Social Network Analysis: Suggested Applications to Economic Control

The current crisis reveals the inadequacy of laissez faire policies of the last 30 years, and the neoliberal theories upon which they rest. The policies directed toward averting depression have largely benefited the corporate rentier and the financial sector they served. Keynes, Minsky, and Galbraith advocated policies to rescue the economy, NOT the rentier. Keynes hoped to make capital sufficiently abundant so as to euthanize the rentier. Minsky attributes their endurance to the public's effort to emulate their consumptive habits. Galbraith points to the use of corporate power to stimulate consumer spending and influence the political process.     

The Narrative of Complexity in the Crisis of Finance: Epistemological Challenge and Macroprudential Policy Response

Official accounts of the 2007–8 financial crisis have recurrently referred to ‘complexity’ in the nature of the securities transacted and in the structure of the financial industry as a way to convey difficulty to understand or apprehend, and thus to predict financial dynamics and regulate financial institutions. On the one hand, the complexity metaphor – as other crisis metaphors commonly do – naturalised turmoil and obscured agency as it subjectified complexity itself as a key driver of instability. On the other hand, it marked a departure from narratives of recent crises insofar as it has pointed explicitly to an epistemological crisis underlying financial turmoil. Such framing of the crisis yielded a powerful theoretical challenge to classical neoliberal assumptions about the exogenous nature of financial turmoil and helped shape a new consensus around the imperative of macroprudential regulation. However, the embrace of the complexity lens may remain relatively ambiguous. Though highlighting properties that render the financial system ‘complex’ and hence unpredictable, it ambitions to ‘manage’ complexity with better methodological tools.     

Profitability Capital Accumulation and Crisis in the Greek Economy 1958–2009: a Marxist Analysis

Abstract

This study examines the behavior of the main Marxian variables in the postwar Greek economy. The different phases of the capital accumulation process are distinguished and analyzed according to the movement of the rate of profit. The ‘golden age’ of the 1958–74 period of high profitability and strong growth was followed by the stagflation crisis of the 1970s and early 1980s. After 1985, and especially after 1991, the ‘neoliberal solution’ to the crisis resulted in a modest recovery of profitability, capital accumulation and output growth based exclusively on the huge increase in the rate of exploitation for labor. When the stimulus to aggregate demand provided from debt driven personal consumption and state deficit spending was removed, the underlying structural crisis in the real economy manifested itself fully in 2009 and after.     

Neoliberal growth models,monetary union and the Euro crisis. A post-Keynesian perspective

The paper offers an account of the Euro crisis based on post-Keynesian monetary theory and its typology of demand regimes. Neoliberalism has transformed social and financial relations in Europe but it has not given rise to a sustained profit-led growth process. Instead, growth has relied either on financial bubbles and rising household debt (‘debt-driven growth’) or on net exports (‘export-driven growth’). In Europe the financial crisis has been amplified by an economic policy architecture (the Stability and Growth Pact) that aimed at restricting the role of fiscal policy and monetary policy. This neoliberal economic policy regime in conjunction with the separation of monetary and fiscal spheres has turned the financial crisis of 2007 into a sovereign debt crisis in southern Europe.     

The Role of the Media in Sustaining Ireland's Housing Bubble

This paper examines Irish mainstream media coverage of the housing bubble that burst in 2007 and plunged Ireland into economic and financial crisis. It is shown that news organisations largely sustained the bubble until the property market collapsed. As such, news stories reflected the views and interests of the Irish corporate and governmental sectors, which had adopted neoliberal policies during the ‘Celtic Tiger’ years (1990s to 2007). A political economic conceptualisation of the Irish media outlines four factors explaining why this is so: (1) news organisations have multiple links with the political and corporate establishment, of which they are part, thus sharing similar interests and viewpoints; (2) just like elite circles, they hold a neoliberal ideology, dominant during the boom years; (3) they feel pressures from advertisers, in particular, real estate companies; and (4) they rely heavily on ‘experts’ from elite institutions in reporting events. The last section presents a detailed empirical analysis of Irish media coverage (newspapers and television) of the housing bubble that confirms the above claims. It is shown that prior to the bubble's collapse, the media made little mention of it, remained vague about it or tried to refute claims that it even existed, thus sustaining it.     

Financialisation and Real Investment in the European Union: Beneficial or Prejudicial Effects?

