Political Economy I
Political Economic developments – one of key aspects of European modernity
What is political economic: state and economy. What we mean is the braod
way that economic activity and development is regulated by the state. But more than
than. Economy is always political and cultural. Negotiated, struggle, using values and
understanding. All economic relations – political.
(1) The Modern Political Economy: Capitalism
The crucial feature of modern economy defines it – is money. Money existed
in all societies but in modern society, money – the cash nexus.
Weber – rationalized system: makes accumulation possible.
Marx – commodity fetishism: that money hides the true nature of relations
between people. Makes those relations look like the relations between things –
conceals exploitation. Dickens and Dostoyevski
(2) The Three Stages of Capitalism:
Broadly speaking the modern (Euro and Amer) pol economy can be
conceputalized in three broad stages;
From Industrial Revolution to 1920s – laissez faire
From 1920/30s to 1970s – monopoly - fordism
From 1970s to present. – multinational – P-f
(3) Laissez-Faire Capitalism:
The principles of this political economic form was expressed in the classical
economic writings of Adam Smith, and Ricardo and criticised by Marx.
(a) Division of Labour:
(b) Rational Individual Action:
Butcher and Baker (allied to money)
(b) The free market:
The state lets the companies get on with it. Best incentive. Those
individuals know better than state. Supply and Demand.
Karl Polanyi’s critique. State necessary for emergence of market and
buttresses it. The market – against society.
Keynesianism: manipulation of demand by government.
Bio Details of John Maynard Keynes. Professor of Economics at Cambridge – but
also political role. Office in Whitehall. Assisted in budget in 1940.
Also have to recognise that Keynes was a reflection of wider conditions – the kind of
state intervention which he pointed towards already underway from about the 1920s
also New Deal in America.
In Britain – war stimulated these things. And under Labour – which dealt with Home
front by end of the WWII they were already implementing many of the measures
which would come to be called Keynesian.
General Theory of Employment Interest and Money (1936):
Depression caused by underconsumption. Gov – full employment – keep up
If demand too high – prices increase
- if demand too low resources idle – unemploy
Mecs of demand management:
-if demand too low – encourage state/priv spending through tax cuts/interest rates
if demand too high – cut spending – increase tax/interest rates.
It must be said that in Brit – traditionally weak state – never intervened as much as it
should have to make Keynesianism work. Only tinkered with demand. And never
controlled commanding heights of eco.
Nevertheless, the central point of Keynesianism was accepted: Full Employment:
Consensus politics. And in post-War period this is cross party belief and kept very
low. Below 3% 1947-50
Butskellism: The Economist 1954.
RA Butler, Hugh Gaitskell.
Also One Nation Toryism
Ben Pimlott – PWS a myth.
But all measures against full employment failed.
(i) RoBOT: 1952.
Treasury Ministers Rowan, Bolton, Otto Clark: save reserves by floating £ - rejected
because it risked unemployment.
(ii) Thorneycroft: 1957: sterling crisis – suggested monetarist measure: freeze public
investment, wage limit; forced to resign.
(iii) Seldon Park Agreement:
Heath monetarist agenday – no support for indust lame-ducks – but could not
implement Indust Rels Policy. Natonalise RR and Upper Clyde Shipbuilders.
Bretton Woods International Monetary system.
New Hampshire 1944. Institutional basis of new order brought into being.
IMF, International Bank for Reconstruction and Development (World Bank)
-stabilize and regulate international financial transactions
All currencies pegged to stable dollar – supported by gold reserves.
Keynesianism also involved a social dimension: in Britain – Beveridgism
(1942) Report on Social Insurance and Allied Services. Sold 635,000 copies. 86%
believed report should be adopted.
Welfare State: social insurance and pensions. Cradle til grave. War on Want,
Disaese, Ignorance, Squalor and Idleness.
Single weekly flat rate contriutbion in return for benefit to provide min standard of
Syst could only work if most employed. Needed full employment to pay for it.
