The Dictionary of Human Geography (50 page)

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Authors: Michael Watts

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something where before there was nothing. Na ture pre existed, but how it was exploited, used, thought about and represented once market capitalism arrived was utterly altered. The original Marxist approach emphasized the centrality of social relations in constituting the economic resource, and in doing so joined dis cussions with political ecology. In a classic paper, Watts (1994b) brilliantly showed how social relations in Nigeria made the natural resource of oil neither natural nor a resource; (NEW PARAGRAPH) instead, it created mal development, social dis cord and political mayhem (see also petroca pitalism). Since then, discussions of nature and resources have centred around two axes. One turns on hybridity, a notion drawn from science studies and extending what counts as social relations, and connoting the insepar ability, their mixing and blending, of nature and the social for example, Swyngedouw?s (1999) work on the political economy of water in Spain, and Morgan, Marsden and Murdoch?s (NEW PARAGRAPH) on food. The other turns on the influ ence of discursive and regulatory regimes, par ticularly neo liberalism, in defining nature and resources for example, Bakker?s (2003) work on water, and the edited collection by Heynen, McCarthy, Prudham and Robbins (2007). (NEW PARAGRAPH) Economic geography is a discipline that is intellectually open, eclectic, pluralist, possibly chaotic and anarchic, and subject to tempor ary whims and fancies. Inconstancy is the only constant, inconsistency the only consistency. Over the past two decades the boundaries between economic geography and other sub fields have become increasingly muddied and indistinct, as the very idea of a separate discip line, and a separate empirical object of study, has been contested (as reflected in the new textbooks for the discipline; e.g., Coe, Kelly and Yeung, 2007). Almost anything can now be fodder for its enquiry. Critics from outside have complained of a hopeless ?fuzziness? and slapdash approach (Markusen, 1999), while even inside there have been grumblings of a lack of rigour, focus and policy relevance (Martin, 2001b). The unusual challenge for the discipline will be less breaking new ground, which it seems to do on a daily basis, than holding its existing ground. tb (NEW PARAGRAPH) Suggested reading (NEW PARAGRAPH) Amin and Thrift (2000); Barnes (2001); Coe, Kelly and Young (2007); Scott (2000a); Sheppard and Barnes (2000). (NEW PARAGRAPH)
economic growth
A sustained increase in the production of goods and services, usually measured at the national level as the change in the gross domestic product (gdp) of a coun try?s economy. Economic growth is, at the same time, one of the most fundamental and perplexing issues in economic theory. There are still no conclusive answers to the questions of what causes economic growth and to what extent it can be sustained, which have been hotly debated since the time of Adam Smith and Thomas Malthus. Smith believed that the ultimate engine of growth was the division of Labour, the increasing elaboration of which drives productivity, which in turn determines growth (or the ?size of the market?). Larger markets would sustain higher rates of growth, and therefore growth would continue indefin itely. Malthus, for his part, was much more pessimistic. He argued that the human popu lation would expand geometrically, while the supply of land (and therefore food) could only grow slowly, resulting not only in a slowing rate of growth, but in catastrophic vulnerabil ity to poverty and famine (see maLthusian modeL). Karl Marx also identified limits to the long run rate of growth, caused in his analysis by the tendency of the rate of profit to fall and rising class conflict (see Marxian economics). For Marx, economic growth would also be inherently unstable, following boom and bust cycles, along with periodic (and gradually increasing) bouts of unemployment (his ?reserve army? of labour). While Marx may have over estimated capitALism?s inherent tendency to system failure, his forecast of sig nificant fluctuation in rates of growth, com bined with spatially uneven deveLopment, has been borne out by the historical record (see Bluestone and Harrison, 2001; Dumenil and Levy, 2004). (NEW PARAGRAPH) ?Growth is the pivot on which inDustriaL geography turns?, Storper and Walker (1989, p. 36) have argued, ?and change is the only constant in a world of persistent disequilib rium generated by the very nature of capitalist development?. There is no evidence of sus tained convergence towards an equilibrium or natural rate of growth; indeed, there is a growing awareness that there are incipient, if not urgent, social and environmental limits to growth. But the search for the ultimate eco nomic causes of growth continues. Often, it appears that the simple fact of growth is taken as a sign of causality. So, during the 1980s, the relatively strong performance of the German and Japanese economies prompted wide spread debate around the essence of these apparently superior models of capitalism (see Albert, 1993). During the 1990s, when eco nomic growth in both these economies fal tered and American growth surged, this was held up as a validation of the brand of market driven, technology intensive growth found in the USA (Friedman, 2000 [1999]), the generic form of which is often described as neo LiberaLism. (NEW PARAGRAPH) The