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LSE 100

Module 0- Poverty
Lecture Professor Mary Morgan: Questions, Evidence and Explanations in the social sciences:
Meaning and Measurement of Poverty.

Absolute/ relative indicator of poverty


Thin measures (easy to measure and compare) vs Thick measures (complex detailed analysis)
Timeline vs snapshot (objective vs subjective)
Actual vs perceived, needs based, income based.
Poverty- (individual faults vs economic system) and associated solutions (charity/social
workers vs reformers)
Triangulation1
Poverty- multi-dimensional in aspect, in causes and there are feedback effects.
Booths mapping of poverty in London used data on 40 occupations to allocated observed
households into 8 income classes
Rowntrees study of York via direct interviewing (observed poverty). Using physical
efficiency
Bowley introduced random sampling. E.g. every 10th household in the street

Criteria:
-

Representativeness of measurement (monetary/ volatility)


Convenience/Ease of measurement
Eventual appropriateness of measurement is determined by the contextual circumstances

Readings:
The measure dictates the policy. The real motivation to change the poverty measurement is to
change the crafting of the government policy.

the idea is that one can be more confident with a result if different methods lead to the same

result.Triangulation is a powerful technique that facilitates validation of data through cross verification from
two or more sources. In particular, it refers to the application and combination of several research
methodologies in the study of the same phenomenon.[2]

It can be employed in both quantitative (validation) and qualitative (inquiry) studies.

It is a method-appropriate strategy of founding the credibility of qualitative analyses.

It becomes an alternative to traditional criteria like reliability and validity.

It is the preferred line in the social sciences.

By combining multiple observers, theories, methods, and empirical materials, researchers can hope to
overcome the weakness or intrinsic biases and the problems that come from single method, singleobserver and single-theory studies.

60% of median household income for monitoring progress in combating poverty


Single headline indicator is vital
Income is central in determining choice and control that individuals and households have
Relative income matters as something considered as a necessity by the society changes over
time
Connects to the mainstream and eliminates skewness and outliers caused by the extremely
wealthy
Facilitates comparison
- Does not capture the volatility and uncertainty of income generated.
- Susceptible to paradoxes in periods of boom and bust
- Issue with an arbitrary line is that you separate those marginally above and below the line.
- Difficulty with the appropriate equivalence scale where incomes differ according to family types
and sizes.
(1) Emphasis on relative deprivation- not just failure to meet minimum nutrition or subsistence
levels, but rather as failure to keep up with standards prevalent in a given society
(2) Broaden the concept of income poverty to a wider set of basic needs. (a) The incorporation
of non-monetary aspects (b) a new interest in vulnerability and its counterpart, security
associated with better understanding of seasonality and of the impact of shocks (c)
broadening of the concept of poverty to a wider construct, livelihood (d) income to increase
capabilities of individuals and thereby permitted functioning in society (e) policies to
empower women and find ways to underpin autonomy, or agency
Ability to identify the poor using local indicators and ability to aggregate the results into
meaningful, national or international figures.

Module 1- Climate Change


Concepts:
(1)
(2)
(3)
(4)
(5)

Decision-making under risk and uncertainty


Property rights, public goods, externalities and market failure
Methods of internalizing externalities- using market to reduce pollution
Collective action failure- economics perspective: public goods and prisoners dilemma
Collective action failure- IR perspective: power politics, international anarchy and normative
structures in international society
(6) Top down (global deal) vs bottom up (building blocks) approaches to collective action
Lecture Professor Nick Stern: Climate Change and Risk
Absorption Retention Depletion (Flow Stock Process)
Mitigation (avoiding the predicted scenario) vs Adaption (evolving ourselves to meet the
challenges of the scenario).
Mitigation reduces the likelihood of climate change and its adverse impact. It has long term
effects and often works on a global scale. It reduces the climate change impacts by reducing
the rate and magnitude of global warming. This increases the chance that the remaining
risks can be adapted to. (Preston 2006)

Adaptation manages with the consequences of climate change. It reduces the impact of
likely or certain outcomes. It can have short or medium term consequences and often works
at the local level. Adaptation increases the ability of the system to cope with the changing
climate, including variability and extreme events. (Preston 2006)
Errors: Type 1 Error (False Positive) and Type 2 Error (False Negative). Policy will have to take
into account both potential errors and possible losses associated with each.
(1) Standard economic valuation methods (Cost-benefit analysis and discounting) rely on effects
being small. It may be inappropriate for large scale changes.
(2) Risk must be analyzed explicitly: the distribution of outcomes matters (not just expected
values of outcomes)
(3) Ethics must be considered explicitly: crucial to discuss intergenerational and intertemporal
valuations. Inappropriate to take discount rates from ST capital markets for these LR issues.
Ethical issues between generations cannot be discounted using market rates. Not only are
market decisions different from ethical choices, we also have to consider market imperfections.
A single representative or aggregate consumption may be over-simplistic. Scenario may be too
complex to warrant a single discount rate.
Assumptions about underlying growth or decline are crucial and climate change may undermind
all that.
We cannot reduce all issues of responsibility, justice and sustainability to judgments relating to
people with different incomes.

