The perils of monetary policy in the global periphery during the Covid-19 pandemic

For several decades, countries of the periphery have been deeply in the grip of debt. The Covid-19-induced crisis has severely accelerated indebtedness and thus increased financial vulnerability. Recent policy measures by peripheral governments and central banks have brought momentary relief, but ultimately represent a manifestation of the interests of finance capital to get the most out of peripheral economies as long as it is still possible. 

Because of the dependence of their currencies on international capital flows, political autonomy in peripheral economies is extremely limited due to the possible effects of political decisions on the movement of such flows. The enormous power of financial markets over monetary policy in the periphery is again becoming evident during the current crisis. The crisis in the global periphery is generally much more severe than in the central countries, not only because of often inadequate health systems that have been abandoned under three decades of neoliberal policy. As peripheral assets do not serve as a store of value, “investors” withdrew almost 100 billion dollars from “emerging markets” within three months, constituting a historically unprecedented capital flight. Factors such as the deflation of prices of primary resources, the fall in external demand for manufactured products, and the fall in cash flows due to decreasing remittances and tourism mean that financial pressure has increased even more. Consequently, peripheral currencies significantly depreciated with the beginning of the crisis, in some cases by as much as 20-30%, as in the cases of Brazil and Mexico.

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Blog Series: Pressure in the City

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The Covid-19 pandemic and the restructuring of the global economy it has triggered have exacerbated the need to study a topic that has flown under the radar of social scientists for too long: individuals and social groups experiencing economic pressure which manifests in myriad of somatic and psychological ways. The fallout from pressure — sleeplessness, ulcers, an atmosphere of hopelessness and social mistrust, gambling, suicides, as well as a growing concern about a lack of mental health facilities in cities of the Global South — now pervades urban as well as rural environments around the world. This blog series aims at taking a fresh look at the phenomenon of economic pressure through a decisively comparative and interdisciplinary approach. We will critically interrogate the role of economic pressure in the lives of both the rich and the poor, the unemployed and the workforce, across class and continents in order to answer, among others, the following questions:

  • What meanings does economic pressure take on as it travels between different contexts?
  • How do city dwellers of diverse class, religious and gender backgrounds experience pressure in their professional and private lives? How do they accommodate, negotiate and deflect pressure?
  • Does economic pressure offer new analytical possibilities vis-à-vis other concepts used to describe similar phenomena (e.g. poverty, uncertainty, precarity etc.)?
  • What is the relation between individually perceived economic pressure and structural changes of the economy or polity?
  • What moral valuations do urban residents assign to economic pressure? What logics underpin ‘good’ and ‘bad’ forms of pressure?
  • How can inter-disciplinary methodological and/or theoretical approaches deepen our understanding of economic pressure —the forms it assumes, the actions it motivates and the effects it generates?

We welcome contributions from a wide range of scientific disciplines (political economy, anthropology, economics, sociology, development studies, gender studies, international relations, geography, etc.) as well as other professions (such as practicing psychologists, counselors, activists, bankers, sports professionals etc.). As the blog’s organizers are all Africanists, the blog will, however, have an initial focus on sub-Saharan and, especially, Eastern Africa. We are confident that this will be balanced over time.

