POL 5032 WEEK VI

Nationalism: Identity and agency within supra-national entities. Are states withering away or just becoming a little different?

Questions:

a). “The European Union is, at its core, a project of Kantian peace, an attempt to create a peaceful union of European states that had been at war with each other for many centuries, but whose orgy of violence in the first half of the twentieth century left Europe exhausted.”  David Held.  Is the European ideal of a Kantian Peace still at the heart of European development?

 b). The recent financial crisis in Europe has raised fundamental questions about identity and politics.  Against this background, signs have emerged of increasing social disintegration and a resurgence of nationalist sentiment; anti-semitism, racism and far-right politics.  In your view, what does it mean to be European and will European identity survive the global financial crisis?

 c). Will France or Germany submit to a new right wing ideology?  How will ethnicity and nationalism develop in a Post-Communist Europe, and especially in Eastern Europe?

I am indebted to two scholars for my point of departure this week:  First, Mitch Ilbury, who reminded me that the origins and debates surrounding particular modern problems may be found in the minds and writings of the ancient Greeks; and second, Christian Salmon who wrote so eloquently in his article, which I found as ”L’impotenza della sinistra,” La Repubblica, March 21st 2015, p.21.

Writing in the Nicomachean Ethics, Aristotle argues:

Things that are exchanged need to be somehow comparable.  This is why coins were invented.  All good[s], which are exchanged, should be measured by some sort of standard coin, which represents a measure of human needs.  [From] the name coin (nomisma) comes the word law, regulation or convention (“nomos”), since the value of a coin is by regulation.

The issue here is that the ‘value of coin is by regulation’.  What Mitch Ilbury argues goes right to the heart of the matter.   I quote: “Aristotle claimed that proportional reciprocation (exchange) is one thing that holds a city together.  It is the reason why people associate with each other.  Various other forms of human association follow that quite basic notion of exchange of goods and services.  Functionalism follows a similar line of thinking.  It is founded on the idea of common interests, just like the notion of exchange between citizens in an Aristotelian conception of the state; in the case of functionalism, integration is founded on sharing knowledge, technology and expertise.  Further association between states follows this as their initial association is grounded on a common interest principle.  However, Aristotle also claimed that the law held a city together in that it tended to preserve community in the city.  This touches on the limits of functionalism.  Although the theory explains integration by association, it does not explain how the association is to be maintained.  In a city, exchange is supported by this idea of law, as an assurance.  Functionalism places a great emphasis on the benefit of association, as there is significant pressure on the potential benefit to bind the association.  [Nevertheless], without the structure of law, exchange only tells half of the story; it is not evident that association by exchange alone is enough to maintain the bind found through functionalism.”  In other words, a union based on a substitute currency, the Euro, without the necessary legal backing in the form of universal European fiscal policy with centralized interest rates and control over the money supply, is doomed to be extremely problematic to put this issue mildly.

Christian Salmon builds on this idea.  Coming to prominence with Storytelling: Bewitching the Modern Mind. (London; Verso, 2010), he now paints a picture of French politics as the French turn out for local elections to decide who will win the second round gunfight between Nicolas Sarkozy’s UMP and Mariene Le Pen’s National Front on March 29th.  Writing on the first round, Salmon focused on how the political landscape in France is being polarized between the Socialists on the Left and the far right National Front. The impotence of the left is the subject of Salmon’s article. The rise or ascent of Mariene Le Pen’s National Front corroborates this story of the Left and the impotence of the Left’s intellectuals, who besides some exceptions have demonstrated that all they can do is express a moral indignation at Le Pen’s values.  Leftist intellectuals now entrench themselves by defending Republican values as mythical paladins.

In assessing the ideology governing France, Salmon arrives at three phenomena: the colonial imagery of France; political attitudes and repression of foreigners; and the lack of sovereignty of the state. By replacing the French Franc with the Euro, and by losing control of its boundaries, France has not just given up aspects of its sovereignty, but as Salmon opines, France has dried up the symbolic terrain where its credibility is built.  Thus sovereignty is simply dissipating in every direction.  Vertically upward toward Brussels, the European Commission and European financial markets, and downward to smaller cultural regions within France like Brittany for example.

For Salmon, the lack of sovereignty starts a dangerous spiral, which leads to bi-polarism within the political landscape as each political party arrives at a direction based on its own narrative.  On the Right, it is back to the future by going home.  On the Left, it is the economic conquest of the world.   For the Right, the hexagon that makes up the boundaries of France is symbolic of a unique horizon.  For the Left, the hexagon is an unlimited horizon.  On the Right, a regressive belligerent discourse, on the Left a naïve epic with no boundaries. 

The argument turns on a nationalist chimera that glorifies a fantasized France against a globalist utopia of Europe. There are two mythologies:  On the Right, an identity of France of villages and steeples.  On the Left, an identity of Europe with boundless markets.  France will now choose:  whether to move to a petrified or ossified state or the dissolution of France itself.  In Salmon’s pessimistic view, it’s a funeral dualism in which the politicians are consumed by their own failure.

France is not alone as other regions within Europe are also agitating for more political autonomy.   To my mind the issue remains one of exercising politics over economics.  For far too long, Europe has drifted on a debate between Keynes and Von Hayek.  Revving the economic engine or practicing an austerity that has crippled the lives of many who find themselves destitute and out of work.  We find, in Aristotle’s words, that law in the end holds the polis together, preserving a community.  Economics without the concomitant legal structure can lead to dissolution and failure.   And in fact the number of regions seeking to go it alone is increasing. Both resurgence in nationalist pride and disappointment at Brussels’ centralized economic management have led to an increase in separatist moods.

We can begin with Scotland’s referendum that took place on September 18th 2014.  Scotland’s referendum was closely watched by Catalonia, which already enjoys a wide degree of autonomy.  Nonetheless the economic crisis in Spain has led to a surge in Catalan nationalism.  And on April 19th 2014, 2.1-million Venetians representing 89 percent of the voters chose independence from Rome in an informal poll.  There is no doubt that Belgium is splitting between Dutch-speaking Flanders in the North and French-speaking Wallonia in the South.  If Flanders decides to go it alone, Belgium may cease to exist as a country. This would probably mean that French-speaking Wallonia would seek to join France, as the region has been French in everything but name.  Indeed Marine Le Pen is already stoking the fires of French nationalism, If Belgium falls and Flanders declares independence, which seems more and more possible every day, France will welcome Wallonia with pleasure.” A less known independence movement is in Brittany in northwestern France. A recent poll found that one in five Bretons want independence from Paris. Brittany has long been isolated from the rest of France. Breton is a Celtic language close to Cornish and Welsh and has recently undergone something of a revival, as efforts to assert a distinct Breton cultural identity enjoy ever-greater support.  Nationalism as a Northern Italian phenomenon is far more prevalent when looking at the Lega Nord per L’Indipendenza della Padania. The party, often referred to as Northern League by English-language media and literature, is also referred to simply as Lega or Carroccio.  Lega Nord, founded in 1991 as a federation of several regional parties of northern and central Italy, advocates the transformation of Italy into a federal state, fiscal federalism and greater regional autonomy, especially for northern regions. And lets not forget the elephant in the room as Greece moves ever closer to default and potential financial disaster.

In moving towards a particular cultural or national identity, communities are displaying nationalism within Europe. In trying to unpack this phenomenon, Rochella Schollij argues from a constructivist perspective that the nation is an imagined community, built on social interaction and historical experience.  It is seen as imagined, as most members of a sovereign state will never meet the majority of their co-members; yet imagine the collective as a bonded community.  The idea that states will revert to a form of nationalism in times of adversity is not new. Writing in 1963, Blair Bolles, argued in Rising Nationalism: A Threat to Projected European Union that in times of strain or economic recession, the first response is national self-sufficiency.  As a result, Schollij avers, ‘where the nation is threatened, national identity becomes activated.  In both a political and economic sense the implications for the state are significant.  We can understand this further by looking at political identity, how it is constructed and used and how it is activated.’