Emissions are driven by economic and population growth. Stabilization will require breaking the link
between activity and emissions- a lower carbon growth.2 Policies recommended:
(1) Carbon pricing
(2) Technology policy (support for research, development and deployment of low-carbon
technologies)
(3) Removal of barriers to behavioral change
(4) Promoting understanding of opportunity and responsibility via public discussion
The misunderstanding of the economics (investment issues), politics (collaboration and
responsibility) and the science (urgency).
Readings- Jones and Preston 2006
Adaptation is most urgent for risks that are already being experienced and those that are sensitive to
only small changes. Adaptation to higher levels of warming will be difficult and costly, required a
great deal of accepted loss. Mitigation reduces the uppermost possibilities of climate change by
reducing the potential volume of accumulated future emissions. Where limits of adaptation are
exceeded, mitigation may be the only realistic risk treatment.
1. They manage different parts of risk: Mitigation reduces the likelihood and magnitude of
climate-related hazards and their resultant impacts; adaptation reduces the consequences
of those impacts.
2

Dynamics of discovery and implication for theory and policy. Theory and policy cannot be solely on the model
of the self-centered, fully informed, perfectly calculating, optimizing decision maker. The current model of
consumer behavior needs to be revised. Policy must go beyond correcting market failures.

2. They manage risk in different parts of the potential climate change envelope: mitigation
reduces the likelihood of climate change at the upper defined limit of the plausible range;
adaptation manages the experienced or more probable changes occurring at the lower limit
of the plausible range.
3. Effective over different timescales. Mitigation- usually have a delayed response
4. Effective at different scales: mitigation reduces climate change at global scale, adaptation is
at the local scale.
Unsuitability of CBA
-

Requires single measure for comparison. Monetary measurement may not be suitable
Long delay between emissions and response makes conventional discounting controversial
because of varying rate of time preferences and risk aversion
Large uncertainties make possibility of damages being non-marginal

Readings- Stern 2007


The effect of climate change on the many different dimensions of human well-being force us to look
carefully at the underlying ethical judgements and presumptions which underpin, often implicitly the
standard framework of policy analysis. The underlying ethics of basic welfare economics, which
underpins much of the standard analysis of public policy, focuses on the consequences of policy for
the consumption of goods and services by individuals in a community and then assess the
consequences in terms of impacts on utility. This standard welfare-economic approach has no room
for ethical dimensions concerning the processes by which outcomes are reached. Different notions
of ethics, those based n concepts of rights, justice and freedoms do consider process.
Climate change is an externality that is global in both causes and consequences. Both involve deep
inequalities that are relevant for policy.
The aggregation of consequences (i) within generations (ii) over time, and (iii) according to risk is not
always consistent with ethical perspectives based on rights and freedoms. But this approach has the
virtue of clarity and simplicity, making it easy to test the sensitivity of the policy choice that emerges
to value judgements made. It is surely within the realms of sensible discourse to think of
consequences of different strategies simultaneously in terms of income, lives and the environment.
Discount rates may differ for different goods and households. Generally, a single constant discount
rate is unacceptable for dealing with long run, global, non-marginal impacts of climate change.
The standard expected utility frameowkr involves aversion to risk. The approach to uncertainty
combined with the assumption that the social marginal utility of income declines as income rises
implies that society will be willing to pay a premium to avoid simple actuarially fair gamble where
potential losses and gains are large. Under formal but reasonable assumptions, one would act as if
he has chosen the action that maximizes the weighted average of the expected utility. And this
introduces the possibility of applying a precautionary principle.
Lecture Professor Eric Neumayer: Public goods and the challenge of managing climate change

