POL 3103, Political Economy Fall, 2012 Instructor: Prof. Kang, Myung-koo Class Time/Place: Mons/Weds, 11:10 ~ 12: 25 // VC11135 Office: VC 5-275. Office hours: Mons/Weds, 4:00 ~ 5:00 or by appointment Email/ Phone: myung-koo.kang@baruch.cuny.edu / 646-312-4431 Course Description The course examines the interaction between states and markets in macroeconomic policy formulation and implementation, both in theory and in practice, linking classic works on political economy with current policy debates. We will, first, review three major theoretical paradigms in political economy liberalist, Marxist, and statist and explore key topics in international and domestic political economy: (1) the origins and evolution of global financial system; (2) the origins and evolution of the international trade (GATT) system. Responding to students growing intellectual demand on finance, this course will review more extensively on the origins and evolution of global financial system, especially focusing on the rise of the Bretton Woods system after World War II and its collapse, financial globalization and crises, and government s macroeconomic policy responses to crises. Learning Goals This course has four main leaning goals. If students read the assigned readings and follow lectures and discussions in class sincerely, students will be able to understand the following four topics: First, the core theoretical content and evolution of three classic views in political economy Second, the origins and evolution of the modern global financial system and the current context of global financial crises Third, the origins and development of multilateralism, regionalism, and bilateralism in global trade and the current major trade-related issues Fourth, the structural problem of global imbalances and macroeconomic policy challenges the nation-state system and each nation-state have confronted in an era of globalization Prerequisites ENG 2100 or equivalent and ECO 1001 or 1002 or departmental permission. Class Format This class will be a mixture of lecture and discussion. The instructor will give lectures first and then lead discussions based on the assigned readings or other relevant topics for each class. 1
Grading Formula Mid-Term 25% Attendance & Class participation 15% One research paper 20% Final exam 40% Students are expected to read the assigned reading critically and play an active role in class discussions. 15% of final grade will depend on students participation in class discussions. Grading Policy Grading will be based on a curse system. 30 percent of enrolled students will get A or A-, 50 percent of students B+, B, or B-, and 20 percent of students below B-. Considering students performance in class, the scores in the mid-term, and the paper quality, if the instructor feels that the distribution needs to be re-adjusted, it will be announced before the final examination. If not, the original grade distribution rule will be applied. Policy Regarding Make-up Exams No make-up exams will be provided, except the cases of unavoidable medical emergences or accidents. All exceptions should be proved by a written document. But note that what qualifies as a valid excuse is at the discretion of the instructor. You should make arrangements or at least email or voicemail me in advance. Failure to comply with this requirement will lead to an F for the exam. Classroom Behavior Rules Classroom is not a living room, dining room, or bedroom. Any of personal talking to each other, eating, or sleeping is allowed. If such kinds of behaviors are noticed by the instructor, the instructor can ask such students to leave the classroom. No mobile texting or checking emails in the middle of the class is allowed. Please turn off your mobile phone or make it sure to a silent mode. If students violate this rule, the instructor can ask students to leave the classroom immediately. Laptop or IPAD or other electronics for note-taking will be allowed. But if the instructor thinks that electronic devices are not helpful for class discussions or other pedagogical purposes, they will not be allowed. It depends on students prudent use of electronic devices. Attendance and Lateness Policy If students skip more than 4 times, participation grade will be F. If students skip more than 6 times, meaning from the 6 th absence, the course grade will be F. Class absence will be excused only if students have a valid and documented excuse. Note that what qualifies as a valid excuse is at the discretion of the instructor. Students should notify the instructor before the class. Email 2