This article presents an empirical analysis of the relationship between financialisation and real investment for non-financial corporations using panel data composed of 27 European Union countries over 19 years (1995 to 2013). On the one hand, financialisation leads to a rise in financial investments, diverting funds from real investments (‘crowding out’ effect); on the other, pressures from shareholders to intensify financial payments restrict the funds available for new real investments. We estimate an aggregate investment equation with the traditional variables (lagged investment, profitability, debt, cost of capital, corporate savings and output growth) and two further measures of financialisation (financial receipts and financial payments). The findings demonstrate that financialisation has damaged real investment in European Union countries, mainly through the channel of financial payments, either by interest or dividend payments. It is also found that the prejudicial effects of financialisation on investment were more severe in the pre-2007 crisis period. It is concluded that financialisation contributed to a slowdown of real investment by 1 to 8 per cent in the full and pre-crisis period, respectively. During the pre-crisis period, financialisation was the main driver of the slowdown of investment in the European Union.     

Islamic Charitable Giving in the UK: A ‘Radical’ Economic Alternative?

ABSTRACT

Muslim financial actions have faced increased scrutiny as financial links to ‘terrorism’ have risen in political rhetoric with anything labelled as ‘Islamic’ being perceived to be in requirement of study in terms of its relation to ‘fundamental British values’ (Kundnani, A., 2014. The Muslims Are Coming! Islamaphobia, Extremism, and the Domestic War on Terror. London: Verso.). Exploring Muslim charitable giving in the UK, it will be posited that much of Islamic charitable practices sustains a relationship with neoliberalism without being entirely reduced to it. The post-9/11 environment ‘has led to renewed scholarly interest in the relationship between the economy and Islam and more specifically the incorporation of Islamic value in daily economic life’ (Rethel, L., 2019. Corporate Islam, Global Capitalism and the Performance of Economic Moralities. New Political Economy, 24 (3), 350–364, 2). Islamic charitable practices potentially offer a resistance to the inegalitarian effects of neoliberalism whilst simultaneously being both a part, and a consequence of, neoliberal dominance. Moreover, Islamic charity in the UK acts as an expression of the Muslim community against a backdrop of security and surveillance. Thus, while potentially offering a ‘radical’ alternative to neoliberalism it is a non-violent and non-conflictual alternative.     

Hedging neoliberalism: derivatives as state policy in Mexico

This article fills the gap in the critical political economy literature by acknowledging the adoption of derivatives as state policy in middle-income countries such as Mexico. The article argues that the Mexican state has turned derivatives into a policy instrument to deal with the capitalist contradictions intensified by neoliberalism. This has created a particular institutional setting that favours large firms and financial investors over working classes. The article examines the role of derivatives as policy instruments in Mexico through the Mexican Ministry of Agriculture’s use of corn futures options during the 2007–8 food crisis and Ministry of Finance's and Central Bank's adoption of hedging strategies through oil derivatives and US dollar put options to preserve the state budget and increase foreign reserves respectively during the 2007–10 global financial crisis.     

Globalisation and the Institutional Re-embedding of Markets: The Political Economy of Price Formation in the Bordeaux En Primeur Market

Contemporary analyses commonly attribute the global credit crisis to faulty regulation. What have been the roots of these deficient rules, particularly in Europe, where rapid spill-over from US markets took policy makers and observers by surprise? This article focuses on regulatory liberalism as the paradigm guiding European Union (EU) regulation. It has dominated regulatory thinking for decades, but it has been implemented throughout Europe only since the mid-1990s. This shift can be traced to political institutions that have filtered policy ideas. EU financial reforms have pushed policy from pragmatism, under which it was adapted to political contingencies, to dogmatism, which adapts it to the intellectual exigencies of rigid policy paradigms. Inadvertently, reforms had created an epistemic community in which ‘professional’ rule setters systematically ignored external criticisms. The institutionalised ambition to craft ‘intellectually sound’ policy–rather than policy that simply ‘works’ –generated rules that persistently ignored the financial markets' self-reflexivity and thereby aggravated the crisis.     

西方金融资本主义下的寄生阶级、债务通缩与大萧条——兼评迈克尔·赫德森的金融资本主义批判理论

金融资本生成于产业资本、商业资本和银行资本的垄断融合。在支配生产、流通和信用的基础上,金融资本通过定价权、金融投机、地租寻租、支配国债、滥用货币发行权等途径而建立一套寄生性的积累机制。随着金融资本对生产关系的全面支配,金融资本的寄生性积累也越来越系统化、自主化,造成的社会危机也越来越不容易从外部加以克服,但同时,金融资本内部自我否定的逻辑却表现得越来越强烈。金融资本的寄生性积累导致债务膨胀和产业萎缩相互加强的危机,即债务通缩危机。新自由主义量化宽松的反通缩政策,在一定程度上避免了旧版大萧条,却导致了更难以解决的新版大萧条。美国学者赫德森把对金融资本寄生性积累的批判纳入到从古典政治经学到马克思主义政治经济学的传统中,从金融资本的寄生性积累探讨西方经济、政治危机的根源,虽然其金融资本批判理论还因缺乏辩证逻辑而有一定的缺点,但是该理论基本的理论方向是值得肯定的。     

