The state as a creature of money

Recent social theories of money have challenged economic conceptions of it as first and foremost a medium of exchange. Writers such as Geoffrey Ingham and David Graeber have revived the chartalist position that money is essentially a creature of the state, whose primary function is to measure value or debt. In this paper, I argue that this is a wrong turning. I first clarify the conceptual underpinnings of Ingham’s treatment of money as an ‘institutional fact’, a concept drawn from Searle. I clarify the sense in which this argument establishes that the state ‘creates’ money – and show that this sense is quite limited. It is a theory of how something comes to be accepted as money, rather than a theory of why there is money in the first place, and it gives no account of money’s value. Finally, I sketch an alternative way of looking at the relationship between states and money. This recognises that modern states have been shaped in part by strategies with regard to monetary management, with state actors engaging strategically in a system they only partially constitute – so that states are ‘creatures of money’ as much as the reverse.     

Securing Japan in the ‘West’: The US-Japan Alliance and Identity Politics in the Asian Century

Why has the military dimension of the US-Japan relationship remained the central point of reference for Japanese foreign relations, despite the demise of the Soviet Union? Why has Japan, deepening economic interdependence notwithstanding, remained politically distant from East Asia? Based on analysis of statements by Japanese and US political elites and academics regarding the US-Japan alliance, this article argues that the rise of China, coterminous with the rise of ‘Asia’, challenges the notion of the ‘West’ as, according to standards of industrial modernity, a superior social and political order. These moving ideational boundaries question Japan’s position as the most advanced Asian nation and member of the (Western) international society of states. Therefore, the US-Japan alliance has since the mid-1990s become increasingly important for securing Japan in the ‘West’ and the ‘West’s boundaries in East Asia.     

Swedish Geopolitics: From Rudolf Kjellén to a Swedish ‘Dual State’

Early in the twentieth century, Swedish geopolitical scholar Rudolf Kjellén wrote of the nineteenth century nation-state as a state of ‘land and people’, but he also suggested that in the twentieth century various empires would eventually force Central Europe to unify into a bloc of states under the protection of a powerful Germany. This concept of ‘state-bloc’ resembles Carl Schmitt’s idea of Grossraum and is also very similar to what later became NATO, but now with the United States, not Germany, as its central protecting power. Within the individual state, this duality of nation-state and state-bloc was fused with what Hans Morgenthau called a ‘dual state’ with a regular state hierarchy of the nation-state versus a parallel security hierarchy, now linked to the central power. After the Second World War, Sweden, despite its ‘policy of neutrality’, was placed under the US nuclear umbrella, creating a duality that typified Morgenthau’s idea of the ‘dual state’. The regular ‘democratic hierarchy’ was confronted by the US-leaning ‘security hierarchy’, with the latter intervening in the event of emergency. In the 1980s, the strength and unpredictability of the Swedish Social Democratic government became worrisome to the US security network. In a crisis situation, the ‘dual state’ – or what we might call a ‘double sovereignty’ of the ‘democratic state’ and the ‘security state’ – might prove unacceptable. In the final analysis, the Schmittian ‘sovereign’ is undivided.     

Behind rising inequality and falling growth

This paper investigates why the upsurge of top income shares has coincided with economic slowdowns in the US since the late 1970s. I argue that a fast-growing unearned income from ‘wealth residual’ – the unexplained increase in wealth that is not accompanied by any increase in real output – lies behind them. To support this hypothesis, I measure wealth residual from the national accounts and associated statistics, and then perform a set of panel regressions using a comprehensive panel dataset of the US at the state level. The estimation results demonstrate that the rapid growth of wealth residual during the last four decades has contributed to a co-evolution of fast-growing inequality and falling growth.     

