With intensifying concerns regarding the soundness and stability of the international monetary and financial system, calls for reforming it have been on the rise. One recent call was made by the Bank of England Governor Mark Carney, in August 2019, in which he suggested a ‘synthetic hegemonic currency’ to replace the US dollar as the key reserve currency. Whether such calls will lead to an end of the key reserve currency status of the dollar remains to be seen.
My review of John Maynard Keynes’s The Economic Consequences of the Peace Macmillan (2019) appeared in Nature – the International Journal of Science – on 23 September, 2019.
“Ann Pettifor finds astonishing contemporary resonance in John Maynard Keynes’s critique of globalization and inequity.”
Keynes, then at the start of his career in economics, had attended the Paris Peace Conference, where the treaty was drafted, as an adviser to the British government. He left in protest. His hastily penned book was, and remains, a publishing phenomenon. Just a year later, The Economic Consequences of the Peace had been translated into 12 languages, and 100,000 copies sold worldwide. By the 1930s, Keynes had become one of the most influential economists in history. His book has never been out of print.
Will market volatility amidst global trade tensions and uncertainty cause a global recession? Although the world’s major central banks had managed to avoid risks in the first week of June, despite some small variations at some maturities, the United States yield curve remained more or less as it was at the beginning. What will happen in the not-so-distant future?
The global economy is heading towards a downturn. However, is the world prepared to deal with the consequences? Whether it is a slowdown or recession, it remains to be seen as to what the future would hold for the banking systems of Eurozone and China, and the global stocks in general.
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.
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.
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…
Neglect of Keynes’s monetary theory and policies has come at the price of increasingly frequent international financial crises.. It is time to restore the revolutionary Keynes.
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.
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.
Ten years ago the bursting of private debt ‘bubbles’ – most obviously in the US, UK and on the periphery of the EU – woke policymakers to the importance of balance sheet dynamics. Today, commentary by international organisations has ongoing rises in private debt as a key risk to global outcomes.
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 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”.
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.
Total global debt has increased, growth has been slowing down since the onset of the global financial crisis in 2007 and has been rapidly decelerating after 2012. This may be a sign that the world has arrived at its debt carrying capacity or has even crossed it, meaning that capitalism is probably already insolvent.
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?
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.
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 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.
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.