Nat Insurance Act 1946.
NHS. Bevan White Paper 1944. Opp of BMA. But created in 1946.
Education. Butler – White Paper 1944. 1944. Free secondary education.
State involved in market: the corporate settlement Cap-State-TU.
In Britain the corporatist state – good rels 1945- 57
After 58, more difficult. And by late 60s outright conflict.
(4) The Collapse of Fordism:
(a) Inflation and oil crisis:
1972 and 1973– Yom Kippur War and Opec. Oil prices x4. Retail
prices up by 10 per cent.
(b) Breakdown of stable markets
(c) Emergence of Multinationals:
Increased competitiveness, transcend nat-state boundaries.
Rise of Japan.
(d) Contradiction of the state management of the market:
Union-cap- state breakdown. From late 1960s. Could not stop wage inflation
while guaranteeing full employ.
(e) Breakdown of international monetary system: 1971
US refuse to make dollar international fixed currency. Flexible exchange
rates – economic instability.
Political Economy: II
(a) Production: Flexible Specialisation
(i) Small Batch:
Piore and Sabel – small batch – continued under mass manufacture paradigm
now paradigm shifted.
new computers: smaller batches quicker changes
GM motors 9hrs to change dyes on its presses in early 1980s. Toyota:
2 mins. Number of body parts 5000 to 500
Just in time: Kanban: avoids wasted overheads.
multinationals – still producing large quantities- but new tecs. Even those companies
eg car or heavy industry changing production techniques rapidly. More to the point if
expand def. Of post-Fordism to soc and eco – more striking developments
(ii) new workers: fewer in number, more skilled.
Eg Benetton 11,5000 workers in N.Italy but only 1500 employed directly –
Some say still large number of unskilled eg. Fast Food – no peripheral
(iii)new type of commodity:
Sign value over use – find niche in fragmented market.
Shift to services. Cannot deny growth in lifestyle commodities –
clothes, music, holidays etc. but theoretical notion of sign value problematic.
(b) The Multinational:
Increased importance after mergers in 60s: Globalization: of market,
div of labour. Increased in FDI, especially US, Jap ones.
Not ‘spaces of flows’ as Castells says or Appadurai – locale a fetish.But still national
based, nat culture – international operations.
Increased centralisation and de-centralisation.
However rise of multinationals v.imp – change rel , local, regional, nat and
New employment structure - new class structure
Core and Periphery
Service Class and White-collar workers; loss of jobs in manufacture
- free market: monetarism. Vs Keynes. No full employ. No state
intervention in market.
- strong state: provide laws to sustain market.
Thatcherism in Britain:
Not a personal matter. Lab and Tory govs of 70s already moved towards this position.
Heath Selsdon agreement.
Lab conference 1974-7: 1976 Callaghan rejects unemploy. 1977 Healey has to adopt
monetarist policies: cut gov spending.
Hall: hegemonic project. Authoritarian pop.
Jessop: pragmatic statecraft. Contradictory – no. Strong state and free market –
directed at diff groups.
Gamble: free market and strong state.
(4) Cultural: postmodernism
I will not discuss this in this lecture course but point it up for the sake of
3 stages of modern political economy.
Economy never objective but always political and cultural. This not definitive
framework but does provide contextualistion for other social issues.
Critique: Discussion of Andrew Sayer’s article,
Post-Fordism exaggerates the trends of minor sectors – eg clothes in the Third
Italy; does not describe what is really happening. Many sectors still mass
manufacture. Look at Jap – none of features of supposed PF yet most imp. Econ.
Japanese model – not p-f but very advanced fordism: labour contracts, vertically
integrated business networks – banks and manufacturers (Keiretsu system). But that
falling apart ironically under pressure from west – who were forced to change by
Ritzer’s Mcdonalidization Thesis.
