THE POLITICAL ECONOMY OF THE STATE AND FINANCE POLS 4115 6.0/GS 5115.06 York University Faculty of Liberal Arts and Professional Studies Fall/Winter 2014-15 Course Director: Prof. Gregory Albo Friday: 2:30-5:30 Location: TBD Office: S642 Ross Office Hours: Wednesday 12:30-1:30; Thursday 12:00-1:00; or by appt. Phone Ext.: x88833 e-mail: albo@yorku.ca This course examines the political economy of the state and its finances and expenditures in a Canadian and comparative context. It looks at these developments historically from the late 19 th century to the present, before focusing especially on the current period of neoliberal economic policies and the new age of austerity. In the first term, students will be introduced to the theory of state economic policy, the history of public spending and shifting political-economic forces that have helped shape state finance in Canada and elsewhere. We will look at how particular approaches to state finance, and the state itself, are embedded within historically specific social and political contexts. We will look at the historical forces that led to changes in approach that were part of the introduction of Keynesian ideas following the Great Depression of the 1930s and World War II after 1945, as well as more recent shifts that have occurred with globalization and the adoption of neoliberal ideas by Canadian and other Western governments in the 1990s. These shifts have shaped priorities in state finance, specific spending, taxation and other policies of governments, as well as how state financial issues are related to democracy and citizens. One of the key issues in the ensuing debate over the financial management of state finances has been the extent to which nation states can still pursue an independent economic policy in a globalized economic and political environment. The second term will focus more specifically on recent changes in policy and current issues with respect to state finance, with a particular focus on Canada. What has happened to Canadian state financial arrangements with the introduction of neoliberal measures and policies? Have new directions in the economic policy and expenditures in the state been established? To what extent have these involved shifting responsibilities and changing funding arrangements between the federal, provincial and municipal governments? In the final section of the course we will focus on an analysis of the most recent period of austerity since the financial crisis of 2008, and subsequent Canadian government budgets. A discussion of alternative budgeting and alternative economic policies will also be taken-up.
Course Objectives: The course aims to strengthen students knowledge and competence in the political economy of the state and public expenditures. This is important as the most important single economic institution we face as citizens, workers and public employees. One purpose is to build a theoretical foundation in a practice of political economy that does not treat economic questions apart from political ones, and that develops analytical competency in understanding different ways public expenditures are constructed and spent. In reading key texts and various interpretative essays of public policy, as well as writing critical essays on them, it is hoped that students learn to utilize the basic analytical concepts of political economy to assess public finances. Students of political science, and indeed economics, often feel limited in forming their own assessments about important economic issues of the day, and developing them in political debate or in research, because they feel they lack adequate knowledge to address complex issues. This course addresses this issue directly by supporting students in the development of their thinking and writing skills in the field of political economy. Finally, the basic skills of writing a research report will be built into the assignment for the course. Required Texts: T. Lewis, In the Long Run We re All Dead: The Canadian Turn to Fiscal Restraint (Vancouver: UBC Press, 2003). W. Streeck, Buying Time: The Delayed Crisis of Democratic Capitalism (London: Verso, 2014). Course Requirements: First Term Exam (Preparation questions will be provided.) 20% Final Exam (Preparation questions will be provided.) 25% Fall Seminar Presentations and Participation (and class attendance) 10% Winter Seminar Presentations and Participation (and class attendance) 10% Essay Assignment (Due: Last class of first term and April 27) 35% Graduate students may substitute the exams for essays of 8000 words. Seminar Presentations: Students will each choose a seminar topic (two students per topic). A 300 word summary and print-out of the presentation will be handed to the instructor on the day of presentation. 2
