THERE IS NO ALTERNATIVE? The rise of global capitalism
Today
An introduction to the dynamics of capitalism
Globalisation as global capitalism
The global dominance of the logic of capitalism
The rise, shame and fall of financial capitalism To what extent does global capitalism work primarily for the wealthiest?
Our Purpose
Moving on from the nation state, we are considering how economic factors influence our local lives
Capitalism, and economics, can often seem very abstract
We will consider how the globalisation of capitalism affects our local lives…
…and how our local interactions through capitalism affect the world of others
What is economics?
Economics concerns the material reproduction of our lives
Material reproduction is the ways in which we organise our lives in order to eat, drink and reproduce
There is no ‘natural’ way to materially reproduce our society
The currently dominant system is ‘capitalism’
What is capital?
Capital is money deployed to buy commodities in order to sell them for more money
This money can be accumulated to become more capital, which is then reinvested to make more money
This is the cycle of capital – a successful capitalist economy will continually expand
The Cycle of Capital Commodities Money
Money II
Commodites
What is capitalism?
Capitalism is the social system in which capital is allowed to be accumulated
Capital is primarily owned by private individuals or conglomerations of private individuals (shareholders)
Surplus from production is able to be accrued by private individuals
Commodities, including labour, are able to be purchased at a price set by the ‘market’
Individuals are presumed to act in their self-interests and make choices
The laws necessary to support capitalism are enforced by governments and global institutions
Capitalist assumptions
It is human nature for individuals to be self-interested with the capacity for individual action
The ‘free-market’ is a reflection of the natural behaviour of selfinterested behaviour
Success goes to those who are prepared to take a risk with their money and to work hard
In what circumstances do people act in a selfish way?
The Debate
Supporters of free market capitalism argue that capitalist societies do have ‘winners’ and ‘losers’
The winners have achieved their success by being entrepreneurial and working hard
Marxist’s and other critics of capitalism suggest that wealth is accumulated through privilege and exploitation
Those who start with resources are able to employ workers who are paid less than the value they create
The Capitalist Dream
A student works hard at retail job and saves a little money
She invests this money into a start-up company, which become profitable and expands
Because of this expansion she is able to give jobs to others
She, the capitalist, becomes wealthy and the workers are grateful for their jobs
The wealthy capitalist and employed workers are able to spend money at other companies, thus increasing their profits and further expanding the economy
If they can do it I can do it If I can do it
You can do it
The Marxist Nightmare
Forced off their farm due to economic restructuring, a family move to a slum in Dhaka, Bangladesh
With no means to reproduce themselves, the family try to sell their labour
There is a number of small garment factories in their slum and, with so many people wanting jobs, the owners pay only what they have to keep their workers alive
Unable to get a job at the factories, the family members enter an informal economy of begging, temporary stalls and prostitution
Victims of capital
What do you think?
What about globalisation?
Globalisation and global capitalism have developed concurrently
The major trends of globalisation have matched the expansion of capitalism Imperial
trade and colonisation The development of global economic institutions The emergence of transnational corporations Electronic communication and financial trading
Globalisation as global capitalism 
Capitalism is naturally expansive
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In order to find places to invest money, the owners of capital are always searching for new markets and new consumers
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Going in search of these markets, capitalism has expanded across the world through multi-national companies and global economic reform
Inherently Global? In The Communist Manifesto, Karl Marx argued that:
The need of a constantly expanding market for its products chases the bourgeoisie over the entire surface of the globe. It must nestle everywhere, settle everywhere, establish connections everywhere
What do you want to know?
Instituting Capitalism
After the catastrophe of World War II, new global economic institutions were established
These institutions, the International Monetary Fund (IMF) and World Bank, were established at the ‘Bretton Woods’ conference of 1944
These institutions attempted to create global economic stability by establishing a shared economic framework
Global Economic Ideas
The IMF seeks to manage the world economy by ensuring a predictable economic system
Whilst it mainly seeks to advise, it also makes loans – with strong conditions
These loans come with ‘Structural Adjustment Programmes’ (SAPs) that enforce economic policy upon poorer nations
Decisions are made by votes, but votes are based on financial contributions
The US has 16.75% of the vote, the UK 4.29% and China has 3.65%
The United States also has veto control of the World Bank
Trade before People
World Trade Organisation (WTO) regulations are able to override national laws
The WTO can make binding rulings on its members and enforce these through trade sanctions
These decisions are made by unelected officials who are able to overrule local law if it conflicts with trade regulations
Instead trade regulations work in favour of trade and transnational corporations
These global financial institutions thus ensure the implementation of a global economic order that has a significant affect upon our everyday lives
Being Transnational
The most visible aspect of global capitalism are transnational corporations
Transnational organisations do not have a specific ‘home’ location
These organisations can be non-profit, political or corporate
The development of transnational corporations (TNCs) has been a significant element of globalisation as power moves beyond the reach of the nation-state
Source: The Economist, 2012
How are transnational corporations involved in your life?
