Conference Report Vojislav Babic PhD, Faculty of Economics Belgrade

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CONFERENCE REPORTMarkets as Networks

“Markets as Networks” – the RC02 con erence in Sofa (25-26 September 2009)critically reviewed the major conceptual tools that economic sociology has proposedin order to understand the orms o interplay between markets and network struc-tures. It also discussed various empirical fndings o this interplay. Two plenary andfve workshop sessions put in touch more than 30 researchers rom Europe, North andSouth America. ( e con erence presentations are posted on the con erence website,see at http://www.netmark.bsa-bg.org). Due to the generous support provided by theFaculty o Philosophy at Sofa University “St. Kliment Ohridski” and ISA, especially

A LETTER FROM THE EDITOR

Colleagues,

Two months ago, our Research Committee held an interim con erence entitledMarkets as Networks at Sofa University (St. Kliment Ohridski). Two o the orga-nizers o this con erence, Tanya Chavdarova and Svetla Stoeva, have been entrust-

ed with the di cult task o distilling the two days into a report summarizing someo the conclusions and debates that animated the con erence. Here you may fndthe ruit o their labor, as well as in ormation on where to access the presentationmaterial.

In this same research tradition, Dennis McNamara has recently published a book on knowledge and in ormation networks in Asia that is likely to be o interestto our members. He generously accepted my request to summarize some o hisbook’s principal fndings or our newsletter.

is issue also marks the passing on June 18th o one o our most in uentialmembers, Giovanni Arrighi. Chris Chase-Dunn contributes a critical survey o some o Arrighi’s intellectual accomplishments. Drawing on world-systems theory, Farshad Araghi introduces the concept o “longKeynesianism” to provide new insights into interpreting the fnancial crisis andour near uture. And Miguel Ángel Vite Pérez has kindly contributed a short ar-ticle exploring the political and economic consequences in Mexico o the NationalAction Party gaining the presidency almost a decade ago.

I hope this issue provides you with new ideas or your own work.

Aaron Pitluck Illinois State University [email protected]

IN THIS ISSUE p1 Markets as Networks

Con erence Report

p1 Economy, Society andGiovanni Arrighi

p5 Business Innovation in Asia

p5 Globalization and Inequalities p8 In the Long Run, Keynesianism Is Dead

p10 e Limits o MexicanElectoral Democracy

p12 Call or Papers: WSF Awardo Excellence Program

Economy, Society andGiovanni Arrighi

Giovanni Arrighi is an historical soci-ologist and one o the originators o theworld-systems perspective (along withImmanuel Wallerstein, Samir Amin Ter-ence Hopkins and Andre Gunder Frank).HisGeometry of Imperialismis yet one o the very best dissections o modern eco-nomic and political-military power, andhis e Long Twentieth Century , which is

really about the last 600 years, is the bestoverall analysis o the modern Europe-centered world-system. Arrighi wastrained in both economics and sociology.He joined Terence Hopkins and Imman-uel Wallerstein at the Fernand BraudelCenter at Binghamton University in thelate 1970s (see Rei er 2009). Arrighi’sLong Twentieth Century (LTC) employeda Braudelian conceptualization o capi-talism as a layered system composed o material li e at the roots, a middle sectoro inter amilial and intervillage exchange

continued on page 2 continued on page 7

November 2009



page 2cont’d from page 1: Markets asNetworks or accommodation grants

or young participants, about hal o thepresenters were young researchers.

e con erence opened with a keynotespeech by Olivier Godechot (CNRS,Paris) entitled:What Do Heads of DealingRoom Do? e Social Capital of InternalEntrepreneurs. Stemming rom the results

o his research on compensation in the f-nancial industry, O. Godechot developedthe idea that the concept o the boundar-ies o the frm, that have already beenshaken by human capital’s greater impact,are going to be urther undermined by the rising power o social capital in thefnancial industry, which lies even urtheroutside o shareholders’ control.

is idea is tested on the example o the heads o dealing rooms who ac-

cumulate social capital by subdividing,recombining and moving work, establish-ing ull control over the division o labor.

us they become internal entrepreneurswho get control over a substantial part o the frms’ productive assets. Since they can move such assets to another frm enmasse, they become their practical owner.In order to do this, heads o rooms mustbe linked directly or indirectly to mostmembers o the group. is supportsColeman’s (1988) cohesion argument.However, they also must be the only per-sons capable o doing so, which provideson the other hand support to the struc-tural holes arguments o Burt (1992).Godechot convincingly showed that acomplex equilibrium between cohesionand structural holes orms o social capi-tal is needed in order to transgress thefrm’s boundaries.

e session on the networks’ role in(re)shaping market exchange showedthe great diversity o intertwining o networks into markets. Vadim Radaev

and Zoya Kotelnikova (State University – Higher School o Economics, Moscow)discussed empirical evidence collected

rom 500 managers in fve cities o Rus-sia. V. Radaev ocused on the idea thatincreasing market pressures (higher levelo competition and stronger bargain-ing power o exchange partners) do notcontaminate social ties as it is prescribed

by the ‘Hostile-Worlds’ approach. Onthe contrary, they stimulate ormationo social ties. On the bases o elaboratedtaxonomy o social ties he showed thatregular monitoring o competitors’ ac-tions is conducted by a vast majority o market sellers while social ties embeddedin network structures and institutionalarrangements are established by less thana hal o the frms.

