Transcript Document

To Do Today List
Approaches to Characterising Economic Eras:
Revolutions – Agriculture and Industry.
Capital.
Globalisation as an Economic Process:
Pre-global processes.
The post-war globalised world.
On Becoming Urban:
Urban growth versus urbanisation.
Demographic transition, urbanisation economic change.
Space, Geography, Territory:
The Global Village.
The Rise and Fall (and rise again) of Colonisation.
Economic Base Theory (EBT):
How places earn a living.
ECONOMIC ERAS
Economic transformations are meshed with social,
demographic and urban change.
Different ways to classify different eras, but going to
look at two:
Revolutions Approach
Agricultural (3) and Industrial (6)
Capital Approach
Competitive, Organized, Disorganized
ECONOMIC ERAS - INTRODUCTION
Agricultural Revolutions Approach
Neolithic: @10,000 years ago, domestication, tool
use, end of wide spread hunter-gatherer and
nomadic society and beginning of urban growth.
British: 1600s-1800s, application of science,
mechanisation, four field rotation, selective
breeding, enclosure, drives industrial revolution
with surplus food and workers.
Green Revolution: 1940s-1970s, application of
chemical and biological tools to create high yield
crops, and creation of factory systems of agricultural
production.
In each case the result was greatly increased
output.
ECONOMIC ERAS - REVOLUTIONS APPROACH
Industrial Revolutions Approach
So far, six of them, starting around 1730 in
Britain.
All involve changes that increase the output of
manufactured goods significantly.
This results in knock-on effects for the socioeconomic and environmental systems in which
they occur.
Most significant changes involve the application
of new technology to either or both of:
• Production systems.
• Consumer goods.
ECONOMIC ERAS - REVOLUTIONS APPROACH
The Six Industrial Revolutions – 1 & 2
(Dates based on U.K. experience)
First Industrial Revolution (1730-1820s in UK)
cottage to factory system, human to water
then coal/steam power, innovations to
inventions, manufacturing moves to urban
areas, ‘invention’ of the factory worker.
Second Industrial Revolution (1830s-1880s)
steam technology applied to transportation,
complex organisational structures, MN firms
begin, ‘The American System of Manufacture’,
labour saving devices, mass production.
ECONOMIC ERAS - REVOLUTIONS APPROACH
The Six Industrial Revolutions – 3 & 4
Third Industrial Revolution (1880s-1939)
Science and technology linked, Systematic and
organised R&D, Mass consumption culture
begins, WW 1 stimulates R&D and changes
labour patterns gender-wise, automation,
electrification, the oil economy starts.
Fourth Industrial Revolution (1945-1974):
WW2 destruction, technical innovation,
transformed labour patterns, Complex
organisational structures (TNCs), servicemen
provide well trained labour force, and huge
economic demand. Consumer Society becomes
engine of growth in the U.S.
ECONOMIC ERAS - REVOLUTIONS APPROACH
The Six Industrial Revolutions – 5 & 6
Fifth Industrial Revolution (1974-2000)
‘Oil crisis’ of 1974 threat to manufacturing, aging U.S.
manufacturing infrastructure, foreign competition,
international division of labour, offshore production,
J-I-T manufacturing systems, automation and cheaper
offshore production, decreased labour dependency in
developed economies, manufacturing declines and
growth in services, especially finance, begins.
Sixth Industrial Revolution (2000 until ??)
Decline of developed world’s manufacturing,
globalization leads to increasingly ‘stateless’ TNCs in
an increasingly territorial world, consumerism begins
in the rest of the world, financial sector risk taking
increasingly impacts economy, environmental impacts
noticeably affect global systems.
ECONOMIC ERAS - REVOLUTIONS APPROACH
What is capital?
One of the “factors of production” in the production cycle
and refers to two things:
First, the money used to fund all these things is called
financial capital.
Second, non-financial capital refers to the things (goods,
capital assets such as infrastructure) produced by or used in
the production process.
