Contemporary Theories of Political Economy

Contemporary Theories of Political Economy
Location: 145 Dwinelle
TuTh 2-3:30P

Beverly Crawford
University of California at Berkeley
127 Stephens
Office Hours: Thursdays 4-5


Study Questions

Newspaper assignments



Course Requirements

Your Instructor

lecture outlines


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This course syllabus presents a general plan for the course; deviations announced to the class by the instructor may be necessary. Later sessions, in particular, may be revised to incorporate newer material, i.e. a new financial crisis, climate change calamity, etc.

I. Introduction to the Course: The Central Issues (August 29)

II. Theories of Political Economy

A . The Political Economy of Freedom: Economic Liberalism--classical and neo

1. Economic Freedom (September 3)

Friedrich Hayek, "The Use of Knowledge in Society"

Hayek, Friedman, and the Illusions of Conservative Economics

2. Freedom and Rationality (Sept 5)


John Elster, “Rationality and the Emotions”

3. A Compelling Case for Freedom: The Problem of Collective Action (Sept. 10)

4. Market Freedom, and the Division of Labor: A Modern Take on Comparative Advantage (Sept. 12)
How can we all get richer than we used to be?

5. The Critique of Economic Freedom Are we really rational? Is the market really a "spontaneous" institution, arising from "human nature?"

a. Social Limits on Freedom and Cognitive Limits on Rationality (Sept 17)

b. Behavioral and Institutional Limits on Freedom (September 19) In Class Exam Sept 19

  • Dan Arialy "Notes on Irrationality"
  • Lindblom, Charles E. "The Market System" in Barma and Vogel The Political Economy Reader pp. 247-258
  • Oliver Williamson, “The Economic Institutions of Capitalism,” in Barma and Vogel The Political Economy Reader


* Amartya Sen, "Rational Fools: A Critique of the Behavioral Foundations of Economic Theory" pp. 322-344

Herbert Simon, "A behavioral model of rational choice"

*J. Bradford DeLong, “The Republic of the Central Banker”


B. The Political Economy of Equality

1. Liberal Equality

a. Political Liberalism and Distributive Justice: Combining Freedom and Equality (September 24)


Isiah Berlin "Negative and Positive Liberty." pp. 1-8
Robert Nozick exerpt from Anarchy, State, and Utopia

b. Are Markets and Democracy in harmony or conflict? (September 26)

2. Radical Equality (October 1)


David Harvey, The Right to the City

Eric Brynjolfsson and Andrew McAfee, Race Against the Machine: How the Digital Revolution is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment ant the Economy


C. The Political Economy of Community:

1. Community, Culture, and Nation (Oct. 3, Oct. 8)

Midterm Review Session TBA Midterm October 10

2. Protecting the Economy of the National Community: Economic Nationalism (Oct. 15)

III. Theory and Reality: A Brief Modern History of the Struggle between Freedom and Equality, and the search for Community

A. Freedom in Crisis: Depression, Fascism, and War (October 17)

Quote of the Day: "In the Long Run we are all dead." --John M. Keynes


B. Limiting freedom in the wake of Depression and War: The Global and Local Quest for Equality and Community and Liberalism's struggle to rise again

1. The Global Quest for Equality and Community in a New Liberal World: Embedded Liberalism and Global Governance (October 22 and 24)

Quote of the day: "Efforts to construct international economic regimes in the  interwar period failed not because of the lack of a hegemon. They failed because, even had there been a hegemon, they stood in contradiction to the transformation in the mediating role of the state between market and society, which altered fundamentally the social purpose of domestic and international authority." --John G. Ruggie


  • Robert Keohane, "The Theory of Hegemonic Stability and Changes in International Economic Regimes," in Ole R. Holsti, et. al. (eds), Change in the International System (Boulder, CO: Westview), 1980, pp. 131-162

2. The Local Quest for Equality and Community in a Liberal World: The Welfare State (October 29)

Quote of the Day: "Can the Welfare State fundamentally transform Capitalist society?" ------Gosta Esping-Andersen

Esping-Andersen, Gøsta, “Three Political Economies of the Welfare State”

October 29 Newspaper Assignment Due

C. The Political Economy of Development

1. Liberal Explanations (October 31)

Quote of the Day

“Once developed economically, nations are destined to become democracies. The relationship between liberal democracy and economic development is one of symbiosis, not conflict.  The relationship has only become stronger and more widespread with the fall of communism and in the era of globalization.”