Again, I am indebted to Rochella Schollij who argues that in order to understand how identity plays a part in the relationship between citizen and state, we need to look to Hegel.  Despite the fact that he lived and wrote between 1750-1850, his understanding is valuable because he was present at a time when political thinkers were observing the evolution of national identity.  He wrote on what modern political identity should look like in order to allow both state and citizen to thrive.  Within an individual’s identity, he separates out two aspects: first, he states that every individual has a practical identity within a state.  This identity is constituted by the practical obligations of a citizen, for example, through voting.  These characteristics are uniform, and endow an individual’s life with a positive purpose.  This is distinguished from political identity and may be termed as action-motivating identification. Individuals will therefore vote because they identify themselves as part of a group that holds this collective responsibility.  Second, an individual identifies himself as having a political identity, which in turn has certain repercussions.  This involves an association with a particular history, but also, with a particular prospective narrative.   Regarding political identity, Hegel states that an individual must have agency.  He must lead a ‘healthy’ political life in order to flourish as a human being in a structured environment.  Hegel sees the relationship with the state as dynamic and dependant on its citizenry and holds that mutually beneficial relationships are vital.  When a citizen sees the laws of the state as being part of who he is and how he wishes to live, rather than being imposed from above, it makes for greater fulfillment.

Hegel’s argument goes to the heart of the matter.  The European Union, by its very nature, has a democratic deficit, as its development has been guided recently not by a political ideal, but by an economic imperative. David Cameron’s ‘EU speech at Bloomberg’, delivered on Wednesday January 23, 2013, provides a point of view that is interesting. Put simply, David Cameron has argued that the first purpose of the European Union was to secure peace, and this he argues, has been achieved.  Today, he maintains, the main, overriding purpose of the European Union is different: not to win peace, but to secure prosperity.  

Given the continuous economic problems the EU is still experiencing, it would appear that the future of the European Union lies in fixing its economic problems through a new political formula. I feel that there are three options:

1).  Continue with more of the same, but as Cameron argues, “More of the same will just produce more of the same – less competitiveness, less growth, fewer jobs.”

2). Strengthen the ‘federalist’ component by creating a central bank, a single market, a single currency, a federal parliament, together with a new central government on the lines of either Germany, Switzerland or the United States of America.   This would immediately stop the economic rot, but is this the only solution?

3).  Create a confederation of states that devolves power back to the states within the European Union; a European Union that respects the rights and individualism of each state while strengthening the notion of a single market without necessarily adopting a single currency.

 

POL 5032 WEEK V

Regionalism as Theory: The Zollverein and the Origins of the European Union. The logical limits of functionalism.

Questions:

a). What are the core theoretical arguments that underpin Regionalism?

b). Can you trace the idea or notion of the European Single Market back to the German Zollverein, and if so would you argue that politically the European Union should be aiming more for a Confederation than a political federation as an end goal?

C).  How would you analyze the logical limits of functionalism?

What are the core theoretical arguments that underpin Regionalism?  Can we argue that Balassa is correct?  Is a Federation of states the correct endpoint for a supranational regional entity?

Earlier on in this blog, and in my first Scramble book, I wrote on the various theories of regionalism.  At the time I wanted to explore Mitrany, Haas, Balassa, Hettne  and Amin in order to ascertain how regions evolve.  Key to my research was, first, whether economics produced a ‘political spillover’ within a region, and second, whether regionalism was a response to globalization or a stepping stone to yet greater global economic integration. 

The research was centered on Africa, which suffered from three core problems prior to the turn of the century: (1) there was a singular lack of FDI; (2) trade was skewed in favour of developed nations; and (3) there was still a problem of small markets, essentially the legacy of colonialism.

 The solution mooted was regionalism, and a debate ensued over the merits of ‘open regionalism’ as opposed to state intervention.  In tracking President Thabo Mbeki’s ideas, I arrived at a notion of ‘developmental functionalism’ where the state took on an economic role through parastatals in order to pay side payments to labour while creating regional development.

Now in focusing on Europe and the development of the European Union, the issue turns on whether economics, through open regionalism, works at all.  Is there in fact any ‘political spillover’ from the region’s economic activity, and can we really accept the theories espoused by both Haas and Balassa.? 

Moreover, when the arguments are coupled with arguments on the Euro and Mundell’s theories of Optimal Currency Areas, the appearance of a Federal United States of Europe looks very much like a pipe dream.

In essence, does economics really trump politics? Are we being seduced by mere myth when following Haas and Balassa, or should we not turn to List for inspiration and view his discussion on nationalism and the management of the economy through the nation state as more pertinent?  My contention here is that the interaction between the economy and List’s nationalism should be explored in order to clarify its economic role within the region.  When turning to List we turn to the Zollverein to understand that politics is the point of departure and not an artificial function of ‘economic spillover’.

 

POL 5032 WEEK IV

Last year I wrote:

“The post-World War II order on trade really begins at Bretton Woods where the United States promoted the notion of an International Trade Organization (ITO) that would serve as an international counterbalance to domestic tendencies toward protectionism.   The ITO would keep trade lines open, which would offset mercantilist tendencies.  

Protectionist interests in Congress killed the ITO and President Harry Truman advanced the idea of GATT as a temporary alternative.  In 1948 GATT became the primary organization responsible for the liberalization of international trade, through a series of rounds.

GATT was based on the principles of reciprocity and non-discrimination.  Trade concessions were reciprocal as all states agreed to lower barriers together.  Non-discrimination meant that imports from all countries would be treated the same way. 

At the Uruguay Round, held in 1993, GATT gave way to the World Trade Organization (WTO), now headquartered in Geneva.  The WTO has been dogged by a lack of progress, however,  and the DOHA round has been singularly unsuccessful in opening up further trade concessions.  As a result, nation states are turning more and more to bi-lateral agreements as the mercantilist impulse continues to fuel protectionism within certain states and to drive discriminating agreements that are often at odds with the spirit and practice of the WTO.

Moreover, the bargain between developed and developing states over TRIPS has not materialized as both Europe and the United States continue to protect their agricultural interests.  The core premise, although unstated, has to turn on whether agriculture remains a strategic interest or not.”

Now, recent criticism by economists turns on the fact that the WTO is still focusing on reducing tariff rates, rather than addressing economic distortions, because reducing rates simply maintains existing distortions and even exacerbates such distortions.

As a result, developing nations have been working to shield themselves from unfair competition from developed countries by filing anti-dumping claims at the WTO. “In the 1980s developed countries were the major filers of anti-dumping suits; by the late 1990s developing countries filed two-thirds of all claims’ (Amsden) 

In addition, the developing world relies on tariff revenue for a large share of government revenue and expenditure. Slashing tariffs may not only restrict the ability of developing countries to foster 

new industries so they may integrate into the world economy, it could also prohibit them from obtaining funds to conduct industrial policy and to maintain social programs for the poor.

Least developing countries rely on tariffs for more than one quarter of their tax revenue. For smaller nations with little diversification in their economies, tariff revenues provide the core of government budgets. In the Dominican Republic, Guinea, Madagascar, Seirra Leone, Swaziland, and Uganda tariff revenues are more than 40 percent of all tax revenue in their countries (South Centre, 2004).

Is the WTO still acting in the developing world’s interest?

POL 5032 WEEK III (First of two posts)

I have already posted commentary by Mark Blyth for this week’s discussion, but as I have received questions from you and a note from Michael Power, I feel that a second post is now necessary.  The questions we need to debate tomorrow in class are as follows:

a).  What are the key paradigms that underpinned the Bretton Woods international financial system?  In your opinion, how influential were John Maynard Keynes and later Friedrich von Hayek?

 b). What, in your view, was the primary cause in the breakdown of the Bretton Woods pegged exchange rate system?

 c). How Important is the ‘Unholy Trinity’ for understanding the current floating-rate system and the potential for cooperation among the world’s leading nations in international monetary affairs?

 d). In terms of the arguments espoused by Michael Power, what attracts FDI and how do states in the developing world compete with developed states to attract FDI?

e). Would you ever consider reintroducing capital controls into the global financial system?

 f).  How would you compare the EMS crisis of 1992/93 with the financial crisis of 07/08?

 First, the key to open the discussion is to understand how the Bretton Woods financial structure moved from a paradigm underpinned by Ruggie’s ‘Embedded Liberalism’ to one of floating exchange rates after capital controls were dropped.  Indeed, we must also understand that dropping capital controls led directly to the notion of the Unholy Trinity. 

Second, I have made no secret of the fact that I believe that ‘Austerity’ is a wrong-headed idea that has never worked, and the debate over whether a state can ‘cut its way to growth’ will be a central theme that I shall be happy to disabuse.

 Third, we should understand where, in Michael Power’s terms, the investment opportunities of tomorrow lie.  Here below is his answer:

Geographically, the regions of tomorrow are as follows:

 The centre of economic gravity is shifting sharply towards China-centred East Asia and, over the next decade, this will expand to include the two Indo’s – India (whose GDP growth rate could overtake China’s this year) – and Indonesia.
 