late 1990s also witnessed the emer gence of ?new growth theory?, developed by economists Robert Lucas and Paul Romer, which posits that the ultimate causes of growth are endogenous (i.e. internal), the rate of growth being a function of the aggregate stock of capital (both human and physical), together with the degree of technological sophistication of the economy (e.g. the rate of investment in research and development). The policy implications of this modeL, which include accelerating the long term rate of investment in technology and skills, have been explored by Bluestone and Harrison (2001). Here, they draw unfavourable contrasts with the prevailing ideology of neo liberal growth, which favours short term measures of market performance and an ethos of governmental deregulation. (NEW PARAGRAPH) Evidently, the search for the ultimate causes of growth continues, and with some urgency. Since the 1970s, growth rates across many of the advanced industrial nations have declined markedly, compared to the so called ?Golden Age? of fordism, while the experience of less developed countries (with the notable excep tions of India and China) has been decidedly uneven. This has led some to conclude that the ?Golden Age? of high growth has given way to a ?Leaden Age? of generally slower, and less sustainable, economic growth. jpe (NEW PARAGRAPH) Suggested reading (NEW PARAGRAPH) Dicken (2003, see especially ?The changing global economic map?, pp. 32 81); Scott and Storper (2003); Storper and Walker (1989). (NEW PARAGRAPH)
economic integration
A term often coupled with gLobALizATion, and typically associated with claims about the virtues of free trade and unregulated capital markets. If one searches for ?economic integration? on the website of the INTerNATIONAL monetary fund (imf), for example, some 3,350 documents appear the bulk of which are concerned with defining the enabling conditions for expanding trade and capital flows, and documenting their beneficial effects. Such claims have been sub ject to intense contestation, exemplified most dramatically by the protests that erupted in Seattle in November 1999 at the time of the worLd trade orgAnizATion (wto) ministerial meeting (see anti gLobALizATion). (NEW PARAGRAPH) Some scholars question the extent and novelty of contemporary global economic integration, thereby casting doubt on efforts to portray it as an inexorable linear process. In the mid 1990s, for example, Hirst and Thompson (1996) observed that the inter national economy was actually less open and integrated than in the early years of the twentieth century under the Gold Standard regime. They also pointed to the concentra tion of trade, investment and capital flows among Europe, Japan and North America. Since then, China has emerged as a major site of trade and investment flows, as well as the single largest holder of US debt. (NEW PARAGRAPH) Burgeoning US debt underscores the struc tural asymmetries that have propelled the lib eralization of financial markets since the 1970s. A widely held view is that the collapse of the Bretton Woods system of international monetary and financial arrangements in 1971 represented a defeat for a weakened US capit alism, unleashing market forces that quickly gained ascendance over nation state power (see money and finance). New information technologies and a ?space of flows ? also figure prominently in this account of intensified eco nomic integration (e.g. Castells, 1996a). (NEW PARAGRAPH) In a revisionist analysis of the shift to what he calls the Dollar Wall Street regime, Peter Gowan maintains that the liberation of international financial markets was part of a deliberate strategy by the Nixon administra tion, ?based on the idea that doing so would liberate the American state from succumbing to its economic weaknesses and would strengthen the power of the American state? (Gowan, 1999, p. 23; italics in original). Cutting the link between the dollar and gold in 1971 meant that the USA could force revaluation on other states through its own policy for the dollar. In a second key set of moves, closely linked to the OPEC oiL price rise, the USA insisted that petrodollars be recycled through the pri vate banking system and devised a set of incentives for commercial banks to lend to governments in the South. These included the abolition of capital controls, scrapping the ceiling on bank loans to a single borrower and repositioning the IMF to structure bail out arrangements that shifted the risk of such loans to the populations of borrowing countries. While ensuring the banks would not lose, these arrangements have also meant that financial crises in the south provoked capital flight of private wealth holders that ended up strengthening Wall Street (see neo LiberaLism). While the banks and Wall Street benefited in the period after 1973, the contin ual liberalization of the financial markets came screeching to a halt in 2008 with the collapse of over extended US investment banks and insurance houses, and the crippling of a global financial system made excessively vulnerable by a massive housing bubble driven by exces sively leveraged banks deploying risky financial instruments (credit default swaps, for example) in a fiscal environment characterized by corruption, fraud and virtually non existent regulation and oversight. (NEW PARAGRAPH) Neo liberal forms of economic integration emerge from this analysis notas a set of in exorable technological and market forces increasingly divorced from state political con trols, but as integrally linked with what Harvey (2003b) calls ?the new imperiaLism?. Such understandings are crucial in a post 9/11 world in which economic integration and military force are becoming closely intertwined. gha (NEW PARAGRAPH) Suggested reading (NEW PARAGRAPH) Barnett (2004); RETORT (2005). (NEW PARAGRAPH)