In her presentation Zoya Kotelnikova

aimed at exploring the patterns o marketexchange between retailers and suppli-ers in Russia. She studied how competi-tion, power relations and institutional

orces in uence the continuity o theirrelationships. According to her fndings,the most widespread pattern o interor-ganizational ties is a hybrid model whichis closer to relationship-orientation andimply medium- and long-term rela-tions, multiple-sourcing and in requentswitching. By carrying out three casestudies in the Buenos Aires WholesaleMarket, María Laura Viteri (NationalInstitute o Agricultural Technology o Argentina, co-authorship with AlbertoArce) addressed the issue o quality o

resh ruits and vegetables and the di er-ent meanings and negotiations aroundit. ey defned quality as a negotiatedsocial interaction which leads to innova-tive orms o ood distribution. e socialinteraction o o -the-books sel -em-ployed young Bulgarians was at the coreo the presentation by Tanya Chavdarova(Sofa University). Her research provided

evidence in avor o the hypothesis thatin ormal sel -employment has gainedsocial legitimacy and could make use o anonymous exchange in the same way that o cial activities do. It was specifedthrough her fndings that strong ties aremore important in the initial phase o setting up the business while weak tiesare more important or in ormal business

expansion.In the session on networking in job

searching, recruiting and status attain-ment our papers added to knowledgeand understanding o the above men-tioned issues in rather di erent ways.Martina Rebien (Institute or Employ-ment Research, Nuremberg) discusseddata rom the annual representativeGerman Job Vacancy Survey ocusingon sta ng via social networks as de-

pendent upon in ormation about: frmsstructure and characteristics, vacancy characteristics and engaged person. Herresults show a tendency that networksare used by smaller frms and in di culteconomic situations, and they really helpto reduce search costs; the positions flled via networks are more likely to be stableones either in a very high labor markedsegment or in a very low one, where theworking conditions are especially di -cult. ose results also certi y a negativeconnection between frms’ use o net-work contacts and the wages and prestigeo the position.

Stoyan Novakov (Sofa University)presented results rom a survey on thelabor market positioning o Bulgariansociology graduates as in uenced by their in ormal networks. He argued, asoutlined through the survey, networks o

amily, lecturers, colleagues and riendshave di erent unctions in the process olabor market positioning depending onwhether graduates began working whilestudying or they began working only

Godechot developed the idea that the boundaries o the frm

are going to be urther undermined by the rising power o

social capital in the fnancial industry



page 3a er their graduation.

Pieter-Paul Verhaeghe (University o Ghent, co-authorship with B. van dePutte) challenged the notion o socialcapital by, frst, theoretically discussingthe pros and contras to the argument that views social support as a orm o socialcapital. Second, he related the issue torepresentative research on attained holi-day jobs o frst year university studentsand added empirical evidence to hisunderstanding o social support as a ormo social capital.

Marc Hoeglinger (Kalaidos University o Applied Sciences, Zürich, co-author-ship with M. Abraham and J. Arpagaus)explored organizational and economicsociology’s central question about theimpact o embeddedness on economicaction and outcomes by looking at frms’procurement o external employee train-ing programs. He analyzed the e ecto organizations’ dyadic (direct ties toproviders) and structural (indirect ties vie third parties) embeddedness on theper ormance o its external training pro- viders and argued that these two kinds o embeddedness don’t act in isolation but

are interrelated; they both can behave assubstitutes and cancel their respective e -ects out. is hypothesis was empirically

verifed through results rom a survey o a representative random sample o Swissorganizations.

e last session on the frst day at-tempted to highlight the questionsconcerning economic dynamics, innova-tions and social networks. Vojislav Babic(University o Belgrade, co-authorshipwith Sinisa Zaric) discussed the causes o the 2007 economic crisis rom the pointo view o economic and social capitaltheory and argued that global economiccrises appear in periods where there arenoticeably low stocks o social capital. Onthe basis o empirical data, he showed thelong-term decrease o average participa-tion rates in in ormal organizations andsocial trust ollowed by deep economiccrises (Great Depression, economic crisisin the 70s and 80s o the previous cen-tury, etc.).

Daniela Wühr and Petra Schütt (Insti-tute or Social Science Research, Mu-

nich, co-authorship with Sabine P ei er)studied synergies and contradictionsin fve technical innovation processes.

ey concluded that markets are shapedby networks o collaboration which aredynamic and changing throughout theinnovation process.

By discussing the social construction o markets, Luisa Veloso (Centre or Re-search and Studies in Sociology, Lisbon)adopted a critical point o view o theconcept o the market and put orwardthe concept o economic feld, as pro-posed by P. Bourdieu. She presented thehistorical trajectory and strategy o a Por-

tuguese business group in the electrome-chanical industry and its R&D activitiesin particular, and clarifed her argumentswith the example o the relationshipbetween the economic and the scientifcfelds.

During the second day, the frst plenary session opened with the keynote speecho David Stark (Columbia University)entitled:“Political Holes in the Economy:Historical Network Analysis of Firm-PartyTies in Hungary“ (coauthorship withBalazs Vedres). D. Stark presented a study o the evolution o politicized businesspartnerships in the Hungarian economy.

e logic o the relationship betweenfrm-to-frm ties and frm-to-party tieswas captured by the implementation o historical network analysis reaching back

to 1987 and covering an entire epoch o economic and political trans ormation to2001. Following the research fndings, D.Stark argued that in the latter hal o the1990s, the Hungarian economy becamemore politicized. Outcomes o electionsled to increasing competition among par-ties or politically loyal frms.

D. Stark showed that frms with politi-cally balanced boards seized a broker-age opportunity to occupy the politicalholes in the economy opened up by thegrowing division between le and right.Stark concluded that the Hungarianeconomy is not an aberrant case: poli-

tics and business are entangled in every capitalist economy. us, the fndings o the Hungarian study suggest the need

or comparative research, constructingcomparable datasets on the structure o business-party alliances among di erenttypes o political economies.

e morning workshop session startedwith a presentation shi ing the subject onetworking rom the politicized busi-ness partnerships to the personal ties o immigrant entrepreneurs. Silvia Gómez-Mestres, Sarah Hoeksma and Jose LuisMolina (Autonomous University o Bar-celona) discussed the personal networkso Bulgarian entrepreneurs in two Cata-lans locations. rough the analysis o di erent cases o migrant entrepreneursin both localities the authors suggested



page 4that setting up a business implies the de-ployment o a heterogeneous network o contacts and personal relationships withmembers o the host society. e ocuson the role o social capital and network membership in transnational migratory processes switched then rom Spain toMoldova, Romania and Hungary.

e paper o Hanna Kónya (Corvi-nus University o Budapest) exploredthe oundation and development o theMoldavian Csángó elite. e authordeveloped the idea that migration net-works generate not only social capital buteconomic and cultural capita, as well. Assuch these networks are undamental orbecoming an elite member. e morn-ing session addressed a broader range o research topics, as well.

