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31 Cards in this Set
- Front
- Back
Tensions between State and Market
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State
- society -collective good -power -public choice and state dec. Market -individual -self interest -money and stuff -invisible hand |
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Normative Theory
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describes or makes argument about how things should be
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Positive Theory
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theories about how things really are
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Three Theoretical Approaches
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Liberalism
Marxism Mercantilism |
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Liberal Approach
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free-trade
minimum state involvement individual self interest invisible hand to greater good |
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Mercantilist
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State interests
Power protects people Wealth is link to power Realist- conflicts from states |
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Marxism
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-class determines pol. change
-ranking and international divisions of labor -International relations come from Lenin |
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Classical Liberalism
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-limited state
-form money, protect interests -private charities -social problems b/c of gov. |
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Adam Smith
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(1723-1790)
-humans are rational -positive sum game -invisible hand guarantees gain -small state |
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Problems with Liberalism
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Collective Action Problem
Free-Rider Problem |
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Why does protectionism still exist?
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1. Domestic Political Pressure
2. National Security 3. Collective Action Problem 4. Misperceptions About Free Trade |
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International View of Mercantilism
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1. State is unitary actor
2. International system is in a state of anarchy 3. Relations between states are driven by power 4. Peace is maintained by balance of power |
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Marxism
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1. Classes are unit of analysis
2. State reflects the ruling class 3. Economics determines poltiics |
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Dialectic process
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interactions of independent variables create a thesis then an antithesis then sythesis to thesis
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Forms of History According to Marx
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1. Primative Communism
2. Slavery 3. Feudalism 4. Capitalism 5. Socialism 6. Communism |
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Falling Rate of Profit
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invest in technology to save labor which will lead to unemployment and cause there to be less money to spend, thus there will be a lower profit
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Law of Disproportionality
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anarchic competition created a boom and bust. There will be overproduction and underconsumption which leads to social instability
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Law of Concentration
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Capitalism produces inequality and competition leads to low wages and monopolies
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Tariffs
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protect their own country's interests and are easiest to raise or lower
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Import Quota
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only import certain amount of product. Domestic more appealing
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Export Quota
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only export a certain amount
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Subsidies
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US and European agriculture is supported even though there is no comparative advantage
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Currency Devaluations
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really cheap to produce goods and export them. Importts are too expensive. Trade issue with China because they are keeping their money down
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Nontariff barriers
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Difficult for imported goods to be marketed
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Dumping
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Lower cost of export while keeping it cheap in country. You are keeping a monopoly inside the country and then after monopoly is established, you raise prices
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GATT
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Genearl Agreement of Tariffs and Treaties
-to stop nations from using protectionist and stop chances of war -IMF and World Bank were formed to help GATT |
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IMF
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-formed by GATT
-lends money to countries in the form of SHORT TERM LOANS |
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World Bank
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Int'l Bank for Reconstruction and Development
-LONG TERM LOANS used to redevelop -put money in to get money out -establish comparative advantages |
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Major Principles of GATT
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1. Reliance on Tariffs
2. Reciprocity 3. Most Favored Nation Status |
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WTO
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-successor to GATT
-created in 1995 -administers trade agreements -forum for negotiation and resolution -research on national trade policies -assist developming countries |
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David Ricardo
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1.Comparative Advantage
-everybody benefits from finding their skills 2.Promotes Efficiency -more total world output with less world effort 3.Promotes International Peace -less incentive to engage in conflict |