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PDF | 3 hours read | International Relations (IR) urgently needs theoretical development Specifically, the paper argues that the `commanding heights' to which. SYNOPSIS -- Commanding Heights -- Episode One: “The Battle of Ideas”. A global economy, energized by technological change and unprecedented flows of . Lectures will coordinate with chapters of the assigned texts and segments of the. DVD (as indicated below), but will also amplify, modify, and supplement what is.

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Uploaded by: TESSA Volume 2, No. 1 (Spring ). Daniel Yergin's and Joseph Stanislaw's The Commanding Heights strives for breadth and. Essays, Interviews, and Profiles are available in printer friendly PDF files. These can be viewed with Adobe Acrobat Reader. If you have Adobe Acrobat Reader. This books (The Commanding Heights: The Battle for the World Economy [PDF]) Made by Daniel Yergin About Books The Commanding.

Overview[ edit ] The authors take the thesis that prior to World War I the world effectively lived in a state of globalization which they term the First Era of Globalization. The authors define globalization as periods when free markets predominate and countries place few if any limits on exports , immigration , imports , or exchanges of information. Overall, they see globalization as a positive movement that improves the standard of living for all the people connected to it—from the richest to poorest. According to the authors, the rise of communism and fascism , not to mention the Great Depression , nearly extinguished capitalism which rapidly lost popularity. Keynes believed in government regulation of the economy and the authors underline this as Keynes' great influence and prestige.

The root of the problem was the government running massive deficits and just printing more money to pay its expenses. Harvard economist Jeffrey Sachs advised the Bolivian government starting in to make a series of major policy reforms to solve the problems that together would constitute economic shock therapy. They would reverse the economic policies that grew out of Dependency Theory. The Bolivian government agreed to make the tough choices and to put Sachs advice into practice.

There were immediate, harsh price spikes, but the economy quickly stabilized.

Commanding heights of the economy

Bolivia did this while under a democratic government, restoring credibility to a set of policies that had previously been sullied through association with Pinochet. Other Latin American countries began to copy it. Shortly after the Solidarity political party won Polands first free elections, Sachs advised the new government on how to dismantle Communism and to rebuild the free market there.

Poland tried shock therapy as well. Again, there were immediate price spikes for all types of goods across the country. Within days, open-air markets spontaneously materialized everywhere and prices began to drop. Next, the Solidarity government went about privatizing the huge government-owned firms under Communism, the means of production had been owned by the state.

Shielded from competition and numb to market signals, these companies were inefficient and wasteful. Once under private management, thousands of workers were quickly laid off to save money. This led to many big strikes against the government and widespread erosion of support for Solidarity among the working classes.

Small business exploded in the country but employment in heavy industries contracted. Under Mao Zedong, China had a more purely Communist economy that was driven more by ideology than pragmatism. Thanks to Mao, Chinas economy remained backward and grew very slowly.

After he died in , Deng Xiaopeng became the countrys leader and made the monumental decision to reverse Maos failed economic policies and to promote a market-oriented economic strategy called Market Socialism that was actually much less Communist than the USSR.

Deng had observed the stunning economic success of Asian Tiger countries like Japan, Singapore and Hong Kong, and he saw that their economic model was clearly superior to Maos. In essence, Deng decided to slowly abandon most of the economic elements of Communism while keeping the Communist party in political control of the country. Eighty percent of Soviets lived in cities. A huge system of sorts had been built around Communism in the USSR, and changing to Capitalism was impossible without a level of difficulty that Gorbachev considered unbearable.

China, on the other hand, was still an undeveloped country where most people were very poor and lived and worked on small farms and there were few factories.

The Chinese therefore were closer to a tabula rasa economic condition, so making pro-market economic reforms didnt entail mass disruptions since there didnt yet exist anything to disrupt.

Shock Doctrine wasnt needed in China, and the country had the critical luxury of time to change its economy. The Soviets didnt have that. Different Eastern Bloc countries handled the transition to democracy better than others. Russias experience was particularly traumatic because, even after democracy came, the Communist Party remained a powerful influence in the legislature and bureaucracy. They opposed Boris Yeltsins promarket reforms at every step, which prolonged the countrys agony.

By contrast, other countries like Poland totally forsake Communism and enjoyed much easier transitions. Predictably, this led to large price spikes for all types of goods. Problems were made worse by the policies of the Russian central bank.

Commanding Heights notes

Gaidar was forced out of his office by Communists. Indias experiment with central planning ended in failure: By , the country had zero annual GDP growth and was facing bankruptcy. The other Asian countries that had gained independence around the same time as India but which had instead embraced Capitalism were now dramatically richer and more advanced than India. The collapse of the USSR dealt the final blow to central plannings credibility. The government was forced to enact radical reforms that opened Indias economy.

As a result, economic growth began again. Yeltsin, who was Russias first democratically elected president first tried to privatize Russias Sovietholdover state-owned enterprises by giving all Russian citizens stock shares in them, and then allowing them to trade shares in a new stock market,.

In what would later be viewed as a highly corrupt move, Yeltsin then sold off many other core state industries worth billions of dollars apiece to wealthy, well-connected insiders who went on to become Russias infamous Oligarchs. In return, they agreed to give him large amounts of campaign funds for his reelection, which he won.

The privatization of the state firms was also a calculated move that damaged Russias Communist party. While Yeltsins actions are widely criticized, especially by Russians, the truth is that such corrupt government dealings didnt start under Yeltsin or only once democracy came to Russia: The government had been incredibly corrupt during Soviet times and insider dealing at the highest levels had long been the norm.

Moreover, had Yeltsin not privatized the state-run firms and gotten the support of the oligarchs, he would have probably lost the election and the Communists would have re-taken control over Russia, which could have been horrible. The alternative therefore could have been much worse. The end of Communism marked the start of the Era of Globalization.

NAFTA became an issue during the elections.

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Clinton won, and his plan was put into action. In the race, the labor unions gave Bill Clinton the support he needed to win. NAFTA led to a huge increase in the amount of trade between the three countries.

Commanding Heights

Moreover, each country had significant GDP growth that was directly attributable to the freer trade. Mexico remains the most vocal proponent of further North American integration since it has the most to gain] The impact on the U.

As in previous cases, deregulation and freer trade benefitted a whole economy in aggregate while severely hurting a small percentage of people and massively benefitting some companies and their owners that are able to take advantage of the new trade policies. The vast majority of economic activity is thus intangible. The experts who manage these funds are enormously powerful.

A large portion of American workers pensions are invested overseas. Thus, most American workers are significantly if unwittingly invested in the global economy. One of his major accomplishments was strengthening the global free market in the aftermath of Communisms collapse. In , Mexico faced political and economic crisis, and the country came to the brink of defaulting on its foreign debt.

There was real fear that the country, left to its own devices, could fall into chaos, and millions of refugees would head north into the U. It worked to stabilize the country, Mexico repaid the money ahead of schedule, and the U. However, many critics considered Clintons actions to be a prime example of moral hazard: By bailing out the Mexican government, the U. The bailout signaled the private sector that it could make similarly bad future investment choices without fear since the U.

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Critics feared this would make sovereign debt crises more likely. Globalization is defined as the free flow of goods, services, capital, and labor across national borders. China has a number of Free Trade Zones, which are small geographic areas in which companies can build factories to build and export anything with very few restrictions. The Zones are exempt from 10 Chinas otherwise strict business and export laws.

Seaports and airports are usually located very close to or within Free Trade Zones. At long last, Japans economic bubble burst in the s and the country slid into a major recession that it never really recovered from. American fears of Japan someday taking over the world economically were quickly and permanently dispelled. Japan really has two economies: Export sector Dominated by big firms like Toyota, Sony and Canon that are highly competitive and efficient and focused on international markets.

Domestic sector Dominated by many small, inefficient, often mom-and-pop businesses that arent very profitable. Many Japanese are employed in the second area, and they add little to GDP. Moreover, Japan also has a very large and wasteful bureaucracy that has resisted attempts at reform, as well as an overly generous social safety net that, thanks to the aging of the population, badly strains GDP.

The growing drains on the Japanese economy reached the tipping point starting in the s. But during the s, less-developed Asian economies boomed. During the s, the government promoted globalism by easing restrictions on foreign capital. Western banks responded by investing massive amounts of money in Thailand. There was a rush to get into the Thai market before competing Western investors bought up all the best deals.

In the hurry, the foreign banks failed to do their due diligence and did not research the investments enough. In reality, Thailand had bad business laws and banking regulations many of the basics of the investment were not sound.

Good investors are mobile and quickly move their money from country to country in search of the highest returns. The number of units constructed quickly outstripped the demand, producing an obvious residential real estate bubble. Like China, Thailand had a fixed exchange rate, which meant the government had to keep large amounts of foreign currency in its possession to defend the exchange rate.

At the first sign of economic trouble in , some foreign investors began selling off their investments in Thailand and taking their payment in more stable foreign currencies mainly U. This depleted Thailands foreign currency reserves to the point that it was forced to devalue its own currency.

This in turn triggered major problems. The devaluation of the Thai baht made Thai exports very cheap but imports very expensive. This hurt millions of average Thai people who relied upon imported foods and products to get by each day. The cost of living thus increased greatly in a short period.

The IMF gave Thailand a bailout package, but it didnt solve the problem. Unlike in Mexico, the U. International investors saw similarities between Thailand and several other East Asian countries like Indonesia and South Korea.

Western banks had also injected huge amounts of capital into those countries without adequately understanding the risks and local laws. In reality, each country was unique and some were fine. Nevertheless, panic ensued as investors rushed to get their money out before these other countries experienced Thai-style meltdowns.

The actions of 11 the investors, of course, led to a self-fulfilling prophecy since the Asian countries needed foreign finance to remain stable. This humiliated many Asian nationalists and was characterized as a modern incarnation of European colonialism. Many of the foreign investors moved their money into Russia, which was seen as a healthy economy and a sound alternative.

Unfortunately, Russia defaulted on its debt in and its stock market quickly crashed. Overseas item Summary "Trillions of dollars in assets and fundamental political power are changing hands as free markets wrest control from government of the "commanding heights" - the dominant businesses and industries of the world economy.

Daniel Yergin and Joseph Stanislaw demonstrate that words like "privatization" and "deregulation" are inadequate to describe the enormous upheaval that is unfolding before our eyes. Along with the creation of vast new wealth, the map of the global economy is being redrawn. Indeed, the very structure of society is changing. New markets and new opportunities have brought great new risks as well.

How has all this come about? When economic conditions in occupied West Germany failed to improve, Ludwig Erhard completely destroyed price controls in without consulting the occupying powers. After this, the Western German economy underwent a massive recovery , although such free-market reforms remains largely confined to the country for many years.

Commanding heights of the economy - Wikipedia

By the time of German reunification in , West Germany was an economic power while East Germany faced many problems due the collapse of the central planning authority. India[ edit ] Unlike Mahatma Gandhi , who supported a village-centric economy, after India 's independence in its first Prime Minister Jawaharlal Nehru promoted industrialization.

However, he supported government-controlled development and the bureaucracy that developed stifled innovation the authors of The Commanding Heights sarcastically claim that the British Raj was replaced by a permit Raj. Bribery and delays became commonplace in the Indian economy while at the same time many prominent economists studied the country and attempted to fine tune its central planning. By the s, the Indian government began to relax these stringent regulations mainly due to the influence of Finance Minister and later Prime Minister Manmohan Singh.

The Indian economy bloomed under the effects of exports and outsourcing and political parties since this period have continued to promote these changes. The free-marketer Singh was appointed Prime Minister when his party won the elections in , although he was not the victorious United Progressive Alliance 's stated candidate and the general expectation was Sonia Gandhi would take the seat. South America[ edit ] Under the influence of dependency theory , a Marxist approach to international economics , many Latin American countries attempted to industrialize by limiting imports of manufactured goods and subsidizing their own industries.

However, these companies had little incentive to become efficient or innovative in the absence of competition and with government subsidies. By the s, the economic problems of these countries became obvious and much of the West's investment in these countries was lost. Chile unwittingly became an experiment in free markets when Augusto Pinochet called in followers of Friedman to evaluate the economy, the so-called Chicago boys.

The authors argue that these economic reforms proved successful , but since Pinochet was a dictator who came to power in a coup and had many political opponents murdered the whole idea of free-market reform became linked to fascism.

While the authors and Friedman claim that these reforms eventually promoted democracy , they acknowledge that this issue and their interpretation of events is extremely controversial.

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Bolivia was hit with hyperinflation as well. While Bolivia remained a very poor country, the authors argue that it is better off now because its inflation was curtailed. They also argue that Bolivia's example vindicates the bad reputation free-market economics acquired in Chile as Bolivia's reforms came after a democratic election. Other countries[ edit ] The authors argue that Africa 's economic development was severely hindered by central planning, socialist ideas and political dictatorships that promoted warfare and other conflicts.

While Japan was seen for many years as an economic success story as late as the early s , the authors argue that its ongoing recession since then resulted from its governments refusal to stop subsidies to many of its industries and companies this issue is ongoing. One feature of the Polish economy that makes it different from other capitalistic countries is that it is dominated by small businesses rather than corporations or conglomerates. China is another major ongoing issue. While Deng Xiaoping after the death of Mao Zedong gradually introduced free market , he did not promote civil liberties or other freedoms as demonstrated by his willingness to crush pro-democracy demonstrators.

While the authors hope according to Friedman's ideas that free markets would eventually promote a free society, it has not happened yet although China's economy continues to grow.

Documentary[ edit ] In , PBS aired a six-hour documentary based on the book. Thanks to its later date, the documentary film is able to address many of the items Yergin and Stanislaw missed in their original book, including the Great Recession , the collapse of Asian economies , the anti-globalization movement and the September 11 attacks.

All told, two of the documentary's six hours—the entire final third—address things that happened since the original book was published.

They also include free market solutions to international poverty that was not included in the book and they interview economist Hernando de Soto , whose book on the subject was not published until after the initial printing of The Commanding Heights. Like the book, the documentary attracted more support and criticism. One example is the anti-globalization movement, which argued they were portrayed unfairly.

In the documentary, James Wolfensohn , then President of the World Bank , is interviewed and says that such protesters are attacking people "who are devoting their lives to addressing the very questions that these people claim to be addressing". The documentary includes a scene of Wolfensohn getting hit in the face with a pie by a protester.