e last two presentations ocused ondi erent aspects o the ormation o net-

work structure and market culture. EfmFidrya (North-Eastern State University,Magadan) studied interorganizationalcompetitive strategies o frms within theMagadan retail sector. e strategies o vertical integration, interorganizationalcoordination, in ormal connections, anddevelopment o stable trusting relationsto clients were identifed as crucial orthe frms’ development. A di erent ocuspresented Tatiana Stoitchkova (South-West University, Blagoevgrad). She putthe question o how the market in u-ences the economic behavior o culturalorganizations. On the basis o a survey onthe Bulgarian literature feld, the authorargued that in times when most literatureand artistic markets are characterizedby uncertainty, networking appears as atool that can o er a sense o stability in a

changing pro essional environment andin art appraisal.

e a ernoon workshop session ad-dressed another aspect o networking:the regional dimensions o organizationaland personal networks, global produc-tion networks, as well as the role o civicsociety in the trans ormative processes o working organizations. Sabine Gensior(Brandenburg University o Technology,Cottbus) applied the theoretical conceptso “social embeddedness” and “socialnetwork” while examining how regionalnetwork structures are established andhow closely- linked regional value-addedchains generate endogenous stability. efndings o the research show that “socialembeddedness” o commercial activ-ity is a crucial actor or promoting theestablishment o regional networks. us,assumed the author, regional networking

may unction as a “springboard” or theacquisition o supra-regional markets.

A urther contribution to the dis-cussion o embeddedness came romMexico. Oscar Contreras (University o Sonora, Sonora) presented a case study o

the auto industry in Sonora. He exploredthe problem o how local assets, embed-ded in social networks, interact with theoperational needs o the assemblers andglobal suppliers in order to meet globalstandards and to promote the upgradingo local suppliers. e paper debated asituation where in the global automotiveindustry, structuring opportunities ornew, low-cost producing regions arises

rom the concentration o production inan ever smaller group o assembly andsupply transnational companies.

A di erent perspective on the problemo networking - disembeddedness rompersonal networks – has been developedGergo Papp (Corvinus University o Budapest). He highlighted the emergenceo credit markets as an important aspecto the transition to capitalism in an 18th-19th century Hungarian county. eauthor suggested that in the course o that transition in Hungary transactionsbecame disembedded rom personal net-works and the selection o partners wasbased on rational calculation rather thanon personal relations. e last contribu-tion to the session was made by VioletaVuckovic (Martin Luther University, Wit-tenberg). She presented a research design

or case studies o medium sized townsin Eastern Germany and Central Serbiaaiming at studying the interdependenciesbetween the trans ormation o post-

socialist economy and civic society.e con erence participants had the

opportunity to get closer together in thepleasant in ormal atmosphere o the wel-come reception organized by the Depart-ment o Sociology at Sofa University andduring the evening walks in Sofa.

Tanya Chavdarova andSvetla StoevaSofa University “St. Kliment Ohridski”[email protected]@sclg.uni-sofa.bg

Stark showed that frms with politically balancedboards seized a brokerage opportunity to occupy the

political holes in the economy opened up by the growingdivision between le t and right



page 5

Business Innovation in Asia*Japanese afliates in South Korea,China & Tailand

Michael Hobday pioneered the cross-border comparison o innovation in EastAsia in a path-breaking volume in 1995.An orderly ladder o Japanese technologytrans er in the region was giving way toa new technology competition. Mappingthe same landscape among productionnetworks today, I fnd in this volumethat Korea has kept pace, China is in hotpursuit, and Japan is still up ront.

We also fnd national competitivenesso both Japan and the emerging econo-mies overshadowed by two new develop-ments: regionalization, and the rise o the Chinese economy. e study looks atboth regional integration within global value chains and complementarity in na-tional innovation systems. I track knowl-edge ows among Japanese a liates inSouth Korea, China, and ailand. I look at manu acturing investment, includingsectors such as autos, electronics, andtextiles. Knowledge Societies.Regional produc-tion networks have already drawn wideattention among economists, as wellas regional political integration amongpolitical scientists. My own e ort draws

Globalization and InequalitiesComplexity and Contested Modernities

How has globalization changed social inequality? Why do Americans die youngerthan Europeans, despite larger incomes? Is there an alternative to neoliberalism? Whoare the champions o social democracy? Why are some countries more violent thanothers? In this book, I examine the many changing orms o social inequality and theirintersections at both country and global levels. I show how the contest between di er-ent modernities and conceptions o progress shape the present and uture. e book re-thinks the nature o economy, polity, civil society and violence. It places globaliza-tion and inequalities at the centre o a new understanding o modernity and progressand demonstrates the power o these theoretical re ormulations in practice, draw-ing on global data and in-depth analyses o the U.S. and E.U. e book analyses thetensions between the di erent orces that are shaping global utures. It examines theregulation and deregulation o employment and wel are; domestic and public genderregimes; secular and religious polities; path dependent trajectories and global politicalwaves; and global inequalities and human rights.

Table o Contents1. Introduction: Progress and modernities2. eorising multiple social systems3. Economies4. Polities5. Violence6. Civil societies7. Regimes o complex inequality 8. Varieties o modernity 9. Measuring progress10.Comparative paths through modernity: neoliberalism and social democracy 11. Contested utures12. Conclusions

Globalization and Inequalities: Complexity and Contested Modernities (Sage 2009)For more in ormation, contact Sylvia Walby, Lancaster University, [email protected]



page 6on both literatures, but with the goal o developing a sociology o regionalism.Knowledge societies, and specifcally innovation, provide a ocus. Technology in East Asia has roots in both local pathdependencies o industrialization, andregional cooperation in manu acturingcomponents and assembly.

Hobday tracked the rapid acquisitionand implementation o knowledge inJapan’s postwar growth, then among theAsian Dragons. More remarkable thanthe earlier acquisition o technology,however, is the recent shi among Asiannations rom a production to an “innova-tion network.” Western frms o -shoringservices and production have contributedgreatly to the shi . Techno-nationalismin Japan, however, has slowed theirembrace o “open innovation” and thetapping o local knowledge resources.