  • Pressure in the City: Stress, Worry and Anxiety in Times of Economic Crisis. The first contribution to the series, written by Jörg Wiegratz, Catherine Dolan, Wangui Kimari and Mario Schmidt will detail the rationale of the series and provide necessary background information and context.
  • Urban Africa under Stress: Rethinking Economic Pressure in Cities. Written by the same four scholars, this post explains in more detail the objectives of our blog series intervention, and our observations regarding pressure as a social phenomenon in a capitalist city in the Global South. It introduces Nairobi as a city of pressure and critically discusses the scholarship on economic pressure. As such, it acts as an introduction to subsequent blogs on Nairobi as a city of pressure.
  • ‘There is a Lot of Pressure on Me. It’s Like the Distance Between Heaven and Earth’ – Landscapes of Debt, Poverty-in-People and Social Atomization in Covid-19 Nairobi. Written by Mario Schmidt, Eric Kioko, Evelyn Atieno Owino, and Christiane Stephan. This post sheds light on the multidimensional ways in which Kenya’s political elite’s response to the Covid-19 pandemic has increased economic pressure on actors living in informal and low-income settlements of Nairobi (Kibera and Pipeline). It will be followed by a second post exploring the effects of the pandemic on inhabitants of Kileleshwa, a wealthier suburb of Nairobi.
  • ‘Life On These Stones Is Very Hard’ – House Helps in Covid-19 Nairobi. Written by Eric M. Kioko, Judith K. Musa, Mario Schmidt and Christiane Stephan, this blog focuses on the economic pressure experienced by women who lost jobs as house helps following the Covid-19 pandemic and how they manoeuvre their new economic situation within Nairobi’s richer suburbs.
  • “Under pressure”: negotiating competing demands and desires in a time of precarious earnings. Written by Hannah Dawson, this post examines the social and economic pressures faced by un(der)employed young men in an informal settlement on the outskirts of Johannesburg. It highlights the multiplicity of demands on young men’s precarious incomes and the tension they experience from the simultaneous pressure to consume and improve their own lives while at the same time providing for their families and children.
  • (De)pressurizing in urban centers beyond the megacity: notes on pressure from Nakuru, Kenya. Written by Nick Rahier, this post sheds light on life ‘under pressure’ from the perspective of Nakuru, a vibrant secondary Kenyan city situated 160 km Northwest of Nairobi. It presents Nakuru as a place where pressure manifests itself as a highly volatile and affective state of being that is rich in meaning about what it means to (de)pressurize beyond the megacities.
  • Less flow, more pressure: accessing water in N’Djamena in times of Covid-19. Written by Ismaël Maazaz, this blog post looks at state policies designed to mitigate the economic pressure weighting on water end-users of N’Djamena, the capital of Chad in the midst of the pandemics in 2020. Such policies adversely affected the actual pipe water pressure, generating additional challenges.
  • Inner-city pressure and living somewhere in-between. Written by Aidan Mosselson, this blog post traces the (pre-covid-19) experiences of people living in social and affordable housing in inner-city Johannesburg. Inner-city residents contend with economic pressure, as they work hard to pay their rent and often forgo other forms of social interaction whilst they strive to get by. But pressures are also more-than-economic, and emanate from difficult and unpleasant environments and concerns about safety. Combined, these pressures create a state of resignation and being in-between, of living in an undesirable area, aspiring to be elsewhere, but unable to find somewhere better and still affordable.
  • Living in the shadows of Dubai. Written by Jonathan Ngeh, this blog post draws on the lived experiences of African migrants in Dubai to shed light on how economic inequality increases pressure on low-income migrants. Furthermore, it reveals how the existence of poverty alongside wealth puts pressure on not only the poor but also on the wealthy city residents.
  • Pressure to Succeed: From Prosperity, Stress (A reflection on aspiration in the new Kenya). Written by Peter Lockwood, the blog post draws attention towards the subjective experience of pressure to succeed, to ‘make it’, and live a good life, by Kenyan youth living on the northern outskirts of Nairobi. Departing from a purely economic understanding of pressure in the city, the blog highlights the feelings of shame and failure harboured by Kenyan youth unable to accumulate the wealth that would allow them to live good lives according to mainstream understandings of economic success’.
  • The pressure to provide and perform: Anti-feminism, masculinity consultants, and the threat of male expendability in contemporary Nairobi. Written by Mario Schmidt, tries to open a space for critical debates about how capitalism affects gender relations by exploring the relations between the sorrows of heterosexual migrant Kenyan men who increasingly feel under pressure and Nairobi’s blossoming sphere of toxic masculinity consultancy.
  • Layers of compounding pressure: the gendered experiences of rural migrant youth in Addis Ababa, EthiopiaWritten by Elizabeth Dessie, this blogpost explores the gendered ways in which rural-urban migrant youth experience pressure in a post-pandemic Addis Ababa, highlighting how strategies devised to counteract pressure are central to migrants’ everyday lives, despite synchronously creating new layers of social and economic strain.   
  • The Salaried Man and His Others: Rethinking Pressure in the Longue Durée. Written by Jordanna Matlon, this blog post situates the social and economic pressures that underemployed men experience in African urban informal economies within the longue durée of racial colonial capitalism and its accordant breadwinning ideology. To do so, it introduces the colon (colonist) statue, a fixture of West African popular art and figurative embodiment of colonial-era social and economic transformations in which masculinity became inextricably linked to the salary.    
  • Working Overtime or Being Laid Off: The Pressure under Hopelessness among Workers in Chinese Internet Companies. Written by Yun Xiong, this blog aims to investigate the relation between the immense working overtime pressure of workers in Internet companies in China’s big cities and the feelings of hopelessness regarding career and life prospects amid the country’s economic downturn. This, in turn, drives the phenomenon of excessive workloads as workers strive to avoid the risk of being laid off.
  • What Pressure Produces: The Generative Aspects of Pressure amidst Urban Displacement in Dakar. This blog post by Gunvor Jónsson explores what is produced by pressure, examining how traders evicted from a market in Dakar (Senegal) responded to persistent uncertainty and economic pressure following the demolition of their market. It argues that the economic uncertainty and sense of disorientation and uprootedness associated with the eviction had led to a kind of urban diasporic formation among the displaced traders. The analysis thus contributes a temporal perspective on pressure, showing what urban dwellers’ responses to pressure may generate in the longer term.
  • The city of the evicted: lives under pressure in the margins of an urban fantasy in Benin. Written by Joël Noret and Narcisse Yedji, the blog post explores the multi-layered consequences of the eviction campaigns that have taken place in Cotonou, the economic capital of Benin, since current president Patrice Talon came to power. Generating multiple and intertwined forms of pressures, such destructions have turned thousands of lives upside down, causing considerable psychic distress while durably affecting the life chances and economic prospects of already vulnerable city dwellers.
  • Absorbing pressure: Bodily ‘tension’ in a changing Himalayan world. Written by Nikita Simpson, this piece examines how such pressures are not evenly distributed across the community but are absorbed by particular people through the experience of bodily and mental tension. Tension, Simpson argues, both registers these pressures in the body, and allows people to push back against them, issuing a particular and paradoxical account of power and the body.

