’t believe in this as they feel they should be one or the other
not both. They can’t provide an explanation for this.
8. * Role of Globalization – There was more integration at the international
market makes it very difficult for governments to control its own economy.
Companies just look for the cheapest labor and move their operations there.
9. The Emergence and role of unions
10.* Emergence of the union: Guilds and Industrial Union. Guilds are a collective
of individuals who are experts in a specific trade; they formed guilds so they
choose who can practice this trade.
11.* Unions: Strikes and Political Power
12.* The ultimate tool or weapon available to unions is the strike or the threat of
a strike – this is when workers withhold their labor. Unions have significant
political power as well. Unions will lobby or fund political parties or
13.campaigns. Unions have also taken a social role. Examples Canadian Auto
Workers Union (CAW) is pushing a national child care program.
14.* Union members are like clients of the Unions. Union members pay their
dues in order to get Unions benefits. Representation when negotiating
contract. Lobby ON THEIR BEHALF FOR BETTER WORKING CONDITIONS.
Union members are encouraged to be vocal to improve their working
conditions. Unions bring individuals together so they can lay out labor
15.* The Challenge of globalization: Globalization of production has challenged
and undermined the union movement in a number of ways that have been
difficult to address.
16.The individual (and Social) Benefits of Union Membership
17.* Benefits of Employees: In Canada and other western countries, union
membership provides better pay, benefits, and safe and clean working
conditions for its members. Some Unions have better insurance rates for
their members, they could also provide legal support if needed.
18.* Job Protection: One of the main benefits of union membership of course is
job protection, as most unions provide legal advice and representation in
labor lawsuits. Job protection also includes members, who have to take care
of family members, as these people are vulnerable to dismissal, unions
19.* Variation Across Unions and Countries. Unions in countries in continental
part of Europe are not as usual as governments provide most of these
21.New Public Management (NPM) is an approach to running public service
organizations that is used in government and public service institutions and
agencies, at both sub-national and national levels.
Neoliberalism and the new public management
▪ Push for austerity
▪ The central point of NPM is that public bureaucracies had to become less
rule-bound ad more inclined toward participating in a competitive environment in which government employees would be given a great deal
more autonomy and flexibility.
Elements of new public management
▪ Autonomy and managerial flexibility
▪ Performance measurement
▪ Citizens centered delivery of services
▪ Openness to competition
Criticisms on NPM
▪ Accountability: if you give managers more flexibility how can we hold them
▪ How is performance measured?
▪ Difference between public and private sectors
Fordist production is a form of social and industrial organization
characterized by the mass production of highly standardized products and
the use of specific equipment and machines to creates similar products,
alongside the organization of workers into specified and rigid work systems.
There are three key elements:
1. Standardization of products; (this makes it easier to produce it in mass)
2. Intensification of the labour process; and
3. Specialized equipment and assembly lines to increase productivity
Rise of Fordist Production:
* Mass production: costs will cut if you can produce on mass. Over time, other
sectors and industries adopted the same production style rather than just car
* Economic and social impact: machines were built to promote efficiency and
higher quality product as well as specific tasks that were strictly defined.
* Increasing volume, standardization, and rigid tasks: trace this back to the
early 19th century, 1913 etc. Initially associated with the model T car.
Taylor and Scientific Management
* Minimizing Lost Time: studied how to become more efficient and why
companies loosed so much time producing a product. He examined factory
floors for this reason. Two reason for lost time: 1) blame on workers- natural
tendency for them to do little work as possible 2) sometimes the work itself
(task) was arranged in such a way that made it awkward and not capable to
* Adopting Scientific Principles to Save Time: the workers realized that it was
better for them to work at a slow and steady past to receive an adequate pay.
Workers did not know how much could be produced in an average shift
because the standards were un scientific (goals unrealistic).
* Better Organizing Work: workers sometimes could not keep up with the
standards of work, clear division between employees and managers. * Financial Motivation: wanted the workers to be consumers and increase
Rise and Fall of Fordism:
Fordism: emerges 1915/1913 and becomes dominant by 1940’s until
1. Toyota became a challenge Fordism
Perspectives on Fordism: shaped social society (more than just the car
industry), emphasize ideas of industries, efficiency and consumers. Some
only applied it to factories or industries producing a mass media of product.
Criticism of Fordism: attacked the relationship between workers and
employees, division of labour took away the creativity of the workers.
Post Fordism: technology has changed industry work, the way goods are
produced have changed, management is more decentralized now, workers
are empowered (unions.