Impact of Chinese growth and trade on labor in developed countries

This paper examines the impacts of growth in China's economy and trade on the skill premium of labor in developed countries. We utilize a unique global dataset that disaggregates workers by occupations to identify impacts across labor categories with different skill sets, complementing the widely used GTAP Data Base in the CGE framework offered by the GTAP model. To study the impacts of China's fast-paced growth, we model the counterfactual, i.e., what if China grew and opened at a more modest rate; we then compare this baseline with China's actual growth. Results indicate that a strong rise in manufacturing exports from China to the US impacts output and employment in the US. The US shifts its production away from light manufacturing sectors to more service-oriented sectors that also tend to engage higher skilled labor. There is a small decrease in the real wages of unskilled labor and a rise in the real wages of skilled labor. Interestingly, not all categories of unskilled labor lose, rather those that are more directly linked with manufacturing sectors are impacted; unskilled ‘service and shop workers’ and the unskilled ‘agricultural workers, machine operators, assemblers, craft workers, and others’ observe a small decline in real wages, while the impact on unskilled ‘clerks’ is insignificant. For all categories of skilled workers, there is an increase in real wages primarily driven by the shift in production to services and high-skilled labor intensive categories, resulting in the rising skill premium. Hence disaggregating the labor data provides greater depth on the understanding of the differential impacts on domestic workers resulting from trade, and thereby guides policy on how these differential impacts can be smoothed through redistribution of benefits. Consistent with other study findings, there is a positive impact on overall growth and welfare in the US, EU and Australasia.     

Missing from the Map: Chinese Exceptionalism,Sovereignty Regimes and the Belt Road Initiative

ABSTRACT

Historical and conventional international relations (IR) frameworks describe the Belt Road Initiative (BRI) as representing a newly ambitious Chinese drive into global politics that positions China as moving away from its long-time reticence towards foreign entanglements. This raises a contradiction of China being at one and the same time both a defender of its own territorial sovereignty while also being engaged in various projects, particularly the BRI and the associated Asian Infrastructure Investment Bank (AIIB), that point in completely different directions. This paper seeks to build upon and move beyond conventional framings to understand how the BRI represents a conflict over the workings of state sovereignty that such frameworks have trouble addressing. We argue that the absence of an official Chinese government BRI map promotes a ‘useful fuzziness’ with regards to China being open to crafting a new as of yet undefined geopolitical identity. In light of the absence of such a map, this work considers key ideas relating to China’s geopolitical expansion via the BRI in terms of so-called sovereignty regimes – the idea that various practices of authority and control emanating originally from states take different geographical shapes. Conflicts arise when a state, such as China, finds itself caught between the operational imperatives of multiple regimes. By identifying the current sovereignty dynamics raised by the BRI in light of the relevant, yet distinctive historical experience of the Marshall Plan, this work can be used as a model for understanding how China’s current leadership is managing the debate of simultaneously protecting ‘strong borders’ yet also promoting a policy of ‘going out’.     

Defence and Promotion of Desired State Identity in Russia’s Strategic Narrative

This article examines how the Russian state promotes and protects its preferred self-identity, using the conceptual framework of ‘strategic narrative’. Nation branding practices, including state-funded ‘mega-projects’ like the Sochi Olympics, have contributed to the narrative by characterising Russia as a welcoming, attractive destination. However, a more salient feature of Russia’s strategic narrative is intense ‘anti-Western’ and ‘anti-American’ political and media discourse, formulated to defend against rival, threatening narratives projected from other countries. Through analysis of official statements and state television content, this article demonstrates how determination to protect ‘great power’ and ‘European’ identities underlay Russia’s strategic narrative in 2014. It considers responses which the narrative has prompted, arguing that desired results in domestic reception have been achieved at the expense of unsatisfactory results internationally. Heavy-handed attacks on the identities of other states boost collective self-esteem among Russian citizens, but they fail to produce – and arguably obstruct – desired responses among foreign audiences.     

Foreign Exchange Accumulation and the Entrapment of Chinese Monetary Power: Towards a Balanced Growth Regime?

