By Maria Pia Paganelli and Reinhard Schumacher
Is trade a promoter of peace? Adam Smith, one of the earliest defenders of trade, worries that commerce may instigate some perverse incentives, encouraging wars. The wealth that commerce generates decreases the relative cost of wars, increases the ability to finance wars through debts, which decreases their perceived cost, and increases the willingness of commercial interests to use wars to extend their markets, increasing the number and prolonging the length of wars. Smith, therefore, cannot assume that trade would yield a peaceful world. While defending and promoting trade, Smith warns us not to take peace for granted. We unpack Smith’s ideas and their relevance for contemporary times in our recent article in the Cambridge Journal of Economics.Read More »
Earlier this month the final deadline arrived for political parties in Brazil to register their candidates for the presidential election in October 2018. The official launch of candidates allows us to discuss more concretely the political forces and players that will be shaping the election. It means that coalitions, alliances, and vice-president choices have taken place. So we asked, what can be said about the first candidates leading the polls? What are the main political forces underlying this election?
The Brazilian political landscape has been extremely polarised since the impeachment of president Dilma Rousseff in 2016. If the left-right dichotomy has recently been considered blurry or outdated, in Brazil one can argue that, due to the impeachment, this dichotomy has a new face, with the coup winners on one extreme and the coup losers on the other.
The nuances between right and left on the political spectrum have largely been overshadowed due to this dichotomy, with one side leading a moral crusade for a clean and corruption-free country and the other side highlighting the ongoing attack on democracy. The political mayhem reached its peak with Lula’s trial and conviction in April, which has led to a great deal of uncertainty over this period (see recent Lula’s Op-Ed from prison in the NYT).
President Termer may have been able to “keep the markets calm in” throughout such political instability, but Brazil’s economic recovery has been weaker than expected, hardships for many families have increased (see IBGE indicators for increases in income inequality, poverty, unemployment and insecurity) and the country has just set a new record for homicides at 63,880 deaths in 2017, with violence against women also increasing. There is a lot at stake in this election.Read More »
The discussions of the processes behind the growing importance of finance, financial transactions and financial motives, as well as the sustainability of the financial systems, have been located in the critical political economy debate of financialisation and neoliberalism (Crotty, 2003; Epstein, 2005; Fine, 2013; Lapavitsas, 2013; Palley, 2016; Sawyer, 2013; Stockhammer, 2004).
The analysis of financialisation in developing and emerging economies (DEEs) is relatively novel (Bonizzi, 2013). It is rooted in earlier discussions about the risks of financial globalisation and liberalisation (Akyuz & Boratav, 2005; Barbosa-Filho, 2005; Crotty & Lee, 2005; Frenkel & Rapetti, 2009; Grabel, 2003; O’Connell, 2005; Palma, 1998; Taylor, 1998), including the Latin American Structuralist literature on the hegemonic role of the US dollar and its financial and monetary implications for DEEs (Belluzzo, 1997; Braga, 1997; Fiori, 1997; Miranda, 1997; Tavares, 1997); the debate on capital account liberalisation and capital market integration (Cohen, 1996; Rodrik, 1998; Stiglitz & Ocampo, 2008; Strange, 1994); and the Minsky-inspired currency and boom bust dynamics of financial crisis in developing economies (Arestis & Glickman, 2002; de Paula & Alves, 2000; Dymski, 1999; Kregel, 1998; Schroeder, 2002).Read More »
I have lately been grappling with the question of how African states came into being, not just as political, but especially economic territorial units. Connected to this are questions of how experts, especially economists came to influence and account for what became national economies. At the center of the state, economy and society are critical question of development and welfare. How did independent African countries make sense of their inheritance and what mechanisms did they deploy to transform themselves into coherent nations of multiple but entangled identities with disparate circumstance but common material goals united by the logic of a national economy? As I grappled with these issues, a great new monograph informed by an impressive historiography has arrived. The author grounds his work in an archivally based history of the transformation of the Sudan into an economic unit between the 1940s and the 1960s. Alden Young’s new book: Transforming the Sudan: Decolonization, Economic Development, and State Formation (Cambridge: Cambridge University Press, 2017) is centred on addressing these question using the history of a territory that transformed from being an Anglo-Egyptian Sudan condominium into the independent state of Sudan.Read More »
Wealth-income ratios are rising everywhere – they are not cyclical but rather unambiguously upward trending for the past three decades. Put simply, the accumulation of wealth is outpacing economic growth. This is true in America, Europe and Japan (Piketty and Zucman 2014), as well as China and Russia (Novokmet, Zucman & Yang 2018). In recent research (Kumar 2018), I found this same trend to persist in the world’s largest democracy – Indian wealth-income ratios have been rising since the 1970s. Why are these trends so similar in countries with such deep structural differences and distinct economic trajectories? By themselves, high wealth-income ratios are not necessarily a social dilemma – they may imply more wealth for everyone. But in general, there is a tendency for wealth to be more concentrated than income. As a result, a rise in wealth over income tends to increase wealth inequality. This is certainly the situation in most economies today. Thus, these trends and the mechanisms behind them need to be understood with careful attention.
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With the consumption patterns in rich countries being more unsustainable than ever and the consumption of the ‘emerging middle classes’ increasing rapidly, it is about time ‘consumption and development’ becomes a field of study. Such a field would necessarily be interdisciplinary and combine analyses of everyday life and the structures of capitalist development. A useful starting point could be found at the intersection of theories of practice and systems of provision.Read More »
The recent global financial crisis sparked renewed debates, both within academia and policy-making circles, about regulating highly mobile cross-border money-capital flows. A particular type of policy tool has received considerable attention: capital controls (CC). Within mainstream economics and policy-oriented circles (including policy-makers in central banks, finance ministries, and international organisations such as the IMF and the G20) there has been a growing recognition that unregulated cross-border money-capital flows can considerably disrupt capital accumulation, and debates have accordingly focused on the potential role and effectiveness of temporary CC in limiting the destabilising potential of those flows, while maintaining a long-term commitment to an open capital-account and free capital mobility. By contrast, the Left (including organised labour, progressive economists, and civil society organisations) has been largely critical of capital-account liberalisation, and has denounced its detrimental effects in terms of constraining policy options for development and long-term industrial development.Read More »