Fordist techniques – still imp. Eg Mcdonalds. In certain cases may be true – but
increasingly new tecs of prod. Misunderstands Mcdonalds: peripheral work force –
flips burgers in Fordist fashion. Core – marketing. Children’s toys.
The advantage of the concept of post-Fordism:
Sayer’s critique must be taken seriously: must be precise not exaggerate the
example of a small sector in eco. But something dramatic clearly has taken place
since 1970s. Post-Fordist – broad – not only economic. There are unignorable, soc,
pol and cult changes which can be encompassed by the term.
Better than Touraine’s Post-Industrial Society (or programmed society):
knowledge the key. Control of info. Technocracy.
Not post-industrial – aren’t all socs info socs. Not very accurate. Amerliorist.
Better than Giddens High Late Modernity. All too individualist – don’t
recognise the new forms of oppression properly – not specific enough.
Our culture fundamentally formed by Enlightenment and by Scientific,
Political and Industrial Revolutions of 17-19c.
In these next three lectures want to focus on the kind of culture which these
revolutions and especially the Sci Rev and Enlightenment, Pol Rev has produced.
Link, Pol and Knowledge Rev.
Today talk about Enlightenment 18c but to do that have to go back to 17c
since origins of Enlightenment there – could go back even earlier.
What is Enlightenment?
Use of critical reason to attain universal standards vs tradition.
Enlightenment – application of Reason to every area of human activity:
instrumental reason – means, ends, order.
Pursuit of Truth
Reason. The success of science against tradition applied to every sphere of
human society – central feature of modernity.
Reason – order, function, truth, universality in all areas of life.
Modernity – as rationality. Today move into cultural sphere.
Classification systems of modernity. Here rationality not so much
means ends as order, cleaniness, neatness.
(1) Elias and Foucault:
Foucault on Prisons:
(a) abstract law which punishes: rational, not sovereign
(b) punishment – isolated: ind deviants must be separated from society.
They might contaminate them.
(2) The Architecture of Modernity:
Links with Foucault.
(a) Georgian Classicism:
Symmetry, order, Division of space.
(b) The Modern City:
Street Plan. The Grid.
Haussman’s Paris. Late 1850s –1860s: Boulevards.
Eco, admin efficiency. Control.
(3) The Nation and Nationalism:
Modernity – emergence of nation state: strict, ordered bureaucracies over set
Need to know, define jurisdictions.
From 18c and particularly into 19, nations as discrete political units emerge.
Nationalism – a way of imagining this community and world.
Imagined as discrete social units, divided from each other absolutely.
The imperial map: imposes this same order inappropriately on colonies.
Foreigners, but Jews (liminal) and blacks especially excluded from this unit.
From this nationality, new cultural classification system, which orders
identity, genders and sexualities.
(4) The Sexuality of Modernity:
In line with this nationalism, this rational, modern social form – new
notions of sexuality emerge. ie. New systems of classicification.
(a) Functional arg:
Darwininism – requires strong manhood.
(b) Cultural isomorphism: the Modern Man
Man symbolically replicates the nation. Discrete, ordered entity
The respectable man: Normal /abnormal
Opposed to sexual depravity ( homosexuality, masturbation,
licentiousness) - and to women (dangerous). Man in control of passions and discretely
separated from the Other.
Theweleit: Male Fantasies
These ideas (noted by Mosse) reach their height in Nazism (connect Frankfurt
School) and Theweleit traces the masculinity in Nazism in one of its most committed
groups - the FreiKorps - in 1920s and then under Nazi - stormtroopers of new order.
Origins in Enlightenment and bourgeoise repectability of 19c:
Control of sexuality - creation of nuclear family
Descartes - sep the body in two. The self. The Subject. Autonomous,
rational internal, pre-formed identity.
The Parade and Body Armour:
Against the flood - weapons and parades
Creation of dual person ; female interior/ male exterior
(c) The Other/Abnormal/Liminal: The other side of the nation.