Essay Assignment: The essay should be 8-10000 words in length for undergraduates and 10-12000 for graduates. An assignment sheet will be provided. A specific area of government policy (at any level of government) should be selected. Part 1 of the essay assignment is due at the last class of the first term and involves providing 750-1000 words summaries of (1) theory and argument about a specific policy area, (2) history of the policy, (3) the way neoliberalism changed the policy area (and expenditures if appropriate), and (4) identifying some of the research and public interest groups. This will be worth 10% of the grade. Part 2 of the assignment will be rewriting the first 4 parts, and adding to them (5) the impact of austerity on the policy area, (6) a specific piece of data relevant to the area and (7) developing an alternative budget and policy for the sector. Accommodation for Disability: Students with disabilities who require adaptations or services should discuss their needs with the instructor. Accommodation for disability will be arranged in conjunction with the Office for Persons with Disability. Plagiarism: Plagiarism is generally considered to be the most serious academic misconduct that a student can commit. Instances of plagiarism, whether intentional or unintentional, will have serious academic consequences. In order to avoid plagiarism, students are advised to familiarize themselves with York University s definition of academic dishonesty. Week 1 Introduction SEMINAR SCHEDULE OECD, Policy Challenges for the Next 50 Years, OECD Economic Policy Paper N. 9 (Paris: OECD, 2014), at http://europa.eu/espas/orbis/sites/default/files/generated/document/en/oecd.pdf. Part I Theoretical Foundations Week 2 The Capitalist State and Market G. Albo, Democratic Citizenship and the Future of Public Management, in G. Albo, D. Langille and L. Panitch, eds., A Different Kind of State? Popular Power and Democratic Administration (Toronto: Oxford University Press 1993), Ian Gough, State Expenditure in Advanced Capitalism, New Left Review, N. 92, 1975. 3
Week 3 The State and Economic Policy G. Albo, Capital, Crisis and State Economic Policy: A Neoliberal Exit? in B. Karagaac, ed., Accumulations, Crises, Struggles: Capital and Labour in Contemporary Capitalism (Berlin: Verlag, 2013). A. Davis, Marx and the Mixed Economy: Money, Accumulation and the Role of the State, Science and Society, 74: 3, 2010. Week 4 The Budgetary Organization of the State H. Radice, Cutting Government Deficits: Economic Science or Class War? Capital & Class, N. 125, 2011. D.A. Good, The Politics of Public Money: Spenders, Guardians, Priority Setters, and Financial Watchdogs Inside the Canadian Government. (Toronto: University of Toronto Press, 2013), Chs. 2 and 10. B. Doern, et al., Canadian Public Budgeting in the Age of Crises (Montreal: Mc-Gill- Queen s University Press, 2013), Chs 3-4. Week 5 Bond Markets and Fiscal Discipline T. Sinclair, Global Monitor: Bond Rating Agencies, New Political Economy, 8: 3 (2003). L. Mosley, Globalization and the State: Still Room to Move? New Political Economy, 10: 3 (2005). A. Davis, The New Voodoo Economics: Fetishism and the Public-Private Divide, Review of Radical Political Economics, 45: 1, 2012. Part II The Making of Modern Public Finance in Capitalist Societies and Canada Week 6 The Origins of Modern Public Finance Lewis, In the Long Run We re All Dead, Ch. 2 V. Tanzi, Government versus Markets: The Changing Economic Role of the State (Cambridge: Cambridge University Press, 2011), Ch. 2. 4
Week 7 The Postwar Order and Keynesianism V. Tanzi, Government versus Markets: The Changing Economic Role of the State (Cambridge: Cambridge University Press, 2011), Ch. 4. Lewis, In the Long Run We re All Dead, Ch. 3. N. Bradford, The Policy Influence of Economic Ideas, Studies in Political Economy, N. 59, 1999. Week 8 The Monetarist Challenge and the Emergence of Neoliberalism Lewis, In the Long Run We re All Dead, Chs. 4-5. Streeck, Buying Time, Ch. 1. D. Harvey, The Neoliberal State, in A Brief History of Neoliberalism (New York: Oxford University Press, 2005). Week 9 The Neoliberal State Lewis, In the Long Run We re All Dead, Chs. 6-7. J. Stanford, The Economics of Debt and the Remaking of Canada, Studies in Political Economy, N. 48,1995. A, Glyn, Austerity, Privatization and Deregulation: Finance and Ownership, in Capitalism Unleashed: Finance, Globalization and Welfare (Oxford: Oxford University Press, 2006). Week 10 Fiscal Dividend or Debt State? Lewis, In the Long Run We re All Dead, Ch. 8. Streeck, Buying Time, Ch. 2. G. Hale, Managing the Fiscal Dividend: The Politics of Selective Activism, How Ottawa Spends 2000-2001(Toronto: Oxford University Press, 2000). 5
