Reviews

Huawei the Hydra

Ren Zhengfei founded Huawei in 1987 as a small supplier of telephone switches. Today, the company has grown into a global giant and a leader in China's chip industry. A new book by technology reporter Eva Dou explores the remarkable rise of China's champion of champions despite the efforts of Western policymakers to slow it down. In his review, Kyle Chan considers how waves of sanctions against China's chip industry may have only helped accelerate its growth.

Democratic Decarbonization?

Electricity, it has become widely recognized, is the key to surviving the twenty-first century. Not only is it required for air-conditioning during worsening heatwaves, it also is one of the only ways we already know to produce large amounts of energy without necessarily pumping megatons of greenhouse gases into the atmosphere, worsening the global climate crisis. Using that energy effectively will involve widespread electrification of many end-use products, like automobiles and home heaters. At the same time, however, the United States is by far the world’s largest cumulative emitter of greenhouse gases, in large part because its electric power sector has itself historically been its largest polluter. Solutions to the global climate puzzle therefore rest not only on expanding the use of electric power, but also on making electricity generation in the US cleaner.

Back to the ’90s

New accounts of the 1990s locate the origins of today’s politics not in the accommodations and defeats faced by labor and liberals in the 1970s and 1980s, but in the unfinished struggle that defined federal policy in the Clinton years over the transition from a productive industrial economy to the services-based postindustrial economy.

Who Benefits From Sanctions?

Sanctions against Iran amount to some of the harshest and longest-running restrictions in the world. Dating back to the 1979 revolution that overthrew one of America’s closest allies in the region, early sanctions imposed primarily by the US froze Iranian government assets, blocked the sale of dual-use goods that might be used for military purposes, and  banned the import of Iranian oil into the US. New measures introduced in the aftermath of the Iran-Iraq war went further by deterring foreign companies from entering Iran’s energy sector, effectively killing the liquid natural gas industry. The US also ordered sanctions on foreign entities assisting Iran in developing “weapons of mass destruction.”

Moralizing Money

Since 2021, inflation has featured as among the most salient issues in American public discourse, with voters actively awaiting pronouncements from the Federal Reserve. Inflation mattered in the 2022 midterm elections, and it looms large over the 2024 presidential election. In historical terms, however, there is room for further politicization. The much awaited soft landing  promises to keep the show on the road but, for the most part, does little to alter the defining traits of the current economy. For critics, these problems are hardwired into the current system and are almost impossible to overcome as long as policy-making takes place within the parameters of the current monetary system—moving interest rates up or down. What is needed instead is a new monetary system: democratic choices about what serves as money, who can create it, and what its value is tied to. 

The Logic of Austerity

In the aftermath of 2008, the pace at which capitalist states moved from bailouts and stimulus policies to fiscal belt tightening was jarring. No less striking was the shift in the intellectual framework deployed to make sense of it. While  in the heady days of 2008, sales of Capital exploded and headlines like “What would Marx say?” appeared in the pages of The Economist, the restoration of the status quo ex ante under the umbrella of post-crisis austerity saw the revival of a different historical figure. To explain the rapid shift from bailouts to fiscal consolidation, academics and center-left intellectuals turned to Keynes.

Constructing “Social Europe”

Accounts on the rise of neoliberalism commonly emphasize the exhaustion of post-war systems of embedded liberalism during the economic crises of the 1970s and the parallel internationalization of economic activity. In Europe, this latter process is especially, and controversially, associated with the process of European integration. Aurélie Andry’s Social Europe, The Road not Taken scrutinizes the narratives behind both these processes. The book traces the debates surrounding a European-level leftwing political project throughout the “long 1970s”—a designation that captures the remarkable period of uncertainty and contestation beginning with the protest movements of the late 1960s and ending with the effective triumph of a new conservative and neoliberal politics in the early 1980s. 

