Exam 2-Economic Georg - Lecture notes 1 PDF

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Introduction to Economic Geography (Geog. 161) Week 6: Nature Part Two: ECONOMIC AGENTS ● Making the spatial economy - state , environment, labor, and finance. Anthropocene (Capitalocene) - A term used to define a proposed epoch (geological time period) whereby humans have become the main drivers of environmental change / destruction. - Industrial revolution - Atomic age (Video-Youtube: capitalism is destroying the planet | Raj Patel) Nature= primary commodities The environmental effects of consumer culture. Consumption of beef (costly from resource perspective) (dairy/ meat = costly) Consumption of energy (2019 by region // non renewable resources) (very little renewable energy consumption) Environmental rollbacks under the trump administration (Graph) Gulf of Mexico “Dead Zone” (video) - Run-off from urban areas and farms, drain into the gulf of mexico, causing dead zone - Excessive amounts of nutrients - Low oxygen, can kill fish - Destroying food chain - Bad for ecosystem China takes the lead on renewables (chart) - Prosperity without perpetual growth (and the unrelenting strain on Earth’s ecosystems)? - Germany and Europe are doing bad in renewables - Green economy ? ECONOMIC GEOGRAPHY AND NATURE ● Economic geography up to the 1990s: - Nature= resources. Nature as passive. ● Economic geography today: - Environment impacts of economic activity (consumption and production) - Environmental (de)regulation and governance - Energy transition (carbon → renewable)

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Critiquing the business as usual (BAU) approach to a green economy

Questions 1. What are natural resources and how are they incorporated into economic processes (commodification)? 2. What does neoliberalism have to do with these (and other) processes? 3. What are key issues a ‘Business As Usual’ approach to the green economy? WHAT IS A NATURAL RESOURCE? - A natural resource is anything created through natural processes that people use and value. - Distinguished from human creation (e.g., money, information, labor) …...But, there is a human component to defining “natural” resources Natural resources ● Nonrenewable resources - Form slowly - Cannot be replaced once used - E.g. coal, oil, gas, copper, iron, uranium ● Renewable resources - Replaceable within a human lifespan - E.g. solar energy, wind, water, trees, great - Some renewables can be depleted (or no longer economically viable) Resource in nature to valued natural resource ● Cultural values - Do social norms say it is desirable and acceptable to use? ● Technology - Is technology advanced enough to use it? ● Economic system - How is it priced? How accessible is it?

October 2, 2019 1. Cultural Values

● Insects - Resource of nature to be largely ignored, exterminated, etc. or valued natural resources to eat? ● Car - Typically idolized in the US - Social status - Symbol of freedom 2. Technology - The utility of a natural substance depends on the technological ability of a society to obtain it and to adapt it to the society's purposes. Potential resources: - things that might become resources in the near future. 3. Economics - Natural resources acquire a monetary value through exchange in a marketplace. Supply and demand: - More Labor = More Value - Higher Quantity = Less Value - Strong Desire = More Value - Low Prices = More Demand Creating a commodity ● Three dimensions of a society determine nature’s commodifications: - Cultural - Technological - Economic ● economic thinking is concerned with assigning a current monetary value to nature, allowing natural “things” to be integrated into a common framework. - And thus a commodity is born ( the valuing of natural resources).

Establishing ownership ● If nature is to be sold in the form of resources, then a further requirement is that it has to belong to someone who will do the selling. ● Four possible models throughout which ownership is established over a natural resource

1. 2. 3. 4.

commodity: Communal access State ownership and state exploitation State ownership( ex. canada) and private exploitation Private ownership and private exploitation