Part III State Expenditures and Public Policy in the Neoliberal Period Week 11 Taxes and Fiscal Constraints J. Cronin and T. Radtke, The Old and New Politics of Taxation: Thatcher and Reagan in Historical Perspective, in R. Miliband, L. Panitch, J. Saville, eds. Socialist Register (London: Merlin, 1987). P. Genschel, Globalization, Tax Competition and the Welfare State, Politics and Society, 30: 2, 2002. S. Steinmo, The End of Redistribution? International Pressures and Domestic Tax Policy Choice, Challenge, December 1994. A. Jackson, The Tax System, in Falling Behind: The State of Working Canada (Ottawa: Canadian Centre for Policy Alternatives, 2000), Ch. 7. Week 12 Market Led Trade and Industrial Policies S. McBride, Canadian Capital and the Politics of Globalization, Paradigm Shift (Halifax: Fernwood, 2005). M. Sharaput, Harper Government Industrial Strategy and Industrial Policy in the Economic Crisis, in B. Doern and C. Stoney, eds., How Ottawa Spends 2010-11 (Montreal: McGill-Queen s University Press, 2010). J. Loxley, Public-Private Partnerships After the Global Financial Crisis: Ideology Trumping Economic Reality, Studies in Political Economy, N. 89, 2012. Week 13 From Welfare State to Workfare and Marketization J. Myles and Pierson, Friedman s Revenge: The Reform of Liberal Welfare states in Canada and the US, Politics and Society, 25: 4, 1997. Cheryl Collier and Rianne Mahon, One Step Forward, Two Steps Back: Child Care Policy from Martin to Harper, in A. Maslove, ed., How Ottawa Spends 2008-2009 (McGill-Queen s University Press, 2008). Week 14 Refinancing Universities: Student-Consumers Pay E. Jackson, How Ottawa Doesn t Spend: The Rapid Appearance and Disappearance and Possible Reappearance of the Social Economy Initiative, in A. Maslove, ed., How Ottawa Spends, 2008-2009 (Montreal: McGill-Queen s University Press, 2008). 6
C. Morgan, Federal Higher Education Policies and the Vanishing Public University, in A. Maslove, ed., How Ottawa Spends, 2008-2009 (Montreal: McGill- Queen s University Press, 2008). Week 15 Remaking State Pensions as Global Investment Funds Archer, Simon. Pension Funds as Owners and Financial Intermediaries: A Review of Recent Canadian Experience, Available at SSRN 1884441 (2011). http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1884441 M. Prince, Blue Rinse: Harper s Treatment of Old Age Security and Other Elderly Benefits, in C. Stoney and B. Doern, eds., How Ottawa Spends 2013-14 (Montreal: McGill-Queen s University Press, 2013). Week 16 The New Security-Military Complex Government of Canada, Canada First: Leveraging Defense Procurements through Key Industrial Capabilities (Ottawa: Public Works and Government Services, 2013), at http://www.tpsgc-pwgsc.gc.ca/app-acq/documents/eam-lmp-eng.pdf. G. Georgiou, The Political Economy of Military Expenditure, Capital and Class, 7: 1, 1983. B. Robinson, Canadian Military Spending, 2010-11, Foreign Policy Series (Ottawa: CCPA, 2011), at http://www.policyalternatives.ca/sites/default/files/uploads/publications/national%20offi ce/2011/03/canadian%20military%20spending%202010.pdf. Part IV The New Age of Austerity Week 17 The Economic Crisis of 2008 and the New Period A. Saad-Filho, Crisis in Neoliberalism or Crisis of Neoliberalism? in L. Panitch, G. Albo and V. Chibber, eds., Socialist Register 2011: The Crisis This Time (London: Merlin Press, 2011). F. Barager and M. Seccareccia, Financial Restructuring: Implications of Recent Canadian Macroecnomic Developments, Studies in Political Economy, N. 82 (2008). Bruce Campbell, The Global Economic Crisis and Its Canadian Dimension (Ottawa: Canadian Centre For Policy Alternatives 2009). 7
Week 18 Trajectories of Austerity and Public Finance Streeck, Buying Time, Ch. 3. G. Albo and B. Evans, From Rescue Strategies to Exit Strategies: The Struggle over Public Sector Austerity, in L. Panitch, G. Albo and V. Chibber, eds., Socialist Register 2011: The Crisis This Time (London: Merlin Press, 2011). Week 19 Neoliberal Authoritarianism G. Albo and C. Fanelli, Austerity Against Democracy: An Authoritarian Phase of Neoliberalism? Socialist Project, Socialist Interventions Pamphlet Series, N. 13, 2014. E. Altvater, What Happens When Public Goods Are Privatized, Studies in Political Economy, N. 74, 2004. Week 20 Analysis of the Most Recent (2014 or 2015) Federal Budget Federal Budget Papers to be assigned. Week 21 Analysis of the Most Recent (2014 or 2015) Provincial Budget Provincial Budget Papers to be assigned. Week 22 Analysis of the Most Recent 2014) Toronto Budget City of Toronto Budget Papers to be assigned. Part V Alternatives to Austerity Week 23 Participatory Budgets and Anti-Neoliberal Fiscal Policies Canadian Centre for Policy Alternatives, Alternative Federal Budget, various years. EuroMemo Group, EuroMemorandum, various years, at http://www.euromemo.eu/euromemorandum/euromemorandum_2014/index.html John Loxley, Alternative Budgets: Budgeting as if People Mattered (Halifax: Fernwood, 2003). 8
United Nations, Department of Economic and Social Affairs, Citizen Participation and Pro-Poor Budgeting (New York: Un, 2005), at http://unpan.org/publications/content/pdfs/e- Library%20Archives/2005%20Citizen%20Participation%20and%20Pro- Poor%20Budgeting.pdf Week 24 Alternative Economic Strategies G. Albo, The Crisis and Economic Alternatives, in L. Panitch, G. Albo and V. Chibber, eds., The Question of Strategy: Socialist Register 2013 (London: Merlin Press, 2012). M. Husson, Exit or Voice: A European Strategy of Rupture, in L. Panitch, G. Albo and V. Chibber, eds., The Crisis and the Left Question of Strategy: Socialist Register 2012 (London: Merlin Press, 2011). Streeck, Buying Time, Ch. 4 9