International & World

A private debt story: Republic of Turkey (un-)hires McKinsey

Turkey and Argentina are non-identical twins; both countries suffered from almost simultaneous financial crises both in 2001 and 2018. Both are currently suffering from currency crises with potential spill-over to the rest of the emerging markets, and there are those who argue that these twins may have triggered a crisis in the emerging markets in 2018.

But this time Turkey, resisting too many internal and external calls for asking for help from the IMF, hired McKinsey & Company instead.

The slowing economy of the Single Market and NAFTA era

Ten years on from the full explosion of the Great Financial Crisis in autumn 2008, and Brexit lurking just round the corner…  A lot of the Brexit arguments revolve around the perceived pros and cons of the EU’s Single Market; meanwhile, President Trump has been using force majeure to overturn aspects of the 1994 NAFTA deal.

Given this conjuncture, I thought it would be instructive to take stock and assess, over a longer time-frame, how the UK and other developed economies have performed from an overall macroeconomic perspective. And in particular, whether any impact of the Single Market and NAFTA can be detected.

Turkey is business-as-usual for the globalised financial system

After the BRICs came the MINTs – Mexico, Indonesia, Nigeria and Turkey.

In a series of January 2014 BBC programmes, Jim O’Neill – then the Goldman Sachs economist who had coined the term BRICs – celebrated the new acronym. On a blog under the title ‘The Mint countries: Next economic giants?’ he raved about the potential of his new discoveries:

I returned from my travels thinking it won't be so difficult for Nigeria and Turkey to positively surprise people, as many put far too much weight on the negative issues that are well-known – crime and corruption in Nigeria, for example, or heavy-handed government in Turkey…

Protecting us from the worst? The Bank of England on private debt and financial ‘stability’

For policymakers, the importance of private debt was the key take home from the financial crisis. Private debt is also a central theme in the Bank of England’s latest commentary around financial stability, with particular emphasis on the position in China and the US.

But there is a sense of this being only a partial account, with only very limited attention to the more generalised inflation of debt across a very large number of countries.

Did This Straw Break the Finance Sector's Back? 

The world’s financial markets are hurtling towards a new phase of crises ranging from currency to balance of payments  to sovereign debt to banking crises. The monetary tightening policies of the United States Federal Reserve and the European Central Bank will only precipitate crises in emerging market as well as peripheral eurozone economies, which will have global repercussions.

How Polanyi best explains Trump, Brexit and the over-reach of economic liberalism

It’s good to see the latest (21 December) New York Review of Books give space to a review – by Robert Kuttner of American Prospect– of a biography of "Karl Polanyi: a Life on the Left" by Gareth Dale.  For as we have been arguing for a long time, it was Polanyi who better than any other historian / analyst got to the heart of the contradictions of free market globalised liberalism, and saw that it was such economic liberalism, pushed too far, that is likely to lead to authoritarian, or even fascist, outcomes.

The neoliberal road to autocracy – a response to criticism

The major point I was trying to make in my article was that the real improvements in poverty reduction, as well as in life expectancy and many other fields, do not depend wholly on  economic policies, but also on the role of fossil fuels, and on scientific, medical and other advances, which, other things being equal, should accelerate in impact across time and space. Hence the fact that the rate of improvement is in the form of a curve, not a purely linear effect. These improvements have taken place under different economic systems, and are not a function of neoliberalism or “global markets”. 

10 years after: a series reflecting on the Great Financial Crisis

PRIME (working with the New Weather Institute) organised an event at the TUC to commemorate the day - 9th August, 2007 - that inter-bank lending froze, central banks came to the rescue, and the Global Financial Crisis began in earnest. We will be publishing transcripts and notes from that event, chaired by Ann Pettifor and with contributions by Frances Coppola, Professor Daniela Gabor and Andrew Simms of the New Weather Institute.  We will shortly publish articles written before August, 2007 that warned of the forthcoming crisis. To begin the series, we are posting a longer version of an article written by Ann Pettifor and published in Red Pepper on 8 August, 2017 - The economic crash, ten years on

Lecture 4. Is America an Exception?

Within the last decade [this lecture was written and delivered, we recall, in 1940 - ed] free institutions have succumbed to the impact of sudden change in most of the countries where civilisation bore the imprint of the Industrial Revolution.