Androgyne - in first half of 19c. praised as symbol of unity: by end a monster.
Male Categories - the conflation of the Other –
(i) Jews, homosexuals (proust - ‘one of a brotherhood’) blacks. Jews behave
(ii) Dangerous Women;
Red nurses: conceived as pulp, slime, mire
Mothers and Sisters: white nurses: clean
Modernity, modern societies: Europe and American from Enlightenment.
Careful about ethnocentricism; that modernity = the best. Term modernity for me
describes certain revolutionary cult, pol, soc changes from about 18c which are
crucial to the way we live now. But the crucial point is that that cult has been
increasingly unthreading since 1960s.
Rationality: instrumental, (means-end), order.
The kinds of pol, soc, cult order of modernity 18c –1950s. But what I will try
to argue in last three lectures is that although we have transformed modernity – to
postmodernity. That postmodernity is still substantially indebted and entrapped within
(1) Modernist Architecture:
Bauhaus – house, Lamp, Chair, Coffee Point
Machine for living.
Le Corbusier: IBM France. 1960-1
UN, NYC 1947-53.
David Harvey: 15.7.72 3.32 pm Pruitt-Igoe project in St Louis dynamited.
Cultural Logic of Late Capitalism.
The Decline of the Nation State?
(1) The Origins of the State:
Arose as bureaucratic admin after Reformation, 1517 but particularly 17c
(England and France), 18 and 19c.
Taxation: War, social order.
Becomes very powerful in the mid-century 20c.
Growth in power of the TNCs. FDI
Money markets: floating exchange rate mechanisms.
(3) Decline of the Nation State:
Ohmae – borderless world.
The state – dysfunctional.
(4) Milward: The European Rescue of the Nation State.
A brief history of Europe:
Treaty of Rome 1957.
(Dicken has four)
(a) 1950s to 1970s:
(b) 1970s to mid 1980s: Eurosclerosis
SEA and Project 1992.
Milward: WWII collapse of state.
Europe – a international process: nation state authority over it. Rescued states.
Council of Ministers over Commission or Parl. Luxembourg Compromise.
ECSC could impose nothing on Belgium.
Key figures of European integration – not supranationalist. Eg. Monnet.
Treaty of Rome – language of free market. But in fact state determines progess.
CAP and freeing up only of market for goods not services – crucial.
State cannot be what it is if has to interact with others. But Milward truer of period up
to 1990s than present.
Leads to final point.
However, Milward reasonably accurate if slightly overstated for early period of
With SEA, Project 1992, Maastricht (now Amsterdam and Nice) – not so true.
Pressure on Luxembourg compromise. Majority voting
Implications of monetary union – do take a major economic sovereignty from state.
But the fact is that the nation-states still key bargainers. It is through them that Europe
promoted and through them that legitimacy and democracy defined.
Democracy and Legitimation:
Democratic Deficit in Europe.
Consociational or Federal Europe.
Chrysouchoou and Siedentop – supranational and federal Europe.
European Elections – Mandelson story
It will be consociational.
(5) The Transformed Nation State:
-hollowed out (Strange). Changed.
Weaker on economic management.
But in some ways stronger: civil control and defence, NGOs, Quangos.
Taxation: figures on proportion of GNP
Changing but certainly not disappearing.
One crucial element to that change – rise of subnational units
Regionalism and the Rise of Cities
(1) European Union and the Decline of the Nation State:
Talked last week about European union – and the possibility of supranationalism.
Transformation of nation-state.
No – key development is not at supranational level. But above all at local, urban
and regional level. Subnational units.
Rise of region.
Ohmae the region -state: 5-20 m, international airport. Harbour.
Policy of selected investment: Proctor and Gamble and Kansai region.
Appadurai: place a fetish.
Decline of national unity.
End of keynesian consensus.
Decline in state-centred policy – more autonomy for regions.
Less aid from centre.
Growing local/regional autonomy e.g Northern Italy, Scotland, Wales.