Corporate Benefits
TNC’s emerge as companies seek greater returns in foreign markets
Expanding into new markets brings a number of benefits:
More markets and more diverse customers
Greater access to resources
Access to cheaper labour
The Rise of the Transnational Corporation (TNC)
TNC’s bring Foreign Direct Investment (FDI) to national economies, which compete for these funds
These companies have come to dominate capitalism and drive globalisation
Whilst this can distribute wealth globally, many TNCs have become immensely wealthy and powerful
Corporate Control
Researchers at the University of Zurich found that there are 43,060 transnational corporations
Of this 1,318 companies dominant the global market
147 of these companies, mostly banks, control 40% of the wealth
These companies are intensely interconnected, often owning parts of other companies and leaving the system vulnerable to collapse
Source: Daily Mail, 2012
Problematic Control
Because of this power they are often able to dictate political conditions in host countries
The size of these corporations has also lead to wealth accumulating in an increasingly narrow range of individuals
Material reproduction within a particular locality is conducted by and for the benefit of those with no stake in that locality
Consumer power
Those who have the most power in the market place are those with the most resources
This leads to a ‘consumer democracy’ where consumers decide what is produced at what price
This creates a capitalist efficiency, but also allows the rich the most votes
Consumer activism
By contrast to the public or union power of the producer society, it is consumers who have the most influence
We have influence of corporations not by withdrawing work, but by withholding purchases
This has been seen recently in corporate tax avoidance cases
Do you feel like you have any power over large corporations?
A freer world?
From the 1980s neoliberal economics has dominated the Western world (and global trade)
It prescribes: The
privatisation of public assets; Reductions on restrictions on commerce; Lower tax rates; Lower public spending.
There is no alternative
Neo-liberal economics relies on assumptions that economic growth is the key to human progress and that global trade will benefit all
It also considers that capitalism is the undisputed and natural mode of material reproduction
In Margaret Thatcher’s words, ‘There is no alternative’
Globally, this was known as the ‘Washington Consensus’
The rise of finance capital
Since the 1990s the global economy has become increasingly ‘financialised’
Rather than being orientated around trade of goods and services, advanced economies are dominated by the complex trading of currency
Instead of using money to buy commodities, the financial economy uses money to buy money
Source: Spiegel, 2011
You are a banker too!
Any money you have in the bank is a loan to the bank
Banks invest this money into financial markets
They are only required to maintain a small amount of deposits
They make a profit by gaining more from your money than they pay in interest
Are you mad at yourself?
The shame of financial capital
Any commodity can be traded within the financial economy
This includes basic items like food – trading in cereals and rice can greatly increase prices, particularly in famines when supply is low
People might be dying, but profits are rising
The fall of financial capital 
Beginning in 2007, a crisis developed in the global banking system from which we have not recovered
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Whilst the causes of the crisis are complex, banks had taken such high risks with their debt that when one institution could not pay, others also collapsed

The collapse of the financial sector spread throughout the economy, leaving us wallowing in debt
There really is no alternative
Whilst the financial crisis showed the weakness of capitalism, it has also made it stronger than ever
Governments were forced to bail out banks to stop the ‘real’ economy from total collapse
Troubled economies are unable to act if it is not supported by the market
It is easier to imagine the end of the world than the end of capitalism
Contemporary Difficulties
Privately owned media now control and ‘commodify’ large element of global culture
The benefits of this production are increasingly accruing to a smaller range of private individuals
The costs of the grand expansion of industrial production are having a marked impact upon the ecosystems in which we live
Taxation is becoming increasingly ‘competitive’ and global markets have more power than democratic institutions
DIY Summary
How has global capitalism impacted upon globalisation?
Next Week Mediated globalisation: Communicating hegemony or technologies of resistance Reading:
Cohen and Kennedy, Chapter 16
Group reading: Introduction, McLuhan, M. (1964) Understanding Media. Abingdon: Routledge. Starter Question: What is meant by a ‘global village’?