The demographic drag seen in Japan – which has heavily contributed to their two lost decades – is spreading to Europe and by 2020 will be evident even in the US as baby boomers continue to retire en masse.
 
The other region I am optimistic about is the Indian Ocean Basin. In Africa, watch East Africa much more than Southern Africa. In Latin America, the most successful countries will be the Andean Three – Colombia, Peru and Chile. Central Asia will gradually be drawn into the orbit of East Asia.
 
The sectors of tomorrow include:


·       Robotics  ·     Biotechnology  ·   Interconnected “intelligent electronics”
·       Alternative energies – solar, wind, thermal  ·  Desalination 
·       The driverless, electric car  · Nanotechnology  · Advanced materials (e.g. graphene) 

·       Machines powered by Artificial Intelligence  ·    3D printing

 

POL 5032 WEEK III

Ending the Creditor’s Paradise

 

What would you tell six hundred leading German social democrats about their party’s handling of the Eurocrisis?

by Mark Blyth

German Social Democratic Party leader Sigmar Gabriel. Richard Hebstreit / Flickr

As I sat in my office at Brown University on December 16, 2014, an email popped into my inbox with the title “Herzlichen Glückwunsch – Sie sind der 1. Preisträger des Hans-Matthöfer-Preises für wirtschaftspublizistik.” This was the award given by the Friedrich Ebert Stiftung (FES), the research foundation closest to the German Social Democratic Party (SPD), and the Hans-Matthöfer Stiftung for the best economics publication in German in 2014. I was, to say the least, surprised.

My 2013 Oxford University Press book, Austerity: The History of a Dangerous Idea, had recently been translated into German by the publishing arm of the FES. Indeed, I had been there a month earlier, in Berlin, to do a book launch, which was very well attended. Since then the book has been reviewed, positively, in the German press, with Suddeutsche Zeitung giving it a rather glowing review. Something odd was going on.

Clearly, despite the impression we get in the US, there was movement away from the “austerity is the only way” approach to thinking about the eurozone crisis in Berlin, at least among the social democrats — but how much movement?

Consider that during the negotiations to form the current coalition with German Chancellor Angela Merkel’s Christian Democratic Union, the SPD could have made an issue out of how the policies designed to heal Europe were causing great harm, a fact acknowledged even by the International Monetary Fund by 2012. But they chose not to do so.

True, as German (and French) politicians know only too well, there are no votes in talking about Europe, only costs, so not speaking up is locally rational. But not speaking up when such inappropriate policies are being applied to Germany’s European partners is collectively disastrous. Indeed, what is so tragic in this crisis is how the center-left throughout Europe have not just accepted, but in many cases actively supported, policies that have done nothing but hurt their supposed core constituencies.

So I was awarded the prize at a ceremony in Berlin for “thinking differently” about economics. Martin Schultz, the head of the European Parliament, gave the introduction. Peter Bofinger, the voice of macroeconomic reason on the German equivalent to the US Council of Economic Advisors, gave a speech praising the book. I had ten minutes to say something useful at the end of the event. But what should I say that would be of use to the six hundred social democrats gathered in the room?

I had just been there a month before, giving the message of the book, and I didn’t want to do that again. I wanted to be useful, and supportive of this shift in thinking. But I also wanted to remind the SPD of who they are supposed to be and whom they are supposed to defend. I hope this was how the following was received.

It is both an honor and an irony to stand here today and receive the 2014 Hans-Matthöfer-Preis für Wirtschaftspublizistik. The honor is to be recognized at all, given the competition. To name but a few of my fellow contenders, Thomas Piketty may be my favorite economist, and Wolfgang Munchau may be my favorite journalist, so to be recognized amongst them is an honor.

But it is also somewhat ironic to be so recognized in the one country that seems, at least at the elite level, utterly impervious to the message of the book that you are recognizing this evening. Perhaps at least in this room, and among social democrats, that message is gaining strength.

Austerity as economic policy simply doesn’t work. In the cases where it looked like it worked, something else was really doing the work, usually the devaluation of a sovereign currency at the same time as the expansion of a much larger trading partner gave exports a short-term boost. Budgets were cut as exports expanded, but it wasn’t the cuts that mattered, it was the expansion.

But I have stood here before and spoken about Austerity, so let’s take the few minutes we have here today to look forward rather than backwards.

All eyes are on Greece and the possibility of default or “Grexit.” Indeed, it’s an impossible position for all sides. The Greeks cannot pay back what they owe, given that the policies enacted to help them grow have resulted in the collapse of nearly a third of their economy. The young and the talented have left, leaving pensioners and the public sector behind.

But to recognize that fact and accommodate policy opens up issues in debtor countries such as Ireland and Portugal and Spain that creditor countries such as Germany do not want to deal with.

So how do we move forward, and what is the role of a social-democratic party in shaping this path? Two issues stand out for me. The first is what I refer to in Austerity as “the false promise of structural reform.” There can be no doubt that the debtor countries of Europe need major reforms in taxation systems, labor markets, business regulation, and a host of other areas.

But…

  1. When we say “structural reform” we really have no idea what those words actually mean, and we often fall back on them as a back-handed acknowledgment that austerity has failed, or
  2. We misunderstand what we did when we refer to prior episodes of structural reform, and thereby miss that it is impossible for anyone else to do what we once did.

Let me explain. “Structural reform” used to be called “structural adjustment.” And European lefties like us used to condemn it as absurd, ridiculous, “neoliberalism gone mad” — and yet we seem quite happy to unleash these policies, despite the damage that they have done in the developing world, upon our European partners.

When you ask for the content of what structural reform means, it seems to be a checklist of lower taxes, deregulate everything in sight, privatize anything not nailed down, and hope for the best. But are these policies not disturbingly American, if not Thatcherite? Indeed, isn’t this everything that the SPD is supposed to be against, and much of which the German public would never put up with?

European reforms take the more subtle cover of simply asking everyone to become “more competitive” — and who could be against that? Until one remembers that being competitive against each other’s main trading partners in the same currency union generates a “moving average” problem of continental proportions.

It is statistically absurd to all become more competitive. It’s like everyone trying to be above average. It sounds like a good idea until we think about the intelligence of the children in a classroom. By definition, someone has to be the “not bright” one, even in a class of geniuses.

But something has to be done, and we are often told that Germany was the “sick man” of Europe, that the country took the “bitter medicine” of the Hartz reforms and became more competitive. Because of this, when the crisis hit, Germany survived and came back stronger. The conclusion that follows — the rest of Europe needs to embrace “structural reform” — quickly follows.

This is a popular story, but it’s quite wrong, and its application to other countries rests upon a rather obvious misreading of recent German history. Christian Dustmann and his colleagues have examined this question in depth and concluded that what really made the German economy more competitive were three interrelated phenomena that happened a decade before Hartz.

First, and I know all about this being married into a family of East Germans, was reunification. Having ten million extra workers suddenly enter the labor market puts massive downward pressure on wages that begins to show up around 1994.

Second, moving parts suppliers for the German Auto complex out to the former eastern bloc countries makes the inputs for German exports even more competitive. This starts around the same time.

Third, German unions, at the same time, realize that globalization starts east of the Elbe and simply stop asking for wage increases. The combined result is a squeeze on wages that lasts for nearly twenty years that is masked by the transfers of the welfare system. This is where your competitiveness comes from.

What Hartz does, a decade later, is remove young single people from the welfare rolls and places them in mini jobs. The result of this is an expansion of the sheltered service sector, and of chronic low pay, that has to be addressed years later by the introduction of a minimum wage. Indeed, almost all the jobs created by Hartz are low-productivity, sheltered service sector jobs.

The export sector, the “competitive” part of the economy, depends upon demand generated elsewhere in the world, and it continues to shed, not add jobs, as capital substitutes for labor in high-skilled production.

If Dustmann et al. are correct, and I think that they are, then the ability to transfer these lessons to other countries is zero. No one else has an East Germany waiting around the corner to push down labor costs, and even if everyone did, all that would do is reduce consumption in the aggregate, thereby impoverishing everyone.

The take home lesson is perhaps then that Germany is only Germany because everyone else is “not Germany.” To try and make everyone a bit more like Germany can only mean the expansion of a poorly paid service sector and the introduction of a minimum wage to compensate. I do not think that’s what structural reform advocates recommend, but it’s where we may end up.