Growing links cities and EC.
Subnational and supranational units.
Growing links between cities: Castells – ‘European cities – nervous system of new
(3) New Urban Politics:
Entrepreneurial Cities. Sassens (the Global City) and Castells- the Informational
Sassen looks at NY, London and Tokyo.
Specialised services – producer of financial innovations
Milieu of innovation.
Amenities and lifestyle agglomeration.
Concentration in major cities. Then dispersal around other areas.
New Urban politics:
More from welfare to entrepreneurial, private sector promotion (often with public
Manchester ‘Defending jobs, Improving services’ – ‘Making it happen’ .
LA under Mayor Bradley. On heals of LA Olympics, mobilise mega-developers
and intelligentsia with manifesto of new Regionalism. LA 2000:A city for the
Transformation of urban space.
Eg Davis on LA City of Quartz. Sprinkler systs and bumproof benches.
Growth of regional identities. Eg. Scottish, Welsh, Northern Italy, Catalonia.
Football fandom and post-national identity.
Europe of regions and cities.
No – state still very important. Autonomy of cities/regions not growing rapidly
Held’s worry about neo-medievalism: no tolerance, no general principles –
main thing is defence vs TNC.
New Social Movements
(1) Post-Industrial Society:
New kind of society. Bureaucracy.
In which new kinds of social groupings salient. Not class – struggles there
over or reduced.
We need a new kind of sociology to account for this different kind of society –
with new social movement at the centre.
1968 – the model, especially for Touraine.
(2) New Social Movement:
Not unified – essential social actor. Contingent.
Not class-based. Diverse social origins.
Directed action at specific issue often beyond usual bounds of politics.
Key examples: Green movement, gay movement, feminist movement.
Although new social movement theory may exaggerate declining salience of class.
The new importance of nsms points to crucial development: rise of multinationals
and decline of the state.
And therefore, increasing politicization of issues around consumption and
lifestyle. The politics of consumer not citizen.
(3) Critique of New Social Movement Theory:
Good on the diversity of action – contingency of groups. Theoretically correct.
(a) Are new social movements really new:
Isn’t it that in any society, period of history, issues which are beyond
formal politics are debated and resisted by groups.
Eg TUS, suffragetes, Kinder trespass.
New issues – reflecting transformations in society eg gay,
environmental but the existence of such groups not new.
(b) The persistence of class:
Not an ‘objective’ structure. But the importance of enduring social inequalities
which is still central to post-fordist society and to the existence of these new social
movements themselves – most are not cross status groups at all. But quite particularly
located. Eg. CND, feminist movement, gay rights – all professional classes.
Theoretical account of group formation – good
Empirical account – problems; exaggerates importance though the
politicisation of sphere of consumption very important.
New social movements – important certainly. But Modern society still structured
around serious inequality. And many movements – important social groups arise
from a similar location in this structure of inequality.
Randall Collins The Credential Society. Hierarchy of status groups monopolising
Changed political economic conditions, new groups dominant.
In post-Fordist era, two groups are particularly important
Eg. the Underclass and the new service class.
(2) Embourgeoisment Thesis:
Late 1950s. New affluence of working class.
Not becoming middle class – but changing.
Respectable/rough working class
(3) The Emergence of the Underclass:
Collapse of mass manufacturing in 1970s. Mass unemployment. One section
of the working class drops in socio-eco status, but the rest increases its
Not just poor people – like old, rural areas.
A strong ethnic especially Afro-Caribbean dimension.
Inner City estates.
(4) Theories of the Underclass:
(a) Charles Murray: rightist
Type of behaviour, not a type of poverty.
-illegitimacy, violent crime, drop-out from labour force.
First he blames on women, second two on men.
Solutions – harsher criminal penalties make it nastier to have children
illegitimately ie prob down to individual responsibility and to be cured by strong
(b) Leftist Accounts of the Underclass: e.g Fielding.
