PS 201B — Fall 2002

The Political Economy of the Advanced Countries:

The Study of Politics and Markets

Professor John Zysman Time: Thursdays 12-2:00 pm

Office: 2234 Piedmont Avenue Place: 791 Barrows Hall

Phone: 642-3067 CC#: 73160

E-mail: johnz@socrates.berkeley.edu

Assistant: Genevieve Taylor

Email: genktay@uclink.berkeley.edu

What is this course about?

This course examines the interplay of politics, institutions, and markets in the advanced industrial countries. The course will consider the political and social adjustments these countries make to the evolving economy, and the political efforts to shape and control that evolution. A unifying perspective is that economic growth and political stability require political settlements that at once resolve the technical tasks of growth (assuring the appropriate allocation of resources and the sustained reorganization of economic activities) as well as the political problem of allocating the gains and costs of development. There is no single best way of insuring sustained economic development and political stability. Nonetheless, some countries have been able to manage sustained economic growth, while others have stumbled along the way.

How do we understand and explain the variety among national outcomes? What research enterprise is required? The analytic approach in the class will view actors, political groupings, and institutions as political creations that underlie the models of the several national political economies. Both political actors and political institutions must be understood as the outcomes and settlements of past political and economic crises. This has substantial methodological consequences. There is no irreducible nub of interests from which to read a political map. Making sense of the political interests of economic actors in the advanced countries also requires the understanding of the competitive dynamics of markets. Understanding market dynamics makes the political interplay of business, labor, and the state more transparent.

Several threads will guide the discussion. First, we use ideal types to analyze the dynamics of the advanced countries. By the late 1980s a conventional wisdom had formed about how the advanced countries differed and operated. As the countries have evolved and political settlements been remade, two questions press forward: Were those ideal types useful and were the national characterizations accurate in the first place? At least one new set of ideal types is now proposed. How do we select? Do national models still matter in a supposedly global economy?

As important, some would contend that we are living through a great transformation of the economy and society. Many generations believe that they are living through a historical transformation; such a belief adds moment to the meaning of one’s own life. Most generations are wrong. But historical transformations do occur. How would we begin to decide whether this is such an historical transformation? What do we learn by asking this question.

 

Course Requirements

Students have two options.

Option 1: This option is aimed at students who are taking the course as a general introduction to comparative political economy or the politics of the advanced industrial countries.

    1. Papers: Together the set of short papers represents the equivalent of one longer research paper.
    2. 1. Three think pieces (5 pages each), each of which should develop one analytic theme from the set of readings from a section of the course. The first paper is due September 28th. The second paper is due October 31st. The third paper is due in December, with a specific date to be announced later. The think pieces must be turned in both as a hard copy to my office at BRIE and by e-mail attachment to myself, johnz@socrates.berkeley.edu, and to Genevieve Taylor genktay@uclink.berkeley.edu, in Microsoft Word format by 9 AM the day they are due. For those who are taking the comparative exam, these two papers will be due before date of the exam.

      2. A longer analytic essay (15 pages) developing one theme or issue from the class and class readings. What problem would interest you enough to research later? What are the issues? How would you undertake the research? Research for the paper is discouraged. This is an analytic exercise. But at the end, you should have an analytic framework and a research "design." This paper is due December 12th. Again, both a hard copy and an e-mail attachment are required.

    3. A final exam. The final exam is intended to help students synthesize the material and review the readings. The exam will be in December, with specific dates to be announced later.

Option 2: This option is aimed at students who have a specific topic they are interested in developing or have another reason to want to do a longer research paper.

    1. One research essay. This essay should emerge from the themes of the class, but is to be determined by the student. Proposed topics must be submitted in writing by the end of class on September 28th. An analytic statement of the problem must be submitted by October 12th. A research outline is due by November 14th. The paper is due in December, with a specific date to be announced later. The proposal, the outline, and the paper must be submitted both as hard copy and by e-mail attachment. The e-mail attachment should go to myself and to Genevieve Taylor in Microsoft Word format.
    2. A final exam.