Supply-Side Coalitions

The Biden administration’s multifaceted industrial strategy of the past two years has ushered in an ill-defined transition away from neoliberalism. In response to the lingering supply chain constraints created by the pandemic and Russia’s war in Ukraine, as well as growing wariness over China’s market-share of dual-use technologies, the administration has promised to stimulate capital expenditure to maximize labor’s share of economic growth, build climate resilience, and promote energy independence. The goal is to expedite new allocations of labor and capital across sectors reeling from shortages, which have raised the cost of living for most workers and middle-class households.

No Alternative?

The Triumph of Broken Promises by Fritz Bartel is a new history of the end of the Cold War. Challenging conventional narratives that focus on Reagan’s military-ideological assertiveness or Gorbachev's openness to reform, the book gives a material and structural explanation of Western victory and Eastern defeat. This makes for fascinating history: finance and energy emerge as silent but vital battlegrounds, unlikely connections—like those between Japanese investors and Hungarian central bankers—come to the fore, and several East-West similarities surprise the reader.

Money as Empire?

Money makes the world go round, or as Karl Marx put it, Geldgespräche, Quatsch-Spaziergänge. How does this work at the global or international level? Perry Mehrling’s elegantly written biography of the MIT economist Charles Poor Kindleberger illuminates the relationship between money and the global structure of economic and political power. Kindleberger, a distinguished economic historian, was in many ways, and to his own surprise, a central and founding figure in the political science subfield of International Political Economy (IPE). Breaking with the emerging abstract economic models of his time, he developed an empirical and practical approach that emphasized the importance of the political infrastructure underpinning global financial markets, and the ever present possibility of crisis. Lurking in the background of this biographical narrative is a greater story about empire, left whispering in the softest possible voice—a Straussian sotto voce. 

The Sanctions Age

Charles De Gaulle declared in 1961, “A great state which does not possess [nuclear weapons]… does not command its own destiny.” France became the world’s fourth nuclear power in 1960 following the Gerboise Bleue nuclear test. Yet the command of France’s destiny continued to elude French policymakers—the great power anxieties that gave rise to Gaullism persist in France today. After all, the proliferation of nuclear weapons did not diminish America’s superpower status, which found new military, economic, and cultural articulations. De Gaulle was worried about France being a junior partner to the United States in the bipolar order of the twentieth century. France entered the twenty-first century as a junior partner in a unipolar world. 

Cold Controls

In an effort to stymie “indigenous” chip development in China, the US Bureau of Industry and Security (BIS) introduced new controls on semiconductor technology exported to the People’s Republic of China (PRC) last October. Targeting high-performance and advanced memory chips, manufacturing, and “know-how,” the new regulations block Chinese firms’ access to core knowledge and products needed to produce supercomputers and advanced weapons systems. The United States manufactures roughly 10 percent of the global supply of integrated circuits; in turn, the controls lean on an expanded “foreign direct product” (FDP) rule, which gives the Department of Commerce the authority to regulate “direct products” of US-origin technology. Supplementing these measures, the BIS added over thirty Chinese entities to its “unverified list.”

Transatlantic Ties

Bretton Woods is often associated with les Trente Glorieuses, the triumph of a certain kind of social democratic governance system, and American hegemony in Western Europe. The postwar system of monetary governance represented a form of “regulated” international capitalism subordinate to the needs of nation states. The termination of this system, then, is often framed in US-centric terms: the Nixon Administration chose to shed the burden of providing stability for the rest of the world, perhaps as a necessary response to US overspending on the Vietnam War and the Great Society Programs.

Politics and Expertise

Explanations for the rise of neoliberal policymaking in the United States commonly take one of two forms: a political history or an intellectual history. The first focuses on the overlapping crises of the 1970s and the rebalancing political coalitions competing to manage them. The stagflationary oil crisis, rising corporate dominance of Germany and Japan, declining legitimacy after Vietnam, Watergate, and the Iranian hostage crisis confronted an increasingly divided American liberal coalition and a more unified conservative one. The result was a collective political shift to the right, the alienation of many working class people from politics, and the unleashing of a virulent politics of grievance that political elites were unable to manage.

