February 20th, 2021

Transitions

On Spain's transition from dictatorship to constitutional monarchy

It’s been some time since the term “transition” was fully incorporated into day-to-day usage in contemporary Spanish. It refers to the process of political change that began during the second half of the 1970s, a process which transformed Spain from the Franco dictatorship to the parliamentary monarchy that governs the country today. The term was coined in the midst of the dictatorship, as if in its invocation it could foreshadow the horizon of its disintegration. It succeeded in connoting the way in which one regime gave way to another—not a violent cut, nor a democratic breakdown in the strict sense. Instead, it was a process negotiated by the leaders who had inherited the state apparatus of the dictatorship, and the leaders of the parties of the democratic opposition. While the first aimed to assert the weight, however trivial, of an obsolete and precarious power structure, the second aimed to channel the democratic impulse of a significant section of Spanish society.

That latter section was composed of men and women who resisted through illegal parties and organized social movements (worker’s movements, neighborhood associations, student unions, and feminist groups) capable of breaking the public order and revealing, between the cracks of the regime, the new alternatives. In their day to day, they developed forms of political participation, experimentation, and cultural innovation which themselves detracted from Franco’s hold on the popular imagination. In many ways, these early experiences were much more profound than the institutional restructuring later termed the transition. From this angle, the transition can be understood as a sfumato, that is to say, not only the fading of dictatorship into democracy, but as a sum of experiential layers each contributing to its atmosphere and offering a depth that we’ve yet to fully grasp.The interviews with Felipe González, Begoña San Jose, and Héctor Maravall contained in this book capture the texture of this historical moment.

On the other side of this politically active reality stood another very diverse and wide sector of society, predisposed to the consensus they were socialized into under Francoism. They were motivated by a timid desire for change, as well as by a deep fear of its consequences. Under- standing the Spanish transition requires gaining an awareness of these inherited social habits which were highly structured by authoritarianism, and the survival of its repressive legal, bureaucratic, and media institutions. It also requires acknowledging an international framework in which any action on the margin of society was limited by the areas of political influence that defined the Cold War period.

But understanding the transition also requires capturing that organic crisis in existing relations of power, the intuitive and automatic social responses which enhanced the appeal of new cultural attitudes and expanded the scope for political action. The much cited phrase of Manuel Vázquez Montalbán—which explains the negotiations behind the changing regime as “an alignment of weaknesses”—is useful if we recognize that, in moments of crisis, any alignment of forces is unstable and fragile. Understood through its underlying estatism, “an alignment of weaknesses” is a declaration that the transition happened in the only way that it could have. It’s an argument in which the real is transformed into the rational, the rational into the optimal, and the optimal into the venerable. But we know that narratives of the past tend to perform this argumentative transposition in the opposite direction: it is from the veneration of the present that earlier events are arranged in a way that inevitably leads towards some determined destiny.

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July 10th, 2020

The Crisis and the Free Market

On crisis, partisanship, and public policy

Will the current crisis transform America’s politics and economic institutions? With unemployment higher than at any point since the Great Depression, rising food insecurity, and an increasingly muscular role for government—are we witnessing the beginning of the end of the four-decade-long era of the free market ushered in by Ronald Reagan? It’s a question worth considering, whether you’re a Democrat who blames the rising inequality of the last four decades on the policies of smaller government, or a Republican who thinks those policies saved America.

It wouldn’t be the first time a crisis has altered the trajectory of the country. The Republican Party of today is defined by its commitment to tax cuts, deregulation, and cuts in social spending. But prior to the Reagan administration, the Republicans were actually the party seen as most likely to increase taxes, because their main commitment throughout the post-war period had been to avoid deficits. The party was, in Newt Gingrich’s famous dismissal, the tax collector for the welfare state.

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June 18th, 2020

Phenomenal Works: Mehrsa Baradaran

Banking between states and markets

Mehrsa Baradaran is a Professor of Law at UC Irvine. Her research situates the American banking system within a dense network of legal, historical, and political relationships. Her first book, How the Other Half Banks, exposed the vast disparities in access to credit generated by the financial deregulation of the 1970s. The solution to these disparaties, the book argues, is restoring the system of postal banking which was foundational for American democracy. Baradaran's 2017 book, The Color of Money, investigates the institutional factors perpetuating the racial wealth gap. The book forcefully argues that in a segregated economy, black banks suffered from the same poverty they were meant to mitigate. Her writing urges scholars, practitioners, and the public to reenvision banking as a public good.

Baradaran is a contributing editor to Law and Political Economy, where she writes about federal banking regulations, exploitative banking practices, and the development of racial capitalism in the United States. She is co-editor at Just Money, a forum for research and policy analysis which views money as a legal entity. Her recent popular articles have also been featured in The Atlantic, the New York Times, and the Washington Post. She tweets here.

