9. The Political Economy of Global Financial Crises

Author(s):  
Louis W. Pauly

This chapter examines the political economy of global financial crises. The current world economy reflects an experiment involving the opening and integration of financial markets on the one hand, and the dispersion of political authority on the other hand, The resulting governance challenges are evident in the circumstances surrounding financial crises spilling ever more readily across national borders. In the late twentieth century, most such crises began in emerging-market countries. In 2008, however, the experiment almost failed catastrophically when policy mistakes in the United States combined with an economic downturn to spawn a global emergency. This chapter considers the changing political economy of systemic risk assessment, crisis prevention, and emergency management as the experiment continues. The timeline for the financial crisis of 2008 is presented.

2020 ◽  
pp. 222-246
Author(s):  
Louis W. Pauly

This chapter studies the globalization of finance. The world economy today reflects a systemic experiment involving, on the one hand, the unleashing of cross-border capital movements and, on the other, the dispersion of the political authority necessary to oversee and, when necessary, stabilize the markets through which vast amounts of capital now flow. Resulting tensions become most obvious during financial crises, when those flows suddenly stop or reverse their direction. In the late twentieth century, most such crises began in emerging-market or developing countries and had limited systemic consequences. In 2008, however, the global experiment capital market openness, now far along in its evolution, almost failed catastrophically when policy mistakes in the United States combined with large national payments' imbalances and a broad economic downturn to spawn a worldwide emergency. Shortly thereafter, Europeans at the core of the system narrowly escaped a similar disaster at the regional level. The chapter then explores key implications for contemporary global governance. It calls particular attention to the increasingly difficult and variegated politics of systemic risk assessment, emergency management, and future crisis prevention as the experiment continues.


2006 ◽  
Vol 19 (3) ◽  
pp. 337-356 ◽  
Author(s):  
Amy L. Fairchild

ArgumentIn this paper I examine the mass medical inspections of immigrants to the United States from the 1890s through the 1920s. I show how, framed as it was not only by nativism and eugenics but also by national industrial imperatives and priorities, scientific medicine served dual purposes. On the one hand, the medical exam was a tool for managing cultural and biological threats to the nation. There were regional variations in medical inspections that reflected the politics of race. On the other hand, the medical exam played an important role in the process of building an unskilled, highly mobile labor force. The industrial demands of the nation provided a rationale for drawing and absorbing millions of European immigrants into the labor force. It was thus a distinct product of the political economy of immigration. It was this second function that characterized the exam for the majority of immigrants entering the nation.


Author(s):  
Pablo Iglesias-Rodríguez

AbstractThis article proposes that product intervention constitutes a form of residual lawmaking by ESMA that allows it to tackle aspects of investor protection not addressed by EU incomplete financial laws. Whilst product intervention may bring about certain advantages and may contribute to mitigating regulatory arbitrage problems, it constitutes a highly intrusive regulatory mechanism that raises important questions concerning: (a) ESMA’s rationale and motivations for its use; (b) its compliance with the EU constitutional framework; and (c) its adequacy for the regulation of complex financial products. This article addresses these questions through an analysis of the rationale and consequences of ESMA’s product intervention measures on binary options and contracts for differences of May 2018–July 2019, and of recent reforms of ESMA’s powers. It offers three main contributions to the existing literature. First, it contributes to the literature on administrative discretion and agencies’ rulemaking through an analysis of the political economy of ESMA’s deployment of product intervention powers and, also, of what this reveals about the relationships between ESMA and the EU Institutions, on the one side, and ESMA and National Competent Authorities, on the other. Second, it contributes to the literature on the constitutionality of EU agencies through an examination of the compliance of ESMA’s product intervention measures with EU constitutional law and requirements. Third, it examines whether product intervention constitutes an adequate mechanism to address problems pertaining to investor protection in complex financial products markets and, in doing so, it contributes to the scholarly discussion on complex financial products’ regulation.


2011 ◽  
Vol 9 (3) ◽  
pp. 659-662 ◽  
Author(s):  
Brian Waddell

Jacob S. Hacker and Paul Pierson's Winner-Take-All Politics: How Washington Made the Rich Richer—And Turned Its Back on the Middle Class is both a work of political science and a contribution to broad public discussion of distributive politics. Its topic could not be more relevant to a US polity wracked by bitter partisan disagreements about taxes, social spending, financial regulation, social insecurity, and inequality. The political power of “the rich” is a theme of widespread public attention. The headline on the cover of the January–February 2011 issue of The American Interest—“Inequality and Democracy: Are Plutocrats Drowning Our Republic?”—is indicative. Francis Fukuyama's lead essay, entitled “Left Out,” clarifies that by “plutocracy,” the journal means “not just rule by the rich, but rule by and for the rich. We mean, in other words, a state of affairs in which the rich influence government in such a way as to protect and expand their own wealth and influence, often at the expense of others.” Fukuyama makes clear that he believes that this state of affairs obtains in the United States today.Readers of Perspectives on Politics will know that the topic has garnered increasing attention from political scientists in general and in our journal in particular. In March 2009, we featured a symposium on Larry Bartels's Unequal Democracy: The Political Economy of the New Gilded Age. And in December 2009, our lead article, by Jeffrey A. Winters and Benjamin I. Page, starkly posed the question “Oligarchy in the United States?” and answered it with an equally stark “yes.” Winner-Take-All Politics thus engages a broader scholarly discussion within US political science, at the same time that it both draws upon and echoes many “classic themes” of US political science from the work of Charles Beard and E. E. Schattschneider to Ted Lowi and Charles Lindblom.In this symposium, we have brought together a group of important scholars and commentators who offer a range of perspectives on the book and on the broader themes it engages. While most of our discussants are specialists on “American politics,” we have also sought out scholars beyond this subfield. Our charge to the discussants is to evaluate the book's central claims and evidence, with a focus on three related questions: 1) How compelling is its analysis of the “how” and “why” of recent US public policy and its “turn” in favor of “the rich” and against “the middle class”? 2) How compelling is its critique of the subfield of “American politics” for its focus on the voter–politician linkage and on “politics as spectacle” at the expense of an analysis of “politics as organized combat”? 3) And do you agree with its argument that recent changes in US politics necessitate a different, more comparative, and more political economy–centered approach to the study of US politics?—Jeffrey C. Isaac, Editor


2015 ◽  
Vol 53 (2) ◽  
pp. 365-367

Benjamin J. Cohen of University of California, Santa Barbara reviews “Currency Politics: The Political Economy of Exchange Rate Policy”, by Jeffry A. Frieden. The Econlit abstract of this book begins: “Analyzes the politics surrounding exchange rates, including the influence of industries on the political process. Discusses the political economy of currency choice; a theory of currency policy preferences; the United States─from greenbacks to gold, 1862-79; the United States─silver threats among the gold, 1880-96; European monetary integration─from Bretton Woods to the euro and beyond; Latin American currency policy, 1970-2010; the political economy of Latin American currency crises; and the politics of exchange rates─implications and extensions.” Frieden is Professor of Government at Harvard University.


Sign in / Sign up

Export Citation Format

Share Document