The Last Days of Sound Finance

When the Federal Reserve turned to unconventional monetary policy in 2008, many feared that we would soon see a return to the wage-price spiral of the 1970s. The combination of deficit spending and monetary ease raised the old specter of debt monetization, in which the Treasury sells its debt directly to the central bank instead of the bond market, thereby freeing itself from interest obligations and market discipline. (Pejoratively, this is referred to as “printing money.”) But while quantitative easing (QE) did involve the mass purchase of Treasury bonds by the Federal Reserve, the Fed was buying these bonds from private financial institutions, not from the Treasury itself. Instead of opening a direct line from the central bank to the Treasury (a public—and, in theory, democratic—entity) , the Fed’s “money printing” operation detoured around the Treasury to create new reserves on the books of primary-dealer banks.      

Developmental Realism

Since Donald Trump’s surprise victory in the 2016 US presidential election, defenders of the postwar liberal international order have panicked over the return of their bête noire: neomercantilism. For them, neomercantilism signals a revival of nationalistic protectionism, a surge in trade wars, and the loss of cooperation and openness that has underpinned globalization.

General Theories

In 2022, the audience for books about John Maynard Keynes is probably as large as it has ever been. With two global economic crises followed by widespread use of government interventions, debates recently relegated to history books and academic journals have acquired new urgency. The curious reader can pick from a wealth of recent books.

Transition Theory

Capitalism is either eternal or it isn’t. There are people who defend the first view, or something close to it—the multivolume 2014 Cambridge History of Capitalism opens in Babylonia, circa 1000 BCE—but it is much more plausible that capitalism, like most other social phenomena, has its origins in specific historical developments. The trouble is that, once you’ve got everyone to agree that capitalism has a history, you have to define what capitalism is and then explain when, where, why, and how it emerged.

Balanced Sheets

On the conceptual and methodological stakes of Trade Wars Are Class Wars by Matthew C. Klein and Michael Pettis

Good writing on international macroeconomics reads like a detective novel. There’s a suspicious event—hundreds of millions of dollars in phantom FX swaps, a container port’s worth of missing exports—and an enormous cast of closely-linked characters. But instead of a preternatural ability to see the clear-cut means, motive, and opportunity of fictional characters in a pulp whodunit, the macroeconomic detective is armed with the knowledge that balance sheets always balance. This simple insight, that every transaction has two sides, means that there are certain aggregate relationships between transactions that must obtain for the world economy. Knowing this, it’s possible to chase actors across seemingly unrelated balance sheets to find where the system as a whole was forced to balance. From here, the skillful economist can identify the long-run tendencies that a given balance is likely to create. (Wynne Godley famously predicted the Global Financial Crisis in just this way, following US mortgage debt around the world and back.) This kind of detective work is difficult, and often unpopular. The balance sheet approach cuts through political and media platitudes to reveal who the winners and losers are in a given regime. By taking this approach to examining trade policy, Michael Pettis and Matthew Klein have, with Trade Wars Are Class Wars, written the ideal book for understanding the long-run trends that have shaped our dysfunctional present.

Pettis and Klein tell a broad story about the last fifty years of global economic development, which links the dynamics of global supply chains and tax evasion, and the historical shift from wage-led to profit-led growth.

Renegotiating Education

Indebted is anthropologist and NYU Professor Caitlin Zaloom’s deep dive into the middle-class American family’s struggle to solve the college cost puzzle. Its animating question: How can middle-class families maintain their status and provide their children with as much opportunity as possible?

Keynes versus the Keynesians

What drives economic growth and stagnation? What types of methodologies and tools do we need to accurately explain economic epochs in the past and present? What models and policy approaches can lead to prosperity for all?