Professional Documents
Culture Documents
Nationalism
Originally called mercantilism
Assumes and advocates the primacy of
politics over economics
Essentially a doctrine of state-building
Asserts that the market should be
subordinate to state interests
Political factors do, or at least should,
determine economic relations
Nationalism
Mercantilism was the conventional trade
doctrine of Europe in the 17th and 18th Centuries
Basic premise was that trade is a zero-sum
game
Any advantage gained by one comes at the expense
of the other
Nationalism
American Alexander
Hamilton and German
Friedrich List argued that
national power is based
on manufacturing and
that economic values
should be subordinated
to the more important
task of state-building
In order to promote
industrial strength, the
state must organize
foreign trade and protect
infant industries with
tariffs and other
exclusionary devices
Nationalism
The foremost objective of nationalists is
industrialization
Industry has spillover effects (externalities)
throughout the economy and leads to its overall
development
The possession of industry is associated with
economic self-sufficiency and political autonomy
Industry is the basis of military power and central to
national security in the modern world
Liberalism
Emerged from the
Enlightenment in the
writings of Adam Smith and
others as a reaction to
mercantilism
A doctrine or set of
principles for organizing
and managing a market
economy in order to
achieve maximum
efficiency, economic
growth, and individual
welfare
Assumes that politics and
economics exist, at least
ideally, in separate spheres
Liberalism
Argues that markets in the
interest of efficiency, growth,
and consumer choice should
be free from political influence
Assumes that a market arises
spontaneously in order to satisfy
human needs and that, once it is
in operation, it functions in
accordance with its own internal
logic
The natural laws of supply and
demand determine what
happens in the marketplace
Liberalism
Human beings are by nature economic animals and
therefore markets evolve naturally without central
direction
Argues that markets in the interest of efficiency,
growth, and consumer choice should be free from
political influence
Because of the role of self-interest, governments
should practice a policy of laissez-faire
Through an invisible hand, self-interest guides the most
efficient use of resources in a nations economy, with public
welfare coming as a by-product
State and personal efforts to promote social good are
ineffectual compared to unbridled market forces
Liberalism
Provides the intellectual rationale for free trade
and capitalism
In contrast to nationalism, in which the purpose
of trade is to build up the state and a modern
industrial base, the purpose of trade in liberalism
is to increase wealth
To do so, nations should adhere to the principle
of comparative advantage
Countries that enjoy particular advantages of
resources, climate, geography, knowledge, and the
like should specialize in producing those things that
they can make cheapest
Marxism
Appeared in the midnineteenth century as a
reaction against
liberalism and classical
economics
Holds that economics
drives politics
Political conflict arises
from struggle among
classes over
distribution of wealth
Therefore political
conflict will cease
with the elimination
of the market and a
society of classes
Marx
Engels
Marxism
Marx and Engels felt that capitalism divided
people into two main classes
Capitalists who owned industrial machinery and
factories (the means of production)
The proletariat who were wage earners with only their
labor to sell
Marxism
In 1848, Marx and Engels wrote Manifesto of
the Communist Party
All human history has been the history of struggle
between social classes
The future lay with the working classes because the
laws of history dictated that capitalism would
inexorably grind to a halt
Crises of overproduction, underconsumption, and
diminishing profits would undermine capitalisms
foundation
Marxism
Members of the constantly growing and thoroughly
exploited proletariat would come to view the forcible
overthrow of the existing system as their only alternative
The socialist revolution would result in a dictatorship of
the proletariat, which would abolish private property and
destroy the capitalist order
After the revolution, the state would wither away
Coercive institutions would disappear since there would no
longer be any exploitation of the working class
Mao Zedong
Corporations
International corporations sought to
extend business activities across borders
in pursuit of specific activities such as
importation, exportation, and the extraction
of raw materials
Multinational corporations conducted
business in several countries but had to
operate within the confines of specific laws
and customs of a given society
Corporations
Global corporations rely on a small
headquarters staff while dispersing all
other corporate functions across the globe
in search of the lowest possible operating
costs
Treat the world as a single market and act as
if the nation-state no longer exists
Some 50,000 global corporations exist,
including General Motors, Siemens AG, and
Nestle
Trading Blocs
Since no single economic power can fully
control global trade and commerce,
groups of nations have entered into
economic alliances designed to gain
advantages for the members
EU
OPEC
NAFTA
ASEAN
Organization of Petroleum
Exporting Countries (OPEC)
Established in 1960 by
Iran, Iraq, Kuwait, Saudi
Arabia, and Venezuela
and later joined by eight
others
Cartel proved to be a
political as well as an
economic power during
the Arab-Israeli War of
1973
Ordered an embargo on oil
shipments to the US
(Israels ally) and the price
of oil in the US quadrupled
between 1973 and 1975
Case Study
Meiji Reforms in Japan
Commodore Perry
In 1853, Commodore
Matthew Perry led a US
naval squadron into
Tokyo Bay and
demanded that the
shogun open Japan to
diplomatic and
commercial relations and
sign a treaty of friendship
The shogun had no good
alternative and
acquiesced to Perrys
demands
Meiji Reforms
The Meiji government strived to gain parity
with foreign powers behind the motto rich
country, strong army
It looked to the industrial lands of the
United States and Europe to obtain
knowledge and expertise to strengthen
Japan and win revisions of the unequal
treaties
Study Abroad
The Meiji sent many
students and officials
abroad to learn
everything from
technology to
construction and hired
foreign experts to
facilitate economic
development and
indigenous expertise
Reforms
The Meiji transformed Japan by:
abolishing the feudal order and therefore centralizing
political power,
revamping the tax system to put the regime on a firm
financial footing
creating a constitution which gave the emperor
effective power and the parliament the ability to
advise but not control him
creating a modern transportation, communications,
and educational infrastructure
Rise in Power
By the early 20th Century, Japan
had joined the ranks of the worlds
major industrial powers
From 1894-1895 Japan defeated
China in a war over Korea which
showed how modern and powerful
Japan had become and how
weakened China had become
In 1899 Japan was able to end
extraterritoriality
In 1902 Japan concluded an
alliance with Britain as an equal
power
In 1904-1905, Japan shocked the
world by defeating Russia in the
Russo-Japanese War
Toyoda Type-G
Automatic Loom
invented in 1924
Practical Exercise
Product Safety in China
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Globalization and Interdependence