economies of scale
The cost advantages gained by large scale production, as the aver age cost of production falls with increasing output. Total production costs usually increase less than proportionately with output, up to a point where diseconomies of scale (cost disadvantages) set in. (NEW PARAGRAPH) Economies of scale generally arise from con ditions internal to the operation of the plant in question. Some important internal sources of scale economies are: (a) indivisibilities, where plant is built to a certain capacity below which the average cost of production will be higher than at full capacity, and the plant cannot be divided up into smaller units working with the same efficiency as the larger one; (b) special ization and division of labour associated with expansion of scale, which can increase effi ciency and hence lower costs; and (c) overhead processes, such as the design of a product, which must be undertaken and paid for irre spective of scale, so that the larger the output, the lower is the overhead cost per unit. Certain externaL economies may also be associated with expansion of scale of output; for example, if the growth of an entire industry reduces costs in each individual firm. (NEW PARAGRAPH) The existence of economies of scale encour ages the expansion of productive capacity up to the point at which diseconomies eventually pull the cost of the additional (marginal) unit above the price that it will fetch. In some modern industry, it may be that this point is reached only at a very high volume of output, so that average cost continues to fall with rising output well beyond the level at which diseconomies might be expected to arise. However, in other activities a trend towards more flexible and differentiated production may lead to diseco nomies at relatively small scale of output. (See also economies of scope.) dms
economies of scope
The cost advantages that may arise when performing two or more activities together within a single firm rather than performing them separately. When econ omies of scope exist, firms have an incentive to internalize (i.e. perform in house) the produc tion of goods or services that otherwise would be acquired through transactions with external suppliers (see transactional analysis). This incentive is normally expressed in terms of reductions in production costs as result of internalization (see transaction costs). Hence, economies of scope may arise where the goods or services in question share inputs to their production (e.g. by using excess capacity in power generation or indivisible machinery), are related to one another through input output relations (one good being an input to the production of the other good), draw upon common technical or man ual skills for their production, or can be most efficiently produced at roughly the same scale of output. This concept, when combined with the idea of economies of scale, provides an understanding of the forces that determine firm size and the nature of inter firm relations in localized clusters of producers (Scott, 1988c). (See also production complex.) msg (NEW PARAGRAPH)
economy
Economy is practice and object. As human practice, Aristotle defined oikos as operating the household (on patriarchal prin ciples) to meet daily needs. Over time, as the meaning of economy migrated from the domestic to the public sphere within political economy, it came to mean ?seeking a desired end with the least possible expenditure of means?. As object, it refers to the hypothesis that practices of economy, now in the public domain, can be separated from the remainder of societal endeavour: as the economy. (NEW PARAGRAPH) Economy has become central to social dis course as a result of this separation: human practices are thought of as reducible to means/ ends rationality, and the (capitalist) economy is thought of as central to human well being. (NEW PARAGRAPH) The genealogy of this separation of econ omy from related societal and biophysical pro cesses is not yet clear. The question of how to organize society on secular principles, as a substitute for (Christian) religious mores, was a preoccupation of the enlightenment in France and Scotland. French Physiocrats constructed the first model of an economy as a self sustaining entity. In 1758, Francois Quesnay built a tableau ?conomique, forerunner of Marx?s theory of the circulation of capital and of post 1945 input output models, depicting the flow of net product from its pre sumed agricultural source, via landlords, ?unproductive? industrialists, and back to agri culture. British political economists concerned themselves with the benefits of organizing soci ety around economy. It was held that the state could not rein in human passions, implying that the key was harnessing self interest for this purpose. Avarice became constructed as a beneficial and mild interest rather than a pas sion, capable of taming other passions deleteri ous to society. Adam Smith solved the puzzle of how self interest could create a society benefi cial to all. He reduced self interest to economic calculation, and articulated the principle of the invisible hand, whereby market competition would translate individual self interested prac tices of economy into mutual benefit. Smith?s argument was