This article criticises the notion that China's foreign exchange reserves have strengthened its monetary power. While some scholars have argued that China's international monetary influence has been ‘entrapped’ by the domestic interests of its export sector, a one-sided focus on the export sector fails to identify the significant constraints on its macroeconomic autonomy. This article proposes an extension of the concept of entrapment that draws attention to the key role of state-owned enterprises (SOEs) and their domestic fixed-asset investment in its growth regime: China's external monetary dependency – which is understood as both export dependency and the need to maintain foreign exchange accumulation – has been caused by a disparity between fixed-asset investment and private consumption that reflects a redistribution of income from the household sector to the SOE sector. In particular, I expose the SOE sector's rising interests in foreign exchange accumulation by uncovering a mutually reinforcing dynamic between China's external monetary dependence and the financial repression of its banking system. By entrenching an investment-led growth regime that provides key benefits the SOE sector, this dynamic is found to have seriously constrained the macroeconomic policy autonomy of Chinese authorities to rebalance growth away from investments and exports towards private consumption.     

A ‘Big Think’ Approach to Government Debt: Promoting Significant Learning in Introductory Macroeconomics

Drawing on Dee Fink's theory of significant learning, the authors present a ‘big think’ learning module to supplement fiscal policy discussions in introductory macroeconomics courses. Students are asked to consider a salient, contentious question that can be addressed in meaningful ways based on principles-level concepts and models, namely: ‘In your judgment, does the recent steep rise in the US debt-to-GDP ratio pose a serious threat to the US economy? Why or why not?’ To enhance students' willingness and ability to engage this big think question, the module provides open-ended preparatory exercises amenable to courses taught from heterodox or mainstream perspectives. Unlike standard textbook treatments which inadvertently thwart exploratory thinking and provide little support for analyzing case-specific burdens and benefits of government borrowing, the big think unit motivates students to think logically and creatively about the debt–GDP relationship in the current US context.     

China's Post-Listian Rise: Beyond Radical Globalisation Theory and the Political Economy of Neoliberal Hegemony

While China's rise has been much discussed, its meaning continues to be contested. This is true in radical international political economy, where, for example, it was the subject of (often polarised) debates between Giovanni Arrighi and David Harvey prior to Arrighi's death in 2009. This reflected a broader debate in IPE between development theory and radical globalisation analysis. The key point of contention is whether China's rise represents a challenge to or further consolidation of neoliberal hegemony on a global scale. This article critically scrutinises some of the key assumptions of the radical globalisation approach, specifically, that China represents another form of the ‘competition state’ whose development aspirations have been radically constrained by global ‘new constitutionalism’ and American monetary power so as to conform to neoliberalism. Deploying a structurationist approach to global governance and an eclectic/regulatory analysis of the Chinese state, I argue that China has challenged neoliberalism by projecting its growing power through constitutionalised global governance. In the face of (declining) American power, global constitutionalism has provided an opportunity structure that may help China consolidate its long-term strategy of consensual development. Far from anchoring ‘neoliberal hegemony’, global economic governance is increasingly central to its unravelling.     

Education as Warfare?: Mapping Securitised Education Interventions as War on Terror Strategy

Across history, the US has strategically used education to buttress its war efforts. The current US global ‘war on terror’ is no different. The US's amplified emphasis on in/security and defence following the September 11 attacks folds education into the assemblage of technologies used to explain and advance military intervention. Through a critical geopolitics framework, this analysis unravels the ‘imaginative geographies’ that facilitate this absorption of education and feminism into imperial strategy of war by looking at three distinct education interventions. It considers how disparate sites of and engagements with education – materially and discursively – ineluctably work to humanise, justify, and advance US warfare.     

Confucian economics: how is Chinese thinking different?

The Chinese have their economics. Not yet acknowledged, it is contained in the Confucian thought. Called by me ‘Confucian economics’, it sharply differs from the Western ‘Liberal economics’. Individuals seek posterity through offspring, rather than ‘instant gratification’. Resources are not seen as scarce but as abundant. Rather than take resources from others, people work to make a living. The work ethics and not the profit margin is a key motive. Individuals work not for themselves but for their family. The family is a source of moral sentiment, understood as responsibility for others. This is why the main institution is family and not market. To Confucians, the key principle is equality, which precedes efficiency. Inequality upsets ‘social peace’, as a precondition for growth. Built on Liberal principles, the Western capitalist system is a market one. The Chinese system, which I call ‘Confucian system’, is also market-based. The former is a ‘free market’ animated by individuals, the latter is a ‘familial market’ built around households. Both approaches advocate ‘minimal state’, but for Liberals the state is a ‘night watchman’ to ensure the security of resources, while for Confucians, the state is a moral guide to enable social harmony. As a theory, Confucian economics is a form of ethics and the Liberal is not. China has never abandoned Confucianism. The recent reforms are not about rolling back the Soviet model to establish a capitalist system. Relying on Confucian economics, China is reviving Confucian system. Paradoxically, the ancient Confucian economics has become the engine of China’s modernity. This is a key reason for China’s ‘longest boom’. To extend it, China needs to refocus its policies from ‘capital formation’ to the ‘moral cultivation’, along the Confucian principles.     

