Crisis management and the diversity of capitalism: fiscal stimulus packages and the East Asian (neo-)developmental state

Abstract

This paper contributes to the understanding of East Asian capitalism by investigating the political economy of crisis management in Japan, Korea and China during the global economic crisis. Reacting to the global shock of the economic crisis that began in 2008, East Asian capitalism has remained a distinct state-led model that differs substantially from the liberal, neo-corporatist or welfare state varieties of capitalism in the West. More specifically, this paper studies the fiscal stimulus packages implemented by East Asian countries to address the global financial crisis from 2008 to 2010. We find that East Asian fiscal stimulus packages were comparatively large and supply-side-oriented. Unlike in the West, where a (short-lived) revival of demand-side-oriented Keynesian strategies stimulating consumption could be observed, East Asian countries reinforced industrial policies and supported investment and international competitiveness. We argue that the East Asian variety of crisis management can largely be explained by a path-dependent transformation of the East Asian developmental state into a neo-developmental competition state.     

Varieties of Capitalism and the Euro Crisis

This article examines the role played by varieties of capitalism in the euro crisis, considering the origins of the crisis, its progression, and the response to it. Deficiencies in the institutional arrangements governing the single currency are linked to economic doctrines of the 1990s. The roots of the crisis are linked to institutional asymmetries between political economies. Northern European economies equipped to operate export-led growth models suitable for success within a monetary union are joined to southern economies whose demand-led growth models were difficult to operate successfully without the capacity to devalue. The response to a tripartite crisis of confidence, debt, and growth is explained in terms of the interaction of institutions, interests, and ideas, and its importance for the future of European integration is explored.     

Class, Capital and Crisis: A Return to Fundamentals

The financial crisis that currently threatens the stability of global capitalism is the latest in a long line of similar episodes stretching back some 200 years. While many orthodox economists explain the crisis in terms of the failure of the proper operation of the market mechanism, radical accounts see crisis as an aspect of the constitution of capital and of the process of the accumulation of capital itself. This article explores the extent to which Marx's understanding of accumulation and crisis can provide the basis for a general theory of capitalist crisis. It concludes that the growing and chronic separation between financial (fictitious) accumulation and productive accumulation is the key to understanding the latest crisis of capital expressed as a global credit crunch. Furthermore, Marx opens the door to the development of an overtly 'political' theory of crisis stressing the 'capitalist use of crisis' as a means for the violent reassertion of the fundamental class relation.     

Ideology as blocked mourning: Greek national identity in times of economic crisis and austerity

This article approaches the 2010–2014 economic crisis in Greece from the perspective of loss and mourning, critically exploring what questions and insights this provokes. We argue first that the rhetoric of mainstream political and media elites has been instrumental in framing responses to the Greek economic crisis in patriotic terms, a frame subsequently adopted by groups from across the entire political spectrum, whether part of the establishment or not. We then draw on discourse theory and psychoanalysis to argue that attachments to the dominant austerity and anti-austerity responses to the crisis can be understood—at least in part—in terms of a failure (or not) to properly articulate and thus mourn the nationalist-inflected loss associated with economic dislocation. We sketch out two ideological pathways in the discourses of austerity and anti-austerity, which we designate as symptomatic of ‘blocked mourning’: a melancholic pathway that seeks to contain loss through self-blame; and a pathway of ressentiment that seeks to contain loss by attributing its cause to a series of ‘others’. We argue that blocked mourning bears a direct relation to the ideological grip of the austerity and anti-austerity discourses, and that we can better appreciate the character and strength of their affective pull by drawing out the fantasmatic aspects of the narratives expressing Greek national and economic identity. Conversely, we argue that a critique of ideology can be understood in terms of the preconditions for mourning, whose satisfaction would make possible a less invested relation to the fantasmatic guarantees underpinning the austerity/anti-austerity narratives. In this view, a critique of ideology proceeds by bringing to light those factors that could facilitate a more open and deliberative articulation of loss, so as to transform and pluralize collective responses to the economic crisis.     

Neo-liberalism and polycontextuality: banking crisis and re-regulation in Sweden

This article gives an account of the interpretative conflicts and re-regulative initiatives that followed the Swedish banking crisis in the 1990s. The analysis is based on systems theory and theories of governance conceptualizing steering and self-regulation. It shows the polycontextuality of the conflicts over the crisis, and how the re-regulation articulated central aspects of neo-liberal government, as conceptualized in terms of governance. The conclusion discusses two paradoxes. The first is that the enforced self-regulation of the re-regulative process 'frees' market actors by embedding them in new webs of governance. The second paradox is that every solution to a problematic event of this kind is at the same time seen as a new problem when observed with distinctions other than the one reduced by the solution.     