Externality3 occurs when one agents production/consumption decision affects another agent in an
unintended way and when no compensation or payment is made. Externality in time and space.
Common but differentiated responsibility.
Free-ridership problem4 occurs when there is a strong incentive to defect if the other cooperate.
One can solve the prisoners dilemma problem by changing the rules of the game or changing the
incentives of the individual agents (building of political capital)
Readings Stadler 2004
Collective action involves interdependency among individuals in which the contributions or efforts of
one individual influence the actions of other individuals, thus implying a strategic interaction. It is
partly associated with the provision of pure public goods whose benefits are non-rival and nonexcludable.
Collective action failures rest on a single premise: that individual rationality is insufficient for
collective rationality. Those individuals who abide by the tenets of rationality make choices that
leave the collective in an inferior position.
A strategy that provides a greater payoff regardless of the other players action is termed a
dominant strategy. Nash equilibrium is a situation where neither player would unilaterally alter his
strategy if given the opportunity. Mutual regret is the hallmark of PD.
One has to bear in mind the institutional environment when studying global collective action. There
are no strong supra-national bodies with comparable enforcement capabilities to those of a national
government within a nation-state. This thus leaves us with the continued reliance on the loose
network of supra-national institutions to be the main mechanism for addressing transnational
collective action as nations resist losing sovereignty to tighter institutions with greater enforcement
powers.
Lecture Dr Falkner: Climate Change: an international relations perspective
Realism: no central authority, self-help. Seek to maximize power and concerned about relative gains.
Rule takers and rule enforcers. Growth in treaties, but weak and ineffective: signal the presence of
national interest.
Liberalism: states pursue relative and absolute gains, have an interest in international cooperation,
international institutions create trust and promote cooperation. Domestic environmental
movements produce shift in state interests and promote cooperation. Ecological interdependence
creates need for international institutions, but divergent national interests still exist. Create trust
through institutions which will lubricate further deals among various stakeholders.

rd

Field 2009 Externality: costs and benefits incurred by a 3 party in a transaction that are not captured in the
transaction
Field 2009 Public goods: non rival (benefits that will not diminish with additional unit of consumption) and
non-excludable (prohibitively expensive to exclude non-payers from enjoying the benefits of the good
provided).
4
Field 2009 Free-ridership: Ability to enjoy the benefit from goods or services without having to pay for the
cost of the benefit. Problem when a party enjoys a benefit accruing from a collective effort, but contributes
little to the collective action

Constructivism: states belong to an international society, with its own fundamental rules and norms
that govern state behavior. Rise of environmental responsibility norm, green norm
Readings Falkner 2010: proposes a building blocks approach
The current approach to negotiating a global deal is unlikely to succeed. An alternative approachbuilding blocks approach helps develops different elements of climate governance in an
incremental fashion and embeds them in a broader political framework. It offers the hope of
breaking the current diplomatic stalemate. It promises no swift short term solutions and may risk
strengthening the logic of free-riding and lead to excessive regulatory fragmentation.
Climate change is widely recognized to pose a more complex and costlier challenge than ozone
depletion and early on there was debate on universal approach vs regional or sectoral approaches.
But by disaggregating the problem and applying the convention-plus-protocol approach, negotiators
hoped to repeat the success of the experience with the ozone regime.
Benefits of a global deal
(1) A treaty that contains firm and measurable commitments that are legally binding is likely to
be more effective in securing lasting emissions reductions than a system of voluntary
pledges. It introduces transparency in monitoring and regulation in the action towards the
emission target.
(2) Multi-lateral environmental policy focused on creating comprehensive regimes has
contributed to the growth of important institutions that support global environmental
governance. These institutions help foster learning effects among states with regard to the
understanding of problems and choice of effective policy instruments.
(3) Firm commitment that states enter into as part of a legally binding global deal send strong
signals to private actors in global economy, enabling them to reduce transaction costs. Such
signaling is important for long term investment decisions
(4) Even if international agreement on a global deal remains elusive, continuous push for such
an outcome helps to maintain political momentum in international negotiations.
Structural shifts in IPE complicated the search for a global deal by strengthening the veto power of
the individual states. This shift manifests itself in 2 principal ways: in growing share of emerging
economies in worldwide emissions; and in demands that these countries are making for enhanced
representation and influence within the established framework of international cooperation. The 3
tradeoffs- participation, enforcement, effectiveness. The bottom up approach removes a major
stimulus for developing more ambitious domestic policies, solidifying the lowest common
denominator. The domestic policies then need to be embedded in a broader international effort.
This would provide a boost to embryonic regional and national carbon markets and keep alive a
more ambitious regulatory framework, which could later become the core of a comprehensive
global settlement. Capturing small gains. The current negotiation structure is based on the principle
that nothing is agreed until everything is agreed. The universal participation allows one party to
secure concessions in exchange for concession in other areas. Building blocks approach, because of
the absence of the need for universal participation will reduce the urgency of concerted global
cooperation. Furthermore, this system of partial agreements and variable geometry may reinforce
the logic of free-riding and heighten concerns over economic competitiveness.
Readings Hare 2010: proposes a top-down approach
Coordination of actions by countries is needed because climate change is a collective action problem
and because of the urgency for rapid emission reductions and a top-down approach delivers
precisely just that: (1) increase in level of ambition of goals and emissions reduction, multilateral
agreements can achieve much more than unilateral agreements (2) reduced transaction costs