The Trans-Political Nature of Southwest China’s Energy Conduit,Yunnan Province

Transboundary flows of energy across Yunnan Province in China and to Southeast Asian states provide insight into the changing nature of borders and border areas. Rather than monolithic symbols of state sovereignty, China’s southwest borders in Yunnan can be more accurately characterised as zones of connectivity and exchange, serving a range of local, national and regional objectives. Energy production and distribution in and across Yunnan can be understood as functioning in a set of dynamic transnational processes that serve as economic and political bridges – increasing interaction and deepening regional integration – while also working to mitigate risk to China’s energy demands. In this article, energy projects in Yunnan and Southeast Asia demonstrate the ways border regions can respond to increasing globalisation, simultaneously strengthening national energy security while promoting regional interconnection and diplomacy. Thus, connections to and through a once peripheral region present an apparent contradiction: once rigid territorial borders are increasingly characterised by transboundary infrastructure development and exchanges of energy, capital and diplomacy, while promoting broader, diversified national energy security objectives – essentially strengthening national security through transnational energy projects. This article investigates how energy development works to shape Yunnan’s role as an “energy conduit,” while advancing both transnational and national geopolitical objectives, and thus, suggesting that these projects can be understood as trans-political in nature.     

China’s Contingencies: Critical Geopolitics,Chinese Exceptionalism and the Uses of History

This paper examines the intimate relationship between narratives emanating from China and their uses of Chinese history, and how such perspectives inform China’s geopolitical positioning and practices in lieu of its purported ‘rise’. Taking inspiration from the deconstructive impetus of critical geopolitics, this article contends that these historical claims to China’s rise constitute deterministic accounts, hinging on the notion of Chinese exceptionalism to provide discursive backing for a Sinocentric geopolitical order in the coming decades. This in turn downplays ‘alternative’ historiographies that can shed light on how the nature of China’s emergence may be more dependent on and shaped by the external environment than previously acknowledged. Building on the historical-geographical expositions related to the idea of contingency, this article demonstrates how China (whether it be in the past or present) cannot be seen as operating in a vacuum but has to constantly negotiate and adjust its strategy of engagements/interactions based on the specific demands imposed by world politics. Specifically, by elucidating these dimensions through cross-strait relations between China and Taiwan, it is argued that understanding China’s contingencies can raise important questions for us to critically appreciate the contextual actors, processes and relationships that differentially impact on China’s engagements in the world.     

Why is China a Reluctant Leader of the World Trade Organization?

ABSTRACT

China has drawn massive benefits via expanded trade since it acceded to the WTO in 2001. We might therefore reasonably expect it to have taken a more assertive lead in trying to rectify the travails in which the organisation finds itself mired, attendant with its rising power status, its active trade diplomacy elsewhere, the high levels of relative gains it has enjoyed since becoming a member, and its broader trade dependency. That China has not done so represents a puzzle, which is usually answered with reference to the international picture: i.e. that global trade has appeared to be holding up reasonably well throughout and beyond the global crisis, and, despite some inchoate protectionism, there generally exists a broad commitment to an open trading regime. Yet this only tells part of the story: China’s approach cannot simply be ‘read off’ from the structural context and there are, in fact, a series of interesting domestic explanations for why China has remained a ‘reluctant leader’ of the WTO too. On the basis of a series of interviews with Chinese experts, we offer a more complete account of these processes that better recognises patterns of agency, and how China navigates a contingent international order.     