Japan now fnds itsel with extensivemanu acturing networks across East Asia,but without a deep tradition o coop-eration in knowledge creation. Westernfrms new to the region have made ex-tensive e orts to tap knowledge workers,but also to incorporate local management

to strengthen their ties with local state,labor, and markets. Western frms ap-pear ar better suited than their Japanesecompetitors to the new rontier o Asianinnovation networks. Cooperation doesnot result here in homogenization, or atechnological leveling, or simply “conver-gence” to a global standard. Priorities orcapacity-building among Japan’s partnersmust be matched with the rule o law and protection o property rights. isturns my attention to local systems o production both in Japan and among itsinvestment partners in Asia, to assess thedistinctiveness o technological exchangein each setting.

Innovation Systems.A review o Na-tional Innovation Systems sheds light onin rastructures in the social systems o production supporting basic and ap-plied research relevant or manu acture.

e relative contribution o knowledgenetworks to regional integration willrest largely on the choice o open versusbounded innovation systems. I examineboundaries within a society o sectors.

Diversity o innovation systems high-lighted diversity o social systems o production. Japanese networks, includingboth state and the private sector, haveworked over time to develop complemen-tarities in the political economies o hostnations.

Analysis o specifc sectors, whetherelectronics, autos, or textiles, brings tothe ore critical di erences in state policy on inward FDI and technology shar-ing, in the organization, independence,and activities o industry associations,and in the landscape o local corporatescale, ownership and activity. Historicalprecedents o “cooperative learning” ininter-frm networks o er a model o theinterplay o cra and concept.

Networks.I look closely to “knowl-edge networks,” i.e., interactive link-ages around nodes o tacit and codifedknowledge embedded in Global ValueChains. Firms within sectors help embedthe social practices critical or e ectiveeconomic coordination and create nodes.Firms such as Panasonic, Toyota, andToray rank as Japan’s leaders in consumerelectronics, autos, and textiles respective-ly. Itochu leads general trading compa-nies in abrics and ashion, and Densostands at the head o the line among autocomponent frms. Beyond manu acturingroutines on the plant oor, frms advancetheir technology levels with in-houseresearch units, industry associations,and sector-specifc technology regimessupported by the state. Manu acturingfrms lead worldwide in R&D unding.Panasonic and Toyota rank among Japan’sleaders in number o patents. Denso andToray are research leaders in their ownsectors among local and global competi-tors.

I discover that the electronics, autos,

and textile and apparel sectors advanced

Knowledge societies,and specifcally

innovation , provide a ocus.

along similar paths and with similar or-ganization in the three nations o North-east Asia. ailand has anchored invest-ment in all three industries, althoughwithout strong local competitors. Stateand state FDI policy remain the majordiscontinuity among the our nations,with some similarity between strongstates’ insulation in Japan and SouthKorea, but discontinuity with China’ssocialist state or with the relatively weak state in ailand’s history o industrial-ization. Knowledge networks come to the

ore at the intersection o frms, sectorsand states within global value chains.

Borders.I also fnd changing bordersamong sectors a ecting the anchoringo Japanese manu acturing in East Asia.Panasonic provides consumer electronics

or the automotive industry in China andailand, supplying Japanese assemblers.

Toray and Itochu supply automotive inte-riors to Japanese assemblers in the sametwo nations. ailand has rein orcedproduction anchors by the triple nestingo manu acturing in Japanese electronicsauto and textile industries. E orts o theJapanese state and peak industry associa-

tions to build complementarity in localindustry associations, trade policy, andproperty rights can yield benefts beyondthe interests o simply one sector.

Multiple major frms at the JapaneseChamber o Commerce and Industry inBangkok can mobilize a common indus-try voice on major issues o market andmanu acture. Korea provides the oil,with weak nesting o Japanese manu ac-turing in electronics and auto assembly,despite continuities in the interests o similarly structured industry associa-tions. China has succeeded in nestingextensive Japanese production in all threesectors recently, although Itochu andPanasonic put down roots much earlierthan Toyota and Toray.

Future.What does the uture hold orthe region? A shi rom o shore plantsto integrated knowledge networks wouldhelp secure Japan’s role, improve humanresources and advance technology in hostcountries, and strengthen regional inte-gration. South Korea aces a similar chal-lenge but without the breadth or depth o



page 7

...his analysis implies that a uture increase in politicalglobalisation based on hegemony would require a

hegemonic national state that is signifcantly largerthan the U.S.

Japanese networks at present. China may well be ready or the challenge as well asindustry moves abroad in the comingyears.

Dennis McNamaraGeorgetown University [email protected]

*Business Innovation in Asia – Knowledgeand Technology Networks from Japan (Routledge 2009), by Dennis McNamara.

cont’d from page 1: Economy, Society

and Giovanni Arrighi called “marketsociety,” and an upper layer in whichexible and evolving orms o fnance

capital and state power orm the com-manding heights. Arrighi’s model o themodern Europe-centered world-systemis constituted around a sequence o ourpartially-overlapping “systemic cycleso accumulation” in which the capital-ist and hegemonic commanding heightsexpand and assume deeper control overprotection, production and transactions.

Arrighi tells the story o the alliancebetween the fnanciers o Genoa and theexpansive Portuguese sea-borne empirein the f eenth century. en he tells thestory o the Dutch, British and U.S. “sys-temic cycles.” is is a more evolutionary approach than Immanuel Wallerstein’smodel o cycles and trends, and it ocusesmore on the exibility o fnance capital.

Arrighi’s LTC ocuses on the evolu-tion o the commanding heights andappears to neglect the roles played inthese qualitative changes by resistance

rom subaltern classes and rom the non-core.LTC also somewhat inexplicably drops any discussion o the relationshipbetween business cycles (e.g. the Kon-dratie wave) and the systemic cycles o accumulation. is might be construedto suggest that he elt that the lowerorders could sa ely be le out o the story,an approach that is taken by many others,especially international relations scholarswho study the “great powers.” To be air,Arrighi was one o the originators o theimportant concept o “world revolutions”

(Arrighi, Hopkins and Wallerstein 1989)and he addressed the ways in which re-sistance rom below a ected to evolutiono the world-system in many other works(e.g. Arrighi and Silver 1999).