through systematic centralization of reporting rules (3) improved economic efficiency from
emissions trading and use of flexibility mechanisms (4) improved transparency of actions and (5)
improved environmental integrity
Fairness and legitimacy considerations militate in favour of a more universal, multilateral negoation.
Procedural fairness dictates that all those who are affected by an issue should have a say in its
resolution, so as to be able to ensure that their interests are taken into account. This is nonetheless
prone to obstructionist actions.

Module 2- Do nations matter in a global world


Lecture Prof Calhoun: Do nations matter?
Argues that a nation is a subconscious identification through an imagined community, which is
constructed through media and other apparatus of the state. Yet there is simply no commonality
among those within an imagined community in the past. The imagined community emanates from
the invention of the printing press, the sharing of the same history and same popular culture. The
social human construct of a nation presents itself as a valid alternative to many other forms from
families to empires.
Sociology 5

Sociology is the scientific study of society and social interaction. Sociologists are primarily
interested in studying the ways in which the interactions between different groups of people
constitute larger social structures that shape the everyday lived experience of us all. The interplay
between agency and structure is a key area of interest in sociological research: whereas society only
consists of real people, in their interaction individuals often create larger structures and institutions
that condition or limit the degrees of freedom people have to do things, and sociologists are
interested in how these looping and feedback mechanisms work.

Examples of sociological inquiry are traditions, norms and customs; the dynamics of small
groups and the nature of friendships and family relations; how issues of class, race and
gender influence peoples life chances; how people divide their time between work and
leisure; the impact of economic systems on everyday experience; why some people deviate
from accepted norms or commit crimes; how socially accepted ideas of appearance and the
body change over time; the effect of science on people lives; the sociological analysis of
governance and management systems; or the ways in which new information and
communications technologies change the ways in which people interact with each other.
Traditionally, sociology was more concerned with a birds eye view of reality and tried to
explain the emergence of large institutions like the economy, the state, or what a society is
generally and why societies are so different in many places. Today, however, there is a
larger concern with explanations on a micro-level: what people do in social networks and
how they develop a sense of selfhood and identity in and through the interaction with
others

The world is not mapped into nation-states, there are many alternatives to nation states.
Nationalism and nations gew prominent in early modern Europe, being shaped by: rise of states,
reformation and religious conflict, economic integration, popular revolutions and wars and shaping
wars, attacks on foreigners and minorities, protectionist economic policies and citizenship.
Nationalism works by symbolism.
Mild benign form of nationalism vs a dangerously strong form of nationalism.
Nationalism can be integrative but it can also be conformist and hostile to difference. Nations are
also the site of most modern democracy. Mainly within national frameworks that people, citizens
vote and have the most political influence. Cosmopolitan is increasingly being associated with the
dominant powers, political, economic and cultural and is hardly as neutral as internationalization
itself. Cosmopolitanism reflects a prestige hierarchy- the precise class consciousness of frequent
travelers where they see the local, parochial culture in a sanitized manner.
Readings Calhoun 2007 Is it time to be post national?
Calhoun argued that there are good reasons to think that we are not entering very abruptly into a
postnational era. These reasons go beyond mere temporary assertions of state power, especially in
the security policies of wealthy countries. He suggested that most cosmopolitan theories are
individualistic in ways that obscure the basic importance of social relationships and culture and
defended tradition and urged thinking of it as a mode of reproduction of culture and practical
orientations to action, not as a bundle of contents. Rather than wishing nationalism away, it is
important to transform it.
Readings Held 1996 The Decline of the Nation State
Sovereignty (having control and power over its own future, ability to take final decisions and to
make and enforce law in a given territory) is different from autonomy (ability not to set goals, but to
achieve goals that have been set).
4 gaps/disjuncture in the power of nation state as in the principle capable of determining its own
future and on the actual practices and structures of the state in the global level
(1) World economy: internationalization of production and finial transaction erodes the capacity
of the state to control its own economic future. Eg MNCs
(2) Hegemonic powers and power blocs: state capacity to initiate particular foreign policies,
pursue certain strategic concerns and choice of military technologies may be constrained by
its role in the international system of power relations. Eg NATO
(3) International organizations: new forms of multinational politics have been established and
with them new forms of collective decision making, involving states, IGOs and a variety of
transnational pressure groups. Eg Members of European Community
(4) International law: idea of membership of a national political community and development of
international law which subjects individuals, governments and NGOs to new systems of
regulation. Eg International laws that protect basic humanitarian values must transgress
state laws if they are in conflict

