Governments as Market Players: State Innovation in the Global Economy (original) (raw)
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Who does the state work for? Geopolitical considerations in the organization of (global) finance
States acting as lenders of last resort in the aftermath of the 2007/2008 financial crisis clearly illustrated the central role that states have in the operations of financial markets. Despite their active roles, however, states continue to be presented as passive actors that dance to the tunes of the financial markets. This paper, however, takes a close look at how states’ geopolitical concerns influence financial regulation. States are perceived as serving the interests of their citizens, yet future rescue operations (as lenders of last resort) at the costs of the taxpayers remain a strong possibility – in particular, Too Big To Fail (TBTF) banks persist and their leverage-ratios have not greatly improved. To better understand why this is the case, this paper argues that geopolitical concerns influence the triangular relationships between the (democratic) state, the financial sector, and the state’s citizens (and taxpayers) in favour of the financial sector. Accordingly, the paper argues that we should more explicitly ask ‘what drives states (and politics) in their approaches to finance?’
IDS Bulletin, 1993
Writing near the middle of the twentieth century, and near the end of World War II, Karl Polanyi (1957(1944)) interpreted the history of capitalism as the tension between two movements. The dominant movement, which originated with the capitalist epoch, was the utopian project to create a self-regulating market. Because it was utopian, that project could have devastating consequences. The counter movement consisted of the multitude of survival strategies of social groups, and political responses of states, to protect human communities and their natural habitats against those consequences. The Great Depression and World War II were the most farreaching devastation so far. The three major selfprotective experiments of his time were the US New Deal, Fascism, and Stalinism. Now that all three mid-century experiments are dead or worse, there has been a revival of the utopian belief in the magical powers of the market to regulate social life. Those who hold this belief appear impervious to increasing evidence of chaos and destruction of the human and natural substance of society. The new language of deficits and debts revives the old belief that human communities exist through the grace, in present terms, of investors. Salvation, in this view, lies nOt in re-embedding production and consumption in the needs and capacities of human communities, but in other people's money. That money is increasingly disembedded from any community or political agency, and moves across the world, creating here and destroying there, at an increasing pace. This article points in bold strokes a picture of the specific rules chosen to organize world commerce and investments after World War II. The main figures in the picture are national states, which entered unequally into the original negotiations, and evolving practices and powers, of multilateral organizations. As the picture becomes animated, these figures begin to fade. States become less central as they come into conflict not only with one another, but also with the new creatures born from the postwar rules, transnational corporations. 49
Sovereign Wealth Funds: The Emergence of State Owned Financial Power Brokers
SSRN Electronic Journal, 2009
financial system into international investments (flowing into the US and other states) (Krugman/Obstfeld 2000:8). In this context international finance has occupied its central position in economics and become one of the core fields in the study of IPE. The financial arena can be characterised as a place where investors, banks or other institutions intermediate between savers and borrowers (Oatley 2008:238; Bryant 1987). Bryant (2003:23) refers to financial intermediation as the "...entire complex process through which the myriad independent decisions of individual […] savers and individual […] investors are reconciled." Through this intermediation, surplus resources-that is, resources which are not consumed-can be transferred from savers to borrowers (Oatley 2008:238; Solomon 1982:4; Bryant 2003:3). Similarly on a larger scale, "[i]nternational financial transactions transfer resources from high-saving to low-saving countries" (Eichengreen 2004:281). However, this intermediation between savers and borrowers on an international scale was challenged in the period before 1971. This period (1945-1971), heavily influenced by Keynesianism, was characterised by capital controls and pegged currencies, which made the exchange of money among individuals of different countries difficult (Oatley 2008:238). Consequently, this period characterised by low international financial transactions was different from the era after 1971. After 1971 the financial sector has grown more rapidly than the real economy in terms of volume. According to Helleiner (2005:152), "International flows of money [in 2005] dwarf the cross-border trade of goods." 4 In other words, financial links have been growing faster than trade links. This indicates a rapid increase in economic interdependence, in particular finance, among countries (Bryant 2003:7). Although nations continue to be politically independent, they are "…economically and financially interdependent" (Solomon 1982:6). Whereas the political world is still organized around nation states, the economic world does not necessarily mirror these political borders
Quaderni di Scienze Politiche, 2021
In this paper we analyse the documents of two prominent international financial institutions (IFIs), the IMF and the World Bank, in order to shed light on how these institutions conceived of the role of the State since the 1990s, and legitimated the reform of State institutions. By paying particular attention to the question of State reform, we argue that IFIs played a strategic role in providing for a “global” framework to guide and legitimate the transformations of the State at national level. On more empirical grounds, we perform a diachronic analysis of IFIs’ discourse on the State, by comparing three junctures: (a) the 1990s, i.e. the crucial decade of the ‘globalization project’, (b) the global financial crisis of 2008 and its aftermath, and (c) the current Covid-19 crisis. Through the development of a detailed account how IFIs conceive the State and its role, the paper aims to make sense of the State–market relations on a more pragmatic way, and in the light of both junctures of economic expansion and crisis. In the final section, through a preliminary analysis of the documents produced during the Covid-19 pandemic, we highlight also some possible innovations in State discourse compared to the previous phases. In the light of the empirical analysis, the main argument of the paper is that IFIs conceived the State as key to the long-term development and preservation of market economy
Varieties of state capital: What does foreign state-led investment do in a globalized world?