My second point returns us to the notion that we have grown quite comfortable talking about “creditor nations” and “debtor nations,” rather than “European nations,” as if being a debtor or a creditor is a national characteristic. Indeed, one of the most poisonous aspects of this period and policy of austerity is the discourse it produces that reduces complex formations of class and institutions to essentials of race and identity.

But look beyond this, and there is a bigger issue for left parties to deal with, one that they unfortunately helped to create. Back in the 1970s, a period that now seems quite benign, corporate profits were very low, labor’s share of income was very high, and inflation was rising. We were told that this was unsustainable, and new institutions and policies were constructed to make sure that this particular mix of outcomes would never happen again.

In this regard we were singularly successful. Today, corporate profits have never been higher, labor’s share of national income has almost never been lower, and inflation has given way to deflation. So are we happier for this change?

What we have done over the past thirty years is to build a creditor’s paradise of positive real interest rates, low inflation, open markets, beaten-down unions, and a retreating state — all policed by unelected economic officials in central banks and other unelected institutions that have only one target: to keep such a creditor’s paradise going.

In such a world, why would you, the average worker, ever get a pay rise? Indeed, is it any wonder that inequality is everywhere an issue? In Europe this plays out at the national level, and at the international level of creditor countries (good) and debtor countries (bad), where the rights of the creditors must be protected and the mantra that “you must pay your debts” must be respected.

Yet even in terms of simple welfare economics, this is nonsense. If the cost of squeezing the debtor is to keep her in debt servitude, or if the losses to the creditors are less than the costs of servicing the debt in perpetuity, then default is efficient, if not moral.

Today it is a profound irony that European social democrats worry deeply, as they should, about the investor protection clauses embedded in the proposed Transatlantic Investment Treaty with the US, and yet they demand enforcement of exactly the same creditor protections on their fellow Europeans without pausing for breath for the money they “lent” to them to bail out their own banking systems’ errant lending decisions.

Something has gone badly wrong when social democracy thinks this is OK. It is not. Because it begs the fundamental question, “what are you for — if you are for this?” The German Social Democrats, for we are all the heirs of Rosa Luxemburg, today stand as the joint enforcers of a creditor’s paradise. Is that who you really want to be? Modern European history has turned many times on the choices of the SPD. This is one of those moments.

It’s great that my book has helped remind you of the poverty of these ideas. But the point is to recover your voice, not just your historical memory. Your vote share isn’t going down because you are not shadowing the CDU enough. Its going down because if all you do is that, why should anyone vote for you at all?

I hope that reading my book reminds the SPD of one thing: that the reason they exist is to do more than simply to enforce a creditor’s paradise in Europe.

I thank you for this award, and I hope that this book encourages us all to think again about the economy we want to build for ourselves, our children, and our fellow Europeans.

POL 5032 WEEK II

Some 70 years and more than a quarter century have passed since the Potsdam Conference and the fall of the Berlin Wall.  Now the world is facing three serious issues: ISIS in the Middle East and North Africa; fallout over Greek debt; and the threat of Russian dominance of eastern Ukraine and perhaps other parts of Eastern Europe.  All were key areas of confrontation at or just after the Potsdam Conference.  Of the three, Putin’s revival of a new confrontation appears to be the most imminent and dangerous threat, and I am reminded by his actions of the complete and senseless failure of European democratic governments to support the Spanish Government against General Franco’s Fascist incursion into Spain.  France and the UK’s nonsensical attitude not to support Spain during the Spanish Civil War led to its collapse. Once again, watching Angela Merkel and François Hollande at their most recent press conference, I fear that their failure to support the Ukraine’s military forces with military equipment is another problematic déjà vu. And has the hegemon gone ‘walkabout’, to pay homage to an Australian term?

As much as I would like to pursue the topics raised above, our mission this week is to explore and unpack the notion of Hegemonic Stability Theory, Regimes, Ruggie’s ‘Embedded Liberalism', the nexus between domestic and international politics through international bargaining and Gilpin’s core theories of IPE.   

Much has been written about Hegemonic Stability Theory (HST). One point I wish to stress here is that the international system is more likely to remain stable when a single nation, or hegemon dominates the rules and arrangements of the international system.  If we return to Charles KIndleberger, who argued that a lack of world leadership led to the Great Depression between the wars, then we can assume that the rise of the United States after WW II and its control of the Bretton Woods system created the environment for the enormous strides in growth and prosperity after the war. 

Moreover, while the classical liberal interpretation of HST argues that the hegemon, using institutions, will cover the commons through ‘enlightened self-interest’, Stephen Krasner has made it quite clear that this self-interest will take the form of an international regime, ‘defined as sets of implicit or explicit principles, norms, rules, and decision-making procedures around which actors’ expectations converge in a given area of international relations’.  Changes in principles and norms result in changes to the regime itself.  For example, John Ruggie contends that ‘the distinction between orthodox and embedded liberalism involves differences over norms and principles.  Orthodox liberalism endorses increasing the scope of the market.  Embedded liberalism prescribes state action to contain domestic social and economic dislocations generated by markets’.  Thus orthodox and embedded liberalism define different regimes.

The interaction between domestic and international politics is self-evident when we contrast and compare classical liberalism and embedded liberalism.  We are indebted to Robert Putnam and Frederick Meyer for a mid-range theory known as ‘Two-Level Games’.  Using international bargaining to differentiate between domestic and international game boards, Putnam and Meyer have demonstrated how domestic politics can influence a state’s stance within the international system.  This position stands in stark contrast to Waltz’s Realism, which looks to the structure of the international system and indeed the state acting as a rational actor to understand its position within the international system.  Realism underpins IPE’s core theory of Mercantilism, which stands in contrast to Gilpin’s notions of liberalism and Marxist structural theories.

If I may return briefly to Putin.  What drives him at the moment to defy the West and suffer the indignity of sanctions and a falling Rouble?  Is it really in Russia’s national interest to acquire more territory or control over more territory, or is Putin playing to a set of domestic factions, and in particular the military, to enhance his power and maintain control of Russia?  Can we explain, as an alternative, Putin’s actions in terms of IPE theory? 

More on the Oil Price

Oil Shock Streaks Across Globe From Moscow to Tehran to Caracas. Ready for $40?

By Gregory Viscusi, Tara Patel and Simon Kennedy

 

Oil’s decline is proving to be the worst since the collapse of the financial system in 2008 and threatening to have the same global impact of falling prices three decades ago that led to the Mexican debt crisis and the end of the Soviet Union.

Russia, the world’s largest producer, can no longer rely on the same oil revenues to rescue an economy suffering from European and U.S. sanctions. Iran, also reeling from similar sanctions, will need to reduce subsidies that have partly insulated its growing population. Nigeria, fighting an Islamic insurgency, and Venezuela, crippled by failing political and economic policies, also rank among the biggest losers from the decision by the Organization of Petroleum Exporting Countries last week to let the force of the market determine what some experts say will be the first free-fall in decades.

“This is a big shock in Caracas, it’s a shock in Tehran, it’s a shock in Abuja,” Daniel Yergin, vice chairman of Englewood, Colorado-based consultant IHS Inc. and author of a Pulitzer Prize-winning history of oil, told Bloomberg Radio. “There’s a change in psychology. There’s going to be a higher degree of uncertainty.”

Related:

A world already unsettled by Russian-inspired insurrection in Ukraine to the onslaught of Islamic State in the Middle East is about be roiled further as crude prices plunge. Global energy markets have been upended by an unprecedented North American oil boom brought on by hydraulic fracturing, the process of blasting shale rocks to release oil and gas.

 

Photographer: Susana Gonzalez/Bloomberg

Gas is flared from a tower on an oil drilling rig operated by Petroleos Mexicans in the Ku-Maloob-Zaap oilfield at Campeche Bay off the coast of Ciudad del Carmen, Mexico. Oil has dropped 37 percent this year and, in theory, production can continue to flow until prices fall below the day-to-day costs at existing wells. Close

Gas is flared from a tower on an oil drilling rig operated by Petroleos Mexicans in the... Read More

Close

OpenPhotographer: Susana Gonzalez/Bloomberg

Gas is flared from a tower on an oil drilling rig operated by Petroleos Mexicans in the Ku-Maloob-Zaap oilfield at Campeche Bay off the coast of Ciudad del Carmen, Mexico. Oil has dropped 37 percent this year and, in theory, production can continue to flow until prices fall below the day-to-day costs at existing wells.