Evident that the operation of states in an ever more complex international system, both limits their
autonomy and infringes ever more upon their sovereignty. One step forward would be to create a
politics beyond the sovereign nation state.
Lecture Dr Lea Ypi: Do nations matter?
Cosmopolitanism is the ideology that all human beings regardless of their political affiliation, do (or
at least can) belong to a single community, and that his community should be cultivated. (Stanford
Encyclopedia of Philosophy).
Normative political theory asks us to look at an alternative world, where assumptions no longer hold,
the differences and the contrast between the empirical world and the imagined construct give us a
critical perspective on current reality. It asks us to think of alternative circumstances, where the
constraints of the real world are no longer there. And it tries to elaborate principles for the conduct
of individuals and the design of institutions under such circumstances. It attempts to identify the
distinction between the imagined construct and the ideal world to try to change the properties of
the current context and make it more similar to the one where we envisaged. It uses normative
questions through the use of counterfactuals, the description of current context in an alternative
construct for the purpose of argumentation. It works with thought experiments, appealing to
intuitions, examples, moral sense and individual judgments. It assess arguments by making use of
the tools of logic, the relationship between premises and conclusions.
The relevance objection
The pragmatic objection
The relativist objection: the need to account and consider the diversity and the divergence of human
activities. Ideals help us to understand the motivations of agents to reshape certain political
institutions, understand the actions and behaviors of agents in the past.
Cosmopolitanism today have adopted strands into commercial interdependence, need for political
coordination (better for citizens represented by nation states to coordinate with others about
common conduct: trade exchange, political conventions, embassies etc) and the demand of justice
applied to social/political institutions (politics should not just follow blindly the behaviors of leaders,
but on the basis of moral philosophy, which forms certain political conventions, justice, equal moral
world of human beings etc, the permeation of such principles in institution building)
(1) Moral cosmopolitanism: nationality is morally arbitrary and that arbitrary features of
distinctions (eg race, gender, class, nationality) should not form the basis of your moral
actions. Charity looks at the symptoms, justice looks at the root causes. Morality requires
one to interact without the basis of discrimination.
(2) Economic cosmopolitanism: market knows no boundaries. The ideal demands an equal
distribution of benefits and burdens of social cooperation
(3) Political cosmopolitanism: reform of political institutions (mechanisms that facilitate the
discharge of political justice/obligation): nation states more oriented to a cosmopolitan
politics. Democratization of politics above the state (institutions that not just appeals to the
concept of national sovereignty, but permeates across state boundaries) and below the
state (civil engagement- transnational activism that involves the appeal of social
movements).
Readings Stanford Encyclopedia of Philosophy

The interest in cosmopolitanism lies in its challenge to commonly recognized attachments to fellow
citizens local state, parochially shared cultures, and the like. As the world becomes a smaller place
through increased social, political and economic contacts, the issues and disputes raised will only
become more pressing.
Readings Nussbaum (1996): proposes cosmopolitanism as the way forward
(1) Through cosmopolitan education, we learn more about ourselves. One of the greatest
barriers to rational deliberation in politics is the unexamined feeling that ones own
preferences and ways are neutral and natural.
(2) We make headway solving problems that require international cooperation. We live in a
world in which destinies of nations are closely intertwined with respect to basic goods and
survival itself.
(3) We recognize moral obligations to the rest of the world that are real and that otherwise
would go unrecognized. That in making choices in both political and economic matters, we
should most seriously consider the right of other human beings to life, liberty and pursuit of
happiness.
(4) We make a consistent and coherent argument based on distinctions we are prepared to
defend. By conceding that a morally arbitrary boundary such as the boundary of the nation
has a deep and formative role in our deliberations, we seem to deprive ourselves of any
principled way of persuading citizens that they should in fact join hands across these other
barriers.
The life of the cosmopolitan, who puts right before country and universal reason before the symbols
of national belonging, need not be boring, flat or lacking in love.
Lecture Dr Madhok: Transnationalism
-