Auditors: Auditors must do three think pieces. The first think piece is due by the end of class on September 28th. The second must be completed by October 31th. The third must be completed by November 21st. Note: the think pieces must be submitted before the relevant class or they will not count toward the assignment. Auditors taking the comparative politics exam must complete two of the think pieces before their exam. The think pieces must be turned in both as hard copy to my office at BRIE and by e-mail attachment in Microsoft Word format by 9 AM the day they are due.

The student must decide by September 28th which option he or she prefers. Your choice must be submitted to my office in writing or by e-mail. If you do not make an active decision, the default assignment is Option 1. A change of options is possible later, but requires a proposal submitted by e-mail and the instructor’s consent.

"Registering": All students auditing or taking the class for credit should have an e-mail address. Please send a single note "registering" for the class both to me and to my assistant, Genevieve Taylor. Her email address is genktay@uclink.berkeley.edu. Auditors must also "register" by email. The registration note should include: department, year, major, intellectual and research interests, topic of your favorite research paper, undergraduate college and major, and anything else you think would be helpful in beginning to know about you.

Assignments: Note that the assignments after week four are subject to revision.

*Reader: All materials, except those noted, will be included in the reader. The reader is available for sale at Copy Central, 2560 Bancroft Way (and Telegraph). (510) 848-8649.

*Library: All recommended materials will be put on reserve at the library.

*Books: Because of the enormous flexibility of the on-line book companies, I have put only a few books on order at the ASUC bookstore. Anything you want you can get from www.amazon.com, www.barnesandnoble.com, www.books.com, etc. Nonetheless, the following books have been ordered at the ASUC bookstore:

Some may find these volumes useful to own:

Recommended Purchase:

Note: Only one article is assigned from this volume and it is expensive. But it is useful to own.

Note: This is in paperback and is useful, but not necessary to own.

PS201B Reading Assignments

Please note that reading assignments are subject to revision after the fourth week of classes. In addition, some classes have been, or may need to be, rescheduled.

 

Part I – Introduction

Weeks I & II – August 29 & September 5. Developments and Debates

 

Will the advanced countries shape technology and global market forces, or conversely, be reshaped or shattered by them? Several buried sets of assumptions underlie many theoretical and policy arguments. One debate is about the relation of the market and politics: Is the market a political creation that in turn shapes politics? Or is the market a naturally occurring phenomenon? A second is the question of whether the several national states remain powerful actors in these adaptations or are simply political icons stripped of power. A third—and related—discussion is about the political strategies available to each country to shape outcomes. The fourth issue is whether the present transformation of the economy in fact will be accompanied by a significant change in the politics of the advanced countries.

Some Debates

    1. Markets: Institutional Construction or Natural Phenomena

Can we reason out the logic of the choices of governments and groups within nations from the structure of the political/economic situation in which they find themselves? How do the frames of reference evolve? Gerschenkron sets up a logic of the 19th century; can we create one of the 20th century? That requires that you can spell out clearly both Gerschenkron’s argument and the underlying logic.

    1. The State is Dead, Long Live the State: Views on Globalization

What capacities does the state retain to shape the course of economic and social development?

    1. A Second Transformation?

 

 

Part II - National Models: Three Logics and Explanations

Week III – September 12 Institutions: Effects and Constraints

What, if anything, sustains national variations in policy and politics? The next weeks introduce a series of starting points for an answer. We will be looking continuously at the interplay of institutions, social groups, and the situations in which they find themselves. Note that there have been a series of characterizations of national models that became conventional wisdom and then faded. How might we replace them?

For a summary of Alexis de Tocqueville "The Old Regime and the French Revolution," see pp.48-54.

Will be discussed in class:

 

Those taking the Fall 2002 Comparative Politics field exam should also read the following (recommended for other students).