Cheap Gasoline

Few expected the extent or speed of the U.S. oil resurgence. As wildcatters unlocked new energy supplies, some oil exporters abroad failed to invest in diversifying their economies. Coddled by years of $100 crude, governments instead spent that windfall subsidizing everything from 5 cents-per-gallon gasoline to cheap housing that kept a growing population of underemployed citizens content.

Oil Prices

Those handouts are now at risk.

“If the governments aren’t able to spend to keep the kids off the streets they will go back to the streets, and we could start to see political disruption and upheaval,” said Paul Stevens, distinguished fellow for energy, environment and resources at Chatham House in London, a U.K. policy group. “The majority of members of OPEC need well over $100 a barrel to balance their budgets. If they start cutting expenditure, this is likely to cause problems.”

 

Photographer: John Moore/AP Photo

An official of the Saudi oil company at a rig near Howta, Saudi Arabia. Close

An official of the Saudi oil company at a rig near Howta, Saudi Arabia.

Close

OpenPhotographer: John Moore/AP Photo

An official of the Saudi oil company at a rig near Howta, Saudi Arabia.

Costs as Benchmark

Oil has dropped 38 percent this year and, in theory, production can continue to flow until prices fall below the day-to-day costs at existing wells. Stevens said some U.S. shale producers may break even at $40 a barrel or less. The International Energy Agency estimates most drilling in the Bakken formation -- the shale producers that OPEC seeks to drive out of business -- return cash at $42 a barrel.

Canadian Natural Resources Ltd. Chairman Murray Edwards said crude may sink as low as $30 a barrel before rebounding to stabilize at $70 to $75 a barrel, the Financial Post reported.

“Right now we’re seeing a price shock coming out of the meeting and it will be a couple of weeks until we see where the price really falls,” said Yergin. Officials “have to figure out where the new price range is, and that’s the drama that’s going to play out in the weeks ahead.”

Brent crude was down $1.40 at $68.75 as of 9:14 a.m. in London, while New York oil lost $1.47 to $64.68. Brent is now at its lowest since the financial crisis -- when it bottomed around $36.

Not All Suffer

To be sure, not all oil producers are suffering. The International Monetary Fund in October assessed the oil price different governments needed to balance their budgets. At one end were Kuwait, Qatar and the United Arab Emirates, which can break even with oil at about $70 a barrel. At the other extreme: Iran needs $136, and Venezuela and Nigeria $120. Russia can manage at $101 a barrel, the IMF said.

“Saudi Arabia, U.A.E. and Qatar can live with relatively lower oil prices for a while, but this isn’t the case for Iran, Iraq, Nigeria, Venezuela, Algeria and Angola,” said Marie-Claire Aoun, director of the energy center at the French Institute for International Relations in Paris. “Strong demographic pressure is feeding their energy and budgetary requirements. The price of crude is paramount for their economies because they have failed to diversify.”

Brent crude is poised for the biggest annual decline since 2008 after OPEC last week rejected calls for production cuts that would address a global glut.

Like this year’s decline, oil’s crash in the 1980s was brought on by a Saudi-led decision to defend its market share, sending crude to about $12 a barrel.

Russia Vulnerable

“Russia in particular seems vulnerable,” said Allan von Mehren, chief analyst at Danske Banke A/S in Copenhagen. “A big decline in the oil price in 1997-98 was one factor causing pressure that eventually led to Russian default in August 1998.”

VTB Group, Russia’s second-largest bank, OAO Gazprombank, its third-largest lender, and Russian Agricultural Bank are already seeking government aid to replenish capital after sanctions cut them off from international financial markets. Now with sputtering economic growth, they also face a rise in bad loans.

Oil and gas provide 68 percent of Russia’s exports and 50 percent of its federal budget. Russia has already lost almost $90 billion of its currency reserves this year, equal to 4.5 percent of its economy, as it tried to prevent the ruble from tumbling after Western countries imposed sanctions to punish Russian meddling in Ukraine. The ruble is down 35 percent against the dollar since June.

This Will Pass

While the country’s economy minister and some oil executives have warned of tough times ahead, President Vladimir Putin is sanguine, suggesting falling oil won’t force him to meet Western demands that he curb his country’s interference in Ukraine.

“Winter is coming and I am sure the market will come into balance again in the first quarter or toward the middle of next year,” he said Nov. 28 in Sochi.

Even before the price tumble, Iran’s oil exports were already crumbling because of sanctions imposed over its nuclear program. Production is at a 20-year low, exports have fallen by half since early 2012 to 1 million barrels a day, and the rial has plummeted 80 percent on the black market, says the IMF.

Lower oil may increase the pain on Iran’s population, though it may be insufficient to push its leaders to accept an end to the nuclear program, which they insist is peaceful.

‘Already Losing’

“The oil price decline is not a game changer for Iran,” said Suzanne Maloney, senior fellow at the Brookings Institution, a Washington-based research organization, who specializes on Iran. “The Iranians were already losing so many billions of dollars because of the sanctions that the oil price decline is just icing on the cake.”

While oil’s decline wrenches oil-rich nations that squandered the profits from recent high prices, the world economy overall may benefit. The Organization for Economic Cooperation and Development estimates a $20 drop in price adds 0.4 percentage point to growth of its members after two years. By knocking down inflation by 0.5 point over the same period, cheaper oil could also persuade central banks to either keep interest rates low or even add stimulus.

Energy accounts for 10 percent to 12 percent of consumer spending in European countries such as France and Germany, HSBC Holdings Plc said.

Nigerian Woes

As developed oil-importing nations benefit, some of the world’s poorest suffer. Nigeria’s authorities, which rely on oil for 75 percent of government revenue, have tightened monetary policy, devalued the naira and plan to cut public spending by 6 percent next year. Oil and gas account for 35 percent of Nigeria’s economic output and 90 percent of its exports, according to OPEC.

“The current drop in oil prices poses stark challenges for Nigeria’s external and fiscal accounts and puts heavy pressure on the exchange rate,” Oliver Masetti, an economist at Deutsche Bank AG, said in a report this month. “If oil prices remain at their current lows, Nigeria will face tough choices.”

Even before oil’s rout, Venezuela was teetering.

The nation is running a budget deficit of 16 percent of gross domestic product, partly because much of its declining oil production is sold domestically at subsidized prices. Oil is 95 percent of exports and 25 percent of GDP, OPEC says.

“Venezuela already qualifies for fiscal chaos,” Yergin said.

Venezuelan Rioting

The country was paralyzed by deadly riots earlier this year after police repressed protests about spiraling inflation, shortages of consumer goods and worsening crime.

“The dire state of the economy is likely to trigger renewed social unrest, while it seems that the government is running out of hard currency,” Capital Economics, a London research firm, wrote in a Nov. 28 report.

Declining oil may force the government to take steps to avoid a default including devaluing the currency, cutting imports, raising domestic energy prices and cutting subsidies shipments to poorer countries in the region, according to Francisco Rodriguez, an economist at Bank of America Merrill Lynch.

“Though all these entail difficult choices, default is not an appealing alternative,” he said. “Were Venezuela to default, bondholders would almost surely move to attach the country’s refineries and oil shipments abroad.”

China Bailout?

In an address on state television Nov. 28, President Nicolas Maduro said Venezuela would maintain social spending while pledging to form a commission to identify unnecessary spending to cut. He also said he was sending the economy minister to China to discuss development projects.

Mexico shows how an oil nation can build new industries and avoid relying on one commodity. Falling crude demand and prices in the early 1980s helped send the nation into a debt crisis.

Oil’s share of Mexico’s exports fell to 13 percent in 2013 from 38 percent in 1990, even as total exports more than quadrupled. Electronics and cars now account for a greater share of the country’s shipments. Though oil still accounts for 32 percent of government revenue, the Mexican government has based its 2015 budget on an average price of $79 a barrel.

Related reading: Oil Seen in New Era as OPEC Won’t Yield to U.S. Shale Oil Bust of 1986 Reminds U.S. Drillers of Price War Risk OPEC Refusal Means Oil Industry’s Weakest Producers Left Behind

To contact the reporters on this story: Gregory Viscusi in Paris at gviscusi@bloomberg.net; Tara Patel in Paris at tpatel2@bloomberg.net; Simon Kennedy in London at skennedy4@bloomberg.net

To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net Timothy Coulter, Ken Fireman 

POL 5032 Syllabus 2015

The more I think about International Political Economy, the more I am convinced that politics and economics within the international system are becoming more and more intertwined.  As such, I have endeavored to create a course that reflects this reality

 

 

 

 

CAPE TOWN UNIVERSITY

DEPARTMENT OF POLITICAL STUDIES

 

International Political Economy                                                                        Fall 2015

POL 5032Z  

Dr. Harry J. Stephan                                                Thursday: 9.00 a.m. – 11.00 a.m.