Analysis of particular process across space


Analysis across time
Analysis of different kinds of transnational activities

Ethnography
-

Relies heavily on participant observation


Produces thick detailed data about how people lead their lives (making sense out of complexity)
Investigates the specific and localized experiences of individuals and groups from within
Allows us to see how global forces play out in everyday life, and how people respond to and
shape complex social, economic and political forces.
Takes into account the multiple sits and layers of social field where migrants are embedded
Introduces scalar shifts in analysis- displacing methodological nationalism as the unit of analysis.
That nations are important but the scale of analysis is no longer only a comparison of nations,
instead it is to look at how and why scales intersect differently in different places.
Focuses on the cultural logics of global processes

Transnational approaches focus on:


-

Global circuits of inequality and difference

Critiquing boundaries, challenges the divide between the national and the global/international
On mobility of people, goods and ideas
The notion of linkage instead of comparison alone
Building solidarities among peoples engaged in challenging inequalities and oppressions across
borders on the basis of equality and without civilization superiority (not there to save people,
but to build solidarity and coalition)

Readings: Coutin (2003)


The adoption of restrictive policies and the promotion of naturalization are perceived as a
disjuncture between the realities of global interdependency and the official models of incorporation
in countries. Migration from El Salvador to US is a good example of ways that global forces compel
movement and the ways that nation-based categories restrict membership. Naturalization instead is
construed not just as a transfer of allegiance, but an additive model of citizenship.
Sameness-difference, choice-nonchoice, and sovereignty-interdependency are key to the logics of
migration, membership put forward.
Readings: Ong (2008)
By tying ethnography to the structural analysis of global change, we are able to disclose the ways in
which culture gives meaning to action and how culture itself becomes transformed by capitalism and
by modern nation-state.

Module 3- Why are great events so difficult to predict?


Lecture Professor Cox- End of Cold War
-

A case of complex causality and the difficulties of prediction in the social sciences
Cold War was an ideological confrontation (after 1917 Russian Revolution) and morphed into a
geopolitical confrontation (after WW2)
- War in terms of military (arms and space race), economic (capitalism, free enterprise vs central
planning, state ownership of means of production), political (liberal democracy vs socialist
authoritarian rule) and ideological (liberalism vs communism). Cold because of Nuclear
deterrence (created instability and conflicts, but also caution and fear), German divide and the
bipolar balance of power may prove to be stabilizing in nature.
- Studying the Cold War allows us to draw lessons from history to avoid future potential
ideological and geopolitical conflicts. It creates the possibility of a debate about the ideologies
of capitalism and communism, relates the unpredictability of events. It reveals to us that
theories/ trends of continuity may be wrong and creates a framework to think about
contemporary world order.
Long because of:
(1) Systemic factors (inherent differences, conflicting interests, security dilemmas)
(2) Perceptions and fears
Ended because of:
(1) Agents:
- Reagan as a catalyst (from confrontation to engagement)
- Gorbachevs new thinking of perestroika(restructuring) and glasnost(openness)
- Thatcher
(2) Structural factors at the international level
- Costs of military competition
- INF treaty and START (strategic armaments reduction) talks
- Imperial overstretch (USSR venture into Afghanistan)

(3) Structural factors at the domestic level


Economic decline in USSR (low labour productivity, quality of outputs, returns relative to
investment)
- Popular unrest in peripheral nations, regime being brought down by revolutions
- Rigidity of political structures
(4) Role of ideas
- Sinatra doctrine, doing it my way
- People power and aspirations for change
- Nationalisms
- Appeal of Western freedoms and prosperity in a pluralistic system and higher living standards
- Failure of communist ideals to deliver tangible benefits
- Human right agenda
Complex causality and multiple contingencies of great social events. Interrelated explanations for
the end of Cold War: agency, structure, ideas. Disciplinary differences in studying and explaining end
of Cold War and the difficulties of prediction.
-

