GEO 273 1st EditionExam # 1 Study Guide Lectures: 1 - 13Disclaimer: this review guide does not cover every aspect of the material discussed in class, nor does it aim to. It would be most helpful to review class readings & personal notes, using this review guide as a supplement to your study. Lecture 1 (January 12)What is Political Economy?Describe the key differences between traditional economics and geographical political economy.Economics Geographical Political Economy- Equilibrium based on supply & demand- Unit of analysis: individuals- “rational” according to theory of maximizing utility - Free exchange between buyers & sellers- Emphasis on market & exchange processes - Dynamic changes, instabilities, crises-Systematic crises every 3-4 years- Unit of analysis: social relations, institutions, social classes-People are not atomized consumers, but are rather dynamic and make economic decisions based on complex social factors- “Inherent” conflict between different groups with specific interests- Emphasis on production, distribution & exchangeCentral theme: Economic processes does not occur in a vacuum. Rather, they form and are formed by the geographic space and time in which they occur. Viewing economic processes through this lens allows us to study economics in a more comprehensive social context, thus challenging our concept of a “good” economy. The geographical political economy perspective shifts our attention away from GDP figures and towards society’s overall wellbeing as the centralmeasure of an economy’s success. Lecture 2 (January 14) Commodities and ValueDescribe the key ideas from which commodities derive their value. Marx defines value as the socially necessary labor time used to produce a commodity at an average level of intensity and skill.Harvey delineates an essential distinction between use value and exchange value, wherein the former relates to the value extracted from the consumer’s use of a commodity and the latter is associated with the price at which the commodity is bought/sold.Commodity fetishism is a tendency for participants in the economy to define a commodity’svalue in terms of only its price. This view does not take into account the various factors that playinto a commodity’s price listing, especially not those that pertain to social relations in the supplychain. Lecture 3 (January 21)What is Money?List the key forms and uses of money.Money exists in the form of deposits, currency, and creditIts key uses include:-store of value-facilitator of exchange-means of payment-unit of accountGive an example of a way in which money is used as a commodity unto itself. What might be theramifications of this?In the financial sector, bankers make a profit by collecting and loaning money in the form of deposits. To break it down:Person X deposits $500 in the local bank. In this scenario, the Federal Reserve mandates that the bank preserves 10% of the deposit i.e., $50, and is free to loan out the remaining $450 to Person Y. Meanwhile the bank must pay a microscopically low Annual Percentage Yield (APY) to Person X, let’s call it .01%. As the bank loans the $450 to Person Y, it ensures that the interest rate it charges him much higher than the APY it’s paying to Person X—we’ll call the interest rate 12%, incurred at the end of every month. In this fashion, in one year the bank will have paid $4.50 to Person X in APY, andwill have earned an additional $648 on top of the $450 from Person Y. If during this transaction Person X decides to withdraw his deposit, and the local bank could not reimburse him past the essential 10% preserved, the Federal Deposit Insurance Corporations would back the remaining 90%, thus deeming the speculative transaction stable.Financial investment becomes more complicated as it is coupled with issues of credit. This leads to increased speculation on the market, typically at the expense of the less powerful borrower. For example, Person Y uses the $450 in the form of credit in order to purchase a new puppy. If at the end of each month, he doesn’t pay back his credit, he will incur an additional $648 at the end of the year, driving him further into debt. Meanwhile, if Person X decides he wants to withdraw his original deposit of $500, the bank will not go into debt, as the overseeing FDIC will cover up to 90% of the original deposit. In this fashion, the bank can continue to speculate and loan and make superfluous profit while borrowers as Person Y sink deeper and deeper intodebt.Lecture 4 (January 26)Property, the State, and Public WealthMain features of capitalist state:- Institution that sets the conditions of the market based on private forms of wealth appropriationo I.e. the purpose of the state is to protect and perpetuate capitalism- Introduces a necessary divide between “politics” and “economics”— in history this dichotomy is unique to capitalism- Invention of territorial nation-states including scales of governance (to make investment inspecific geographic regions safer)8 steps to forming a capitalist state: 1. Destroy the commons2.Create legal & institutional framework for private property3. Enforce private property and markets4. Produce consent without coercion/ force5. Deal with social costs & externalities6. Issue currency7. Provide National Defense8. Respond to popular pressureLecture 5 (January 28)Capital and LaborIn the theory of capital as a class system, capital gains profit via production and labor is paid for its services, but does not gain direct access to means of production i.e. profit.Social reproduction entails the lives of the labor force outside of the workplace. This may include housework, leisure, biological reproduction, education, health etc.The perceived value of labor in society is influenced by historical and moral elements i.e. the good life/ American dream. I.e. labor may contend that it is worth more than the wages allotted to them, a statement that is rooted in political and cultural ideology. Surplus value is extracted from the difference between the real value of labor and the price of labor (wage). I.e., capital’s goal is to generate the most surplus value possible by increasing intensity, lowering wages, and introducing labor-saving innovation.Lecture 6 (February 2)Accumulation as a WholeCapital can be defined in 3 ways:Process: used to make more money—constant flow of capitalThing: commodities, means of production, money Class system: capital is the