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July 22nd, 2019

...Höhere Wesen befehlen

PHENOMENAL WORLD

Blog highlights

At the Phenomenal World, we have been publishing pieces covering a wide-range of topics, many of which are common ground in this newsletter. Below, in no particular order, is a round-up of some recent work in case you missed it.

Be on the lookout for upcoming posts over the next months—including work on counterfactual fairness by Lily Hu; an interview with scholar Destin Jenkins on race and municipal finance; an examination of the philosophy of Neyman-Pearson testing by Cosmo Grant; and a piece on UBI in the 1970s by Nikita Shepard—and subscribe to the Phenomenal World newsletter to get new posts directly in your inbox.

As always, thank you for reading.

  • Max Kasy discusses the standard of social science experimentation—randomized controlled trials—and proposes, in a new working paper with his colleague Anja Sautmann, a new method for designing experiments that lead to the optimal policy choice. Link.
  • Amanda Page-Hoongrajok reviews James Crotty's new book, Keynes Against Capitalism. Page-Hoongrajok discusses Keynes's thought, Crotty's interventions, and the relevance of these discussions for the current macroeconomic environment. Link.
  • Owen Davis surveys the monopsony literature, dispelling some persistent misunderstandings and clarifying its significance for the state of current economics research. Link.
  • Maya Adereth interviews the legendary and influential political scientist Adam Przeworski. In an expansive conversation, Przeworski discusses his intellectual trajectory, his experience and observations around Allende's government in Chile, the neoliberal turn, and the future of popular politics. Link.
  • Greg Keenan examines the history of copyright formalities in the United States and Europe, arguing that the frequently derided US copyright regime is, in fact, well suited for the digital age. Link.
  • Hana Beach interviews basic income scholar Almaz Zelleke on the neglected history of feminist welfare rights activists's campaigns for unconditional cash transfers, the complex relationship between advocacy and policy, and the current drive towards UBI. Link.
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June 10th, 2019

Sketch for a Counter-Sky

MECHANICAL SHADOWS

On central bank independence and the rise of shadow money

Debates over the political impacts of Central Bank Independence (CBI) reached their peak in the late 90s and early 2000s, due to rising inequality and the volatility of financial markets. Initiated with the 1977 Federal Reserve Act and Paul Volcker’s subsequent term as chairman of the Fed, CBI was, and remains, a means of isolating the more "mechanical" field of monetary policy from the fleeting interests of politicians. In order to preserve stability and credibility, independent central banks have made inflation targeting the center point of their agenda. Critics of CBI have argued that the distinction between economic science and political incentives are not as clear as they might seem; low levels of inflation may benefit creditors and investors, but they harm those whose income entirely depends on rising wages. While monetary policy has distributional and political consequences, its decision makers are insulated from public accountability.

Expanding the literature on the politics of CBI, BENJAMIN BRAUN and DANIELA GABOR examine its financial consequences. In a recently published paper, they argue that the anti-inflationary policies of central banks have catalyzed dependence on shadow money and shadow banking, key components of a broader trend towards financialization:

"In the late 1990s, the US Federal Reserve was confronted with a peculiar predicament. While the world was celebrating central bank independence as a mark of 'scientific' economic governance after the populist era of monetizing government bonds, the US Federal Reserve worried about projections that the US government would pay down all its debt by 2012. A world without US government debt, they worried, was a world filled with monetary dangers. Market participants would not have a safe, liquid asset to turn to in times of distress.

Rather than seeking to limit shadow money supply, the Fed actively encouraged its expansion, seeking market solutions to political problems. It lobbied Congress to ensure that holders of shadow money backed by private (securitized) collateral had the same legal rights to collateral as those holding shadow money issued against US government debt. The Fed also changed its lending practices, allowing banks to issue shadow money backed by private collateral to borrow from the Fed. These concrete steps contrast starkly with the picture of central banks watching passively from the margins, as financial institutions find new ways to monetize credit and circumvent rules."

Link to the article.

  • More contemporary iterations of the debate over CBI can be found in the comparison between a 2018 HKS working paper, which distinguishes between "political oversight" and "operational independence," and a 2014 Levy Institute working paper which argues there is no practical meaning of operational independence at all. Link and link.

  • A primer on shadow banking, from Stijn Claessens and Lev Ratnovski at Vox EU. Link.

  • A new article by Andreas Kerna, Bernhard Reinsbergc, and Matthias Rau-Göhring finds that the IMF’s targeted lending practices actively encouraged the proliferation of independent central banks in low income economies. Link.

  • On CBI, inflationary targets, and the 2010 Eurocrisis, by Mark Copelovitch, Jeffry Frieden, and Stefanie Walter. Link.

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