Readings- CIA 1989


As Gorbachev engaged in radical reform, he opened up the Pandoras box and Soviet system as a
result is less stable than it has been at any point since Stalins great purges in 1930s. It pointed out to
the economic decline that was occurring and the corruption within the system that erodes
legitimacy. CIA identified various sources of instability: popular discontentment, ethnic tensions,
collective action against regime and regime ill capabilities. (structural factors)
Gorbachev gambling on 3 fronts:
- Nationality arena, on defusing ethnic grievances and achieving a more consensual federative
union through unrestrained dialogue
- Economic arena, putting marketization on hold and pursuing short term stabilization program to
avoid confrontation with public
- Political arena, transforming the party from a universal political, social and economic
management into a brain trust and authoritative steering organ, while empowering popularly
elected soviets
Soviet Foreign Affairs Memorandum in 1989: indicates that there was a need to not allow the
erosion of socialism in Eastern Europe and to keep all countries on socialist path of development.
Readings- Suri 2002: identified structural and agency factors and argued that there was an
absence of inevitability and hence unpredictability in the course of history and outplay of events.
- Domestic politics and international politics were deeply interdependent during that period.
American fears of nuclear war drove Reagan policy. Soviet internal weakness inspired reform
efforts and contributed to dissolution.
- Gorbachev and Reagan both played a role in ending the Cold War. Both leaders reinforced their
respective reform inclination
- End of cold war not inevitable. Change arises-often unpredictably-from the interplay of personal
will and propitious circumstances.
Lecture-Ludlow: A historian approach
Historians dont like to approach issues with a pre-defined theory. The key is to find evidence and
then explain rather than devise or use a theory and then seek to test it against evidence. The
presence of other factors: a rejection of bipolarity, there is also
- Eastern European dissident movements
- Other European actors

- Pan-European structures etc.


So there was the adoption of nuancing bipolarity where historians who look at superpowers and add
nuances, where Gorbachevs motivations were more complex. Historians however may
(1) encounter excessively details that all the complexity can break issue up into too many small
intricate parts. Political scientists are frequently better at asking the big questions and at
comparing the precise significance among the various factors.
(2) Encounter the danger of inevitability: too smooth a narrative can remove all sense of
contingency (the sense that had circumstances been slightly different, events could have
evolved in an entirely different way), the sense that everything is pre-ordained, having a
clear direction of unfolding of events. One possible approach to counter the issue of
inevitability is to adopt counterfactuals, but this may be inherently risky in itself.
Counterfactuals: most historians talk of turning points and they implicitly identify moments when
events might have evolved differently. Even the process of selecting evidence and prioritizing causes
based on calculation of which factors, if removed, might have made the situation different.
Beneath the set of narratives are elements of analysis, judgement calls and assumptions. It is the
subconscious behavior of a human mind that underplays this. Dialogue with other disciplinarians is a
useful corrective mechanism as it forces historians to recognize: challengeable methodology, the
silent assumptions and even the implicit theory. It can also reveal the crucial role of close analysis of
historical documents and eyewitness testimony to understand specific events and decisions, helps to
add meat to the complexity of the situation.
Readings- Brooks (2000): interaction of structural factors and ideas
The author thought that conventional scholarship to study the role of ideas should not place
unnecessary constraints on the role of material incentives in determining behavior. In fact, to better
understand the role of ideas, there is a strong need for scholars to develop a more useful conception
of how material incentives in the international environment affect state behavior.
Readings- Evangelista (2001): need to bear in mind the structural context
Existing strands of theories are primarily subdivided into 2 distinct causal mechanisms may be
operating simultaneously when actors comply with new norms. One mechanism premised on the
assumption of methodological individualism view actors behavior as based on cost-benefit analysis
and strategic bargaining. The other focuses on normative change that comes about through learning,
socialization and persuasion at the group of societal level. The author argues that on top of these 2
strands of thought, one should add the institutional or domestic-structural context. And the success
of these 2 mechanisms varies depending on institutional and structural constraints.
Readings- Geir (2000): imperial overstretch (structural)
Author argues that imperial overstretch, in terms of the disproportionately large defence budget as
a proportion of GDP was suffocating the Soviet economy.
Readings Patman (1999): agency- Reagan
Reagans confrontational first term may have contributed to the adoption of the New Political
Thinking adopted by Gorbachev, by exacerbating the crisis and accelerating existing long term
pressures for foreign policy change from a possibility to an urgent necessity for significant elements
within the Soviet elite.
Readings Wolforth (1998): theoretical modifications that need to be made
The indeterminacy of theories and complexity of events prove to be stumbling blocks in the
identification and prediction of events. What needs to be changed fundamentally may be the
methodological concept of identifying and testing evidence. Evidence comes in trickle, and evidence