Outrage at Murray: causes of the underclass is poverty and post-Fordist de-indust.
Economic reasons. Collapse of mass manufacturing.
Baggalay – stronger: the discrimination against these people in terms like
Underclass – cause of the problem.
Left-wing view effectively incorporates right-wing view because it argues that the
new cultures developing are a response to eco circumstances in which people find
Moral tone of Murray objectionable and individualism of his argument wrong –
but the leftist account – which omits the problematic nature of the individuals who
develop in this area. Not all well-meaning but misunderstood. Young girls have
children who then become criminals a problem.
Campbell highlights the reality of this – the young men not just misunderstood.
But dangerous and are negative influence on the estates.
Who suffers the most from them – the locals.
(5) The Ethnography of the Underclass:
informal structures of masculine power.
Estates lacking eco resources – criminal masc fraternitites have developed which
dominate (and terrorise) estates. Burt these fraternities also provide vital eco resources
even at political costs.
Eg nightclubs in Manchester account in Manchester England by Dave Haslam
- at same time – resistance against these fraternities and violent youth.
Campbell has argued that this division of estates runs exactly down gender lines; that
not right – criminal fraternities do provide for women who are part of those families
Complex structure over the estates.
(6) Rise of the Service Class:
Post-fordism and the decline of mass manufacture and rise of service sector and
TNC brought to rise – new social group, private sector professionals, increasingly
separated from rest of professional class and increasingly dominant.
Bourdieu: right- bank
Savage: excessive life-style.
Influence on culture.
Diverse social origin.
Although term ‘class’ problematic and what we are really talking about is
diverse hierarchical status groups located at different positions and monopolising
certain key goods, the existence of this enduring hierarchy and its transformation key
to understanding the politics of post-Fordist society.
Two key groups – underclass and private sector service class- emerged as a
result of free market. Critical to political and cultural transformation of post-Fordist
Conclusion and Revision
(1) What is Modernity?
When and where is modernity:
Three Revolutions: Scientific 17-18c, Political 18c and Industrial 18-19c.
But stretches back to Reformation and even Renaissance – kind of critical
thinking, politics and nascent economic activity.
These revolutions give rise to distinctive, cultural, pol, soc and eco formations.
Bureaucracy: the emergence of the state, law, democracy.
Economy: capitalism, industrialism, money.
Some of this is starting to unravel and has been unravelling since the 1960s.
(2) Periodisation of Modernity:
The opening end of this is difficult, depends on country, depends on definition.
Could be 15c – 16c – overseas expansion but definitely by 18c and certainly by
Date Political Culture The State Class
1500 Agricultural Renaissance State Landed
revolution and Apparatus Aristocracy
Global trade Reformation emerges in dominant
control of state
1700 End: industrial Enlightenment: Ditto. Rise of indust
revolution in Modernity and financial
England Classical bourgoisie
1800 Laissez Faire Nationalism. Bourgeois
of Euro states: Rise of
Italy and Ger. working class.
1920/30 Fordism Increase of
1950 European Embourgeois-
Community: ment of
Not working class
supranational Hegemony of
but inter- Public sector
1960 Wave of Post- New Social
corporate Modernity Movements:
mergers; rise Non-classed
of new based politics
1970 Crisis of Eurosclerosis De-indust-
1980 Post-Fordism Decline of Emergence of
State power; the Underclass
Multinational Rise of service
corporations. Class. The
SEA 1986. Yuppie.
Rise of regions New Social
and cities. Movements.
1990 New Europe: Growing
still dominance of
intergovern- private sector
mental. service class.
But supra- Relative
national more Decline of
significant and public sector
more inter- professional
Rise of regions
(3) Conclusion: The Other Side of Modernity
Holocaust, Indigenous populations etc.
Modern does not mean the best. Simply the term we use to describe key changes
to European and American society since about 1500.
Not at all clear that Euro and America will retain the dominance they have
enjoyed since 1500