Broader definitions can include land (or natural) capital,
social capital, human capital, and examples would be:
The machines that make goods;
The machines that make machines that make goods;
Trucks, ships, railways, etc;
Roads, schools, hospitals, etc.
ECONOMIC ERAS - THE CAPITAL LABOUR APPROACH
Capital Approach
Competitive Capital (1730-1880)
1st and 2nd industrial revolutions
Organized Capital 1 & 2 (1880-1974)
1.Imperial capitalism (Colonialism – to 1945)
3rd industrial revolution
2. Advanced Capitalism (Decolonialism –1945 to 1974)
4th industrial revolution
Disorganized Capital (1974-present)
5th and 6th industrial revolutions
ECONOMIC ERAS - THE CAPITAL LABOUR APPROACH
Competitive Capital (1730-1880)
Birth of fundamental capitalism where supply and demand
are allowed to reach equilibrium in the free market of
consumers and producers – or so the theory goes.
Also known as laissez-faire (Fr.: “let do”) or the economics
of non-intervention and non-interference.
Principal system governing political economies after end of
feudalism and fueled by mercantile capital.
Application of capital to the purchase and production of
commodities – so called commodity capital.
Operated in an almost resource unlimited world – i.e. raw
materials and labour.
Applied mechanisation and division of labour to extract
‘surplus value’.
ECONOMIC ERAS - THE CAPITAL LABOUR APPROACH
Organized Capital 1 (1880-1974)
Imperial capitalism (Colonialism – to 1945):
Organised production begins (Fordism) as demand for labour
outstrips supply and technology offers a solution.
Organised government and labour interventions begin as
excesses of capitalism become obvious: Sherman Anti-Trust
Act (1890), Clayton Act (1914), UK Trades Union Act (1871),
U.S. Federation of Trades and Labour Unions (1881), U.S.
National Labour Relations Act (1933).
By the 1940s Keynes and fiscal policy theory becomes
widespread operational model of economies work.
Money capital dominates in the form of accumulated wealth
used to generate more wealth, as in stocks for dividends.
Growth of financial trading sector: money for money
instead of money for commodities and goods.
ECONOMIC ERAS - THE CAPITAL LABOUR APPROACH
Organized Capital 2 (1880-1974)
Advanced Capitalism (Decolonialism – after 1945):
Rapid decolonialisation of imperial territorial holdings and
ascendancy of the TNC as the new ‘colonial’ power.
Development and application of the Bretton Woods Agreement’s
instruments (World Bank, IMF, gold standard).
Application of the Marshall Plan to rebuild Europe and Japan’s
industrial sector.
Development of the General Agreement on Tariffs and Trade to
control trade.
Continued use of Keynesian fiscal policy to control economies.
Development of consumerism as an engine of growth.
Rapid application of capital to production in response to the
development of consumerism.
ECONOMIC ERAS - THE CAPITAL LABOUR APPROACH
Disorganized Capital (1974-present)
Age of paradoxes as globalisation increases rapidly with…
•
•
•
•
•
•
•
Increasing territorialisation through decolonialisation;
Increase in # of global & corporate cartels;
Increase in competition from developing nations;
Increase in calls for freer trade and/or trade controls;
Increase in offshore production facilities;
Maturation of the TNC.
Increasing globalisation & complexity of finance &
capital with few controls and high risk taking culture.
Development of Global Village where investment, finance,
communications, disease, terror, respect neither rules nor
boundaries.
ECONOMIC ERAS - THE CAPITAL LABOUR APPROACH
In stores now!
Mercantilism + Renaissance
=
Revolution
Money + Freedom
=
A New World Order
HISTORY - PRE GLOBALISATION
Mercantilism + Renaissance = Revolution
Refers to an era when trade became the principal means of
wealth generation.
Begins in 12th century with opening of trade routes by
crusades.
By 15th to 17th century Age of Exploration leads to expanded
resource base and trade routes.
By 18th century immense surplus of financial capital
generated in Europe through trade, along with banks and fiat
currency.