is most preferred. If the instructor does not reply to student s email within 24 hours, send it again. Lateness policy: If students are late to the class more than 20 minutes, it will be counted as absence. Also, if students are late to the class more than 20 minutes, it is strongly encouraged not to come in the classroom, not to interrupt the class. Paper Assignment To test the students ability to synthesize information for a policy analysis, the instructor asks students to write at least 10 page (double-spaced) research paper as to U.S. government s macroeconomic policy (or any specific country after getting an approval from the instructor) in response to the global financial crisis of 2007-09. Base your paper primarily on course readings. Focus on the political dynamics in addition to economic nature of the issue. What kinds of policy were adopted to deal with the current financial crisis in the U.S.? Which interest groups, government agencies, and political parties are involved in setting policy in this area? What are their respective positions on the issue? How do they interact? Link your argument to theories and analytical perspectives introduced in the course. Students are strongly encouraged to talk with the instructor in advance about the key focus on one s own paper. It s due in class on Nov. 19 th. No late paper will be accepted. Late paper will get F for the assignment. Be prepared in advance! Also, send the file to the instructor after the class. Course Website Reading materials will be posted on the Blackboard site. If you have any questions about your Baruch email address or your password, or if you have any problems accessing the site please call the computer helpdesk at 646.312.1010. You can check your grade at any time by visiting the Blackboard site for the class and using the check my grade feature. Every required reading material will be available on the Blackboard course website. Students with disabilities Students with disabilities may be eligible for a reasonable accommodation to enable them to participate fully in courses at Baruch. If you feel you may be in need of an accommodation, please contact the Office of Services for Students with Disabilities at (646) 312-4590. The student who wants to get auxiliary aids and services, and need appropriate academic accommodations with disabilities must provide documentation of disability to the Director of Disability Services and get registered. If not, no special accommodations with disabilities will be provided. Academic Dishonesty Issues 3
Cheating and plagiarism are serious offenses. The following definitions are based on the College's Academic Honesty website: Cheating is the attempted or unauthorized use of materials, information, notes, study aids, devices or communication during an academic exercise. Examples include but are not limited to: Copying from another student during an examination or allowing another to copy your work Unauthorized collaborating on a take home assignment or examination Using unauthorized notes during a closed book examination Using unauthorized electronic devices during an examination Taking an examination for another student Asking or allowing another student to take an examination for you Changing a corrected exam and returning it for more credit Submitting substantial portions of the same paper to two classes without consulting the second instructor Preparing answers or writing notes in a blue book (exam booklet) before an examination Allowing others to research and write assigned papers including the use of commercial term paper services Plagiarism is the act of presenting another person's ideas, research or writing as your own, such as: Copying another person's actual words without the use of quotation marks and footnotes (a functional limit is four or more words taken from the work of another) Presenting another person's ideas or theories in your own words without acknowledging them Using information that is not considered common knowledge without acknowledging the source Failure to acknowledge collaborators on homework and laboratory assignment My policy is to give a failing grade to any assignment that has been plagiarized or an exam in which you have cheated. In addition, I am required by College policy to submit a report of suspected academic dishonesty to the Office of the Dean of Students. This report becomes part of your permanent file. 4
