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Assessment: Term Paper
Question One.
It has long been observed that an irregularly repeating sequence of technological advances and R&D lie at the core of capitalism and many major powers throughout history have sought to monopolise this process. While major powers have often managed to get their hands on the levers of this process, these world powers never succeed in keeping their hands on these levers for long. Schumpeter (1942) coined the term creative-destruction to capture the essence of this process of technological progress. Schumpeterian creative-destruction appears to drive long-run national growth, economic fluctuations, and largely limit the strategies that firms can deem feasible.
At the level of individual organisations, thereappear to exist forces that continually incentivise the taking of risk and making of complex decisions to reorganise the organisations markets and contracts, often for operational reasons and less frequently, for strategic reasons. Whether those decisions are successful or not depends partly on managerial talent and partly on sound institutions to provide a safe scaffolding for the change to materialise. Failure along the institutional dimension appears to create negative macroeconomic consequences if it interferes in creative-destruction. While some limits are inherent to the sheer complexity of such decisions, others have their genesis in ill-conceived economic and organisational ideas or seeking to achieve desirable human goals, such as basic human rights to life, liberty, human capital and private property. (See Caballero, 2008).
Anglo-Saxon economies appear to be the best organised among others to incentivise the taking of risks inherent in entrepreneurial activity. While innovation and breakthrough creativity appear most often in these liberal and democratic nations, these economies also experience disastrous financial cycles of booms and recessions but also recur in puzzling cycles.
China, with limited political freedom and continued growth claims it has found a better balance between innovation and growth without theses crashes than liberal societies that have high political freedom and slowing growth, although these are already highly developed. A socialist approach is necessary, says China, to restrict markets to transactions that are morally acceptable to society and political power should decide where markets should operate, or else markets will corrode theverything it promises to provide.
Liberal economies claim that lack of freedom and political restrictions mean that citizens will refrain from risking creativity unless authorised by the state. While states start out wise, they tend to become more corrupt than liberal markets and, more importantly, have historically been unable to see the next technological breakthrough that disrupts the world.
Required:
In the light of these competing claims, supporting either the liberal approach or the socialist approach (but not both) to managing national economic affairs, discuss the role of financial markets in delivering an affordable and good quality of life for people, while limiting the likelihood of financial crises and the inevitable consequences that people end up bearing.
Readings Starting Points
Caballero, R. J., 2008, The New Palgrave Dictionary of Economics, 2nd Ed., Eds. S. N. Durlauf and L. E. Blume.
Inside Job: Watch the Hollywood movie.
Levine, N. (2023), A Clash of Worldviews: The United State and China have reached an Ideological Impasse. Foreign Affairs August 2023,
Mazzucato, M., 2015, The Innovative State: Governments Should Make Markets Not Just Fix Them, Foreign Affairs Jan/Feb 2015 Vol. 94, No. 1.
Milanovic, B., 2020, The Clash of Capitalisms: The Real Fight for the Global
Economy’s Future, Foreign Affairs Jan/Feb 2020 Vol. 99,No. 1.
Milgrom, P. and J. Roberts (1992), Economics, Organisations and Management, Pearson-Prentice Hall: New Jersey. Chs. 13, 15.
Schumpeter,J., 1942, Capitalism, Socialism, and Democracy. New York: Harper & Bros.
Sandel, M., 2009, What Money Can’t Buy.
Sandel at Oxford Union https://www.youtube.com/watch?v=zMg9Gjz8PKs
Scott, J., 1997, Corporate Business and Capitalist Classes - Read Ch. 6 for China.
Question TWO.
There is no doubt that living standards have risen sharply for billions of people in the last 200 years since the advent of the industrial revolution and the spread of capitalist market economies, as compared to the poverty, violence and oppression experienced by almost all humans in the previous 2,000 years, bar the ruling elites. Markets are the solution not the problem and what we want is a market society, not merely a market economy.
