THIS COURSE WILL COUNT AS AN ADVANCED POLICY ECONOMICS COURSE.
Course Description
Professor James Galbraith, galbraith@mail.utexas.edu, Skype Fridays 9-12, by Zoom
Electronic Office hours: Tuesday 2 – 4 PM or by email appointment Teaching Assistant: tk
Assistant: Jayashree Vijalapuram: jayashreev@austin.utexas.edu
This course will examine the political economy of resilience, recovery and reorganization in the face of the world crisis unleashed by the pandemic of Covid-19 in 2020/21.
The class will build on a background analysis of relevant historical phenomena, in particular financial crashes and economic depressions, and the US experience of economic and social mobilizations to meet severe challenges, such as during the New Deal (1933-1939) and the mobilization for the Second World War (1940-45). It will examine how core lessons of those experiences were diluted in the post- war years, and the specific context of the Great Financial Crisis of 2007-2009 and its aftermath, with the rise of precarity as a core feature of many Western societies.
We will then take up the economic challenges of the pandemic, as they were experienced in the US and elsewhere. We will examine in some critical detail the emergency responses taken by China and by the United States. The class will then examine the social conditions in different countries that faced the pandemic, including for example Italy, Korea, Cuba, Taiwan, Singapore, Sweden, Germany, France, the UK, New Zealand and Brazil, and how these conditions affected the capacity to make an effective re- sponse. Key questions include the speed and effectiveness of policy reaction, the stability and effec- tiveness of the health care system, the reliability of the supply chain for medical products, food and other essentials, the problem of providing financial support to the unemployed, the question of lock- downs and their effect on public health and economic and social resilience.
Finally, the class will explore the problem of post-pandemic reorganization and the condition of the world system in view of the experience of the pandemic, including the changes in financial conditions, social behavior and the distribution of power it will have wrought -- and how to build a more robust en- vironment for public health and economic security going forward.
Historical and Theoretical Background
1. Economic Systems: Capitalism, Social Democracy, Socialism, Communism
The distinctive features of a capitalist economy include decentralized decision-making, credit-money, the purchase and sale of capital assets, and the profit motive. Socialism and communism feature cen- tralized decision-making and an engineering approach to the problem of production. Capitalism's ad- vantage is adaptability and diversity; its disadvantage is inequality and weak provision of public goods. Socialism has the opposite problems. The postwar vision of economic development saw each major developing country developing a largely-self-sufficient industrial base and social-democratic working/middle class on the model of the US or Western Europe. This gave way in the 1970s/1980s to a reassertion of global integration, export-led growth, financial interdependence, deregulation, privati- zation and deepening specialization in productive structures, a combination known as neoliberalism.
However, the systems remain distinct, since it matters which variant provides the foundation for what is built on top. In this respect, we may speak of an “Asian model” and a “Western model.”
Crises, depressions, New Deals and more crises
Capitalism is dynamic but unstable. The US economy has a history of instability, which characteristi- cally takes the form of financial crisis leading to economic depression. This class will examine the canonical case of the Great Crash and the Great Depression; how the American economy was rebuilt in the wake of the Great Depression by the New Deal and the mobilization for World War II, and the re- turn of crisis economics in the 2000s. The ideas for the New Deal flowed from many sources, includ- ing agrarian reformers, state-level progressives, trust-busters and the World War I mobilization, but a principal and integrating intellectual framework came at the time from the ideas of John Maynard Keynes. The New Deal and the war together delivered the postwar welfare state, characterized by a large government sector, large industrial corporations, extensive regulation, social insurance and coun- tervailing power, under an overarching framework of international financial controls. The erosion of the welfare state, alongside globalization, in turn yielded up the conditions that led to the Great Finan- cial Crisis of 2007-2009 and the following years, setting the stage for the pandemic.
The pandemic and its aftermath.
Challenges of Covid-19 to the US Economy
The evolution of the US health system; fee-for service and public health; health insurance and the de- livery of health care. The global supply chain for medical and other basic products; social structure of the supply chain inside the United States. The pandemic and the capital markets, especially vulnerabili- ties to short-selling and manipulation. Decentralization and messaging effectiveness. Economic mod- els of the effects, and trade-offs between public health and economic activity. The problem of fixed costs & profitability in services, investment goods and in energy. The problem of debt. The two risks of globalization: supply-chain interruptions and short-falls of global demand.
The US: Economic ideas, politics and policy responses.
The “Keynesian” legacy in the concept and practice of “stimulus.” The CARES Act: UI, PPP, rebates. Household saving and changing patterns of demand for goods and services in the pandemic and after. Economic forecasting and political considerations in the policy response: “return to normal” and the election. The HEROES Act. The ARP and the Infrastructure Bill. The vaccination regime in the US, Europe and Brazil. The problem of employment and the problem of debts. Things achieved, things pro- posed, and things left unsaid and undone so far.
The Pandemic and the world system.
Why Asia handled the pandemic more effectively than the US or Europe. The emerging nature of sys- tem competition; the emergence of China and a China-led world bloc; technology, finance and military power; propaganda and confrontation. The situation in Russia and the economic relationship between Russia, Germany and Europe.
Where Things Stand Now.
Secular stagnation, inflation, unemployment, American power, and the future of the world system.
Specific cases and problems, with alternative perspectives.
Comparative policies and experiences (three classes, with student presentations)
China, Korea, Vietnam, Cuba, Taiwan, Germany, France, Italy, Spain, Greece, Ireland, the UK, New Zealand, Russia, South Africa, Brazil... what patterns emerge from experience?
Critical issues and policies (three classes, with student presentations)
Sources of the pandemic. Controversies over treatment. Controversies over medical practices. Race, class and gender: differential effects and social justice. Economic strategy: basic income or job guar- antee? How to restructure the provision of health care. Deglobalization and New Deals? The pandem- ic and social upheaval: which way the revolution?
General Structure and Assignments
The class will meet each week for one three-hour session over Zoom. Please download and install Zoom on your computers or other electronic devices, and please monitor Canvas Announcements for class information and updates. Readings will be largely on Canvas, or otherwise over the internet.
They will be eclectic, sometimes shocking, and voluminous. Much will be very new. Needless to say, that an item appears on the reading list does not imply my endorsement. Our task in this class is to work at analyzing and evaluating a mass of material under the real-world conditions of uncertainty, propaganda, misinformation and fake news.
In general, I expect the class to unfold in three broad segments. The first will cover general ideas in political economy, a desperately-condensed effort to introduce a range of concepts and facts about the world economy and the place of different countries within it. The second will cover the specific cir- cumstances of this pandemic, as it is affecting the US and other countries. The third will be more de- centralized, permitting students to pick a specific problem and work on it.
Some readings are available on-line and links are indicated. Most are on Canvas. Complete books are available on Amazon/Kindle, usually at reasonable prices. Students will be expected to keep pace with the readings and to participate actively in class discussion. From 9/3 through 10/8, I will expect a one- page typed memorandum of candid notes, thoughts and reactions to the readings each week, submitted over Canvas. I will review these briefly and return them, usually with a few notes and comments. In the next six sessions, students will present comparative analyses of the pandemic in a range of countries and on a range of issues. The final requirement of the course is a short paper – in the range of eight typed pages – presenting a lucid summary of national experiences in different parts of the world, or an
analysis of some particular issue relating to the politics, economics or social aspects of this crisis.