Arrighi’s (2007) last book, Adam Smithin Beijing , provided a world historicalcomparison o the trajectories o China,Europe and the United States. Arrighirevisited the classics o political economy to explain the rise o the West, its eclipseo China in the nineteenth century, therise and decline o U.S. hegemony in thetwentieth century, and China’s recent rise

to greater centrality in the world econo-my.

ough Arrighi did not say this, his

analysis implies that a uture increase inpolitical globalisation based on hegemo-ny would require a hegemonic nationalstate that is signifcantly larger than theU.S. e act that there are no other stateslarger than the U.S. in terms o economicsize (the European Union is about thesame size, and China is much smaller)means that the hegemonic sequence o an evolution toward a more coordinatedand integrated orm o global governanceby a single national state has probably come to an end. O course a new periodo hegemonic rivalry and deglobalisationis likely during the decline o U.S. hege-mony. Hope ully this will not devolveinto another ‘Age o Extremes’ o the kindthat happened during the frst hal o thetwentieth century. But eventual urtherintegrative evolution o global gover-nance will require a condominium o ex-isting states, or even a multilateral globalstate. As Peter Taylor (1996) has said, theU.S. is probably the last o the hegemons.Further political integration in order tomanage the massive global problems that

have been created by capitalist industrial-isation will require a capable multilateral,and hope ully democratic, global state.

is sheds a somewhat di erent lighton discussions o global state ormationby theorists o a global stage o capital-ism such as William I. Robinson (2004).I global capitalists are creating a globalstate it might be a good idea to democ-ratise it and use it as a terrain o struggle

or social justice and an instrument ordealing with environmental issues. Adam Smith in Beijing helps us to re-think the past and the uture o East/West

relations and to consider the most basicissues about modes o production thatare centrally important or both under-

standing the human past and or politi-cal action in the present and the uture.It carries the world-systems perspective

orward, developing both its value asan explanation o human socioculturalevolution and its use ulness as a tool orguiding present e orts to move in thedirection o a democratic and collectivelyrational global commonwealth. It shouldbe read widely and debated, especially by those who think that another world ispossible.

Giovanni Arrighi was a paragon o the engaged intellectual, a global publicsocial scientist, who used his power ulmind to systematically analyze socialchange over the long run to try to solvethe huge problems that humanity hascreated or itsel in recent centuries. Hedid not shrink rom the complexities o what he called “the og o globalization”nor o his own commitments to a moreegalitarian world society. A mutual riendasked Giovanni a ew months be ore hisdeath as to which o his many works hemost wanted to be remembered. He told



page 8our young riend not to worry about suchthings, but rather to just “fght the goodfght.”

Chris Chase-DunnInstitute or Research on World SystemsUniversity o Cali [email protected]

References

Arrighi, Giovanni 1978,e Geometry of Imperialism, London: New Le Books.Arrighi, Giovanni, Terence K. Hopkins, and Immanuel Wallerstein. 1989.

Antisystemic Movements.London: Verso.Arrighi, Giovanni 1994,e Long Twentieth Century , London: Verso.Arrighi, Giovanni 2006, ‘Spatial and other ‘fxes’ o historical capitalism’, in

Global SocialChange: Historical and Comparative Perspectives, edited by Christopher Chase-Dunn and Salvatore Babones, Baltimore: JohnsHopkins University Press.

Arrighi, Giovanni 2007, Adam Smith in Beijing: Lineages of the Twenty- rstCentury, London:Verso

Arrighi, Giovanni, Takeshi Hamashita, and Mark Selden 2003,e Resurgence ofEast Asia: 500, 150 and 50 Year Perspectives, London: Routledge

Arrighi, Giovanni and Beverly Silver 1999,Chaos and Governance in the Modern

World-System: Comparing Hegemonic Transitions, Minneapolis: University o Minnesota Press.Rei er, Tom 2009 “Histories o the Present: Giovanni Arrighi, the Longue Dure

o Geohistorical Capitalism, and the Current Crisis”http://www.tni.org/en/article/histories-present-giovanni-arrighi-longue-duree-

geohistorical-capitalism-and-current-crisisRobinson, William I 2004, A eory of Global Capitalism, Baltimore: Johns

Hopkins University Press.Taylor, Peter 1996, e Way the Modern World Works: World Hegemony to World

Impasse, New York: Wiley.

In the Long Run,Keynesianism Is Dead*Observations on the Financial Crisis

In exploring the social roots and theuture o the global fnancial crisis rom a

sociological and world-historical per-spective, this research project o ers theollowing twelve observations:(1) World-historically, there is a cru-

cialdi erence between the current crisisand the crisis o the 1930s. e existenceo socialism as a global alternative inthe early twentieth century providedthe context in which the 1930s crisiswas resolved at the expense o capital,as labor, arm, and populist movements,amid expanding global instability andcrisis, orced the recognition o a socialwage contract and collective bargainingrights on capital. us the alternative o socialism brought a action o re ormistcapitalism to the metaphoric negotiat-ing table to agree to the compromiseo labor’s right to collective bargainingand rising wages accompanied by massconsumption. In the absence o a macrosocio-economic alternative to capitalism,however, capital is handling the currentcrisis at the expense o the global work-ing classes.

(2) It is a historical irony that social-ism (as both a political threat and statistwel are model, as Keynes himsel ac-knowledged) provided a solution to thecrisis o capitalism. While the solutionto the 1930s crisis involved adownward redistribution o income, capital’s reac-tion to the crisis since the late 1970s hasbeen one o upward redistribution ofincome via globalization, depeasantiza-tion and deproletarianization, fnanced-based surplus extraction via macro and

micro credit and the global debt regime,

and regressive tax policies. Put in otherwords, dealing with the crisis at theexpense o capital resolved the crisis o the 1930s, whereas dealing with the crisisat the expense o labor hasdeepened andexpanded it.

(4) e current period is a continua-tion o the 1970s. Contrary to the epi-sodic analyses ocusing on the real estatecrisis, the latter is only a symptom o a deeper long term crisis. Real estatewas brought into the speculative gameby Greenspan’s reduction o the capital

unds rate to about 1 percent in 2000 tocause a huge migration o fxed incomesecurities to Wall Street through themortgage industry. To be sure, while thismeasure did extend the ending li e o the fnancial boom or six more years viaexpanding the mass o “fctitious capital”in the Polanyian sense, it did not causethe crisis.