Blog series editors:

Jörg Wiegratz is a Lecturer in Political Economy of Global Development at the School of Politics and International Studies, University of Leeds, and Senior Research Associate, Department of Sociology, University of Johannesburg. j.wiegratz@leeds.ac.uk.

Elizabeth Dessie is a postdoctoral fellow at the African Cities Research Consortium at the University of Manchester. elizabeth.dessie@manchester.ac.uk.

Catherine Dolan is Professor in Anthropology at SOAS, University of London. cd17@soas.ac.uk

Wangui Kimari is a Postdoctoral researcher at the African Centre for Cities, University of Cape Town. kuikimari@gmail.com

Mario Schmidt is postdoctoral Fellow at the Max Planck Institute for Social Anthropology (Halle/Saale, Germany). marioatschmidt@gmail.com

Photo by cheng feng on Unsplash

Pressure in the city: stress, worry and anxiety in times of economic crisis

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By Jörg WiegratzCatherine Dolan, Wangui Kimari and Mario Schmidt

2020 may well be remembered as the year the global economy shut down. Airports have been closed, stock markets have crashed, and workers have been laid off en masse while politicians discuss if and how to reopen and restructure the economy. According to snapshot data, this economic turmoil has precipitated a global surge in anxiety, as people worry about their immediate and future financial situations. Their jobs, livelihoods and businesses, their incomes and finances, their assets and investments, their social relations and family ties, and their plans and dreams of economic progression, all seem on the brink of being fundamentally devalued. A now ubiquitous government response to COVID-19 – national lockdowns – has mandated the working class to stay home and worry about health first and livelihoods later. This dictate has pulverised the livelihoods of millions of people within a matter of days. Curfews, travel restrictions and other measures put into place to stop the spread of the virus are in the process of ravaging entire economic sectors (e.g. tourism and air travel, energy, export agriculture, personal services), undermining the prospect of growth for years to come. The hardest hit, however, are the poorest members of society: factory workers in India who left the cities and walked home to their villages in ‘an exodus not seen in decades’, Bangladeshi garment factory workers facing hunger and unexpected levels of poverty, as well as droves of US-Americans queuing for food stamps. All round is a picture of jobs lost, wages unpaid, contracts cancelled, futures foreclosed, and hunger and desperation for millions.Read More »

Urban Africa under Stress: Rethinking Economic Pressure in Cities

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By Jörg WiegratzCatherine Dolan, Wangui Kimari and Mario Schmidt

Research on economic pressure in Africa has been approached from diverse vantage points.  While economists frame ‘pressure’ as a consequence of market failures, or as a by-product of macro-economic measures such as structural adjustment reforms or technological and political change, anthropologists who zoom in on the economic pressures individuals face in their everyday lives, i.e. the lived experiences of those who are ‘under pressure’ have focused more on topics such as uncertainty and precarity. Alternatively, economic psychologists tend to naturalise pressure as an individual response to an adverse financial situation, eclipsing the varied ways pressure is intertwined with and shaped by broader societal transformations, power structures, social relations and obligations, and webs of exchange. There are currently no studies we are aware of that focus on the multi-faceted societal constitution of economic pressure in capitalist Africa, or that compare how pressure is experienced across gender, generation or socioeconomic groups.Read More »

The return of the visible hand: How struggles for economic and political dominance turn state capitalism into authoritarian capitalism

budapest-parliament-hungarian-parliament-building-hungary-people-politicians-viktor-orban-hungarianBy Gerhard Schnyder and Dorottya Sallai

The state has made a return with a vengeance in economic matters in the past decade or so. Mainly due to the success of the Chinese model and the – less permanent – strong economic performance of countries like Brazil and Russia, the erstwhile Washington Consensus of the superiority of markets over states as mechanisms of economic coordination has been put in serious doubt.

Scholars have picked up on this trend by increasingly referring to the term (new) ‘state capitalism’. Some consider it an undesirable threat to the existing economic world order, while others show how states can effectively promote development and economic growth.