testing should not be viewed as discrete operation but an ongoing process. It comes in degrees,
rather than confirmation and rejection. The rewards of greater attentiveness to the challenges of
causal evaluation will bring about increased clarity of debate and empirically driven progress in our
general understanding of world politics.
Readings Zubok (2002): agency- Gorbachev
Argues that Gorbachevs personal character, which conditioned his preferences and choices was an
important factor in the history of the end of Cold War. That a different person could have taken a
different course of action.
Lecture: Prof Cox Why did we fail to predict the end of Cold War
Difficulty in predicting:
- Nature of causality and problems of: contingency, multiple causes, complex interactions
between causes (only know the truth in retrospect) and instability of predictions.
- Pressures of academic specialization and empiricism (subdivision into highly specialized
departments, academic progression depends on narrow focus, empiricism emphasized over
grand theories and the tendency to miss the big picture)
- Tendency to groupthink (self-reinforcing effect of emphasis among policy makers)
- Problems of acquiring and interpreting data (failure to predict is the failure to realize certain
outcomes, but political reasons for data misrepresentation on both sides)
- Core assumptions held by policymakers and analysts (bipolarity evident in multiple policy
analysis due to the bipolarity of the world)

Module 4- Global Financial Crisis


1. Buildup and initial irrational exuberance
2. Collapse
3. Credit crunch and recession

1. State of economy
Financial assets riskier in reality than they seem, extended chains of originate-and-distribute
from underlying mortgages to final asset holdings
Increasingly complex and opaque handling of securitization
Greater interconnected across institutions and across countries
Heightened leverage
2. Amplification and propagation
Bank runs on assets and liabilities
Liquidity and solvency
3. Financial excess
Subprime credit extension
Securitization; extreme financial engineering
Weak governance
Ratings capture and inadequate regulation
Moral hazard, too big to fail
Political economy of inequality (social turmoil)

Readings Blanchard 2009- talks about the initial conditions:


-

Underestimation of risk contained in newly issued assets. Assets were created, sold and
bought, which appeared much less risky than they truly were.

The opacity of the derived securities on the balance sheets of financial institutions.
Securitization led to complex and hard to value assets on the balance sheets of financial
institutions. With complexity came opacity.
Connectedness between financial institutions, both within and across countries.
Securitization and globalization led to increasing connectedness between financial
institutions.
High leverage of the entire system means higher probability that capital would be wiped out,
and higher probability that institutions became insolvent.

Amplification mechanisms that transmitted and magnified the effects so dramatically:


-

Sale of assets to satisfy liquidity runs by investors. Fire sales led to a further decrease in the
value of assets and hence a greater exposure to institutions.
Faced with a fall in value of assets, sale of assets by financial institutions to re-establish and
maintain an adequate capital ratio. Opacity, connectedness and leverage all implied more
amplification. A downward spiral of asset value.

Turning to policies: policies should aim to limit the 2 amplification and propagation mechanism and
avoid a repeat of some of the policies.
Readings- Rajan 2010
Easy credit has always been used by governments that are unable to address the deeper anxieties
(growing income inequality) of the middle class directly. Expanding credit to consumption and home
ownership. That the way forward is not to award the regulators with more power, but rather to
tackle inequality at its root, not by doling out credit, but giving more Americans the ability to
compete in the global market.
Lecture Calhoun
Sociology: everything is connected, has a history. Meanings matter. Human choices always involve
prior influences, other options, unequal power and unintended consequences. Meanings are shaped
by social influences. Abstraction and context. Sociology complement economics.
Sociological interpretation: social character of financial entity. It morphed from direct interpersonal
relationship contracts into complex multi-party interactions. Inbuilt modelling inadequacies and
conflicts (principal agent problem). Could be a reflection of a pattern of systemic relationships. Look
beyond the financial crisis and relate it to the larger underlying social forces. Financial wealth grown
much more rapidly than material wealth.
Neoliberalism and financialization, shaped by broader politics (privatization is an ideological
commitment by the public service to efficiency gains) and social patterns. Massive growth of value of
financial assets as a proportion of total wealth through credit and financialization. It increased
leverage and risk in both LT ownership and trading. Financialization intensified connections, scale
and speed, it created new opportunities, moved money where it could bring greater returns and
made markets more opaque.
Readings- Paul De Grauwe

Eurozone policy seems driven by market sentiment. Fear and panic led to excessive and self-deating
austerity. Austerity produces unnecessary suffering. After crash, private sector has to reduce debt, it
tries to save more and sell assets. Private sector can only save more if government sector borrows
more. If government tries to save more, attempts to save is self-defeating and economy is pulled
into deflationary spiral. He proposes moving towards a fiscal and political union in the long run.
Insufficient but not redundant
Reflexivity problem: prediction may be self-fulfilling. Reaction and behaviors may change in response
to prediction. Self-falsified. Explanation on grounds of probabilistic causation does not permit
prediction.
Sufficiency and necessary condition