(5) e current fnancial crisis shouldbe seen as a moment within the crisis o the long 1970s when “negative Keynes-ianism” in ree-market clothing (or what

became known as “neoliberalism”) wasthe political response o capital to thecontradictions o “positive Keynesian-ism” (wage-labor contracts and e ectivedemand management leading to “wagein ation,” amidst competitive pressuresand expansion o democratic rights).“Negative Keynesianism” wasnegative in the sense that it broke up the post-war wage/social contracts and violatedthe “development compromise” in thepostcolonial world; it wasKeynesian itthe sense that it continued with e ec-tive demand management via socializingcredit as a component o wages and theglobal debt regime as a component o re-structuring the postcolonial nation-statebased divisions o labor. is involved, asis now well-known, the rejection o the(positive) Keynesian social contract via“globalization” i.e., spatial and temporalmobilization o capital, exiblization,de-unionization, and casualization onthe one hand, and the massive expan-sion o indebtedness as a solution tomassconsumption with low wageson the other



in this context, the Bush/Obama (Paul-son/Geithner) plan is a re ection o privatized politics which will ironically deepen the current crisis by making theU.S. state an appendix o Wall Street. By doing so, the crisis o confdence will beextended to the U.S. government, result-

ing in heavy downward pressure on the value o the dollar.

(9) With the rising production costso ood and energy (or what I have called

the “end o cheap ecology”),supply- side in ation will combine with monetary in ation to produce the economists’worse nightmare, stag ation. While therewill be downward pressure on pricesdue to massive de ationary pressures(demand-side de ation), there will alsobe upward pressures on prices (supply-side in ation) due to rising productioncosts o human and physical energy (notethe convertibility o ood and oil) andthe colossal increase in the supply o thedollar. ese counteracting e ects willcombine to create a low-level, but persis-tent stag ation.

(10) From an ecological perspec-tive, there is no long-term Keynesiansolution to the global crisis. “Green andglobal Keynesianism” is a contradic-

tion in terms, once we note that postwarKeynesianism was (1) an externalizingregime undamentally standing on theshoulder o “cheap oil regime” o 1953-1973 and (2) that the mass consumptioncomponent o high wage Keynesianismin the North was always standing on theshoulder o “ orced underconsumption”in the South. Even i we assume that thehigh employment/high wages /high con-sumption policies were to be adopted ata global level,high global consumptionisnot ecologically possible, and “disposableenvironments” are no longer obtainable.High global consumption and ecologicalcrises will contradict the Keynesian solu-tion more severely and more quickly thanwage in ation did in the 1970s. us theKeynesian solution to the crisis o globalcapitalism has been exhausted. At best,long Keynesianism is in a coma, but itcannot be resuscitated.

(10) Hypothetically, a re ormist solu-tion that could have ameliorated the cri-sis in the short runwould have involvedabandoning the debt regime in avor o high wages and ull employment policiesand massive (and rapid) state investment

in in rastructural projects. Even thisshortrun alternative would have required longterm planning. As Naomi Klein wouldask, where are the long term planners?Not in the private, “ ight-by-night state”and other institutions o negative Keynes-ianism.

(11) Contrary to Marx’s expecta-tions, capitalism seems to be reaching itseconomic end be ore its political end. Ar-guably, global social justice movementshave been gaining strength since the1990s. en again, these movements arein the main re ormist, and have yet to o -

er a coherent view o a global alternativto capitalism as a social property system.

(12) Politically, an extremely danger-ous era is ahead o us. Capital has ornow taken political re uge in hybridity,but its puri ying tendencies are alive andwell. “Going beyond Obama” should havealready been posed by the le , but it isthe extreme right that is taking the lead.

e uture de eat o Obama’s economicand military strategies will suddenly opena space or the rapid growth o regressive

page 9hand. Debt became the continuation of policy by other means, as credit and mi-crocredit substituted wages to solve theKeynesian e ective demand problem.

(6) is characterization o “longKeynesianism” (as a contradictory unity o liberalism and neoliberalism) would

allow a better exploration o the rela-tively under-theorized phenomenon: eglobal institutions o positive Keynesian-ism (the World Bank and the IMF) weretrans ormed under negative Keynesian-ism rom development institutions toen orcers o a global debt regime aimedat the construction o mutually depen-dent export-based and consumption-based economies.

(7) It is precisely the crisis o negativeKeynesianism that is at the heart o thecurrent crisis, and which is leaving theglobal institutions o negative Keynesian-ism (the WTO, the IMF and the WorldBank) with no solution other than trans-

erring the costs o the crisis to the South(and to the South within the North).

(8) While positive Keynesianism de-pended on the state as a relatively publicinstitution, the spectacular achievemento negative Keynesianism has been therelative “privatization o the state.” Seen



and progressive political movements. Itis time to pose “global green socialism” asan alternative to both positive and nega-tive Keynesianism.

Farshad AraghiFlorida Atlantic University,araghi@ au.edu

*See also Farshad Araghi, “ e Politi-cal Economy o the Financial Crisis: AWorld-Historical Perspective,”Economicand Political Weekly , Vol. 43, No. 45(2008); “ e Invisible Hand and the Vis-

ible Foot: Peasants, Dispossession, Glo-balization” inPeasants and Globalization:Political Economy, Rural Transformationand the Agrarian Question, edited by A.H. and Cristobal Kay Akram-Lodhi, New York: Routledge (2009), and my orth-coming article, “Accumulation by Dis-placement: Food, Ecology, and the Crisiso Reproduction,”Review: A Journal ofthe Fernand Braudel Center , volume 32,no 1. Your comments and questions aremost welcome.

page 10

The Limits of MexicanElectoral Democracy

e Mexican democratic transitionhas not been a homogeneous processeven though it has been characterizedas a partisan alternation in the di erento ces subject to popular election.1 is

is mainly because the presence o theInstitutional Revolutionary Party (Par-tido Revolucionario Institucional or PRI)is still hegemonic in some o the munici-palities and states o the country.Nevertheless, in the year 2000, a candi-date o the National Action Party (Par-tido Acción Nacional (PAN), Vicente FoxQuezada, won the Mexican presidency ina highly competitive election. is wasparticularly remarkable because it meantthat a er more than 70 years, the PRIhad lost the presidential election or the very frst time. is partisan alternation,however, was also a consequence o thechanges that the traditional political elitehad undergone, especially when econom-ic matters were considered the subject o so-called specialists which was evident

since the economic crisis o 1982.e specialists in economics—also

known as “money doctors” – establisheda new type o governability in tune withthe neoliberal economic idea o commer-cializing public policy; that is, they usedthe methods o corporate managementto achieve e ciency goals as in a privateenterprise. e economic re orms whichwere implemented sought to support theinterests o capital with the objective o inserting the Mexican economy into theinternational market (López-Portillo,1994). It is thus that the transition wasmade rom economic nationalism toneoliberalism, stressing the importanceo the ree market (Zapata, 2005).