While the term state capitalism has been useful to bringing the state back in yet again into debates in political economy, the term itself is not unproblematic. Indeed, there is a risk that it perpetuates, rather than surpasses, the sterile debate about the state versus the market. Put bluntly: If there is such a thing as state capitalism, what does non-state capitalism look like?Read More »

Sub-Saharan countries are taking on more debt, and women will bear the brunt of repaying it

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By Matthew BarlowJean Grugel and Jessica Omukuti

By May 2020, every African nation had registered cases of COVID-19. By late July, cases had exceeded 844,000. A key factor in Africa’s struggle to mount a response to the pandemic (although not the only one) is that years of debt servicing have eroded states’ capacities to build strong health systems.

Research on crisis and pandemics in different parts of the world, particularly in sub-Saharan Africa (SSA), shows that countries will respond to COVID-19 in two phases – the fiscal expansion phase, which involves a series of stimulus packages, and the fiscal contraction phase, which is characterised by austerity. In the case of COVID-19, these phases will require significant levels of financing. In a region with predominantly low and narrow tax bases, debt and donor aid have become an alternative way for governments to finance state obligations. Currently average African debt-to-GDP is below the 60% (danger) threshold, which is way below the crisis levels of the 1980s and 1990s.

However, the cost of debt has exponentially increased due to low credit ratings translating into poor interest rates. By 2018, 18 SSA countries were at high risk of debt distress and governments made austerity cuts to public services to service their debt obligations. In 2018, 46 low-income countries — most of which are in SSA— were spending more on debt servicing than on healthcare. Annually, SSA countries were spending an average of $70 per capita on healthcare (supplemented with $10 external assistance), in contrast to $442 in China and an average of $3,040 in the EU.Read More »

Separated under the Same Roof: The Revived Relationships of State-Market Institutions. 

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When looking at the way contemporary global value chains/global production networks (GVCs/GPNs) and the articulations of globalised capital have been studied, it is clearly visible that the hegemonic power of Multinational Corporations (MNCs) has monopolised the empirical and theoretical analysis. Indeed, their ability to maintain control over the technological, financial and commercial flows through private-led governance has impacted most of the industrial development and underdevelopment of the Global South. Such footloose private operations have often caused undesired consequences such as eroded environmental standards, low wages and scrapped social protection rights. Governments have joined in a race to the bottom on fiscal and labour deregulations in order to attract foreign direct investment in exchange for low and semi-skilled jobs, resulting in very low fiscal revenue, low productivity, balance of payment imbalances and poor social outcomes. 

The underpinning theory was that countries should follow their comparative advantages and let the market determine prices of labour (costs) and goods in order to be competitive in the world market and maximise returns. Yet, such losing game has been criticised since the start by heterodox development economists who widely denounced how theories and policies of development forgot the role of the state in history and in the present. In other words, public institutions have always played a key role not only in the quantitative making of capitalist accumulation, but also in its qualitative distributional and developmental outcomes. 

Building upon the heritage of such scholarship, and in view of multiple and overwhelming ‘market failures’ in the global South and beyond, a new wave of Marxist-institutionalist inter-disciplinary literature spanning from Geography to International Economics and Finance has been trying to untangle the potential synergies between the public and the private domains by connecting the GVCs/GPNs and Developmental State approach. 

In this debate, it has been emphasised that the state should be seen as a facilitator (i.e. assisting firms in smoothing market transactions); a regulator (combined with distributor to mitigate inequality and negative market externalities); a buyer (i.e. public procurement); a producer (i.e. state-owned enterprises) and a financer as a result of state-capital reconfigurations through sovereign wealth funds and development banks. Therefore, such functions should be foregrounded in analyses of development, because they are key to understanding developmental sources and processes within GVCs. Read More »

Oikonomia is Back, for Now

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Plato and Aristotle, at The School of Athens. Photo by By Raphael – Web Gallery of Art.

The current pandemic is a human tragedy on an enormous scale, not only in terms of death and illness but also in loss of employment, disruption to education and increased anxiety. Perhaps of most concern to politicians, the various restrictions put in place to reduce the spread of COVID-19 have had large negative effects on national and regional economies. 

As a result, many leaders have opted to ‘re-open’ their economies prematurely, partly since economic performance affects electoral cycles. In some cases there have been disastrous consequences to such loosening of social distancing restrictions, with spikes in infections in various countries or states. This has led to a discussion of a false dichotomy – between protecting human life and reviving the economy. 

This dichotomy is false for several reasons. At the most basic level, if large parts of the population get infected and either die or are unable to work, this would not bode well for the economy either. But more fundamentally, what we think of as ‘the economy’ is really broader than just profits and asset values. Read More »