Neoliberalism of Nature ● Neoliberalization - New opportunities for profit (reinvention of capitalism) - biological resources - Privatizing water (i.e. private ownership of nature) - Commodifying pollution/ environmental degradation Neoliberalization of nature: privatization Water: - Water is in many ways an “uncooperative “ commodity when it comes to private ownership. - However , this has not deterred efforts to do just that. - Over the last two decades, water has been privatized in many contexts around the world. Bolivia - World bank loans in 1990s: “privatize the water systems” - Left many without access to water - Two revolts: Cochabamba (2000) and El Alto (2005) (nearly 5% of Africa's agricultural land was bought or leased by foreign investors as of 2010) Burning food to fuel the hungry Country -Ghana, Uganda, Benin, Ethiopia, Zambia, South South Accumulation by Dispossession - David harvey - Neoliberal policies from the 1970s onward serve to concentrate wealth and power in the hands of a few by dispossessing others of their wealth and or land. ● Example: foreign direct investment - Farmers in Uganda selling land to tobacco companies The commodification of environmental protection - How does protecting the environment from pollution and degradation become commodified? 1. Being sustainable or green is used as a selling point for many products- i.e. environmental protection is being integrated as part of the value of commodity 2. The protection of natural environments from the waste, outputs and……..he went too fast

Market as mechanism of environmental protection - “Saving the world through consumption: how enjoying a beer from Maine Beer Company can cleanup the coastline.” - Issue : leaves the neoclassical paradigm of unending growth undisturbed, thus exonerating the system. (video/ youtube: RSA ANIMATION: First as tragedy, then as farce) (video / youtube: Can carbon offsets really save us from climate change?)

Week 7: labor Part two: economic agents ● Making the spatial economy - state , environment, labor, and finance (university of chicago center strike 2019) - Knowledge embodied in labor ❏ Whether we are talking about the collective bargaining of auto workers, nurses, teachers, or others, labor acts as a significant agent of economic change ❏ Labor as an agent that shapes the economy. Gibson-Graham’s iceberg model of economy. Labor extends well beyond performing wage labor for firms. (different labor conditions vs work types vs location) Labor and geography - Labor has important geographical dimensions ➢ Uneven development plays a major role in creating differentiated landscapes of employment and labor. (online workers?) (outsourcing is profoundly geographical) (outsourcing manufacturing, yes, but also labor control) ● Labor is mobile ● World bank: “migration is, therefore, the most effective way to reduce poverty and share prosperity”. ● The feminization of labor migration questions : 1. What is labor? 2. What are some of the major ways work and employment have changed in the global economy? 3. What influences labor markets? 4. How does labor actively shape economic life?

5. What is labor migration? 6. I knew it! Neoliberalism matters here. How so? Labor ● Traditional economic analyses - Labor as a commodity; as a key input to the production process. Input → Land Labor Capital Entrepreneurship

Output Cars Houses Food Computers

Labor : David Ricardo (1772-1823) - Concerned with how to conceptualize labor under capitalism Labor theory of value - The value of a good is linked to the quantity of the labor required to produce it. - snags : prices of goods that didn't really match the quantity of labor used to produce them. E.g. wine labor : karl marx - Labor power under capitalism became commodified after the means of production were taken away by capitalists during a process of primitive accumulation. - Labor under capitalism is exploited Labor markets - Commodifications of labor means it can be sold on the market. - Employment and the local scale (local labor markets) - Labor markets are embedded in social institutions that shape and regulate them in various ways. - Flexibility and deregulation (monopsony) -Assumptions that labor market are naturally competitive ❏ A monopsony is a market condition in which there is only one buyer. Like a monopoly, a monopsony also has imperfect market conditions. The difference between a monopoly and monopsony is primarily in the difference between the controlling entities.

October 9, 2019

Monopsony - A market where there is only one buyer is called a monopsony. - Map: relatively competitive labor markets at major urban areas, but monopsony is rather pervasive elsewhere. - Important why? Monopsony creates spatially uneven labor markets and creates conditions where wage stagnancy can exist alongside corporate profit. Global economy: work and employment - Globalization ➢ TNCs (spatial fix) ➢ New international division of labor (NIDL) ➔ The process by which TNCs based in western countries have shifted low status assembly and processing operations to developing countries where costs are much lower. ➔ BRICS - NIDL = spatial division of labor at a global scale Spatial division of labor - Doreen massey (1944-2016) - Massive industrial restructuring in england during the 1970s and 80s - Accumulation as distinctive rounds of investment unfolding over time. - Each round of investment produces a distinct geography= spatial division of labor. Global economy: work and employment - Deindustrialization in the midwest brought new spatial configurations of labor, unemployment, investment, devaluation, and more. - 2007-8 economic crisis and recession ad similar effects in California and Nevada. - These spatial divisions of labor and conditions of work are dynamic. Shaping labor markets - The labor markets is influenced by a range of institutions: - Governments (as employers and as creators of labor laws). - Controlling access to trades and professions - Families are crucial as well. - Market intermediaries (temporary staffing agencies) - Some models of labor market regulation minimize regulation while others prioritize government involvement in labor market processes ★ e.g. US/ Germany Local labor control regimes (LLCR) - Refers to the ways that labor is disciplined and controlled in distinctive ways in specific

