Accounts of major historical shifts tend to treat states as unified actors responding to external incentives. In a new article, INGA RADEMACHER complicates this assumption. Drawing on archival documents from the German Federal Cabinet and Bundesbank Council from 1960-1981, she argues that competition among state actors is a crucial, but often overlooked, factor in shaping policy trajectories.
From the piece:
"The globalisation literature argues that capital mobility, and capital flight in particular, are critical drivers of austerity. However, during the 1970s, capital outflows were not a problem in the German economy. Rather, capital inflows caused problems for monetary actors—triggering conflicts between Bundesbank and administration. In the 1970s, when the expansion of Eurodollar markets peaked, the Bundesbank’s autonomy became increasingly curtailed as so-called ‘hot money’ flooded the German capital market. But the enforcement capacity of the central bank increased with the breakdown of the Bretton Woods system.
Initially, central bank officials were not convinced of monetarist ideas. Instead, during the debates over solutions to the crisis—capital controls or the float of the Deustchmark—in January 1973, the central bank reviewed two rival approaches to resolve inflation: a ‘dirigiste’ approach and monetarism. Since the dirigiste proposal found considerable support among a large group of central bankers, including the president of the Bundesbank, Karl Klasen, it seems unlikely that ideational changes drove the shift to new policy instruments in the central bank. Instead, monetarist policy settings and instruments were suddenly endorsed on the basis of strategic considerations on how to enhance the power position of the central bank in the overall macroeconomic system. This micro-level analysis shows that institutional instruments are only one way that central bankers gain power within the larger macroeconomic framework. They also actively utilise opportunities in the political and economic context to bargain with the government."
Link to the text.
- "The analysis of change does not come easily to institutionalists, for its opposite—stability—is built into the very definition of the term institution itself." Kathleen Thelen and James Conran on theorizing institutions as sites of "political contestation." Link.
- "The inclination and capacities of democratic governments to pursue specific growth regimes depend not only on economic circumstances but also on evolving electoral conditions." A recent paper by Peter Hall. Link. And from 2019, Baccaro and Howell on "social blocs and growth models." Link.
- From Robert Putnam's seminal 1988 essay on the "logic of two-level games": "Domestic politics and international relations are often somehow entangled, but our theories have not yet sorted out the puzzle." Link.
Egyptian-Chinese Economic Zones
In a 2018 paper, PhD candidate in development studies at SOAS University of London SAFA JOUDEH analyzes economic zones in Egypt.
From the abstract:
"This paper focuses on the global integration of economic zones for the movement of knowledge and technology. Using the case of China’s Economic and Trade Cooperation Zone in Egypt, it examines the dynamics of coordinating global value chain activity in a foreign-operated industrial cluster highlighting two main determinants of achieving technological progress, industrial planning and institutional dynamics. The key question asked is whether a framework for the operation of economic zones that is controlled by lead economies can succeed in enhancing industrial competitiveness of domestic enterprises. As evidenced by this case study, the organisation of global production, including decisions relating to the choice of location, industry focus, vertical cooperation and shifts in value chain activity, is not determined endogenously within the chain but by the policy imperatives of the lead economy. Accelerating GVC participation fails to ensure the vertical move upward of domestic enterprises, and may counter the development of indigenous capabilities in the host economy."
Link to the text.
Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations: email@example.com.
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- Watch a recording of last week's panel on the future of social democracy, which featured Stephanie Mudge, Adam Przeworski, and Wolfgang Streeck, and was moderated by Waltraud Schelkle. Link.
- JW Mason on alternative visions of inflation. Link. And see a PW essay by Andrew Elrod on the various causes and effects of inflation. Link.
- "Economic policymakers in Thatcher and Reagan's administrations in the early 1980s did not set out to ‘fail forwards’ by generating a crisis that would enable a statist kind of neoliberalism." Jacqueline Best studies the early days of neoliberalism. Link.
- Annie Lowrey writes on administrative burden and the "time tax." Link. And read a PW Sources edition from 2019 on the political choices behind administrative burdens. Link.
- Kevin Corinth, Bruce Meyer, and Angela Wyse present a new dataset to better understand homelessness and the social safety net in the US. Link.
- Killian Clarke looks at bias in datasets on Middle Eastern protests. Link.
- Matthew M.C. Allen, Maria L. Allen, Syed Imran Saqib, and Jiajia Liu examine 'state-permeated capitalism' in the solar photovoltaic industry in China and India. Link.
- "Factoring in precarity puts into question the idea of comparing the incomes of formal employees with those in informal jobs in one unified, clean dataset. That dataset is the ‘killer app’ of poverty reduction." Rishabh Kumar on the debates around global poverty. Link.
- Scott Timcke on Kwame Nkrumah and current day fintech in Africa. Link.
- "These bills would return the federal government to its more familiar historical role in bolstering and directing the nation’s growth." In the Washington Post, Robert Manduca, Nic Johnson and Chris Hong on the Biden infrastructure legislation. Link. And see Johnson's PW essay on the New Deal-era Reconstruction Finance Corporation. Link.
- "This article assesses why the French and US banks Paribas and Speyers underwrote a series of loans to revolutionary Mexico in 1912 and 1913, when the state was in the process of collapsing. Based on unpublished primary documents, the article shows that the 1913 loan involved a conflict of interest. The credit delayed a default and sustained the price of Mexican securities while Paribas, its main underwriter, was liquidating its Mexican portfolio. Paribas accessed pessimistic but accurate first-hand information on Mexico, while the public read over-optimistic press reports. Paribas forced the government to sell the bonds on the primary market at a price that was low, controlling for publicly available data. It subsequently sold the bonds at a margin on the secondary market." By Leonardo Weller. Link.