Chapter 5: The State and the Economy

GEOG 240: Day 8

• I will try to have your assignments back by Wednesday.

• Anybody biking or walking to school this week?

• Kate and Dianne will be leading discussions today.

• In addition some of what we’re going to be talking about today was introduced by Lee on Wednesday.

Housekeeping Items

• Despite the neo-liberal rebellion against the state, the state still regulates every aspect of our lives.

• The book gives the example of going to the pub. The state regulates

its hours how old you have to be to enter the size of the drinks when they’re supposed to cut you off how much taxes are charged hygiene in the kitchen, and wages paid to staff.

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Source: Bing

• The role of the state in relation to the economy is highly fluid. In most countries, its role includes:

encouraging economic growth facilitating profit-making by companies enabling workers to find employment generating revenues for itself through taxes sometimes addressing regional disparities, and regulating trade with other nations, and

promoting social stability through a combination of social programs and political repression.

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Dual Role of the State

Source: Bing

• Despite much talk about the ‘free market’, the economy would grind to a halt without the state playing a crucial facilitative role, including in the provision of infrastructure [Canadian examples?].

• The state consists of parliament or congress, the judiciary and police forces, army, security services, the civil service, and various orders of government. In Canada, this consists of federal, provincial, and municipal and – to some degree – First Nations.

• States have exclusive authority over a given territory and what the authors call “a monopoly of legitimate force.” There are currently 195 (some 196) in the world, 192 (some 193) of which are represented in the UN.

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• I could only find out the names of two of the missing nations – Kosovo and Vatican City.

• While states are associated with nations, as in the concept of nation-state, not all states comprise only one nation. What are some exceptions?

• Indeed, there are also nations without states or nations which have limited autonomy within states. What are some examples?

• While tribes, kingdoms and empires are not new, states relatively speaking are. They arose in tandem with the absolute monarchies of the 1600s.

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1918

Circa 1500

Source: Bing

• The state is constantly fluctuating. Examples:• In the past, scientists and civil servants had more

freedom to speak to the media in Canada; today they are silenced.

• In many countries, public enterprises have been privatized, including BC Ferries and parts of BC Hydro.

• In the U.S., there is no public broadcaster, but in the UK and Canada there; in Canada’s case it has been progressively undermined in recent years. Canada also has rules and supports for the sphere of cultural production. It also has a public health care system, something the U.S. just got in a vastly watered down form.

Dynamic State

• As we discussed last time, what is acceptable in one culture – i.e. high taxation – is not acceptable in others. Nonetheless, all advanced industrialized nations have some level of social safety net.

• These were originally developed to stave off major social cataclysms (see Table 5.1 for a comparison between 1925 and 1975, the high-water mark), but with the decline of major economies and the fiscal crisis of the state, these have declined somewhat. Any directed or family experiences around that?

• Based on the writings of John Maynard Keynes (1930s), industrialized countries embraced a ‘Keynesian’ paradigm.

Dynamic State

Keynesianism• Centralized intervention in the

economy from demand management perspective

• Full employment policies and investment in infrastructure

• Support for collective bargaining, progressive taxation and social welfare programs

• Efforts to address regional disparities (in Canada, these included the Agricultural and Rural Development Act [ARDA], Fund for Rural Economic Development [FRED], and Department for Regional Economic Expansion [DREE]).

Source: Bing

See http://www.sjsu.edu/faculty/watkins/canada.htm

• Beginning in 60s, there was a decline in social cohesion and in economic productivity

• The U.S. was facing major industrial competition• Markets for consumer durables were becoming

saturated• Governments were getting into deficit over social

spending and, in the case of the U.S., massive military spending for the arms race and Vietnam (New York was bankrupt and the UK had to apply for an emergency IMF loan)

• Governments had less to spend and industrial economies were hit hard by the oil crisis

• ‘Stagflation’ (high unemployment and inflation) became the order of the day

• All this led UK Labour PM to say that the Keynesian “party is over.”

Decline of Keynesianism