Chapter 8: Political Economy OER materials

Transcript:Chapter 8: Political Economy OER materials:
Chapter 8: Political Economy OER materials provided with support from the Academic Senate for California Community Colleges (ASCCC) Open Educational Resources Initiative (OERI) 1 Chapter Outline Section #8.1: What is Political Economy? Section #8.2: Political Economic Systems Section #8.3: Comparative Case Study: Germany and China 2 Section #8.1: What is Political Economy? 3 What is Political Economy? 1 Political Economy: the interaction of and between political and economic goals and policies: Interactions run both ways Because both politics and economics involve human behavior, which is driven by emotion, making predictions is not easy Understanding the influences of each on the other is a core element of providing advice for political leaders, such as in the COVID-19 pandemic 4 What is Political Economy? 2 The study of political economy goes back to ancient times, but as a formal discipline it dates to the mid-1700s Adam Smith published The Wealth of Nations in 1776 Trying to study politics and economics separately is more of a 20th Century phenomenon Political economy is studied at both the domestic and international levels Domestic issues include tax policy, regulation of business and monetary policy International political economy [IPE] focuses mainly on trade policy 5 Section #8.2: Political Economic Systems 6 Mercantilism / Economic Nationalism 1 Mercantilism is the oldest of the IPE approaches, but has regained popularity in the 21st Century It is also called “economic nationalism” because the focus is on preserving and expanding the power of the state Economic nationalists favor protectionist trade policies that give advantage to domestic producers in the competition with foreign producers Tariffs, domestic industry subsidies and favorable tax treatment are some of the common policies 7 Mercantilism / Economic Nationalism 2 A key objective of Mercantilism is to have a diversified economy at home to avoid being dependent on other countries for key resources The main risks of the are: A decline in the quality and an increase in the price of products due to lack of competition If other countries choose the same path, making imports expensive, exporting companies will lose customers and therefore hire fewer workers (Source: Speeches of Year One by Trump White House Archive via flickr is licensed under Public Domain.) 8 Free Market Capitalism / Economic Liberalism 1 Economic liberalism is a newer, though well-established, competing approach to IPE Adam Smith, in The Wealth of Nations, tried to disprove the “zero-sum” nature of mercantilism