However, we also see that inequality in market economies has risen sharply around the world, as confirmed by rising Gini-coefficients. Furthermore, we that increasingly
i) the global economy is becoming fragile for the have-nots and those in poverty,
ii) the financial markets are more susceptible to crashes even for those that have secure employment and safe futures due to high levels of inflation,
iii) wars are being fought with unimaginable collateral damage falling on ordinary people caught in the cross-hairs of a powerful military-industrial complex,
iv) migration appears the only avenue and, for many in marginal and oppressed
societies,a final last-ditch do-or-die attempt, creating fear and loathing in the developed world for the new “migrants”, all the while forgetting that many in the developed world are but themselves the children of earlier migrants.
Surprisingly the rising inequality can be seen in nations like the USA and UK with democratic politics and market capitalism as well as in nations, like China and Russia with state-controlled politics and market capitalism. Capitalism appears to have triumphed everywhere. Nevertheless, the world appears to becoming full circle, back to the protectionism-economics and ultra-right nationalisms of Germany and Japan ofthe early 20th century, an unprecedented period in human history that saw two world wars with more than 100 million dead.
If this recent trend of rising inequality continues, the world will be ruled by a private members club of plutocrats: membership of the club requires a net worth of ￡1 billion. The rest will have no basic human rights and will be employees who can be bought as wage slaves. However, as Elon Musk said in an interview with the UK Prime Minister, Rishi Sunak, the planet will shortly reach a stage where noone has to work, if they do not want, work will be optional because artificial intelligence and robots will do all the work. Provided technology is allowed to perform. its function, all of humanity can enjoy a good quality life, irrespective of where they chose to live.
These perspectives are the looming future reality and not merely a dystopian and unlikely future.
Required:
In the light of these competing claims, discuss whether we are destined to forever repeat the mistakes of the last 800 years of financial crashes, irrespective of ideology, merely that we can look forward to crashing with better technology, while people bear the same consequences in each crash, or might there be workable solutions to the predicament humanity appears to have found itself in at the end of the first quarter of the 21st century?
Readings Starting Points
Banerjee, A., and Duflo, E., 2020, How Poverty Ends: The Many Paths to Progress –
and Why They Might Not Continue, Foreign Affairs Jan/Feb 2020 Vol. 99,No. 1. Hunger Games: Watch the Hollywood movie.
Milanovic, B., 2020, The Clash of Capitalisms: The Real Fight for the Global
Economy’s Future, Foreign Affairs Jan/Feb 2020 Vol. 99,No. 1.
Milanovic, B., 2023, The Great Convergence: Global Equality and its Discontents, Foreign Affairs July/August 2023 Vol. 102, No 4.
Rajan, R. and Zingales, L., 2000, The Great Reversals: The Politics of Financial
Development in the 21st Century, OECD Economics Department: Working Paper 265.
Sandel, M., 2009, What Money Can’t Buy.
Sandel at Oxford Unionhttps://www.youtube.com/watch?v=zMg9Gjz8PKs Stiglitz, J. E., T. N., Tucker, and G. Zucman, 2020, The Starving State: Why
Capitalism’s Salvation Depends on Taxation, Foreign Affairs Jan/Feb 2020 Vol. 99, No. 1.
IMPORTANT
Pay attention to the need for a sound, justified, valid argument.
No sitting on the fence (do not give me, on the one hand …. on the other hand), and please ensure you make a clear, explicit decision as to which side of the fence you have chosen to sit, supported by good argument for your choice of position.
Ensure you include counter arguments undermining potential arguments that oppose your own while supplying evidence to support your own.
See the marking rubric below and be well briefed on how the marks are distributed.
Format and Styling
Your report must not exceed the stated word limit (excluding title page, references, bibliography and appendices) and should be word processed, double spaced, contain margins of at least 2 cm. all round, with page numbers at the lower right, and employ regular Times Roman font of 12-point size. You may use bold, underline or italics Time Roman font for emphasis but sparingly.
Ensure that you provide complete references for articles, books and other sources that you have cited in the body of your essay and exclude any you have not directly referenced in the essay (body includes footnotes). The Harvard referencing system is preferable although any other conventional system is acceptable too, provided you are consistent.
- 经济Economics
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- 艺术art
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