* Required readings # Recommended readings or documentaries Aug. 27: Introduction What is political economy? What topics will be covered in the course? What does the instructor expect from students? The Liberalist Paradigm I. Rival Views on Markets and States Aug. 29: The Theory of Moral Sentiments *Smith, Adam (1759). The Theory of Moral Sentiments Ch.I~V, pp.213-15 (Universal Benevolence); pp.239-241 Sept. 3: No class (holiday) Sept. 5: Self-Interest, Free Market, and Market-Equilibrium *Smith, Adam (1976). An Inquiry into the Nature and Causes of the Wealth of Nations: Book I-Ch. 1 (of division of labor), Book IV Ch.I (Of he principle of the commercial or mercantile system) & Ch.VIII (Conclusion of the mercantile system) #Hayek, Friedrich (1944). The Road to Serfdom: 32-42 & 72-87. #Friedman, Milton (1962). Capitalism and Freedom: 22-36. The Marxist Paradigm Sept. 10: Class Struggle and Mode of Capitalist Production *Marx, Karl, The Capital: A Critique of Political Economy, Vol.1: Chapter 1 Commodities & Part VIII : The So-call Primitive Accumulation (http://www.marxists.org/archive/marx/works/download/pdf/capital-volume-i.pdf) Sept. 12: Variants of Marxist view (World System Theory, Dependency Theory) *Hilferding, Roudolf (1910). Finance Capital: A Study in the Latest Phase of Capitalist Development ch.23 & 24. (available at http://www.marxists.org/archive/hilferding/1910/finkap/index.htm) *Wallerstein, Immanuel (1974 & 2011). The Modern World-System I: pp.346-357 Sept. 17: No class (holiday) The Statist Paradigm 5
Sept. 19: Mercantilism & State *List, Friedrich (1916). The National System of Political Economy: Ch.XII (The theory of the powers of production and theory of values), Ch.XIII (The national division of commercial operations) Ch.XIV (Private economy and national economy) (http://oll.libertyfund.org/index.php?option=com_staticxt&staticfile=show.php%3ftitle= 315&Itemid=27) *Wallerstein, Immanuel (2011). The Modern World System II, Prologue to the 2011 edition pp.xiii-xxvii. #Pincus, Steve. (2012). Rethinking Mercantilism: Political Economy, the British Empire, and the Atlantic World in the Seventeenth and Eighteenth Centuries. The William and Mary Quarterly 69 (1): 3-34. #Heckscher, Eli (1934). Mercantilism vol.1 & II. Sept 24: Gerschenkron & New Mercantilism * Gerschenkron, A. (1962), Economic Backwardness in Historical Perspective: 5-30. # Johnson, Chalmers (1982), MITI and the Japanese Miracle: 3-34 & 305-324. # Önis, Z. (1991). "The Logic of the Developmental State." Comparative Politics 24(1): 109-126. Sept. 26: No class (holiday) Oct. 1: Self-Regulating Markets vs. Embedded Markets *Polanyi, Karl (1944). Great Transformation: Ch.6 ( The Self-regulating market ) #Vogel, Steve (1996). Freer Markets, More Rules: pp.9-24 Oct. 3: Keynesian Revolution *Keynes, J. M. (1926), The End of Laissez-Faire; entire pamphlet *Keynes, J.M. (1936), The General Theory of Employment, Interest, and Money: Ch.15 (The psychological and business incentives to liquidity) Oct. 8: No class II. The Origins and Evolution of Global Financial System Oct. 10: Ascent of Money: Nation-State building & War financing *Kindleberger, Charles P. (1984). A Financial History of Western Europe. London & New York: Routledge: pp.19-70. #Ferguson, Niall (2008). The Ascent of Money: A financial history of the World. #Documentary: Ascent of Money (PBS):http://www.pbs.org/wnet/ascentofmoney/ Part 1 & 2 6
Oct. 15: Gold Standard, Great Depression, and Inter-War Conflicts *Eichengreen, Barry. (1998). Globalizing Capital: A History of the International Monetary System. Princeton, N.J.: Princeton University Press: ch.2 & ch.3: pp.6-90. #Eichengreen, B. J. (2004). Capital Flows and Crises pp.13-46. #Documentary: Ascent of Money (PBS):http://www.pbs.org/wnet/ascentofmoney/ Part 3 & 4 Oct. 17: The Origins of the Bretton Woods System *Bordo, Michael D., Barry J. Eichengreen, and National Bureau of Economic Research. (1993). A Retrospective on the Bretton Woods system : lessons for international monetary reform: pp. 3-98. *Ikenberry, John G. (1993), The Poltical Origins of Bretton Woods Bordo et. Al: pp.155-198. #Eichengreen, Barry. (1998). Globalizing Capital: A History of the International Monetary System. Ch.4. Oct. 22: The Collapse of Bretton Woods System and Aftermath *Garber, Peter (1993), The Collapse of the Bretton Woods Fixed Exchange Rate System, Bordo et. al : pp. 461-485. #Eichengreen, Barry. (1998). Globalizing Capital: A History of the International Monetary System. Ch.5:pp.134-184. # Mid-Semester Self-Evaluation Oct. 24: Mid-term Exam Oct. 29: The role of the IMF & the World Bank group *Krueger, Anne O. (1997). Whither the World Bank and the IMF? NBER Working Paper No.6327. #Serra, Narcís, and Joseph E. Stiglitz. (2008). The Washington Consensus Reconsidered : Towards a New Global Governance: pp.14-30 ( A short history of the Washington Consensus ) #Birdsall, Nancy & Francis Fukuyama (2011). The Post-Washington Consensus: Development After the crisis Foreign Affairs 90(2): 45-53. #Documentary: Commanding Heights; the Battle for the World Economy: part I (http://www.pbs.org/wgbh/commandingheights/hi/index.html) Nov. 5: Governance of Economic Globalization; Trilemma *Rodrik, Dani. (2007). One economics, many recipes : globalization, institutions, and economic growth: pp.195-212. *Rodrik, Dani. (2011). The Globalization Paradox: ch.9 & 10 #Joseph E. Stiglitz. (2008). The Future of Global Governance, in Serra & Stigltiz (2008): pp.309-323. 7