                                                                                    Venue:  Seminar Room

 

This course is designed to provide a graduate-level discussion on the fundamental issues and concepts that deal with the International Political Economy. The course will deal specifically with institutions that govern finance and trade; regional supra-communities; notions of nationalism, agency and identity; the ideas of austerity vs. Keynesian models of growth; Europe’s regional economic agreements with Africa; and finally core issues that confront the globalized world.

 

 

The requirements for the course are as follows:

(1).             Students will be expected to research each week’s topic and prepare a                        short paper of 600 words for each discussion session. 

(2).              Students will be expected to prepare a major research paper in this course of no more that 25 typed pages double spaced.   The paper will be due towards the end of May. Topics must be approved by May 1st 2015.

3).             Course Attendance at seminar (Thur. 9.00am – 11.00am)

4).            Grades for this course are dependent upon class participation, class                        attendance, and all written assignments. 

 

 

 

 

Required Reading:

Harry Stephan and Michael Power, eds., The Scramble for Africa in the 21st Century: From the Old World to the New (Cape Town: Renaissance Press, 2012).

 

Week 1:  Introduction and orientation.

 

Week 2:  The Nature of Power in the International System: Explaining hegemonic stability theory and the post 1945 international regime.

 

Week 3:  The Global Financial and Monetary Order: International monetary systems, the Unholy Trinity; The nature of Foreign Direct Investment.

 

Week 4: International Institutions and the International Trading System.  Cui bono?

 

Week 5: Regionalism as Theory: The Zollverein and the Origins of the European Union. The logical limits of functionalism.

 

Week 6: Nationalism: Identity and agency within supra-national entities. Are states withering away or just becoming a little different?

 

Week 7: Interpreting European Law and the Regional State: Are Calhoun, Clay and Webster relevant today?

 

Week 8:  The EU/SADC Trade Agreement:  Wither multilateralism? How will regional trade play out within the North/South divide?

 

Week 9:  Power or Money:  How will European trade and investment flow to Russia given Putin’s petulance in the Crimea?  Are we seeing a major shift in attitudes, or will Merkel kiss and make up?

 

Week 10:  Back to the Future: The End of History, trouble in paradise, the price of oil, BRICS and other areas of economic turmoil.

 

 

 

 

Course outline and Readings

 

Week 1:  Introduction and Orientation

I strongly advise that you begin reading before lectures start, and the following general texts are recommended.  A more complete source-list is provided in the course outline below. 

 

John Ravenhill, Global Political Economy (4th ed.) (Oxford: Oxford University Press, 2014)

Thomas Oatley, International Political Economy  (5th ed.} (Boston: Longman, 2012)

Andrew Walter and Gautam Sen, Analyzing the Global Political Economy (Princeton:  Princeton University Press, 2008).

Robert Gilpin, Global Political Economy: Understanding International Economic Order (Princeton, NJ: Princeton University Press, 2001).

Susan Strange, States and Markets: An Introduction to International Political Economy  (2nd ed.) (New York: Basil Blackwell, 1988).

 

 

 

 

 

 

 

 

 

 

Week 2:  The Nature of Power in the International System: Explaining hegemonic stability theory and the post 1945 international regime.

 

Questions:

 

a). Is hegemonic stability theory useful in explaining the nature of the post WW II international economic order?  How does it compete with alternative explanatory paradigms, especially Ruggie’s concept of ‘embedded liberalism’?  How do we understand the nexus between international and domestic politics to explain international bargaining within the international economic system, and in your view, which of the theories espoused by Robert Gilpin best explain the workings of the international economic system?

 

b). Can domestic and international theories of political economy be reconciled?

 

Required Readings

 

Stephan and Power, Chapter V, pp. 261- 298.

Stephan and Power, Chapter 1, pp.9 – 26.

 

Further Readings

Matthew Watson, The Historical Roots of Theoretical Traditions in Global Political Economy, in Ravenhill, Global Political Economy, pp.25-50.

Stephen D. Krasner (ed.), International Regimes  (Ithaca: Cornell University Press, 1983).

John Ikenberry,  “A World Economy Restored: Expert Consensus and the Anglo-American Postwar Settlement,” International Organization, Vol. 46, No. 1, Winter 1992, pp.289-321.

John G. Ruggie, International Regimes, Transactions and Change: Embedded Liberalism in the Postwar Economic Order,” International Organization, Vol. 36, No. 2, Spring 1982, pp.379-415.

John Odell, ‘From London to Bretton Woods: Sources of Change in Bargaining Strategies and Outcomes,” Journal of Public Policy, Vol.8, No.3/4, July-December, 1988, pp.287-316.

Oran R. Young, “Regime Dynamics: The Rise and Fall of International Regimes,” International Organization, Vol.36, No.2, 1982.

Michael J. Hiscox, The Domestic Sources of Foreign Economic Policies, in Ravenhill, Global Political Economy, pp.74-106.

 

 

 

 

 

 

 

Week 3: The Global Financial and Monetary Order: International monetary systems, the Unholy Trinity; The nature of Foreign Direct Investment.

 

Questions:

 

a).  What are the key paradigms that underpinned the Bretton Woods international financial system?  In your opinion, how influential were John Maynard Keynes and later Friedrich von Hayek?

 

a). What, in your view, was the primary cause in the breakdown of the Bretton Woods pegged exchange rate system?

 

b). How Important is the ‘Unholy Trinity’ for understanding the current floating-rate system and the potential for cooperation among the world’s leading nations in international monetary affairs?

 

c). In terms of the arguments espoused by Michael Power, what attracts FDI and how do states in the developing world compete with developed states to attract FDI?

 

d). Would you ever consider reintroducing capital controls into the global financial system?

 

e).  How would you compare the EMS crisis of 1992/93 with the financial crisis of 07/08?

 

Required Readings

 

Stephan and Power, Chapters II and III, pp. 27- 190.

 

Further Readings

 

Eric Helleiner, The Evolution of the International Monetary and Financial System, in Ravenhill, Global Political Economy, pp.173-197.

Mark Blyth, “The Austerity Delusion: Why a Bad Idea Won Over the West,” Foreign Affairs, May/June 2013, pp. 41-56.

IMF, World Economic Outlook (WEO): Recovery Strengthens, Remains Uneven. http://www.imf.org/external/pubs/ft/weo/2014/01/

B. Eichengreen, “The EMS Crisis in retrospect,” in NBER Working Paper 8035 (2000). http://papers.nber.org/papers/w8035.pdf.

Eric. Helleiner and Stefano Pagliari, “The End of an Era in International Financial Regulation? A Postcrisis Research Agenda,” International Organization, Vol.65, No.1, 2011, pp.169-200.

Eric Helleiner, “A Bretton Woods Moment? The 2007-08 Financial Crisis and the Future of Bretton Woods, International Affairs, Vol. 86, No. 3, May 2010,

pp.619-636.

Ngaire Woods, “Global Governance after the Financial Crisis: A New Multilateralism or the Last Gasp of the Great Powers?” Global Policy, Vol.1, No.1, 2010, pp.51-63.

 

Week 4: International Institutions and the International Trading System.  Cui bono?

 

Questions:

 

a). What are the key principles that underpinned both the GATT and WTO?  How would you trace continuity and change through the Kennedy, Tokyo, Uruguay and Doha rounds?

 

 b).  In your opinion why do mercantilist tendencies still intrude into the international trading regime?

 

c).  How would you describe economic development in the Third World through international bargaining under the WTO agreements?  Will we see opportunities for development and institutional change within the WTO in the future?

 

 

Required Readings

 

Stephan and Power, Chapter IV, pp.191-260.

 

Further Readings

 

Gilbert R. Winham, The Evolution of the Global Trade Regime, in Ravenhill, Global Political Economy, pp.109-138.

Eward D. Mansfield and Diana C. Muntz, “Support for Free Trade: Self-Interest, Sociotropic Politics, and Out-Group Anxiety,” International Organization, Vol.63, No.3, 2009, pp.425-457.

Kishore Gawande, Pravin Krishna and Marcelo Olarreaga, “What Governments Maximize and Why: The View from Trade,” International Organization, Vo.63, No.3, 2009, pp.491-532.