The (Over)Cost of Capital: Financialization and Nonfinancial Corporations in France (1961–2011)

ABSTRACT

The term ‘financialization’ is often used to describe the major changes that occurred in the macroeconomic regimes of most developed and, to a lesser extent, emerging economies since the beginning of the 1980s. In the present paper, we propose a reappraisal of the notion of the cost of capital and subsequently argue that financialization in France has increased the cost of capital for nonfinancial corporations with new standards of financial profitability. We introduce a measurement for what could be called the over-cost of capital and describe how the evolution of this additional financial burden may explain the slowdown in the pace of capital accumulation, and thus the drop in French macroeconomic performance observed for the past 30 years.     

International restructuring,health and the advanced industrial state

For the better part of the last century, the debate between ‘liberalisers’ and ‘interventionists’ marked thinking about the relationship between finance and development. It has by now been superseded by the emergence of the discourse of financial system development, which links economic growth to the development of the financial sector. As the risks entailed by wholesale financial reform came to the fore in the financial crises of the 1990s and early 2000s, emphasis shifted from liberalising financial markets to building institutional frameworks to accommodate investment. Arguably, the emergence of the financial-system-development discourse occurred within a wider shift in the neoliberal paradigm towards institution building. These changes are particularly pronounced in East and Southeast Asia. This paper argues that a convergence of opinions has occurred between Asian financial policy elites, previously strong supporters of the bank-based developmental state model, and the liberalisers, represented through international financial institutions such as the IMF. This consensus is geared towards the expansion of capital markets and a generally more neoliberal, market-oriented mode of economic governance. To illustrate this claim, this paper traces institutional changes in Asian financial systems since the 1997-98 financial crisis. Although local characteristics remain, a common feature is the more salient role of bond markets in the financial system. This is the result of the conscious and deliberate development of local currency debt markets by policymakers. However, the new consensus narrows down the space in which economic policymaking takes place. Yet, by re-politicising financial system development, this space could be broadened again.     

欧洲福利国家危机的政治经济学分析

20世纪70年代以来,福利国家的危机日益加剧,凯恩斯主义在欧洲各国不同程度地被新自由主义所取代.新自由主义从意识形态、全球化与竞争力、不平等、经济与社会政策、公共财政等方面对福利国家发起了攻击,其目的 不是取消福利国家,而是改变福利国家的内涵,使之服务于新自由主义,其核心利益关切点不再是社会大众,而是金融资本.在这一背...     

Capital accumulation and ground-rent in Brazil: 1953–2008

The paper measures the size of primary-sector surpluses in the form of ground-rent appropriated by social subjects other than landowners in Brazil, and assesses their weight in supporting the process of capital accumulation during the period 1953–2008. For that purpose, the paper identifies the mechanisms through which state policies channelled a portion of ground-rent to capital, especially in the industrial sector, assessing their individual impact. The paper finds that transferred ground-rent has complemented surplus-value normally available for appropriation by capital and thus helped sustain its process of accumulation throughout most the period analysed here, including the post-1990 ‘neoliberal’ era.     

Charter value,risk-taking and systemic risk in banking before and after the global financial crisis of 2007-2008

ABSTRACT

We investigate how bank charter value affects risk for a sample of OECD banks by using standalone and systemic risk measures before, during, and after the global financial crisis of 2007–2008. Prior to the crisis, bank charter value is positively associated with risk-taking and systemic risk for very large ‘too-big-too-fail’ banks and large U.S. and European banks but such a relationship is inverted during and after the crisis. A deeper investigation shows that such a behaviour before the crisis is mostly relevant for very large banks and large banks with high growth strategies. Banks’ business models also influence this relationship. We find that for banks following a focus strategy, higher charter value amplifies both standalone and systemic risk for large U.S. and European banks. Our findings have important policy implications and cast doubts on the relevance of the uniform more stringent capital requirements introduced by Basel III.     