From 1982 on, the arrival o di erentrepresentatives o the neoliberal econom-ic technocracy to the Mexican presidency

was urther evidence o the demise o the political myth called the Mexicanrevolution. is meant the end o socialcommitment through state intervention,thus eroding the hegemonic party’s (PRI)social oundations or support. iscaused ractures within the party that

1 e Mexican transition to democracy has tended to be interpreted more by what occurs in the electoral plane. e voting laws that the di erent political parties have promoted, in the a ermath o the 1968 student movement, havegreater presence in the Federal Congress as well as in local congresses. ese laws include respect or the vote andat the same time, the need to establish neutral electoral institutions where the ederal government has no right tointervene. In this sense, any political party would be guaranteed the ability to win, competition among political parwould be a reality, and there would be uncertainty as to the fnal results o the voting process. is vision neglects th

important role that social mobilization can play in electoral institutional changes (Salazar, 1999: 13-41).

From 1982 on ,

the arrival o di erentrepresentatives o the

neoliberal economic

technocracy to theMexican presidency

was urther evidenceo thedemise o the

political myth called the

Mexican revolution.



page 11led a number o its members to orga-nize themselves independently and, insome cases, to seek the support o socialorganizations that were unhappy with thegeneral decline o the level and quality o li e (Reséndiz, 2005: 169).

As a result, the deterioration o thePRI’s hegemony alongside the consoli-dation o a party system at the nationallevel with greater competition guaranteedby the respect or the vote because o the existence o independent electoralinstitutions, made it possible to haveparty alternation at the local level as wellas a more plural presence in the Fed-eral Congress. ese are the conditionssurrounding the PRI’s loss o politicalmonopoly over the Mexican presidency at the beginning o the 21st century.

e relationship between the govern-ment and society changed, however, notonly because o the disappearance o thesocial pact established between the hege-monic party and the social organizationsthat were part o it. e change was alsodue to the need or di erent social move-ments to de end the right to vote in orderto be able to govern through projects that

emerged as alternatives to the neoliberalones –this is what happened during the1980s (Tamayo Flores, 1997: 166).

Later on, during the 1990s, the subjecto electoral transparency became themain concern o the political parties,

which beneftted the experts in techni-cal electoral procedures. e election o representatives in public o ce did not,however, lead necessarily to the democra-tization o the mechanisms o governanceat the local and national levels. In somecases, authoritarianism and discretionali-ty continued to orient public action whenit came to the management o public

unds, which has prevented democratiza-tion rom having a positive impact in theimprovement o material conditions o

the population.On the one hand, there ore, there are

problems with the government’s account-ability. Moreover, the government doesnot even appear to be in close touch withthe needs o the people it governs despitehaving been elected by them. While itis a technically legitimate government, itcan resort to illegal actions without su -

ering any immediate consequences whileit is in power (Elizondo, 2006: 88).

As a result, social rights cannot bematerialized in an institutional mannerbecause Mexican citizenship has becomeincreasingly defned through su rage(political rights), which has had the e ecto diluting the State’s responsibility inregards to those who have su ered themost within the neoliberal economicmodel; thus, the State o ers assistance tosome poor amilies without consideringsocial wel are as a social right (Dieterlen,2003: 91-93).

On the other hand, the importanceo the presidential election o July 2006rests on the act that it demonstratedthat the partisan option, headed by thecandidate o the Party o the Democratic

Revolution (Partido de la RevoluciónDemocrática, PRD), Andrés ManuelLópez Obrador2, who sought to introducesome changes in the neoliberal economicmodel, was neutralized through theintervention o corporate businessmen

and also the actions o the then-presidento México, Vicente Fox Quesada. Botho these interventions translated into thesuccess ul support o the PAN’s presi-dential candidate and, thus, the party won the presidency or the second time(Camacho y Almazán, 2006: 17-74).

Meanwhile, the electoral institutionsin charge o overseeing the presidentialelection showed their pre erence orthe PAN’s presidential candidate, whichclearly called into question their neutral-

ity or impartiality. It was acknowledged,there ore, that the presidential electionhad not been “clean.” According to theFederal Electoral Tribunal, however, thatdid not cast doubts on the fnal result,which avored the PAN candidate.

Miguel Ángel Vite PérezDoctor o Social Wel are and InequalitiesUniversity o Alicante, [email protected]

References

Camacho, Óscar, Almazán, Alejandro (2006)Lavictoria que no fue. López Obrador: entre la guersucia y la soberbia,México: Grijalbo.

Dieterlen, Paulette (2003)La pobreza: Un estudio losó co, México:Universidad nacional Autónomade México-Fondo de Cultura Económica.

Elizondo, Carlos (2006) “Democracia y gobern-abilidad en México”, Aguilar Rivera, José Anto-nio (coor.)Pensar en México, México: Fondo deCultura Económica.

Hernández, Anabel (2006)Fin de Fiesta en LosPinos, México: Grijalbo.

Hernández, Anabel, Quintero, Arelí (2005)La familia presidencial. El gobierno del cambio bajosospecha de corrupción,México: Grijalbo.

López Portillo, José Ramón (1994)Economicought and Economic Policiy-making in Con-

temporary México: International and DomesticComponents, Great Britain: PhD, Antony´s CollegeOx ord University.

Reséndiz, Ramón (2005) “Del nacimiento y muerte del mito político llamado RevoluciónMexicana”,Estudios Sociológicos67: 139-183.