geographical: the invisible hand and free trade would benefit Britain. These justifications gradually transformed into the abstract argument that self interested practices of economy were universal, and generally socially beneficial. (NEW PARAGRAPH) Seventeenth and eighteenth century polit ical economy focused on the relationship between economic processes and the national polity. Karl Polanyi (1944) argues that the economy was disembedded from society during Britain?s ?Great Transformation? to liberal capitalism in the early nineteenth century, and increasingly, the economy was placed in a national frame. By 1841 Friedrich List, influenced by American economic policy, was proposing protectionist policies for the German national economy, facing the debilitating consequences of free trade with Britain. (NEW PARAGRAPH) After the 1890s, European and then American economists completed a marginalist, subsequently neo classical, revolution reinfor cing the principle of the invisible hand. Assuming a world of autonomous self interested individuals of equal political power engaged in perfect competition, neo classical economics created a level playing field, on which equilibrium market prices would track the marginal utility of each commodity; ensure that capitalists, landlords and workers are fairly paid (reflecting their marginal contribution to production); and maximize social utility, in a self regulating market. It was also extended as a normative principle to broad areas of social life. rational choice theory, the broadly influen tial idea that social structures and dynamics are the result of the rational economic choices of autonomous self interested individuals, essen tially grounds all social processes in practices of economy and equates such actions with capitalist markets. This vision of a harmonious self regulating capitalist economy, grounded in self interested practices of economy, and gov erned by rules of perfect competition, came to dominate social thought. (NEW PARAGRAPH) After 1945, as the formal end of coLoniaL ism created a world largely divided up into autonomous nation states, each with acknowledged sovereignty over their econ omies (controlling borders, managing eco nomic activities within the border), the idea of the national economy became common place. Indeed, much of the statistical know ledge produced about the economic aspects of society appears in reams of national statis tics, produced using universally agreed prac tices of measurement (such as the Gross National Product; grounded in mainstream Anglophone economic theory), and collected and published by supra national agencies. Timothy Mitchell (2002d) dates ?the making of the economy? to this post coLoniaL era; this is certainly when the discourse globalized. (NEW PARAGRAPH) economic geography has at times aligned itself with such arguments for example, dur ing the 1960s but even then serious reserva tions were expressed about the adequacy of this discourse. Earlier eras of commercial geography and regionaL geography created an awareness of different, non capitalist and non individualist practices of economy in dif ferent places, that are perfectly adequate to the social and biophysical context in which they operate. For example, slash and burn and shifting cuLtivation remain highly func tional for subsistence based societies in deli cate ecological environments (see subsistence agricuLture), now being destroyed by the clear cutting of forest ecosystems to undertake cash crop monoculture. (NEW PARAGRAPH) spatiaL science offered a nascent critique of capitalism?s self sufficiency and social optim ality, even under the extreme assumptions pre supposed by neo classical economics. It was shown that while neo classical theory works well on the head of a pin, it breaks down in the real world of a geographically extensive space economy. Perfect competition turns into monopolistic competition, the level play ing field disappears and prices no longer approximate marginal utilities. (NEW PARAGRAPH) Marxian political economy, gaining popu larity in economic geography during the 1970s and 1980s, offered much deeper criti cisms: that capitaLism entails exploitation of labour and nature, generates social and polit ical conflict and uneven deveLopment, and is incapable of resolving these problems internally (see marxism). The space economy poses difficulties and complexities for Marxist theory too, but these only exacerbate capital ism?s internal contradictions. Capitalism thus cannot be disembedded from its non economic context, as it depends on state intervention, biophysical processes with their own logic, social and legal norms, and civiL society for its own reproduction (see also cuLturaL ecoLogy). post structuraLism has pushed economic geography away from analyses that begin with even political economic processes, towards a view in which these are co implicated with cultural, gendered and biophysical processes, and non capitalist economic practices. (NEW PARAGRAPH) Geographical economy is inseparable from and constituted through societal and biophys ical processes, and is variegated rather than simply capitalist. There is no single economy applicable to all places, with advanced capit alism constituting a ubiquitous best practice for all, but room for geographically differenti ated possibilities and imaginaries. es (NEW PARAGRAPH) Suggested reading (NEW PARAGRAPH) Dumont (1977); Gibson Graham (1996); Hirschman (1977); Sheppard and Barnes (2000). (NEW PARAGRAPH)

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