→ the creation of a wealthy merchant class that contrasts
with the “landed gentry” of the Middle Ages.
Fundamental shift in how money was earned and who
owned it.
HISTORY - PROCESS - PREGLOBAL
Mercantilism + Renaissance = Revolution
Transition from medieval to modern history starting in
the early 14th century.
Across 15th to 19th centuries the Ages of Reason and
Enlightenment were in full bloom in Europe.
Characterised by the emancipation of scientific thought
and methods of inquiry, → discovery of the scientific
principles necessary for the development/application of
machinery.
Freedom from religious interpretations of nature and
social behaviour → critical reappraisal of the political
economy and the development of democratic capitalism
in most of Europe.
FundamentalHISTORY
shift- PROCESS
in human
world view.
- PREGLOBAL
Mercantilism + Renaissance = Revolution
Transition from a chiefly agrarian society to an industrial
society, early 18th century, U.K.
Characterised by the application of scientific principles
and inanimate power sources to the development and
use of industrial machinery in producing goods.
Creates a new division of labour: factory workers who
produce and consume goods, → market that is
consumption driven.
Starts process of urbanisation, growth of personal &
national wealth → the creation of public institutions.
Result is a new type of political economy –
capitalist democracy.
HISTORY - PROCESS - PREGLOBAL
A Short History of Globalisation
For our purposes three periods to discuss:
Pre- 1945
@1870-1914: growth, innovation, expansion
1918-1945: risk taking → crash → sobering reality
1945 to 1973
Global institutions → prosperity → naiveté
1973 to present
mid 70s to mid 80s – shock and pessimism
mid 80s to mid 90s – recovery and restructuring
mid 90s to mid 2008 – growth and greed
post 2008 – sobering reality - or not?
HISTORY - PRE GLOBALISATION
Pre 1945 1945-1973 1973-Now
1870 until 1914:
Growth of capital, labour, and trade.
Innovations in transportation & communications
technology.
1918-1945 (complicated hiatus):
WW I (1914-1918) caused cessation in growth & trade,
then huge growth (roaring twenties) until ended by...
... the Great Depression (1929-1932) & after …
... protectionist policies stifled growth and international
trade until after WW2.
Was perhaps the first stage of globalisation though this
would be disputed as merely a continuation of
internationalization and economic liberalism.
HISTORY - PROCESS - POSTWAR
Pre 1945 1945-1973 1973-Now
Period of unprecedented growth and prosperity in the
west under the Keynesian model.
Birth of many impoverished nations.
Politically, world divides into 1st, 2nd, and 3rd worlds.
Economically, each has very different characteristics.
Socially, creation of the ‘global village’ of McLuhan.
Three global economic structures:
1. Bretton Woods: World Bank, IMF, gold to currency.
2. Marshall Plan: $14b to rebuild Germany and Japan.
3. GATT: Free trade among signatories.
Watershed: 1973 oil crisis
Cessation of western growth and prosperity.
Rebirth of free market thinking.
GLOBALISATION - POST WAR HISTORY
Bretton Woods (1944)
The most significant political and economic event of
the 20th century.
Shaped (and continues to shape) the political
economy of the 1st and 3rd worlds.
Three important economic institutions:
The International Monetary Fund (IMF).
The International Bank for Reconstruction and
Development (The World Bank).
Establishment of fixed exchange rates using the U.S.
dollar as a reserve currency, it in turn fixed to a $35
ounce gold standard.
GLOBALISATION - POST WAR HISTORY
The Marshall Plan (1948-1952):
US$17 billion (US$223 billion 2014 dollars) injected
into war torn economies in Europe and Asia.
Money to West Germany and Japan in order to ‘win
the peace’ and not repeat Versailles Treaty.
Also, to build a ring of containment around the Soviet
Union’s “Iron Curtain”.
Rebuilt economies of the two principal axis powers
(Germany and Japan) allowed them to dominate post
war manufacturing.
GLOBALISATION - POST WAR HISTORY
The General Agreement on Tariffs and
Trade (GATT, 1947):
Designed to prevent similar protectionist policies that
crippled the post depression global economy.
Free flow of capital and goods essential for a healthy
economy.
Signatories got freer trade among themselves, and
trade protections from competitors.
Since 1995 superseded by the WTO (World Trade
Organisation).
GLOBALISATION - POST WAR HISTORY
A Brief Summary of the Period
Pre 1945 1945-1973 1973-Now
Remarkable growth rates (8-10%) for developed
western economies.
Trade increased more rapidly than production.
Offshore production starts.
International division of labour starts.
A few smaller newly industrializing economies began
to prosper based on comparative advantage in labour
costs.
Many third world nations born but languish.
GLOBALISATION - POST WAR HISTORY
Post-war prosperity ends with the…
…1973 oil crisis
GLOBALISATION - POST WAR HISTORY
Much more on oil in the resources
lecture, but for now the impact of The
Oil Crisis…
… the first one.
GLOBALISATION - POST WAR HISTORY
100.00
Hostage crisis ends,
2008
January 1981.
financial
Non-OPEC oil
crisis.
becomes
economically
feasible. OPEC
2003 - Iraq
increases supply
War and
and price drops.
Venezuelan
general
strike.
Asian
October 19th-20th 1973
financial
Oil embargo begins.
crisis.
Iran takes US
hostages. Saudi
80.00
Arabia raises
market crude from
$19 to $26 barrel.
60.00
40.00
20.00
0.00
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
Price Per Barrel Constant (2012) Dollars
The
price of oil quadruples to nearly $12 per barrel ($58 today). US and
120.00
Netherlands
embargoed
for supporting
in the
1973 Yom
Kippur war.
Oil Price
Per Barrel,
Constant Israel
(2012)
Dollars,
1965-2012
Pre 1945 1945-1973 1973-Now
Post Oil Crisis – 1973 until now
History has yet to “officially” characterize the past
four decades but we can possibly see it as:
A decade of shock and pessimism.
A decade of recovery and restructuring.
A decade of growth and greed.
Perhaps now, a decade of sobering reality?
(…or not.)
GLOBALISATION - POST WAR HISTORY
Mid 70s to mid 80s - Shock and Pessimism
Optimism, growth and prosperity of post war years ends,
Keynesian economic policy stumbles and eventually fails
due to speed at which transactions takes place.
Western nations find themselves vulnerable to debt and the
development of newly emerging industrial nations.
U.S. had changed from gold standard for its dollar to
production as measure of wealth facing increased
competition and obsolescence.
Developing countries take on huge debt loads trying to
address balance of power and balance of payments.
Debt and political problems of the developing world begin
to impact the financial institutions of the West.
Western response was to address their vulnerabilities.
GLOBALISATION - POST WAR HISTORY
Mid 80s to early 90s - Restructuring and Recovery
The corporate west diversifies, globalises, modernises.
Corporations create international division of labour and
come to control foreign companies.
Foreign policy increasingly becomes economic policy
driven by profit needs of TNCs.
Financial sector becomes a risk laden driving force in
wealth creation.
Countries shift to the political, economic, social right,
adopt free market, deregulatory, monetarist policies.
Cracks in the planned economies of the world become
too big to hide, repair: Soviet de-colonialisation follows.
GLOBALISATION - POST WAR HISTORY
Mid 90s to 2008 Crisis - Growth and Greed
Development of transnationals, high growth in the
financial sector, shift towards free market,
deregulation and right wing politics creates a renewed
global laissez faire economic system.
End of 1990s, the laissez faire attitude of the global
financial sector unravels in the Asian Meltdown that
threatens the whole global economic system.
Debt laden developing countries brought under
control of global financial institutions whose loans are
tied to adoption of free market, monetarist policies.
1999 WTO meeting in Seattle: opposition to
globalisation begins in response to meltdown of the
global economy.
GLOBALISATION - POST WAR HISTORY
Where We Are - or Where Are We?