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places. Results in the creation of local spaces where laor can be controlled and where the labor force can be reproduced. ★ E.g. Export processing zones Capital encounters a spatial limit as it peruses perpetual growth. (“labor problem”) TNCs cannot continually drive down labor through spatial switching of production locations. Eventually it (a TNC) settles down to produce things and make profit. What else factors into this “solution”? ➢ Local labor control regimes! These regimes seek to construct sustainable conditions for profit accumulation and typically involve various local and national government actors.

Labor as active - Labor geography: a branch of economic geography that seeks to understand how workers exert agency in the face of the economic structures around them. ➢ Trade union , resistance, and international coalitions ➢ Key concern: to counter dominant narratives of work and labor supplied by businesses and states. Labor migration - While labor is relatively immobile, more people are moving than ever before-- e.g., mobile elites, temporary migrant workers. - What does this kind of mobility mean for the power of labor? ➔ For the minority of migrants it represents empowerment. ➔ For the majority of migrants the experience is quite the opposite. Labor migration: temporary migrant workers - A majority of global migrants are engaged in temporary labor migration ➔ Less stability and security ➔ Protections ➔ Threat of deportation - Labor markets in dubai and singapore ➔ Temporary workers and government recruitment Neoliberalism and labor - One prominent way that neoliberalism shapes labor and labor markets is through the policy imperative of flexibility - Flexibility in this context (neoliberal state) means efforts to reform labor markets through policies that: 1. Place business needs at the forefront

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2. Make it easier for companies to hire and fire employees Labor markets flexibility in four key elements (employer perspective): 1. Numerical - reduce the number of workers according to business needs. 2. wage - ability to change payment based on business needs 3. functional - ability to reorganize labor between job tasks based on business needs 4. Time - ability to control the hours employees work based on business needs

Chapter 7: global finance ( THE DAY WE MISSED CLASS) Money, credit, Debit

Banking system

Global Finance and financial instrument

Shift: Finance of Production “ finance as production” ( as its own industry detached from “real economy” Financialization 1. (uneven) geographical expansions of the economy 2. Casino capitalism: economy crisis 3. Continued importance of place

Money: Conventional Economic Perspective ● The use of money developed to address the limitation of bartering ● Davis Graeber (2011) : Rise of money is about financing wars and imperial expeditions ● Money as medium of exchange ● Money has made market economy and international trade (inc. financial markets) possible Money: Perpetual Growth ● Culture of capitalism is one that must maintain perpetual growth (3%) ● 40.000 in 2015 = $44,800 in 2019 ● This steady increase in money is only possible by making increases to money supply HOW? Money : commodity money ● Commodity money --Eg coins ● First bit of magic: going from coin to paper ● Fractional reserve banking ( 1:10 rate) --Every $1 deposited = $10 lend out

-- Making more money Money:: “Free” - Important years in transformation of commodity money to debt money - 1931: paper money can’t be converted to gold - 1971: currency no longer backed by gold Virtualization of money Money: consequences of Debt Money ● Debt Money: Promise by borrow to repay debt in future -Money is lent into existence which means for every $1 lent To someone/ thing incurs dollar debt Debt based economy -1960 : debt 2x shipping -2010: debt 4X supply of money

Credit Card (Debt) ● Neoliberal State: “Hey you! Now is the time to get involved in financial market” ● COnsumer credit (personal credit cards) ● Consumerism + interest = growth

Money Consequences of Debt Money ● Money supply must grow for a health economy -growth occurs when there is a steady inc. in things to buy Commodification: Things of no monetary value are transformed into things that do Make it Grow ● How does money supply increase? -transforming money to debt or account money -Fractional reserve banking

