Global Economy, Global Justice: Theoretical and Policy Alternatives to Neoliberalism

294 Pages·2000·1.08 MB·English

by  George DeMartino

Global Economy, Global Justice

Global Economy, Global Justice explores the vital question: “What makes for a
good economic outcome?” It rejects the normative commitment of neoclassical
economic theory to welfarism, and its resulting claim that the global, market-
based economy emerging at present represents the highest possible stage of
economic development. In place of global neoliberalism the book calls for
policies that promote global equality. The author demonstrates that
neoclassical economics embraces a range of objectionable assumptions about
human nature, society, and science, the exposure of which destroys the ethical
foundations of global neoliberalism.
Global Economy, Global Justice explores ethically viable alternatives to
welfarism. Drawing on the work of Amartya Sen, it proposes the egalitarian
principle of the “global harmonization of capabilities” to guide economics. This
principle provides a basis for resisting oppression while respecting cultural
diversity. It is put to work to adjudicate contemporary debates about global
policy regimes, and the book ends with a set of deeply egalitarian global
policies for the year 2025.
George DeMartino is an Associate Professor at the Graduate School of
International Studies, University of Denver.
Contemporary political economy series
Edited by Jonathan Michie
Birkbeck College, University of London, UK
This series presents a fresh, broad perspective on the key issues in the modern
world economy, drawing in perspectives from management and business,
politics and sociology, economic history and law.
Written in a lively and accessible style, it will present focused and
comprehensive introductions to key topics, demonstrating the relevance of
political economy to the major debates in economics and to an understanding
of the contemporary world.
Global Instability
The political economy of world economic governance
edited by Jonathan Michie and John Grieve Smith
Reconstructing Political Economy
The great divide in economic thought
William K.Tabb
The Political Economy of Competitiveness
Employment, public policy and corporate performance
Michael Kitson and Jonathan Michie
Global Economy,
Global Justice
Theoretical objections and policy
alternatives to neoliberalism

George DeMartino

London and New York
First published 2000 by Routledge
11 New Fetter Lane, London EC4P 4EE

Simultaneously published in the USA and Canada by Routledge
29 West 35th Street, New York, NY 10001

Routledge is an imprint of the Taylor & Francis Group

This edition published in the Taylor & Francis e-Library, 2003.

© 2000 George F.DeMartino
All rights reserved. No part of this book may be reprinted or
reproduced or utilised in any form or by any electronic, mechanical
or other means, now known or hereafter invented, including
photocopying and recording, or in any information storage or
retrieval system, without permission in writing from the publishers.

British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library

Library of Congress Cataloguing in Publication Data
CIP data have been applied for

ISBN 0-203-01316-6 Master e-book ISBN

ISBN 0-203-20860-9 (Adobe eReader Format)
ISBN 0-415-12427-1 (hbk)
ISBN 0-415-22401-2 (pbk)
For Ilene

Contents

List of tables viii
List of figures viii
Preface ix
Acknowledgements xiii
Introduction 1
PART 1
Normative matters 27
1 Neoclassical theory and welfarism 35
2 Welfarism and the market 53
3 Distributive justice and economic heterodoxy 91
PART 2
Global neoliberalism 125
4 Whose values, whose rules? 128
5 Contesting competitiveness 152
6 The trade debate 190
PART 3
Rethinking global policy regimes 217
7 Global economic policies for the year 2025 218
Notes 245
Bibliography 259
Index 271
vii
Tables

1 Summary of policy prescriptions 25
5.1 Attributes of industrial policy 160
5.2 Industrial versus competitive policy 169
6.1 Sources of comparative advantage 199
6.2 Origins of differences in standards 203
7.1 SITS performance and tariff bands 224

Figures

2.1 Market demand and supply 58
2.2 MSB and MSC 61
2.3 Price ceiling and price floor 63
2.4 The marginal revenue product of labor and the demand
curve for labor 65
2.5 The labor market: before and after the introduction of a
minimum wage 87
viii
Preface

Before reading this book I ask the reader to indulge me in a simple exercise. In
your mind or even on a piece of paper, please conclude the following
statement: “A good economic policy measure or outcome is one that…”. In
providing your conclusion, I ask that you consider the criterion (or set of
criteria) that you think ought to be brought to bear when assessing economic
policies and the economic outcomes they generate. What purposes should
economic policy serve, and/or what outcomes should it promote? Do not be
deterred if you have not formally studied economics or have not thought about
this question before. I am sure that you already have at least tentative views
about this matter. What are they?
Now please conclude a second statement: “When economists claim that an
economic policy or outcome is good, they mean that it…”. You may know that
most economists support free trade. You may also know that these same
economists also support the market economy over government planning
regimes. But what I’m asking you to write down is the criterion or set of
criteria they use in reaching these conclusions. Why do these economists
support free trade and the market economy over alternative arrangements?
What kinds of outcomes do they hope these policies and institutions will
generate?
One final statement: “A good theory is one that…”. In concluding this
statement, consider what a good theory is to do, what features it should have,
and/or what form it should take. All our lives each of us has had to make
choices between contending theories. I’m asking you to reflect for a moment
on the criterion of theory choice that you bring to bear (or think should be
brought to bear) when confronting alternative theories.
This book is intended in part to speak to the questions raised here. My
suspicion is that most people know far more about which policies and outcomes
economists support than just why they hold these views. I further suspect that
most people (especially students of economics) know far more about the basic
principles of the theory that these economists employ—called “neoclassical
theory”—than they do about just why this theory is taken to be more
appropriate than the many alternative economic theories. And there are good
reasons for this unevenness in economic literacy. While economists spend a
good bit of time adjudicating among policy options, they rarely discuss openly
ix