Salazar, Luis (1999) “Incertidumbres y transición”,Salazar, Luis (coor.) 1997:Elecciones y transición ala democracia en México, México: Cal y Arena.

Tamayo Flores, Sergio (1997) “La participaciónciudadana: un proceso” ,Revista Mexicana deSociología4: 155-185.

Zapata, Francisco (2005)Tiempos neoliberales en México, México: El Colegio de México, A. C.

2 e government o the then-president VicenteFox Quezada (2000-2006) was a government or thebusinessmen given that the business sector fnanced hispresidential campaign (see Korrodi, 2003). Fox used hisposition to manage in uences that avored his relatives

and riends (Quintero and Hernández, 2005), as well aslarge private monopolies (Hernández, 2006).

Moreover, the government does not even appearto be in close touch with the needs o the

people it governs despite having been elected by them.



page 12

What began as a fnancial meltdown in the United States hasnow become a crisis o the entire world economy. Crisis impacts,however, vary across countries and regions, thereby a ectingglobal and international social inequality, altering core-periphery relations, and re-defning the international power balance. Whileseveral semiperipheral countries are profting rom their consid-erable oreign currency reserves to gain more political weight ininternational fnancial institutions, peripheral countries are expe-riencing sharp rises in poverty and accumulating new oreign debt.Given their lack o fscal space to implement stimulus programs,peripheral countries are likely to su er substantially longer romthe crisis allout than the rest o the world. There is a great risk that

aster recovery in core and semiperipheral countries may againdrive up oil and ood prices, leading to a renewal o the ood crisisand heightening existing political tensions at the periphery o theworld-system.

Simultaneously, the crisis has le t politicians, policy advisorsand top managements o enterprises and international institutionsin an ideological vacuum. Well-established theories o the market,as well as hegemonic assumptions about the alleged benefts o un ettered global economic integration, are alling into pieces. The

current recession nevertheless calls or immediate policy responses.There is strong need or ad-hoc theories o the crisis’ causes toguide short-term cures and long-term structural re orms, both atthe national and the international level. International organiza-tions, business representatives, and civil society organizationshave entered a ferce interpretative contest over crisis mechanismsand possible political remedies. The current crisis thus presentsa extraordinary opportunity to study the strategies employed by various interested actors to gain public resonance and in uence orold and new political ideas.

With this call or papers, the World Society Foundation encour-ages researchers to investigate into the social construction o crisisinterpretations and/or the e ects o the current crisis on percep-tions o global social relations (economic globalization, North-South relations, multilateralism, etc). Issues that may be addressedinclude:

• Crisis representations and interpretations in the mass media(qualitative and quantitative content analysis) or the generalpopulation (quantitative surveys);

• Crisis raming by social movement organizations, businessactors, or international organizations (content analysis,participant observation, etc);

• Impacts on political mobilization and transnationalorganizing among civil society organizations (protest eventanalysis, participant observation, interviews, etc);

• Impacts on national and international regulating agencies andmechanisms

• E ects o the crisis, and policy responses to the crisis, on trust

in (international) political institutions;• E ects o the crisis, and policy responses to the crisis, on

perceptions o global and regional governance institutions;The above list is not exhaustive. The Foundation will give

highest priority, however, to papers that combine a general theo-retical discussion with new empirical fndings. These fndings may be based on comparative research as well as single-case studies,and on qualitative as well as quantitative research methods. In any case, paper proposals should give a very clear indication o theresearch methods, data sources and analytical tools to be used.

Please note that the Foundation is seeking original contribu-tions. Papers that have already been published or submitted orpublication will not be accepted.

Interested scholars are kindly invited to submit their paperproposals be oreDecember 15, 2009. The Foundation’s Board o Members will evaluate these proposals and ask success ul appli-cants to elaborate their proposals into ull papers (25-30 pages,but no more than 8000 words) in good English language. Westrongly encourage authors to discuss the implications o theirfndings or both, uture global social integration and existingworld society theories. The deadline or delivering the papers is

May 31, 2010.Each paper meeting the typical quality standards o the lead-ing scholarly journals will be honored with US$ 1.000. The mostoutstanding papers will be published in a orthcoming volume(2011/12) o World Society Studies, the Foundation’s edited book series.

The authors o the most outstanding papers become candi-dates or the Foundation’s Award o Excellence in World Society Research (2010). The prize money or the Award will be US$10.000 (First Prize) and US$ 5.000 (Second Prize). The candidateswill be invited to a con erence to be held at the University o Zur-ich, Switzerland, on September 10-11, 2010, where the award willbe presented. The Foundation’s Board o Members will act as the jury or this evaluation.

Applicants are invited to present proposals or their papers giv-ing the ollowing in ormation:

• Title o the paper• Abstract o no more than 500 words (longer abstracts will be

disqualifed)• Name o the author(s), present address (including e-mail

address), and name o the institution to which the author isa fliated (i applicable)

Proposals must be sent by e-mail to ws @soziologie.uzh.ch; sub-missions by postal mail will be disqualifed.

For more in ormation on the WSF and its activities, pleasecheck out our website: www.uzh.ch/ws /.

Sti tung Weltgesellscha t World Society Foundation

WSF Award of Excellence Programon the topic of

THE GLOBAL ECONOMIC CRISIS:PERCEPTIONS AND IMPACTS



President:Sylvia WalbyLancaster University, [email protected]

Vice Presidents:Sabine GensiorBradenburg Technical University-Cotbus, Germany [email protected]

Alexius PereiraNational University o [email protected]

Treasurer:Andrew SayerLancaster University, [email protected]

Secretary andNewsletter Editor:Aaron PitluckIllinois State University, [email protected]

Board:Salvatore BabonesUniversity o Sydney, [email protected]

William CarrollUniversity o Victoria, [email protected]

Michelle HsiehAcademia Sinica, [email protected]

Andrew JorgensonWashington State University, USA [email protected]

Eun Mee KimEhwa Womens University, [email protected]

Darlene MillerRhodes University, South A [email protected]

Georgina MurrayGri fth University, Australiag.murray@gri fth.edu.au

Cristina PugaUNAM, [email protected]

O fcers

page 13

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Conference Report Vojislav Babic PhD, Faculty of Economics Belgrade

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