Banking: Financial Production ● Savers ( creditors ● Borrowers( debtors) ● Banks as intermediaries, as facilitating exchange ● Pool together money/ saving

9oct . 16, 2019 Part two: economic agents ● Making the spatial economy - State, environment, labor, and finance Banking: financing production - Savers (creditors) - Borrowers (debtors) - Banks as intermediaries as facilitating exchange. ➢ Pool together money/ savings as capital and use that capital to finance productive activity. Savers - Receive compensation in the form of interest on their deposit Borrowers - Pay a cost for using the funds pooled from many creditors depositing with the same bank. The bank, saver, and borrower all receive returns in relation to their inputs into the overall financial Banking: a reorganization - 1970s onward - This context brought forth a reshaping of the existing geography of banking and finance, namely the consolidation of banks. ➢ Closing bank branches ➢ Financial exclusion - consequence : the emergence of a new role for banks (and the rise of financial capital). The rise of global finance - Banks increasingly keep their financial resources ➢ ‘Churning” ➢ Actively engaged in securitization by issuing securities with underlying asset values rather than just engaging in direct lending to borrowers. - Since the 1980s, the proliferation of financial services and investment instruments has led to the emergence of what we now know as global finance.

Deregulation as a driver of global finance - National banking systems in the 1960s ➢ Closely regulated ➢ self - contained - A limited form of internationalization of finance came about when national banks expanded activities abroad in order to service transnational corporations from the 1960s onward. - Since the mid-1970s, competitive international deregulation became the dominant trend. - State organization in the U.S. and the U.K. was experiencing an ideological change from a welfare regime to a neoliberal market regime. ➢ Bolstering securitization Financial instruments: - Another prominent factor contributing to the globalization of the financial system concerns the emergence of new financial products. ★ Monetary contract between parties ★ This contract is tradeable in a market. ★ E.g. Bonds Financial instruments: bonds 1. You purchase a bond, which means you are lending out money to a borrower. 2. Borrower uses the money. 3. Borrower pays you a set amount of interest over an agreed amount of time 4. At maturity the borrower pays the principal (returns your investment). Financial instruments: derivatives - Encompass a diverse range of instruments. - A contract between two parties that establishes the value of underlying things, as well as sets dates, obligations and more - Value is derived from the value of underlying things (commodities, assets, debt, etc.) - Bought and sold through an exchange (e.g. chicago mercantile exchange) or over-thecounter. Financial instruments: cdos - CDOs (Collateralized Debt Obligations) are a type of derivative - A bank makes a loan → sells that loan to an investment bank → the investment bank repackages the loan into a financial product called a CDO - Investors can then buy and sell the CDOs : i.e. tradeable - underlying : loans and the promise to repay them So what about CDOs? - Whitefish Bay, wisconsin

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➢ Deregulation ➢ High risk, potential high returns (by no means guaranteed). ➢ Crisis, defaults, crash state : here’s your bailout ➢ Using taxpayer money for bad business decisions/ risks. ➢ Creates a culture where it is okay to take continued financial risks = more crises.

Financialization - The financialization of the economy: ➢ A concept that helps us understand the growing influence of financial processes and actors in the global economy. ➢ Shift: ‘finance of production’ to ‘finance as production’ (i.e. circulating investments detached from the real economy). ➢ Profits over people; the environment, etc. Three key aspects of financialization: 1. Growth of financial activity in relation to the rest of the economy. 2. The dominance of financial capital over productive capital 3. Financialization of everyday life.

1. Growth of financial activity - Financial activities have increased as a share of total economic activity in recent years. ➢ Geographically variable ➢ Global south mid-90s 2. The dominance of financial capital - The emergence of finance as production doesn't mean productive activity vanishes. - Non-financial activity being driven by financial imperatives. ➢ Maximizing shareholder value → new redistributions of production processes, downsizing. 3. financialization of everyday life

End of geography? - Does the highly mobile financial investment that shape our global economy signal the end of the geography? Time-space compression - Refers to the effects of information and communication technologies in reducing the time and costs of transmitting information and money across space. Week 9- Commodity chains Part three: spatial organization ● Organizing economic space: ➔ Commodity chains, technology, TNCs, and retail questions : - What are global commodity chains and how do they work? - How is value added within a com...