 

Week IV – September 19 Who Are the Actors and What Shapes Their Behavior?

The underlying question in the reading the next two weeks is how political groups come to be formed and define their interests. How do we proceed analytically to identify them and understand their interests? What different answers do the authors provide to this question?

Those taking the Comparative Exam should also read:

 

Week V – September 26 What Will Be the Lines of Division: Class, Coalitions, and Groups

Two questions concern us this week. First, how do interests coalesce into groups, coalitions, and politics? We cannot understand the formation of political groups, their objectives or their success as a simple extension of a national production profile or a simple elaboration of economic interests. Second, what are the essential cleavages in society? Note that Barrington Moore organizes his analysis around the commercialization of agriculture. Luebbert and Ruth Collier organize their discussion around the entry of labor into politics. Are there any parallel economic phenomena that will organize contemporary politics?

Those taking the Comparative Exam should also read:

 

Paper I. Write a 10 page essay considering the alternative lines of explanation and argument developed here. There is a range of issues that might be considered. The formulation of the paper is part of the task. Here are a few suggestions of issues: What difference does the choice of framework make for the conclusions we might reach? What are the limits of each of the several frameworks? That is, what questions can a framework explain and what issues are outside its optic? Does the analytic frame constrain the questions you can ask? Where would you start to analyze your favorite question?

 

Part III - Cases and Developments

Weeks VI & VII – October 3 & 10. Where the State Mattered or Did it?

  1. Japan: The State and Economic Competitiveness

Although assigned different labels by several scholars, there is a category of advanced countries in which the state mattered to the pattern of development. The accounts vary, emphasizing different variables. The labels run from strong states (Katzenstein and others) to state-led growth (Zysman and others) to coordinated markets with the state as coordinator (Soskice). A critical question in these several accounts is, "what happens to interests and social groups in both politics and policy making?" We look here at several such stories, i.e. cases.

As you consider these cases recall that the Japanese and Asian cases were for years the model of how an effective bureaucracy led by a coherent political coalition could solve the problem of distribution and allocate resources to growth. Then, in a flash, the same cases became evidence of the inability of governments to sustain development in increasingly complex economies. Now, with equal rapidity the Asian’s are back in fashion. Our theories must not be driven by the latest news story. Can we accommodate the growth years and crisis years in the same story? What really was going on?

1. The Developmental Story

2. The New Crisis

  1. France: The State and the Politics of Economic Modernization

    1. The Developmental Story.

  1. 2. The Emerging Adaptation

Recommended -- May appear on the Exam: Asia

 

Week VIII – October 17 Reregulation, Deregulation, and Corporate Governance:

Is the State Deconstructed or Reformed; Is Corporate Reform a Political Issue?

The term "deregulation" hides the fact that the state has been less pushed back than altered in its functions. Indeed many issues of control have been re-fought in the guise of corporate governance. Indeed, the questions of national political economy are increasingly being phrased in terms of corporate governance. We need to understand both discussions.

To break through the ideological debate, the deregulation story must be reframed as the transition from one market structure to another. There have been clear successes; the French financial market reorganization in the 1980s, and clear catastrophes, the Japanese financial market debacle and the California energy market experiment. When do these deregulations succeed and when do they fail?

The American domination of the governance debate in the past decade hinged on the notion that there was a "better" way of managing firms, markets, and markets for firms. With the present debacle how do we rethink the varieties of governance debate. How do we resituated the evolution of the past decade.

Regulation:

Corporate Governance:

Week IX – October 24 The Neo-liberal Cases: Britain and the United States

1. The British Case

2. The American Case

 

Part IV – Redefining the Lines of Politics in A Global Era.