2. Inequality and Underdevelopment: A Critique of Liberal Development Theory (November 5)

Quote of the Day:

“Globalization is nothing new; it began with the expansion of European Capitalism in the 16th century; furthermore it is far from a linear,  irreversible, and inexorable trend" --Immanuel Wallerstein


3. Institutional Arguments for Development: Why do some develop and others don't? (November 7, Nov 12)

  • Gerschenkron, Alexander “Economic Backwardness in Historical Perspective” in Barma and Vogel The Political Economy Reader
  • Steven Vogel, “Why Freer Markets Need More Rules,” in Barma and Vogel The Political Economy Reader
  • David Landes, “The Wealth and Poverty of Nations,” in Barma and Vogel The Political Economy Reader
  • John Lie, Han Unbound Chapter 6, pp. 154-169

D. Theories and Practice of Globalization: Hopes, Fears, and Nightmares

1.Expanding freedom? Neo-Liberalism and and Globalization (November 14)

Quote of the Day:

"The Golden Straitjacket is the defining political economic garment of this globalization era. The Cold War had the Mao suit, the Nehru jacket, the Russian fur. Globalization has only the Golden Straitjacket." --Thomas Friedman


James Varellas "Globalization as Constitutional Counterrevolution" pp. 145-152 only

2. Weakening National Community? Globalization and the Fears of the Economic Nationalist (Nov. 19)

3. Rising Inequality: Globalization's impact on Income and Work (Nov. 21)


Nancy Fraser A Triple Movement?

4. Resource Scarcity, Exploitation, and Environmental Degradation: The ultimate challenge to contemporary theories of political economy (Nov. 26)

"We destroy the beauty of the countryside because the unappropriated splendours of nature have no economic value. We are capable of shutting off the sun and the stars because they do not pay a dividend." --John Maynard Keynes


Anup Shah "Poverty and the Environment"

Elenor Olstrom et. al. The Future of the Commons 2012

IV. Summary and Conclusions: Toward new Theories of Political Economy December 3--5

Recommended Reading: Buddhist Economics
Final Exam Due: December 17, 11 a.m.

For those who want to read further, I recommend the following:

Richard Peet, Theories of Development 2009

Fukuyama, Francis, “Have We Reached the End of History?”

Peter Evans, “Counter-Hegemonic Globalization: Transnational Social Movements
in the Contemporary Global Political Economy”

· Peter Evans, "The State as Problem and Solution: Predation, Embedded Autonomy, and Structural Change," in Haggard and Kaufman, pp. 139-181.

World Development Vol. 21, No. 8 August 1993. Special Issue: "Economic Liberalization and Democratization: Exploration of the Linkages."

Three Pillars of Welfare State Theory: T.H. Marshall, Karl Polanyi, Alva Myrdal

* Robert Gilpin with Jean Gilpin, “The Nature of Political Economy in The Political Economy of International Relations (Princeton: Princeton University Press), pp. 25-45.

* Lindblom, Charles E. “The Market as Prison” Journal of Politics 44

*Michael Doyle, “Liberalism and World Politics”

· Amarta Sen, 1999 “”Global Justice: Beyond International Equity” in Inge Kaul et al, eds., Global Public Goods, (Oxford University Press).

*Stephen Hymer, "International Politics and International Economics: A Radical Approach"

· Albert Hirschman, National Power and the Structure of Foreign Trade (Berkeley: Univ. of Cal. Press), 1980, pp. 3-52.

Jacob Viner, "Power vs. Plenty as objectives of foreign policy"

· Philip Selznick, “Social Justice: A Communitarian Perspective.”

* Robert Gilpin, "The Nationalist Perspective"

James Varellas "Globalization as Constitutional Counterrevolution" pp. 145-152 only

* Peter Temin, “The Golden Age of European Growth Reconsidered,” European Review of Economic History, Vol. 6, No. 1, pp. 3-22.

* Keohane, Robert and Joseph Nye Power and Interdependence 1989 Chapter 1.

* Peter Evans, “National Autonomy and Economic Development: Critical Perspectives on Multinational Corporations in Poor Countries,” International Organization, Vol. 25, No. 3, pp. 675-692.

James R. Markusen. 1995. "The Boundaries of Multinational Enterprises and the Theory of International Trade." Journal of Economic Perspectives 9(2): 169-189.

· Krasner, Stephen D., Structural Conflict: The Third World Against Global Liberalism Berkeley: Univ. of Cal. Press, 1985 3-25.

Evans, Peter Dependent Development: The Alliance of Multinational, State and Local Capital in Brazil Princeton Univ. Press: 1994.

*James Hoge, "A Global Power Shift in the Making" Foreign Affairs 2004

*Steve Weber and John Zysman "The Risk that Mercantilism will define the next Security System” in Wayne Sandholz, et. al. The Highest Stakes: The Economic Foundations of the Next Security System, (Oxford University Press, 1992) pp. 167-196.

*Jeff Frieden, "Invested Interests: The Politics of National Economic Policies in a World of Global Finance" in International Organization (Autumn 1991) Vol. 45, No. 4. pp. 425-451.

*C. Fred Bergsten, "Fifty Years of the GATT/WTO:
Lessons from the Past for Strategies for the Future"

· Peter Evans, "The State as Problem and Solution: Predation, Embedded Autonomy, and Structural Change," in Haggard and Kaufman, pp. 139-181.
Williamson, John, "Did the Washington Consensus Fail?"

* Soros, George “The Capitalist Threat” Atlantic Monthly 279. 2 February 1997

· Roberto Sanchez 1994 “International Trade in Human Wastes: A global problem with uneven consequences for the third world” in Journal of Environment and Development 3:1 pp. 137-152.

Dani Rodrik, "The Developing Countries' Hazardous Obsession with Global Integration" January 8, 2001