2021
Existing studies have scrutinized the rise of states as global owners and investors, yet we still lack a good understanding of what state investment does in a globalized economy, especially in host states. Comparative capitalisms research has analyzed foreign state investment as a potential source of patient capital for coordinated and mixed-market economies. However, this patient capital framework cannot explain the recent surge of protectionist sentiments, even among the ‘good hosts’ of state-led investment. Therefore, we go beyond the patient capital argument and develop a novel framework centered on the globalized nature of foreign state investment. We create and empirically illustrate a novel typology based on different modes of cross-border state investment – from financial to strategic – and different categories of host states. Our results provide a new pathway to study the rise and effects of cross-border state investment in the twenty-first century.
State and Governance in the Contemporary International Economic System
The end of the Cold War caused many changes in the world " s political and economic order. Under the newly reshaped world order, debate on the role of states with regard to governance of the international economic system has reached unprecedented levels, with some scholars proclaiming the end of the state and the beginning of a new era in a borderless world, and others insisting that nothing has changed with regard to the state " s role. It is obvious that, since 1991, changes in technology have greatly enhanced the volume, intensity and speed of international economic activities. In today " s highly interdependent world economy, the state " s power has indeed been transformed to meet the needs of changing international markets, but this transformation does not necessarily mean a diminishment in the power of the state. When an international crisis arises, neither private actors nor civil society organizations are called upon to solve the problem. The state as an actor appears to be turning to the economic scene these days through ongoing bail-out operations.
Kanishka Jayasuriya, Professor of Political Science at the University of Adelaide, Australia and author of two monographs – Reconstituting the Global Liberal Order: Legitimacy and Regulation (2005) and Statecraft, Welfare and the Politics of Inclusion (2006) – argues that changing forms of governance and new regulative laws are enabling the transnationalization of institutions within national states. He also interprets these changes as giving rise to a new type of institutional struggle unique to globalisation. For social scientists in general and political economists in particular, Jayasuriya’s work provides a useful lens through which to understand intra-state transformation in the global epoch. By rejecting Realist/Weberian conceptions of the state and drawing inspiration instead from materialist state theory, he understands state transformation as a reflection of ongoing processes linked to socio-economic forces that are novel to the historical present. And in the wake of the global financial crisis, he argues, we should not see the state as either disappearing or returning, for it is continuing to transform in ways peculiar to the age of globalism. The real question is for whom states will act in the future. In order to answer this, Jayasuriya suggests that we must look to transformations occurring within the national state, for it is these that are changing statecraft as we know it. In this interview, Jayasuriya discusses some of his main concepts and theories, such as the regulatory state; meta-governance; the transition from ‘social constitutionalism’ to ‘economic constitutionalism’; and describes how each of these relate to the ongoing crisis of global capitalism. He clarifies his views on the idea of a transnational capitalist class, arguing that there must be “different fractions within it”; and goes on to discuss the connection of his theories on state-transformation with the related works of William Robinson and Martin Shaw. Finally, he discusses some of the theorists that have influenced his work – such as Nicos Poulantzas, Carl Schmitt, Franz Neumann, and Amartya Sen – and briefly describes his areas of ongoing research.
The Reconfiguration of the Global State–Capital Nexus
Noting an apparent ‘return’ of the state this article analyzes the rearticulation of state–capital relations in the context of the current global crisis. Departing from the notion that capital and state are internally related, we distinguish four roles that the state can play with respect to capital accumulation and on that basis examine to what extent and how the state–capital nexus is reconfigured in both the global South and global North. We argue that in spite of a more activist role of the state in the latter and the rise of globalizing yet state-led accumulation strategies in the former, the globalizing dynamic of capital and the concomitant deepening commodification go on unabated. The ‘rebound of the state’ that is the focus of this special issue is thus seen as instrumental to an ongoing globalization of capital, notwithstanding significant power shifts arising out of this contradictory process. Este artículo analiza la rearticulación de las relaciones del estado y el capital, indicando un aparente ‘retorno’ del estado, en el contexto de la crisis global actual. Tomando como partida la noción de que el capital y el estado están relacionados internamente, distinguimos cuatro funciones que el estado puede jugar con respecto a la acumulación del capital y sobre esa base, examinar hasta qué punto y cómo el nexo capital-estado se reconfigura tanto en el sur como en el norte global. Sostenemos que a pesar de un rol más activista del estado en el último y del auge globalizador en las estrategias de acumulación aún dirigidas por el estado en el primero, la dinámica globalizadora del capital y la profunda mercantilización concomitante sigue sin tregua. La ‘recuperación’ del estado es el foco de esta edición especial, visto por lo tanto como instrumental en la globalización actual del capital, no obstante los importantes cambios de poder que surgen de este proceso contradictorio.
Science and Society, 2015
The globalization and state debate of the last two decades has been dominated by progressive liberal and left-nationalist approaches. Progressive liberals, including social democrats and some Marxists, argue that not only economic, but also political processes have become globalized. In contrast, left-nationalistswith a similar ideological diversification -treat both economic and political processes as primarily national. What is problematic about both camps is the assumption of compatibility between the space of capital accumulation and the space of state action, whether at the global or national level. This makes it impossible to explain the contradictions of international accumulation as reflected within specific social formations, and to develop class-based political alternatives. There is, however, a third alternative: even when economic processes are internationalized, their administration remains primarily a national affair. This alternative can explain the contradictions of state restructuring within specific social formations without falling into the pitfalls of either abstract internationalism or nationalism. * I would like to thank Greg Albo, Fuat Ercan and the anonymous referees for their comments and suggestions. The usual disclaimer applies.