Until now we have looked at cases of state led growth or markets with a heavy dose of state coordination, depending on your vocabulary and perspective. In the remaining weeks we need to consider the liberal economies and the corporatist or coordinated political economies. To do so, we look at the issues of regulation and welfare. The two are tied together, since they amount to the redefinition of rules for the markets for goods and labor. In some sense a set of rules grew up, a role for the state, beginning in the depression and reformed in the postwar settlement. In some views they need to be repealed, in other views, they need to be recast.

The search for political strategy by left and right, in a global era is common to the two stories and the several cases. Hence for the next two weeks please review the following:

And read:

 

 

Week X – October 31 Social Democracy in a Global Era: Welfare and Labor as

Defining Features of Politics

The debate over welfare politics has become a central theme in the political debates and economic strategies of advanced industrial countries. Are there real issues or has the Left lost visionary focus while the Right tries to roll back earlier advances?

1. Welfare

 

2. Labor

 

Week XI – November 7 National Cases: Germany and Sweden

1. The German Case

2. The Swedish Case

Week XII – November 14 Production, Politics, and the Internet Revolution: Are we at the beginning of the second enclosures?

There are two ways of treating this material. The more conservative starts with the observation that several times in the past several decades radical changes in the organization of production have shaken the competitive position of industries in the advanced countries. Each time there was a paradigm shift in the social organization of factories and markets. Each time there were significant international repercussions. We hear talk of an internet economy, of radical reorganizations in production. Are those assertions real? The .com phenomena should be seen as part of an ongoing transformation of the economy.

How, then, do we understand the associated political story? We begin by proposing that each production revolution must be seen as a product of a particular national political economy. The success of each nationally rooted innovation then forced change on its peers by example and by market pressure. What dynamic generated the innovations? We ask as well whether recent trends in inequality are a product of technology, trade, or politics?

The more radical approach states boldly that the present reconfiguration of rules for market and society will prove to be of the significance and scale of the enclosures. Issues, such as privacy and freedom of communication, will all be refought and redefined. In this vantage, the emerging network economy is not the historical equivalent of telegraph or telephone, which altered patterns of business and social communications; nor is it the equivalent of radio and television which generated national mass media; but rather more and other. Will nationally distinct approaches be possible?

At this point, please review the following:

    1. The Network Economy and Network Politics
    1. Revolutions in Production
    1. Some political implications:

 

Weeks XIII & XIV – November 21 and December 5 Global Regions, Nations, and Sub-National Politics

Happy Thanksgiving!

National stories must be embedded in a regional context. For example, the strategic fragmentation of Asia contributes to the political foundations for national development policies. Independent militaries require broad technological autonomy. Here we focus on Europe. The strategic logic here works differently. There are sets of connected questions. What drives EU Evolution? How are economic interests tied into the problem of governance? How are European choices related to national politics and policy? How will the proposed enlargement affect policy and governance?

1. Interests and Governance in the EU: The Single Market Program

    1. Enlargement

Those interested in Eastern Europe and EU expansion might also wish to examine:

3. Geo-Politics, Geo-Economics, and EU evolution

 

 

Week XV – December 12 Strategies for Research Design: The Right Way is the Easy Way

Paper III. Choose an analytic problem in this section. Make an effort to set the problem up so that you could contribute substantively to the intellectual debate. For example, what national variation will remain in the face of global forces? Will domestic developments shape the response to international market developments?

 

Recommended readings, by week:

Weeks I & II

Highly Recommended:

113-124.

Week III

Highly Recommended:

Or Hall Chapters 1 & 10 in The Politics of State Intervention in Britain and France.

Week IV

Highly Recommended:

Week V

Highly Recommended:

Recommended:

Weeks VI & VII

Highly Recommended:

Week VIII

Highly Recommended:

Note: Also available at: http://neweconomyindex.org/

Note: Also available at: http://www.ecommerce.gov

Note: Also available at: http://www.esa.doc.gov/de2000.pdf

Recommended:

Note: These readings are all available at Main.

Weeks IX & X

Highly Recommended:

Week XIII

Highly Recommended: