Transcript American Political Economy

American Political Economy
0 Political economy = interaction between
economy and government; state and markets
0 Democratic political system/capitalist economic
system
0 Capitalism = capital is privately owned and
controlled/business decisions driven by
profits
0 Markets = decentralized and “self-regulating”
0 Never wholly free or self-regulating
0 Require rules, regulation by government
Market Capitalism
0 Promotes efficiency, productivity
0 Externalities (socializing cost; privatizing gain)
0 Contradiction between private interests and
community (public) interests
0 Expansion/growth and ecological crisis
0 Instability (recession, depression,
unemployment, inflation); boom and busts
(cycles)
0 Undemocratic
US Market Capitalism
0 Markets freer, less regulated
0 Corporate capitalism = small unrepresentative,
unelected group controls economy, possesses
immense political power
0 Whether to invest, where to invest, what to invest in, and
how to produce
0 Campaign contributions, lobbyists, lawyers, media
0 Private government = fundamental impact on
people’s lives and communities
0 Considered nonpolitical, private (not political)
0 Enormous pressure to offer inducements to business
0 Mobilization of bias = political advantage business
enjoys due to economic power
0 Not all-powerful (competing interests; democratic politics)
Changing Landscape
0 Structure of American economy has changed
0 Competition intensified due to globalization and
technological innovation
0 Mergers have created huge corporations
0 Production more concentrated, control more
centralized in fewer hands
0 Threat to democracy = concentration of
economic power tends to promote
concentration of political power
Who Owns Private Government?
0 “Share-holder” democracy?
0 Half of households do NOT own stock
0 Wealthiest 1%, 37%
0 Next wealthiest 9%, next 42%
0 10% of households own 80% of stock
0 Corporate elite = white and male
0 Capitalist class cohesion
0 Social clubs, interest groups/peak associations,
corporate boards
0 Small group (vast income and wealth) own America’s
private government, situated to shape political system
to serve their interests
Changing Employment
0 Industrial occupational order (blue-collar factory jobs)
replaced by postindustrial order (professionals, service
employees, and white-collar workers)
0 Good and bad jobs grew at expense of middle; huge growth in
financial sector
0 Service and sales jobs poorly paid, few benefits, require
menial and routine labor, and rarely union protection
0 Income inequality in U.S.
0 Top 20% captured 50% of all income; bottom 20% got 3.4%
(2007)
0 Political choices shape inequality
0 Markets generate inequality, pay unskilled labor with povertylevel wages unless checked by political/public forces
0 In U.S. these forces weak = labor movement tiny; parties
skewed to the right; government unresponsive to interests of
low-income groups
Extreme Market Capitalism
0 Public sector quite small
0 Public employees only 15% of workforce
0 Low proportion of GDP collected in taxes
0 Government spending as share of GDP low
0 Few public services
0 Few constraints on business firms
0 Government regulation of workplace thin
0 Lowest proportion of unionized employees of any
industrialized democracy
0 Helps account for income inequality
0 Caused by: failure to unionize in South; restrictive labor
legislation placed obstacles in way of union-organizing;
opposition to unions by corporations
0 Supercapitalism = roles as consumers and producers
increased at expense of importance of public sphere and
role as citizens
Capitalist Instability/Crisis
0 Great Recession (2007-present)
0 High unemployment – hardest on low income groups
0 Decline in stock market – now booming again
0 Bursting of housing bubble
0 Three time bombs: Sub-prime mortgages, Leverage,
Securitization
0 Government’s “hands-off” relationship to capitalism
shelved when system in jeopardy
0 Socialism for the rich, capitalism for the poor = losses
socialized and profits privatized (Stiglitz)
0 Key question: Will huge public monies used to shore up
financial system be followed by reforms to minimize
chance of a similar future crisis? Answer = NO!