Judith L. Goldstein, Douglas Rivers and Michael Tomz, “Institutions in International Relations: Understanding the Effects of the GATT and the WTO on World Trade, International Organization, Vol.61, No.1, 2007, pp.337-67.

M. Busch and E. Reinhardt, “Developing Countries and GATT/WTO Dispute Settlement, Journal of World Trade, Vol.34, No.4, 2003, pp.719-735.

Kevin P. Gallagher, “Understanding Developing Country Resistance to the Doha Round, Review of International Political Economy, Vol.15, No.1, 2007, pp62-85.

 

 

 

 

 

 

 

 

 

 

Week 5: Regionalism as Theory: The Zollverein and the Origins of the European Union. The logical limits of functionalism.

 

Questions:

 

a). What are the core theoretical arguments that underpin Regionalism?

 

b). Can you trace the idea or notion of the European Single Market back to the German Zollverein, and if so would you argue that politically the European Union should be aiming more for a Confederation than a political federation as an end goal?

 

C).  How would you analyze the logical limits of functionalism?

 

Required Readings

 

Stephan and Power, Chapter VI, pp.299-362.

 

 

Further Readings

 

John Raveenhill, Regional Trade Agreements, in Reavenhill, Global Political Economy, pp.139-170.

W. Mattli, The Logic of Regional Integration: Europe and Beyond (Cambridge: Cambridge University Press, 1999).

A. Wiener and T. Diez, (eds), European Integration Theory (2nd ed.) (Oxford: Oxford University Press, 2009).

Ludger Kühnhardt, European Union — The Second Founding: The Changing Rationale of European Integration  (2nd revised ed.) (Baden-Baden: Nomos Verlagsgesellschaft, 2010).

E.N. Roussakis, Friedrich List, The Zollverein and the Uniting of Europe (Belgium: College of Europe Press, 1968).

R. Hudson, “The Formation of the North German Confederation,” Political Science Quarterly, Vol.6, No.3, September 1991, pp.424-438.

Robert A. Mundell, “A Theory of Optimum Currency Areas,” American Economic Review, Vol.51, No.4, 1961, pp.657-659.

D. Levi-Faur, “Friedrich List and the Political Economy of the Nation State,” Review of International Political Economy, Vol.4, No.1, Spring 1997, pp.154-178.

F. Ploeckl, “The Zollverein, or How to Sequence a Customs Union” Economics Series Working Papers, No.84, (Oxford: University of Oxford, Department of Economics, May 8, 2009). http://www.nuff.ox.ac.uk/economics/history/Paper84/ploeckl84.pdf.

B. Rosamond, “The Uniting of Europe and the Foundation of EU Studies: Revisiting the Neofunctionalism of Ernst B. Haas,” Journal of European Public Policy, Vol. 12, No.2 2005, pp.237-254.

Phillip Schmitter, “Ernst B. Haas and the Legacy of Neofunctionalism,” Journal of European Public Policy, Vol. 12, No.2, 2005, pp.255-272.

 

 

Week 6: Nationalism: Identity and agency within supra-national entities. Are states withering away or just becoming a little different?

 

Questions:

 

a). “The European Union is, at its core, a project of Kantian peace, an attempt to create a peaceful union of European states that had been at war with each other for many centuries, but whose orgy of violence in the first half of the twentieth century left Europe exhausted.”  David Held.  Is the European ideal of a Kantian Peace still at the heart of European development?

 

b). The recent financial crisis in Europe has raised fundamental questions about identity and politics.  Against this background, signs have emerged of increasing social disintegration and a resurgence of nationalist sentiment; anti-semitism, racism and far-right politics.  In your view, what does it mean to be European and will European identity survive the global financial crisis?

 

c). Will France or Germany submit to a new right wing ideology?  How will ethnicity and nationalism develop in a Post-Communist Europe, and especially in Eastern Europe?

 

Required Readings

 

Benedict Anderson, Imagined Communities: Reflections on the Origin and Spread of Nationalism (London: Verso, 1991).

 

Further Readings

 

Mikael Hjerm and Annette Schnabel, “Mobilizing nationalist sentiments: Which factors affect nationalist sentiments in Europe? Elsevier Social Science Research, Vol.39, 2010, pp.527-539.

CharlesA. Kupchan, “Centrifugal Europe, Survival, Vol.54, No.1, February-March 2012, pp.11-118.

Anthony D. Smith, “National Identity and the Idea of European Unity,” International Affairs, Vol.68, No.1, January 1992, pp.55-76.

John Erik Fossum, “Identitypolitics in the European Union,” Journal of European Integration, Vol.23, No.4, 2001, pp.373-406.

http://dx.doi.org/10.1080/07036330108429109

Angelika Scheuer and Hermann Schmitt, “Dynamics in European Political

Identity,” Journal of European Integration, Vol.31, No.5, 2009, pp.551-568.  

http://dx.doi.org/10.1080/07036330903145856

Jürgen Habermas, “Historical Consciousness and Post-Traditional Identity: Remarks on the Federal Republic’s Orientation to the West,” Acta Sociologica, Vol.31, No.1, 1988, pp.3-13.  Accessed through Sage Publications, http://www.jstor.org/stable/4200681

Alberto Spektorowski, “The French New Right: Multiculturalism of the Right and the Recognition/Exclusionism Syndrome,” Journal of Global Ethics, Vol.8, No.1, 2012, pp.41-61.

Aleksander Lust, “Review Essay: Nature or Nurture? Ethnicity and Nationalism in Post-Communist Europe,” Elsevier Political Geography, Vol.29, 2010, pp.408-410.

 

Week 7: Interpreting European Law and the Regional State: Are Calhoun, Clay and Webster relevant today?

 

Questions:

 

a). Will judicial power remain at the nation-state level, or will the European Union merge into a federal institution?

 

b).  Can we compare the early debates within the United States on federalism with current judicial debates within the European Union?

 

c).  How does the ECJ compare to the US Supreme Court?

 

 

Required Readings

 

Larry Backer, “The Extra-National State: American Confederation Federalism and the European Union,” Columbia Journal of European Law, Vol.7, No.2, 2001, pp.173-240.

 

 

Further Readings

 

Roland Flamini, Judicial Reach: The Ever-Expanding European Court of Justice. Available at: http://www.worldaffairsjournal.org/article/judicial-reach-ever-expanding-european-court-justuce

Geoffrey Garrett and Daniel Keleman et al, “The European Court of Justice, National Governments, and Legal Integration in the European Union,” International Organization, Vol.52, No.1, 2013, pp.149-176.

Herbert Johnson, “Judicial Institutions in Emerging Federal Systems: The Marshal Court and the European Court of Justice,” John Marshall Law review, Vol.33, 1999, pp.1063-1465.

R.Daniel Kelemen and S.K. Schmidt, “Introduction — The European Court of Justice and Legal Integration: Perpetual Momentum?” Journal of European Public Policy, Vol.19, No.1, 2012, pp.1-7.

Walter Mattli and Anne-Marie Slaughter, “Revisiting the European Court of Justice,” International Organization, Vol.52, No.1, 1998, pp.177-209.

Oreste Pollicino, “The New Relationship between National and European Courts after Enlargement of Europe: Towards a Unitary Theory of Jurisprudential Supranational Law?” Yearbook of European Law, Vol.29, No.1, pp.65-111. doi:10.1093/yel/29.1.65.

J Weiller, “Does Europe Need a Constitution? Demos, Telos and the German Maastricht Decision,” European Law Journal, Vol.1, 1995, pp.232-235.

 

 

Week 8:  The EU/SADC Trade Agreement:  Wither multilateralism? How will regional trade play out within the North/South divide?

 

Questions:

 

a). What are the core elements that describe the new EU/SADC Trade Agreement? 

 

b). Can we discern both continuity and change?

 

c). Does the EU/SADC Trade Agreement signal the death knell of multilateral trade agreements within the WTO?

 

d). Does the new EU/SADC Agreement signal a new projection of economic power from the EU?

 

Required Readings

 

Nicola Philips, Globalization and Development, in Ravenhill Global Political Economy, pp.344-371.

 

Further Readings

Stephen Karingi et al, “The EU-SADC Economic Partnership Agreement: A Regional Perspective,” African Trade Policy Centre, Work in Progress, No. 28, December 2005. http://www.uneca.org/sites/default/files/publications/atpc28.pdf

European Commission, “Economic Partnership Agreement with SADC EPA Group: An Agreement for Economic Development in Southern Africa,” September 5th, 2014.