中美新型大国关系：全球体系与力量转换理论的探究

作为新兴的全球性经济和地缘政治大国,中国对于一些大国而言,不论是在全球体系上,还是在次全球体系（区域）上都是一个政策性的困难抉择。对于如何构建与这些在中国外交总架构中居于＂关键＂地位的全球性大国的关系,中国新一代政治领导人提出了无论是在国际关系理论上,还是在近现代国际关系实践上都具有创新内容的＂新型大国关系＂的构想。这一构想在很大程度上是邓小平关于＂和平与发展是世界两大主题＂论断的逻辑性结果,也是在中国经济和地缘政治实力日益增长的情况下作出的蕴含着中国古代哲学＂和而不同＂和战略智慧的＂不战而屈人之兵＂的理性选择。这一构想有助于中国坚定和平发展的崛起新路径,同时也为其他新兴大国共同参与全球体系重塑和世界新秩序的构建打开了便捷之门。新型大国关系的构建有可能使美国在中国经济外交与外交攻势的双重作用下,接受中国的＂和平崛起＂的理念,弱化视中国为安全与战略＂威胁＂的观念,从而有利于世界力量的和平转移与全球体系的和平转型。在此层面上,新型大国关系的构想无疑有助于打破人类几千年历史上大国崛起与战争形影相随的宿命,对推动全球力量的和平转移有着深远的意义。     

价格粘性下人民币不同升值模式对中国经济的影响研究

文章以衰减函数的方式将新凯恩斯学派提出的价格粘性理论引入中国动态可计算一般均衡模型中,使模型更符合经济系统中价格调整规律,并利用模型模拟渐进式升值和快速升值两种不同的人民币升值模式对我国经济的影响。模拟结果表明,在价格粘性的作用下,人民币快速升值将在短期内对我国实体经济产生较大的负面冲击,GDP增速下降最高达1.6个百分点,失业率明显上升,而渐进式升值最高只有0.67个百分点;快速升值能有效抑制我国的通货膨胀和促使我国贸易再平衡,最多使我国CPI增速下降3.6个百分点和贸易顺差占GDP比重下降1.06个百分点,并且在长期内对实体经济的负面效应略小于渐进式升值。因此,在不同的经济形势下应采取不同的人民币升值模式。     

The accidental agro-power: constructing comparative advantage in Brazil

Brazil has emerged as an agro-export powerhouse: from being a net-agricultural importer and food aid recipient as recently as the 1960s and 1970s, it has now become the world’s third largest agricultural exporter, after the US and EU. What is more, Brazil’s new role as a major agricultural trader has provided an important foundation for its enhanced status and influence in global economic governance, as an emerging power and one of the ‘BRICS’. This paper analyses how such a remarkable transformation was brought about. I argue that Brazil’s emergence as an agricultural powerhouse was the result not of its natural factor endowments, but extensive intervention on the part of the Brazilian state that had the effect of constructing a new comparative advantage. This transformation was propelled by state-driven innovation and related policies that opened up massive new areas of the country to agriculture, enabled it to shift to producing goods in direct competition with the world’s dominant agricultural exporters, and generated significant gains in productivity and competitiveness. The irony is that the intention of these policies, initiated in the 1970s, was to foster industrial development in Brazil as part of its import-substitution industrialisation programme, yet they wound up having precisely the opposite effect – transforming Brazil into one of the world’s dominant agricultural powers.     

A flying goose chase: China’s overseas direct investment in manufacturing (2011–2013)

This paper examines whether rising wages have driven Chinese manufacturers to make foreign direct investment abroad to reduce the costs of production. We match the Chinese Ministry of Commerce’s register of Overseas Direct Investments with China’s Industrial Enterprise Survey data from 2011 to 2013 and annual average wage data for prefecture-level cities. Although high-income developed economies are the preferred destinations for Chinese manufacturing investment abroad, labor-intensive light manufacturing sectors related to the textiles, clothing and leather industries are focused on the low-income countries – consistent with a ‘flying goose’ effect. But, these are only a small part of the Chinese investment – account for 6% of the number of matched official ODI registrations. Yet, it might be still too early to observe that rising factor prices are systematically driving investments offshore.