2008 Crisis and after - A Decade of Sobering Reality?
Still too close to this period to know for sure what has
happened let alone where it is going.
The west has suffered from an economic crisis of
Depression proportions, and now faces an unprecedented
sovereign debt crisis with no obvious solution, yet seems
paralyzed to do anything to end it.
Meanwhile west still focuses on oil and problems in the
Middle East, and on terrorism in Afghanistan, as the real
economic history is being made by China and India.
And where economic history goes, political history
follows.
GLOBALISATION - POST WAR HISTORY
Where We Are - or Are We Anywhere?
Perhaps not…
Current oil price plunge due to excess Middle East
production and thus supply has devastating
implications for shale oil, tar sands and African oil.
In December big US banks successfully got parts of
the Dodd-Frank law repealed, especially the Volkler
Rule that stopped them from trading in the more
speculative derivatives – such as CDOs.
More on all this later. Suffice to say for now that self
destructive human behavior appears so well
entrenched that we just can’t learn – we still support
the right wing school of self interest and easy
answers.
GLOBALISATION - POST WAR HISTORY
URBANISATION
On Becoming Urban…
Urban areas are:
Dense collections of people.
The largest machines on earth.
Nodes in the global network of interaction.
Collections of production and consumption chains.
Points of economic, demographic and cultural transformation.
They are comprised of and driven by:
Form & structure, and the processes that give rise to it.
Change in response to economics, technology, demography, culture.
We humans were not always an urban species – we became such in
response to major transformations in the way we convert resources
into lifestyles.
URBANISATION
World Urban Population
REGION
WORLD
North America
URBAN POP 1955
850 million (30%)
125 million (67%)
URBAN POP 2015
3,819 million (52%)
301 million (83%)
Latin America
Europe
Asia
87 million (45%)
307 million (53%)
280 million (18%)
510 million (80%)
532 million (73%)
1,970 million (45%)
41 million (16%)
477 million (42%)
Africa
Africa and Asia still not quite 50% “urban” but urban
growth rates there have been by far the most rapid of
any region since 1955. Asia also has 6 of the 12 largest
cities and Africa has 2 of them.
Urbanisation, Industrialisation, Demographic Transition
Relationships between these 3 processes shape
modern societies.
Is a cause/effect cycle where all elements must stay
synchronized for economic development to occur.
For the developed world this has occurred over the
past 100+ years.
For developing nations, they have occurred over a 2030 year period - or are in the process of occurring.
→developmental problems for virtually all newly
industrializing nations.
URBANISATION, DEMOGRAPHIC TRANSITION, ECONOMIC CHANGE MODEL
Urban Growth versus Urbanisation
Urban Growth
Total
Population
Growth
Rates/Share
Rural
Urban
10,000ya
Time
URBANISATION, DEMOGRAPHIC
TRANSITION, ECONOMIC CHANGE MODEL
1700s
Urban Growth versus Urbanisation
Urbanisation
Total
Population
Growth
Rates/Share
Rural
1700s
Urban
Time
URBANISATION, DEMOGRAPHIC
TRANSITION, ECONOMIC CHANGE MODEL
Present
Urbanisation Stages
100%
80%
Urban
Share of
Population
20%
0%
10,000ya
To 1700
Terminal Stage
high levels, low rates
Growth Stage
increasing levels, high rates
Initial Stage
(low levels, low rates
1850-1950
(depends on
Time
URBANISATION,
DEMOGRAPHIC
country)
TRANSITION, ECONOMIC CHANGE MODEL
Present
Natural
Increase
Demographic Transition Model postulates four stages of
demographic change premised upon the interplay of birth
and death rates and resulting population change.
URBANISATION, DEMOGRAPHIC
TRANSITION, ECONOMIC CHANGE MODEL
Economic transition reflects the changing
employment profile for sectors of the economy
and how people earn a living.
URBANISATION, DEMOGRAPHIC
TRANSITION, ECONOMIC CHANGE MODEL
Urbanization (urban transition) is the process
wherein a predominantly rural population migrates to
become predominantly urban one.
