Analysis

Selling Power

A comparison of the New Deal power program and the IRA exposes key design questions regarding the financing of power systems.

Brave New World

Endogenous dynamics have crippled the current growth wave that began in the 1980s—yielding the period of decay in which we are now living. Rather than achieving a new stability of horizontal competition, the turn toward the market brought about a vertical domination of brand-name intellectual property claims and captive supply chains. What is next as we pass through a historical inflection point? Yogi Berra, the Prophet of Prudence, suggests waiting a few decades to see what the Owl of Minerva says.

Transfer and Transition

Over the past years of escalating trade disputes between China and the US, the latter has repeatedly highlighted a practice it considers anathema: technology transfers that US companies need to offer to their Chinese collaborators if they want to do business in the country. Donald Trump railed against them and Joe Biden branded them “unfair.” Across the other side of the Atlantic, European Commission President Ursula Von Der Leyen explained that such practices by China threaten Europe’s “economic and national security” and necessitate multi-pronged “de-risking” measures to unlink the two economies. In this framework, technology transfers are being “forced” by a major competitor.

Class Cleavages

Within the American business lobby, it seems there is no classwide consensus about the direction of the country’s future. The large blocs of organized money that found Trump a threat to democratic institutions in 2021 evidently no longer do—proposals once thought bad for American capitalism, such as a twenty-percent universal tariff and “mass deportations,” are no longer outside the realm of possibility. As a result, today, the American capitalist class’s record of partisanship could best be described as incoherent. What accounts for business’s inability to challenge the Republican Party? And are there any patterns in the chaos?

Debt’s Political Fix

The IMF claims that the debt crisis is one of liquidity, requiring money thrown at the problem, rather than one of solvency, compelling debt forgiveness that should be absorbed by losses to the financiers. In Sri Lanka, this political fix is forcing a new government elected on the promise of change to accept the IMF’s debt restructuring program.

“Greenwashing” Structural Adjustment

In a global financial system underpinned by the US dollar, the Federal Reserve's interest rate hikes can push much of the global South to the brink of a full-blown debt crisis. The exposure of Southern countries to such external risks, as well as their need to incur dollar-denominated debts, result from an uneven and broken international financial architecture. How this crisis unfolds could have lasting consequences for the global energy transition. Not only does debt limit a country’s ability to finance an ambitious climate agenda, but now, it also makes the institution often at the center of debt negotiations—the International Monetary Fund (IMF)—increasingly relevant for global climate policy. 

Breaking Up Google

In late August, Judge Amit P. Mehta of US District Court for the District of Columbia found Google guilty of maintaining an illegal monopoly in online search. Google had paid billions to device manufacturers and browser developers—including Apple, Samsung and Mozilla—to install its search engine as the default in web browsers and smartphones, which allowed the company to hinder competition and enabled its search engine to dominate the market. This landmark ruling was followed by a Virginia judge formally initiating the trial of a second US Department of Justice (DOJ) antitrust suit against Google in September. This second lawsuit, originally filled in January 2023, denounced Google’s acquisitions related to its monopolistic digital ad technology.

Adaptation in the Sanctioned Economy

The oil boom of the late 2000s created significant headwinds for Iranian manufacturers. As the value of oil exports surged, the Iranian rial appreciated, real wages rose, and foreign goods flooded the Iranian market. Middle-class families relished in their newfound purchasing power, gladly buying French cosmetics, Korean appliances, and Turkish clothing while shunning domestic brands. This is how Iran caught a textbook case of “Dutch disease”—the oil bonanza undermined Iran’s manufacturing base. Programs initiated by populist president Mahmoud Ahmadinejad redistributed wealth to Iran’s lower classes and exacerbated the problem. But the  sanctions shock of 2012, when the Obama administration’s stringent financial and energy sector sanctions thrust Iran into a recession, altered the course. 

AMLO’s Surrender

Lopezobradorismo is without a doubt the most significant political movement to have emerged in Mexico over the past three decades. Since 2018, it has reconstituted the country’s post-authoritarian political system. The movement’s new leader, Claudia Sheinbaum won the Presidency with 60 percent of the votes in early June. With a two-thirds majority in both houses of Congress, the Movement for National Regeneration (Morena) will have the power to completely rewrite the country’s constitutional compact. 

Peripheral Conditionalities

The need to reorganize global governance so as to make space for a growing  China has long been apparent. With the financial crisis of 2008, another demand emerged: the reshaping of capitalism itself. The Covid-19 pandemic represented a strategic moment to advance this dual task. A decade after the announcement of Lehman Brothers’ bankruptcy, the health emergency provided an occasion for one international grouping to launch their plea for a post-neoliberal new world order, a plea that went hand in hand with calls to restructure global governance, particularly its economic dimension. This project became known as the “new Bretton Woods.”

Seeking Stability

Central banking has been described as a “quest for stability” and with good reason. Nearly every major central bank today is charged with securing price stability. The Fed sees itself as responsible for securing price stability and maximum sustainable employment. The European Central Bank was created by the Maastricht Treaty in 1993 with a primary mandate to maintain price stability. The Bank of Japan “decides and implements monetary policy with the aim of maintaining price stability” which is important “because it provides the foundation for the nation’s economic activity.” And so on. Since 2008, most central banks have become responsible not just for securing price stability but financial stability as well. 

Industry Preference

Despite their numerical minority as individual voters, in electoral democracies the economic elite wield significant political power. Through their investment decisions, those who control a nation’s wealth and credit have significant influence over its pace of economic growth, the value of its debts, and the exchange rate of its currency. On each of these rests the stability of a government and, ultimately, the legitimacy of its democratic institutions.

Labor’s Gains?

In 2023, a “banner year” for labor in many regards, only 115,551 workers voted in National Labor Relations Board (NLRB) representation elections, out of roughly 160 million workers in the United States labor force. In FY 2018, that number was 84,505, and in FY 2013, 85,290. Union density today sits at an historic low of 10 percent, with only 6 percent density in the private sector. A mere 1 percent increase in union density would mean that a fresh 1.6 million workers are organized with no losses elsewhere, before accounting for growth in the labor force. Even if unions won every 2023 NLRB election (which they did not), this rate of growth would have been far less than the increase in the civilian labor force, which, in the full employment years of 2015–19, averaged around 1.5 million new workers annually. 

Taking Money Seriously

The relationship between money world and the concrete social and material world is a long-standing, though not always explicit, question in the history of economic thought. Do the money payments and prices we see all around us have their own independent existence, distinct from the objects they are attached to? Can things that happen in money world affect the real world?