Oct. 31: Financial Globalization & Financial Crises *Documentary: Inside Job (wathcing in class) *Roubini, Nouriel & Stephen Mihm (2010). Crisis Economics: A Crash Course in the Futgure of Finance. Ch.3 Plate tectonics Nov. 7: Monetary vs. Fiscal Policy Responses * Blanchard, Romer, and et. al, ed.(2012). In the Wake of the Crisis: Leading Economists Reassess Economic Policy. Ch.1 (monetary policy in the wake of the crisis) & ch.5 fiscal stimuli and consolidation). #Bhagwati, Jagdish. (1998). The Capital Myth: The Difference between Trade in Widgets and Dollars. Foreign Affairs 77 (3): 7-12. #Stiglitz, Joseph E. (2002). Globalization and Its Discontents. Nov. 12: Global Imbalances * Obstfeld, Maurice (2012). Liqudity and the International Monetary System in Blanchard, Romer, and et. al, ed.(2012). In the Wake of the Crisis: Leading Economists Reassess Economic Policy. *Dunaway, Steven. (2009). Global Imbalances and the Financial Crisis. Council on Foreign Relations Press. #Eichengreen, Barry. (2006). Global imbalances: The new economy, the dark matter, the savvy investor, and the standard analysis. Journal of Policy Modeling 28 (6): 645-652 III. The Evolution of International Trade Regime Nov. 14: The Formation of GATT system and Its Evolution *Harvard Law Review Association. 1968. Free Trade and Preferential Tariffs: The Evolution of International Trade Regulation in GATT and UNCTAD Harvard Law Review 81 (8): 1806-1817. #Moore, Patrick M. 1996. The Decisions Bridging the GATT 1947 and the WTO Agreement. The American Journal of International Law 90 (2): 317-328. #Documentary: Commanding Heights; the Battle for the World Economy: part II (http://www.pbs.org/wgbh/commandingheights/hi/index.html) Nov. 19: World Trade Organization: Birth and Functions *Gowa, Joanne (2010). Alliances, market power, and postwar trade: explaining the GATT/WTO World Trade Review, 9, pp 487-504 *Wallace, Taylor. (2010). Most Favoured Nation Treatment and WTO Dispute Resolution. Journal of Contemporary Legal Issues 19 (1): 462-467 #Crowley, M.A., An Introduction to the WTO and GATT, 2003 Economic Perspectives, 4 th Quarter 2003, Federal Reserve Bank of Chicago. 8
# Paper Due (in class + email) Nov.21: Thanksgiving holiday Nov. 26: WTO: Dispute Resolution Procedure *Sacerdoti, Giorgio. 2006. The Dispute Settlement System of the WTO: Structure and Function in the Perspective of the First 10 Years. Law & Practice of International Courts & Tribunals 5 (1): 49-75 #Moon, Don. 2006. Equality and Inequality in the WTO Dispute Settlement (DS) System: Analysis of the GATT/WTO Dispute Data. International Interactions 32 (3): 201-228. #Documentary: Commanding Heights; the Battle for the World Economy: part II & III (http://www.pbs.org/wgbh/commandingheights/hi/index.html) Nov. 28: Regionalism: EU, NAFTA, ASEAN, Mercosur *Molchanov, Mikhail A. (2005). Regionalism and Globalization: The Case of the European Union. Perspectives on Global Development & Technology 4 (3/4): 431-446. #Nair, Deepak. 2009. Regionalism in the Asia Pacific/East Asia: A Frustrated Regionalism? Contemporary Southeast Asia: A Journal of International & Strategic Affairs 31 (1): 110-142. Dec. 3: Free Trade Agreements: Spaghetti Bowl Effects *Rodrik, D. (1997). Has Globalization Gone Too Far? : Ch.4 Trade and the Demand for Social Insurance *Cooper, W. H (2010). Free Trade Agreements: Impact on U.S. Trade and Implications for U.S. Trade Policy. CRS Report #Bhagwati, Jagdish N. (1988). Export-Promoting Trade Strategy: Issues and Evidence. The World Bank Research Observer 3 (1): 27-57. IV. Future Prospects Dec. 5: The Rise of China and Its Potential Impacts on Global Political Economic Order *Ikenberry, john (2008). The Rise of China and the Future of the West: Can the Liberal System Survive? Foreign Affairs, 87(1) *Glaser, Charles. (2011). "Will China's Rise Lead to War?" Foreign Affairs. 80-91. Dec. 10: The Debate on the Relative Decline of the U.S.: Chimerica? *Walt, Stephen M. (2011). The End of the American Era, National Interest *Brzezinski, Zbigniew (2012). Balancing the East, Upgrading the West: U.S. Grand Strategy in an Age of Upheaval, Foreign Affairs 91(1) Dec. 12: Class wrap-up 9