POST FORDISM AND CRISIS OF CAPITALISM
End of Fordism
Characteristics of Post-Fordism:
1. Products are produced on demand
2. Post Fordism like to diversify their products
3. Constant process of trying to improve the work place and product
4. We have subcontracting, outsourcing, moving production of goods off
shore to other places
Managerial Revolution: this was the revolution that resulted of two
intertwined historical processes: a corporate revolution that radically
transformed the economic and social landscape of America and the
professionalization of management, including business-school training and
theory building, which provided the ideological pillar for the revolution.
* Process that took place from the 1800’s-1900’s and began to see changes in
the way management runs a company.
1. Professionalized management
2. Separation of ownership
Corporate revolution: private entities that were once government and owned
dominated the economy; they both created a division between management
Critical Commentary and Future Directions:
Marxist provide commentary on management, corporations etc. They viewed
revolution as highly exploitative and stated that management was serving
the interests of the elites only. The majority of the wealth is concentranted
ina minute group of people.
4. Free trade agreements
McBride and Whiteside reading
• Globalization caused for domestic politicians to restructure their state economy to
make path for incoming market forces
• WTO and NAFTA were embedded in neoliberal rules and shifted • Under Chretien there were a lot of changes in new public management.
Business and Government
STATE CAPACITY TO GOVERN AND INTERNATIONAL COOPERATION
How does globalization affect the states? Does it weaken the ability of governments or
capacity to govern?
• We often measure governments by their ability to pass economic legislation, to
respond to economic crisis and provide public goods. As governments become
more intertwined, they lose the ability to control their boarders and manage the
economy. Especially for countries whom are already smaller and have a weak
economy. Example: Europe Unions, financial crisis. Countries such as Portugal
who were weaker lost the control of their monetary system. Regions such as this
complain based on the lack of control at immigration. England for example
complains about the Polish population that is allowed there. This loss of control
worries democracies because they earn their vote from popularity vote. Not
having control of factors such as immigration leads to a fail in election.
What can they do?
• International cooperation and international institutions may alleviate some of the
issues with globalization and state capacity that can be looked at as a positive
factor for globalization.
Globalization has caused policy and institutional convergence amongst States. When
states open their economies, and integrate with other states, it’s more likely that they will
adopt similar policies and institutional. There are different reasons for this such as the
world puts pressure on states to adopt these similar policies, for example: if a country
wants to cooperate with the US, the US will pressure that country to adopt to certain
policies. Second reason is international institutions such as the world back, UN. These
institutions have the power to command different countries to adopt certain policies.
Third reason is the increased integration in the world encourages countries to adopt these
similar policies. An example of a policy is a neoliberal policy by trying to downsize the
size of the government, removing regulation, which is referred to the “Washington
Are these policies beneficial? Can be debated. Pro businesses would say this
development is beneficial by cutting transaction prices when cooperating with other
countries. On the other hand, this destroys local cultures by modernizing them.
A global system is an increasingly interconnected one where problems in one country or
region can spread more rapidly. This causes diseases to travel faster and become deadlier
example the Zika Virus. Fast communication can spread instability increasing crisis to
arise. For example, the Zika virus during the world Olympics in Brazil. Communications
spread the message rapidly causing scare and a turn down to individuals travelling.
Globalization and Domestic Economies: • Globalization continues to feed the capitalists and owners. Example: wealthy
• Right wing political parties benefit from globalization. This is because neoliberal
policies tend to be more effective for the economies. Right wing political parties
argue that they will shrink control of the government, create jobs and increase
• Owners have grown to this because they can take their capital and invest it in
another country, a different economic environment. These different economic
environments tend to have less tax, higher growth percentage etc.
• Other researchers say that globalization doesn’t have an effect on domestic
economies. They say that domestic political institutions often do a good job of
absorbing the effects of globalization.
Can globalization be Managed?
Developing countries trying to improve economic countries increasingly relies on
international trade, capital movement which means they must deal with integration. To
what degree will they integrate? Security is also analyzed; how do countries manage
foreigners? Security threats have come from governments to governments. These threats
aren’t new but are now globalized which increases the severity. Environmental issues
are also considered.
Role of International Institutions:
Only way to manage these threats are through institutions. We see this through the
environmental issues, a group of countries are needed to help this problem. Working with
institutions can affect the governments and change their behaviour. They are more likely
to work with an institution because there is a set of rules which apply to all members,
there is transparency (governments can feel comfortable knowing what their other
members will do, enforcement mechanisms (ICC, charge war criminals) and reduce
costs for governments because they don’t have to manage threats on their own.
Two Approaches of Globalization: