SCHOOL OF ECONOMICS
UNIVERSITY OF THE PHILIPPINES DILIMAN
Course Name and No.: Econ 31
Course Title: A Journey Through Time: Economic Ideas and Civilization
Course Credit: 3 u.
Course Description: A survey of the influence of economic ideas on historical events of the last century and a half.
Lecture O: Setting the Stage
A. Idea of a University
B. Constructive Disbelief
C. Why History
1. Churchill: On looking back
3. J. Schumpeter and N. Rosenberg: “Path Dependence and “Lock-in”
4. W. and A. Durant Lesson “…history teaches but man never learns”
D. Events and Inferences
1. Random Concatenation of Events?
2. History as Cumulative Process? Teleological? (Hegel, Christian Theology, Marx)
3. Cyclic? (Plato and Greeks)
E. Fallacies and Rules of Logic
1. Logical Consistency and Evidence: Two Tests
a. Fallacy Types
b. Necessity and Sufficient Conditions
c. Ideological Straightjacket
2. Two quotes from Acad. O. Corpuz
3. Certainties and Fallacies
a. Economics as a science: Of central tendencies, multiple channels of feeback and complexity
b. “The century has been littered with the debris left behind by false certainties, sometimes deliberately false, mostly accidentally so.” The Economist “The 20th Century”
c. Kant: “The greatest enemy of good is perfection.”
Lecture 1: Long Term Economic Growth
1. Economic Growth in the Past 150 Years: By Periods and Regions: A. Maddison’s
Tables, P. Kennedy’s Tables
2. Economic Growth in the Past 50 Years
a. Tables on GNP growth and Trade
b. Regression Results from EAEM on GNP per capita, total factor productivity
c. Regression Results from Barro and SM, D. Rodrick, the Magee Effect
3. General Reflections
a. Aristophanes: The bane of affluence
b. A. Smith and R. Solow
c. Marx: Impoverishment
d. Olson and Civilization
e. Landes: Geography
f. Technology: Kondratieff
Lecture 2: Trade and Globalization
Topics
1. 1860 – Cobden-Chevalier Treaty
2. Pre-WWI Globalization Episode: 1860-1915
a. The Technological Infrastructure
b. Imperialist Competition
c. Nationalism and Wars
d. Tables from P. Kennedy
3. WWI and Inter-war Period
a. The Great Depression and Classical Monetary Theory
b. Beggar-Thy-Neighbor Trade:
c. Emerging Orthodoxies
d. Tables from P. Kennedy
4. Post WWII Globalization: Trade
a. GATT, IMF, WB: Keynes
b. The Cold War and the Bipolar World: Proxy Wars
c. The “Golden Age”: 1950-1973
d. East Asia as bastion of Ricardian Comparative Advantage
5. Post WWII Globalization: Equity Capital
a. Direct Foreign Investment: Bane or Boon?
b. The Role of Free Trade Zones
c. Tariff Jumping
6. Post WWII Globalization: Portfolio Capital
a. Open Capital Account
b. WTO and Uruguay Round: Agriculture and Services
c. The Asian Currency Crisis and Problems with Globalization
7. General Discussion:
a. Gains from trade: Smith and Schumpeter
b. Do LDCs gain and how? Unequal exchange?
c. Von Thunen competition
d. China in WTO
Lecture 3: Money
Topics:
1. Monetary and Exchange Rate Policy: Mundell-Fleming Model
2. Origins of the Gold Standard
a. Main Features
b. Problems
c. Socio-Political Reasons for Success
d. Challenges and Origins of Collapse
3. Inter-War Monetary Arrangements
a. Return to Gold
b. Great Depression and Collapse
c. Currency Blocks and Competitive Devaluations
4. The Bretton Woods System: The Dollar Standard
a. Features and Safeguards
b. GATT, IMF and WB
c. Why its Success: 1945-1965
d. Collapse
5. Plaza Louvre Accords and Collapse
6. European Monetary System
a. Hard EMS: 1979-1992
b. Soft EMS: 1993-2000
7. Maastricht Treaty and the Euro
8. Reflections on:
a. Denationalization and the Nation-States: Ohmae
b. Why Marshall-Fisher Quantity Theory was routed by Keynes was routed by Friedman
was replaced by Radical Rationalists
c) Argentina and Currency Boards
Lecture 4: Japan
Topics
1. Pre-Meiji: The Tokugawa Shogunate:
a. “The law may upset reason but reason must never upset the law” (T-Eijasu)
b. Three Shoguns
c. Genetic cleansing?
2. “Korufumi” (Black Ships) and Gunboat Diplomacy
3. The Unequal Treaties: Exchange Rate and Tariffs
4. The Meiji Revolution
a. Social transformation and decimation of industries
b. Peasant Resistance
c. Matsukata deflation
d. 1894: Sino-Japanese War
e. 1904:Russo-Japanese War
5. Governance and Human Capital
a. The Currency of Japan (1881)
b. Education and the Eiyasu Tokugawa Rule
6. Post WWII Maneuvers
a. Currency Reform: “Swiss Knife” Japanese Style
b. Drive to Export
c. “Keiretzu”
d. Korean War
7. Plaza Accord and the Bubble Economy
a. Capital export
b. Investment in Nontradeables
c. The Great Dragon Effect
8. Stagnation: Liquidity Trap?
Lecture 5: East Asia and M. China
Topics:
1. The East Asian Model
2. Taiwan: An in-depth recall
3. S. Korea
4. Singapore
5. M. China
6. Malaysia, Thailand, Indonesia
7. Exports or Investment or Good Governance or Fundamentals: The Debate
8. The Asian Currency Crisis: Open capital account and Mundell-Fleming
Lecture 6: Anatomy of Failure: The Iron Curtain and Latin America
The Iron Curtain
1. The Cold War
2. The Comecon and central planning
3. The Berlin Wall
4. Cracks: Hungary 1956, Prague Spring 1968
5. Stagnation
6. Afghanistan: The Red Army on Retreat
7. Solidarity
8. Berlin Wall falls
9. The market vs. the state: Why did the market triumph?
Latin America
1. The Prebisch-Singer Thesis
2. Big Push and import substitution
3. Boom and bust with import substitution: The Model
4. Foreign debt and white elephants
5. The record
6. The lost decade: 1980s
7. Chile breaks out
8. Revival in Latin America
Lecture 7: Poverty, Income Inequality and Globalization
Topics:
1. Measures of Income Inequality
2. The Globalization-Inequality-Poverty story: Pros and Cons from
Ricardo to Mauro
3. The East Asian Experience: Comparative Advantage
4. Trade in Goods, Services and Capital: The GATT and WTO
5. Inequality in the first globalization episode
6. The question of convergence
7. A Race to Upgrade in the Von Thunen World
8. Income Inequality in the Philippines
Lecture 8: Boom and Bust in the Philippines
Topics:
1. The boom-bust pattern
2. 1949 crisis and aftermath
3. Import substitution and beauty parlors
4. Smuggling: the most vigorous industry
5. Macapagal’s Decentralization
6. Marcos: Power and Greed
7. Aquino, Coups and missed opportunities
8. Ramos’ deregulation
9. Estrada: The soft state at its most naked