Christopher Wood, “The Way Forward for the Southern African Development Community Economic Partnership Agreement,” SAIIA Policy Briefing 97, June 2014. http://www.saiia.org.za/policy-briefings/the-way-forward-for-the-southern-african-development-community-economic-partnership-agreement

William Mwanza, “The Legal Framework and State of Play of Economic Partnership Agreements between the EU and the African Regions,” Tralac Trade Law Centre, Tralac Trade Brief No. S14TB12/2014, October 2014.

Gerhard Erasmus, “Legal and Institutional Aspects of the SADC Economic Partnership Agreement,” Tralac Trade Law Centre, Tralac Working Paper No. S14WPO7/2014, August 2014.

 

 

 

 

 

 

 

 

 

 

 

 

Week 9:  Power or Money:  How will European trade and investment flow to Russia given Putin’s petulance in the Crimea and the Ukraine?  Are we seeing a major shift in attitudes, or will Merkel kiss and make up?

 

Questions:

 

a). How would you describe the current relationship between the European Union and Russia?

 

b). Will Russia continue to dominate Europe’s gas supply, or are we destined to see a new set of supply chains emerging in the future?

 

c).  Will EU/Russian relations degenerate into a new Cold War?

 

d). Is Russia just too important as a trade and investment partner for Germany, and will there be a new German/Russian rapprochement?

 

Required Listening

 

Gorbachev’s Speech at the Security Symposium in Berlin on November 8th 2014.

http://rt.com/news/203475-gorbachev-speech-berlin-wall/

 

 

Further Readings

Giles Moec and Marco Stringa,, “Who is Exposed to Russia?”  Deutsche Bank Research Data Flash, March 20th 2014.

Alexander J. Motytl, “The Sources of Russian Conduct: The New Case for Containment,” Foreign Affairs, November 16th 2014.

David Schoenbaum, “ Back to Europe’s Future: Twenty-Five Years After the Fall of the Berlin Wall,” Foreign Affairs, November 8th 2014.

Robert Legvold, “Managing the New Cold War: What Moscow and Washington Can Learn From the Last One, “ Foreign Affairs, July/August 2014. <http://www.foreignaffairs.com/articles/141537/robert-legvold/managing-the-new-cold-war>.

Stefan Meister, “Reframing Germany’s Russia Policy — An Opportunity for the EU,” European Council on Foreign Relations Policy Brief, April 2014.

Jakob Mischke and Andreas Umland, “Germany’s New Ostpolitik: An Old Foreign Policy Doctrine Gets a Makeover,” Foreign Affairs, April 9th 2014.

 

 

 

 

 

 

 

 

 

 

 

Week 10:  Back to the Future: The End of History, trouble in paradise, the price of oil, BRICS and other areas of economic turmoil.

 

Questions:

 

a). Now, 70 years after Bretton Woods, how would you position the United States in terms of your original thoughts on Hegemonic Stability Theory and Ruggie’s Regime Theory.  Where does the United States fit into the international system, both in terms of its power and its financial leadership?

 

 

b).  Given that the arc of uncertainty in the Middle East just seems to grow and grow, will the Middle East still dominate the energy market, or will the world wash its hands in the area and acquire fossil fuels from other potential regions?

 

c).  Where in your opinion will the oil price bottom out?

 

d). With growth destined to slow within the BRICS, are these nations still the main drivers of the world economy or will we see a new generation of aspirant developers on the world bloc?

 

 

Required Readings

 

Anthony McGrew, The Logics of Economic Globalization, in Ravenhill, Global Political Economy, pp.225-254.

 

Further Readings

 

Gregory F. Treverton, “Making Policy in the Shadow of the Future,” Rand Corporation Occasional Paper, 2010.
http://www.rand.org/content/dam/rand/pubs/occasional_papers/2010/RAND_OP298.pdf

Ludger Kühnhardt, “The World’s New Thirty Years War: How to Shape a coherent long-term Western strategy for the Age of the New Global Violence,” The Globalist, November 16th 2014.

 http://www.theglobalist.com/world-new-thirty-years-war/

Gunes Murat Tezcur and Sabri Ciftci, “Radical Turks: Why Turkish Citizens are Joining ISIS,” Foreign Affairs, November 16th 2014.

John Kilduff, “Why Oil is more likely to test $50 than $100 again next year,” CNBC, November 16th 2014. http://www.cnbc.com/id/102189040

Lant Pritchett and Lawrence H. Summers, “Asiaphoria Meets Regression to the Mean,” NBER Working Paper No. 20573, October 2014. http://www.nber.org/papers/w20573

 

OIL

John Kilduff writes as follows:  Are we to have an interesting finanical break in oil-consuming countries? 

When oil and gasoline prices are soaring, oil analysts like myself try to assuage the fears of consumers with the old saw: There is no better cure for high prices than high prices.

The succinct analysis of commodity market dynamics likely makes motorists irate, as they pay $100 or more to fill up the family SUV. They fail to appreciate how efficient market forces can be, even at that particular moment of pain.

However, that is precisely why oil prices are falling now—and will likely continue to fall in the coming months to as low as $50 per barrel!

On Thursday, in its weekly inventory report, the U.S. Department of Energy reported that oil production in the United States rose to its highest level in 29 years to just over 9 million barrels per day. To put that in perspective, the U.S. is now nipping at Saudi Arabia's heels, with that country currently producing about 9.6 million barrels per day.

The surge in U.S. oil production is due to the immense success of a reborn technology: hydraulic fracturing (better known as fracking), which has liberated millions of barrels of oil and millions of cubic feet of natural gas from fields that were thought to be bereft of fossil fuels.

Opponents of the practice have their work cut for them given the tremendous impact the drilling is having on oil and natural gas prices.

Read MoreSaudi America? Close...but no cigar: Analysts

The second part of the low oil price story involves several key pipeline upgrades that actually changed the flow of oil, bringing it from the middle of the country to the Gulf Coast, where it is needed to supply the majority of the country's refineries.

The changes have been so impactful that, at times, Gulf Coast storage facilities have been nearly filled to capacity. The U.S. has virtually ended imports of crude oil from West African countries, such as Nigeria, which used to be a key source of supply.

Read More US oil output booms—now refiners have to catch up

OPEC members are now scrambling to prop up oil prices, and find buyers for their oil. During the past several months, tankers of oil have sat idling, waiting to sail to port to unload their cargo. Saudi Arabia, Kuwait and Iran are in a battle to secure sales to China and other Asian buyers at the expense of other countries in the cartel.

It is not helping their cause that Alaska North Slope crude oil is now being exported to South Korea on a regular basis now. That started in September.

Adding to the supply glut has been the return of Libya's oil production, despite a raging civil war with two competing governments asserting governance over the country. Also, even as ISIS forces roll through Iraq, exports continue to rise to record post-Iraq war levels.

Read MoreOil prices collapse as OPEC stands back, while US booms

The Kurds were finally able to strike a deal with Baghdad that will allow exports from Northern Iraq to surge, as well, in the coming months. If that's not enough, North Sea production is set to rise over 11 percent in December, due to upgrades to the system there.

In other words, increasing amounts of crude oil are hitting the global market, left, right, and center.

Several OPEC members are now calling for a production cut to be announced at their upcoming meeting, but they are looking for Saudi Arabia to carry the load, which is not going to happen. Based upon bewildering statements by the Saudi oil minister this week, the Saudis do not appear inclined to cut.

Read MoreSaudi minister: It's all 'misunderstanding,' no 'price war' talk

Market share is more important to them because they want to maintain their relevance. With their low cost of production, they believe they can sweat out the higher-cost competition, including U.S. frackers.

So, the OPEC meeting on Thanksgiving Day will likely end in discord and cause another leg lower for oil prices.

By next March, U.S. oil production will be nearing the 9.5 million barrel per day level, and possibly higher. With the winter coming to an end then, the global market enters a slack demand period, which will increase the downward pressure on prices.

Oil producers of all stripes will be staring down prices near the $50 level. Russia's President Putin is already preparing for a "catastrophic" oil price drop.

Something will have to give. Saudi Arabia and other OPEC members will be forced to curtail production or U.S. oil producers will have to throw in the towel as they await a price rebound. The U.S. needs to be careful what it wishes for, in terms of setting back the march toward energy independence.

The surging production trends will have consequences, in addition to the huge benefit to consumers. After all, as the saying goes, there is no better cure for low prices than low prices.

--John Kilduff is a partner at Again Capital, an investment management firm that specializes in commodities.