The Stagnation Tendencies of Neoliberalism: A Review Essay

In his 2012 book, From Financial Crisis to Stagnation, Thomas Palley argued that the financial crisis of 2008 would be likely to result in a period of long-term stagnation. Both the crisis and the predicted stagnation, Palley argued, were the outcomes of policies pursued since the 1980s; the persistence of those policies explains the stagnation. Underpinning the policies and their consequences are the flaws of the neoliberal macro model and the particular role played by finance in that model. The rejection of Keynesianism meant the abandonment of the commitment to full employment. The neoliberal paradigm rests upon a foundation of ‘bad ideas’ that are located in political philosophy as much as in economic theory. Palley’s argument has a bearing on recent discussions among mainstream macroeconomists, whose interest in secular stagnation has been revived by the ‘ongoing crisis’. These discussions have left mostly unanswered the question of the causes of stagnation. The present essay argues that Palley’s concept of ‘structural Keynesianism’ can benefit from a closer association with the analysis of structural transformation and its effects on policy regimes and stagnation tendencies.     

‘Socialization of Investment’ and ‘Euthanasia of the Rentier’: the Relevance of Keynesian policy ideas for the contemporary US Economy

This paper builds from two explicit policy ideas that Keynes introduced in the General Theory, a ‘somewhat comprehensive socialization of investment’, and ‘the euthanasia of the rentier’. The paper argues that, to a significant degree, the stagnation of the contemporary US economy can be attributed to the nature of its capital-market based, or ‘exit led’ financial system, which promotes short-termism, speculation and financial fragility, as well as excessive political power for the rentier class. In combination, these factors also diminish governments' capacity to successfully implement policies that promote egalitarian growth and full employment. In making these points, I contrast the US financial system with the bank-based or ‘voice led’ systems, such as those in Japan, France or South Korea. The paper then sketches a series of policy proposals which would address these problems. These proposals include regulatory policies which would ‘level the playing field upward’ among all financial intermediaries, and credit allocation policies that give preference to projects with high social rates of return. The proposals also aim to substantially increase the degree of democratic accountability within the financial system.     

State-led or Capital-driven? The Fall of Bretton Woods and the German Currency Float Reconsidered

This article argues that the lead role of West Germany in the transition from fixed to floating exchange rates sits uneasily with accounts that conceptualise the breakdown of Bretton Woods in terms of hegemonic power politics, the influence of global economic interests or a neoliberal paradigm shift. Short of a convincing explanation, the German currency float seems to be a prime example of states surrendering to financial markets. The article offers an alternative interpretation that focuses on the nexus between state agency and capital accumulation. German authorities were indeed confronted with a destabilising influx of dollars that undermined their available policy options. But as they realised that these inflationary flows emanated from the same export-oriented forces in whose interest they had sought to hold on to an undervalued currency, they chose floating in order to regain command over liquidity and create an anti-inflationary programme that was at the heart of Germany's subsequent ability to better manage the 1970s crisis than its partners. Attention to the particular circumstances and consequences of these ‘structured choices’, I conclude, may offer a more compelling account of financial globalisation as a state-led project than those which generalise from the US context.     

Accumulation by Conservation

Following the financial crisis and its aftermath, it is clear that the inherent contradictions of capitalist accumulation have become even more intense and plunged the global economy into unprecedented turmoil and urgency. Governments, business leaders and other elite agents are frantically searching for a new, more stable mode of accumulation. Arguably the most promising is what we call ‘Accumulation by Conservation’ (AbC): a mode of accumulation that takes the negative environmental contradictions of contemporary capitalism as its departure for a newfound ‘sustainable’ model of accumulation for the future. Under slogans such as payments for environmental services, the Green Economy, and The Economics of Ecosystems and Biodiversity, public, private and non-governmental sectors seek ways to turn the non-material use of nature into capital that can simultaneously ‘save’ the environment and establish long-term modes of capital accumulation. In the paper, we conceptualise and interrogate the grand claim of AbC and argue that it should be seen as a denial of the negative environmental impacts of ‘business as usual’ capitalism. We evaluate AbC's attempt to compel nature to pay for itself and conclude by speculating whether this dynamic signals the impending end of the current global cycle of accumulation altogether.     

Feeding (On) Geopolitical Anxieties: Asian Appetites,News Media Framing and the 2007–2008 Food Crisis

This paper analyses the role of news media in (re)producing geopolitical narratives of food insecurity in relation to the 2007–2008 global food price spike. News content and textual analysis suggests that the media’s representation of the food price spike is partly framed by Western geopolitical anxieties of the ‘threatening rise of Asia’, and features ‘fast growing’ Asian appetites among the main culprits of the crisis. Seeking to explain the widespread circulation of such representation, this paper analyses media-source relationship within the context of market-driven journalism, and suggests that the changing role of news media has in turn contributed to a rapid and uncritical circulation of elite-based interpretation of, and neoliberal geopolitical approach to, food security. The paper points at the importance of critical enquiries into geopolitical representations of food insecurity and of opening media space for a ‘counter-geopolitics of food security’.