URBANISATION, DEMOGRAPHIC
TRANSITION, ECONOMIC CHANGE MODEL
The stages of each
transition must
more or less
synchronize for
economic
development to
occur.
URBANISATION, DEMOGRAPHIC
TRANSITION, ECONOMIC CHANGE MODEL
URBANISATION, DEMOGRAPHIC TRANSITION, ECONOMIC CHANGE MODEL
25
Demographic Transition
50
40
15
Death Rates
10
35
Rates per 1000
Rate Per 1,000 Population
45
20
Birth Rates
30
25
20
15
10
5
Demographic
Transition
0
-5
5
0
Years
Year
Birth Rate
Employment
Change
Percent Employment
8
7
6
5
North…
4
3
Stage 1
Stage 4
2
1
2000
1997
1994
1991
1988
1985
1982
1979
1976
1973
1970
1967
1964
0
1961
Natural Increase
Percent Employment in Agriculture
Percent Employment
Percent Employment in Agriculture
Death Rate
90
80
70
60
50
40
30
20
10
0
Sub Saharan…
Year
Year
Urban Share of Total Population
90.0
60.0
Percent Urban
80.0
Urban Share of Total Population
Urban
Population
Percent Urban
Europe
70.0
60.0
50.0
E…
50.0
40.0
30.0
40.0
Sub Saharan Share
20.0
30.0
Stage 4
20.0
10.0
Stage 3
10.0
0.0
0.0
Year
DEVELOPMENT - TRENDS
Year
Developing World
Current
point
in time
Stage 4
Stage 3
Europe Demographic Transition
Space, Geography, Territory
SPACE GEOGRAPHY TERRITORY
Space, Geography, Territory
Territorial Implications:
More and more nations from 1945 as
decolonialisation occurs – 56 in 1945 to 193 in 2013.
Geographical Implications:
More complex culture, language, social, religious,
economic, legal, boundary landscapes to navigate.
Spatial Implications:
Development of Global Village has led to rapid
movement of ideas, money, people, problems,
conflicts, both because and in spite of more nations.
SPACE GEOGRAPHY TERRITORY
The Global Village
Marshall McLuhan, technology and the global village
(1962).
Information, ideas, attitudes travel at the speed of
light though mass media.
‘Reduces’ the size of the earth to that of the village.
Everyone knows everyone else’s business.
The demonstration effect and societal
homogenization.
Darker side of the global village:
Darknet, terror, surveillance, sex tourism, human
trafficking.
SPACE GEOGRAPHY TERRITORY - THE GLOBAL VILLAGE
The Global Village(s)
Also means, for our purposes:
more and smaller nations, and as a result…
… more borders and boundaries…
… more laws, more rules …
… more corruption.
… and thus more ways to circumvent them:
Increase in number of sectoral and regional blocs.
Sophistication of financial sector.
Communications and technology innovations.
Which in turn leads to:
More channels for disease and contraband.
More intra and inter regional conflict.
More disenfranchised groups, leading to…
… more terrorism.
Recent Historical Reasons…
Technology and transportation advances started during
and after WW2: radar/radio technology, computing/
data capture, visualization technology, weather
prediction, nav systems, sonar, etc.
Transportation technology improved significantly.
Large global movements of people (military, refugees,
migration).
Rapid resource extraction, production & consumption.
Growing number of nations → new geopolitical
interest and often aggressive foreign policy initiatives.
Tourism and infrastructure also begins to expand
rapidly
SPACE GEOGRAPHY TERRITORY - THE GLOBAL VILLAGE
Decolonialism and the Rise of Modern Nation States
All but @30 of the @200 modern nation states of
the world resulted from the past 70 years of
decolonialisation.
Three major areas and phases:
The Americas, Australia and New Zealand from
1776 to 1900.
Africa, South-East Asia, the Caribbean and Oceania
from 1945 to 1980.
The former Soviet Union from 1990.
SPACE GEOGRAPHY TERRITORY COLONIALISATION