Must America go the same way? Or is there hope that she might be able to master her own future?

Lecture 3: The Breakdown of the International System

The failure of the international economic system was ultimately due to the same inherent weaknesses which characterized the national systems under a market economy. The view which makes autarchy responsible for the breakdown can hardly be upheld. On the contrary, it might be more justly argued that it was the failure of the international system which gave rise to autarchy.

Lecture 1: The Passing of 19th Century Civilization

The subject matter of these lectures is a vast and unique event: the passing of 19th century civilization in the short period that elapsed between the first and the second wars of the 20th century.

At the beginning of this period, 19th century ideals were paramount, indeed their influence had never been greater; by its close hardly anything was left of that system under which our type of society had risen to world leadership. 

The Present Age of Transformation - Introduction by Kari Polanyi-Levitt

The recovery of five lectures under the title The Present Age of Transformation, delivered by Karl Polanyi in Bennington College in 1940, is indeed serendipitous. It invites a comparison of the collapse of the 19th century liberal economic order in the Great Depression and its transformative consequences, with the contemporary unraveling of its neoliberal reincarnation and the rise of right-wing populist politics in the Atlantic heartlands of capitalism.

“Market-Utopia”-  lessons from the past, implications for our future

This week PRIME is publishing (as individual posts) the set of five lectures given by Karl Polanyi in autumn 1940 at Bennington College, Vermont, and entitled "The Present Age of Transformation". The lectures, together with introductions from PRIME's Jeremy Smith and Ann Pettifor, and from Professor Kari Polanyi-Levitt, have also been put together for ease of reference into a pdf "publication". We begin with the PRIME editors' introduction.

Our Polanyi week - the 1940 Bennington College Lectures

This week is PRIME’s Polanyi week.  We are re-publishing – because of their topical as well as historical significance – a set of five lectures given by Karl Polanyi in autumn 1940 at Bennington College, Vermont, and entitled “The Present Age of Transformation”. The first three essays briefly prefigure the main themes of his major work, “The Great Transformation”, published in 1944.  

We are publishing each of the lectures as individual posts, and have also compiled them into a pdf “publication”, including introductions from Professor Kari Polanyi-Levitt and PRIME's Jeremy Smith and Ann Pettifor.

The variable relationship between trade and GDP

Earlier this week, the World Trade Organisation published its latest trade statistics and outlook – and was in pessimistic mode:

“World trade will grow more slowly than expected in 2016, expanding by just 1.7%, well below the April forecast of 2.8%....With expected global GDP growth of 2.2% in 2016, this year would mark the slowest pace of trade and output growth since the financial crisis of 2009.”

But the relationship between trade and GDP for individual countries is far less clear. The extent of change in the share of trade in the economy differs enormously between countries – and is not correlated in any evident way with the rate of increase in GDP.

United Stag-Nations – the decayed decade for GDP per head

When looking at how economies are doing, we tend to look mainly at the trend in GDP.  But in terms of economic well-being, a clearer (though still imperfect) indicator is GDP per head of population – how the economy is doing relative to changes in population.

In general, since the end of World War 2, in most all so-called advanced economies, there was an almost inexorable upward slope in any chart on GDP per head of population.  But over the last decade, in particular since 2007-08, many countries have reached a virtual plateau. In a few cases, there is still a tiny, upward glide.  In others, the line is flat.

And in several cases, the slope is downward.

Is Brexit Moment a Lehman Moment? Fear Factor in Financial Crises

The Lehman moment is the moment when Lehman Brothers—one of the largest investment banks in the United States (US) at the time—collapsed. The collapse happened on 15 September 2008. Almost nobody disagrees with that the Lehman moment has been the most important moment in the ongoing global financial crisis that started in the summer of 2007, at least, up until the Brexit moment.

Uber, Newsnight and Donald Trump

I fluffed my lines on a recent BBC Newsnight  segment on Uber.  As the discussion was wrapping up, I warned that the uberisation of the economy – the ambition to corral the entire cash flow of whole sectors of the global economy into the pockets of a few - is utopian.

My fellow guest, Julie Meyer of Ariadne Capital, shared her dystopian vision of a world in which companies like Uber will apparently “enable the future infrastructure of the (global) transportation industry”. One in which the owners of a few companies are about to become “the organisations who organise the economics for these ecosystems”.