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POLS 3270 Study Guide - Midterm Guide: Hegemony, State Ownership, Logistic Function


Department
Political Science
Course Code
POLS 3270
Professor
Hannes Lacher
Study Guide
Midterm

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POLS 3270 Midterm Study Guide
The exam will be 2 hours, in class, during regular lecture hours; please be there at 4pm sharp. It will
cover chapters 1-5 and 7 of Schwartz: States vs Markets. If you can deal with the following questions,
you should be able to deal with the actual exam questions (which will not be exactly the same):
1. What, according to Schwartz, accounts for the ‘rise of the West’? What differences
characterized Europe in comparison to East Asia and the Indian Ocean?
- The establishment of modern state is the coordination of gun (monopoly of violence), lawyer
(property rights and political obligation), money (revenue extraction) and god (national myth).
- The development of mercantilism is also an important part of the rise of the west: it pursues the
inflow of money and the monetization of the economy.
o Use of state power (organized violence) to pursue plenty (economic wealth)
o Trade surplus and accumulation of metallic money
o Externally: waterborne economy contains more movable resources and states consciously
tried to use external resources for immediate use
o Internally: kings move barriers to the movement of goods to reduce the resources
controlled by nobles
- Internal development: coordination of kings, nobles and merchants
o Nobles:
Mobilized people with immobile surplus
Seize surplus by coercion or custom
Lack luxuries
Contradiction of monetized economy: use money to buy luxuries; inflation of
money may devalue their rent extracted from peasants
o Kings:
Want to subordinate nobles by a single hierarchy administration
Replace the nobles’ local monopoly of the violence
Shift control over law and taxation
Facing conflict with other kings as an external obstacle
Monetization the economy: merchants naturally have money
o Merchants:
Two types:
Inland merchants: trade luxuries
Long-distance trade: daily necessities
Overlap with the other two actors
With kings:
o Monetization of economy: kings link inland microeconomies and
merchants link coastal economies
o Avoid external threat
With merchants: avoid kings too powerful
Intersection of the three actors:
Kings and nobles: states constitutions
o Property right
o Sovereignty
Kings and merchants: public debt (merchants provide funds, kings
provide protection)
Merchants and nobles: lawyer
Different kings: absolute sovereignty
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- External development: Indian Ocean
- Different from East Asia:
o China: monarchs triumphed completely and created an absolutism
Highly monetized economy (but did not help merchants constitute a capitalist
market economy with secure property rights)
Monarchy could acquire a large proportion of surplus
Administrative superiority made it easier to restore the old system
China does not tolerate fusion of mercantile power with military might
o India: merchants triumphed largely and created trade-based world
A complex network of trading communities insulate from inland empires
Different groups cohabited the Indian Ocean coasts with a minimum of conflict
2. Examine the strengths and weaknesses of Schwartz’s account of the ‘rise of the West’.
- Strengths:
o Use four concepts to explain the key factors of the modern state: gun, lawyer, money and
god.
o Use different forms of coordination among merchant, kings and nobles to explain different
types of state organization, explain why France and Spain did not become hegemony
o Emphasize the important of role of state in the development of modern states and British
hegemony and do not perceive state and market are opposite actors
o This theory can be applied and referred to for the contemporary China.
- Weakness:
o This theory does not explain the colonism and imperialism of the West. The west predate
on the Asia countries like China and India to achieve their own development of economy.
o Does not explain clearly about the rise of British hegemony
3. Examine Schwartz’s theory of international inequality.
Stratification within societies and inequality among regions and nations
A. Neoclassical economic explanation
o Market and trade are benign forces
o Success or deficiency of growth is due to unit-level institutional successes and failures
o Strong institutions protecting discrete, absolute property rights
o Diffusion of innovation produces only relative inequality
o Division of labor
o Comparative advantage
B. World system theory
o International economy and international trade are malign forces
o System-level, local institution matter very little
o Major impediments were social and political and not economic
o Absolute backwardness
o Distinction between world empires and world economies: world empire contains the
division of labor within one political system; world economy has a single division of labor
but multiple polities
o Specialization benefits only core areas
o Unequal exchange: a mechanism in which market pressures alone cause
underdevelopment
o Core, semi-peripheral, periphery
C. Intermediate position
o Global markets create a hierarchy of potential production sites
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o Blend two models:
Thunen: agricultural location model
Krugman: spatial agglomeration of industrial activity
o Poland, France and England
Thunen (agriculture)
- Different production system: final price=cost of production + transportation cost; rent; six general
production role
- Peripheralizaiton: not necessarily lower living standard;
- Coercion is the more direct cause for underdevelopment and regression
Krugmen (industry)
- Assuming essentially immobile labor
- Transportation costs interact with economies of scale
- Product cycle model: new industries emerge in areas with high incomes, high wages and high
skills
4. What is the difference between a Kaldorian and a Ricardian strategy of development?
Ricardian strategies: acquiescence to the peripheralizing tendencies
- Relies on comparative or factor advantages
- Use agricultural or other primary product exports to drive economic development or base on low-
value industrial activities
- Success relies on a resolution of Gerschenkronian collective action problems (state mobilization of
capital for social overhead capital)
- Long-time success is limited: Ricardian exports are subject to constant or to decreasing returns,
and Ricardian exports can only create increasing returns indirectly (by inducing investment in
manufacturing activities that are characterized by increasing returns)
- Long-term success rests on the ability:
A. To find new agricultural or mineral exports
B. To link other industries to the export sector and use export growth to create growth in those
other industries
- Try to maximize the gains from accepting that position
Kaldorian strategies: mitigate or reverse peripheralizing tendencies
- Verdoorn effects: the greater the rate of increase of output inside a firm, the greater the increase in
that firm’s productivity
- Investment driven
- Export oriented and contained by ability to pay for imports with export
- Face both Gerschenkronian collective action (collective problems surrounding investment)
problems and Kaldorian collective action problems (collective problems surrounding the growth of
productivity)
- Attempt to construct a new town
5. Most developed countries today have achieved development through the use of Kaldorian
strategies’. Discuss!
Ricardian strategies will lead to increasing gap among states
- Both the Ricardian and Kaldorian strategies will contribute to the absolute increase of income and
surplus of states, but Ricardian strategies will lead to the increasing gap between the importers and
exporters. States adopting the Ricardian strategies became supplier zones of advanced countries,
and become more and more backward because they stagnated in the production of food, NFAs and
raw material for the core state(s), but the advanced states could use these supplies to facilitate and
promote their industrial development. Overtime, the richer and advanced states become more and
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