Power and changing modes of governance in the euro crisis

Which European Union actors are most powerful in the governance of the euro crisis? The euro crisis has reignited the classic debate between intergovernmentalists, who tend to stress the coercive power of dominant member states in the European Council, and supranationalists, who maintain that through the use of institutional power, the Commission, and the European Central Bank turned out the “winners” of the crisis. This article argues that euro crisis governance is best understood not just in terms of one form of power but instead as evolving through different constellations of coercive, institutional, and ideational power that favored different EU actors over the course of the crisis, from the initial fast‐burning phase (2010–2012), where the coercive and ideational power of Northern European member states in the European Council was strongest, to the slow‐burning phase (2012–2016), when greater influence was afforded supranational actors through the use of ideational and institutional power.     

The Asian financial crisis and financial reforms in China

Abstract

Although China has avoided the direct attack of the Asian financial crisis, it has suffered secondary consequences leading to an economic slowdown. More importantly, the plight of its neighboring countries has driven home the urgency of financial reforms as China shares many of the problems at the root of the crisis in Thailand, Indonesia, Malaysia, and Korea. This article reviews the reform measures adopted by the Chinese government since the crisis. It analyzes the political dynamics of financial reforms in terms of state preferences and state capacities. In retrospect, the Asian financial crisis may well be seen as a turning point in reforming China's financial system.     

The present crisis in historical perspectiveTitle ∗

The present crisis of capitalism differs from that of the 1930s in major ways. Investment has not collapsed, macroeconomic policy has moved away from instead of towards Keynesian ideas, and economic class conflict has played an important role. The rise of class conflict is attributed to structural, political and ideological changes in the advanced capitalist countries, and macroeconomic policy developments are interpreted as a response to the resulting difficulties. Reasons are advanced for the bouyancy of investment spending since 1973.     

Future Public Service Capacity: Employment of Young People into Australian Public Services during the GFC

Public services face several workforce challenges, including impending retirements and austerity programs. Although employing more young people is a likely solution to balancing the demographic profile of public services, the literature and theory suggest that young people would have fared worse during the global financial crisis. This research tests propositions around the vulnerability of young people in selected Australian public services during the global financial crisis, in terms of quantity and quality of jobs obtained. Surprisingly, the findings suggest that many young people fared as well or sometimes better than other age cohorts during the global financial crisis in terms of both recruitment and access to ongoing jobs. There are several indications that perhaps public services provided a safe haven in a turbulent labour market.     

Asian multilateral institutions and their response to the Asian economic crisis: the regional and global implications

Asian multilateralism has been a relatively recent development. It differs from that elsewhere and reflects the history and characteristics of the region. It has been important in the growth of regional cooperation, in developing common regional interests and in the development and adherence to norms. These characteristics contributed in responding in a constructive, if limited, way to the Asian economic crisis. Nevertheless, the crisis has revealed the weaknesses of existing regional multilateral institutions and those weaknesses are often seen as raising doubts about whether those institutions can be effective in the future without major reform. Yet, although the response of the regional institutions was clearly inadequate, the region's response overall was far from negligible. Efforts to ensure regional coherence in the future by way of ASEAN, APEC and ASEAN+3 in particular are already being made to ensure greater stability in the financial sector. The region also wants to overcome its under representation in the global arena, but increased global participation, while positive, will remain supplementary to the global institutions, notably the IMF. Greater global involvement would provide, however, a more appropriate balance between regional and global contributions to future crises, since they will need to be better tailored to regional conditions and therefore depend on greater regional involvement from the start.     

The Club Rules in Global Financial Governance

Though the list of reforms following the onset of the financial crisis is long, we should resist the temptation to view the emerging regulatory framework in terms of a paradigm shift. Many key features of the system, including the privileged position of financial institutions, remain unchanged. This is not merely due to obstruction or capacity shortcomings but can be explained by considering the sources of ideas and the governance setting. Ideas and policy programmes for reform were generated by a policy community also responsible for shaping the pre‐crisis governance framework. Moreover, the ideas and preferences of these players are moulded by their transnational interactions and the club‐like mechanisms in place for determining what (and who) is to be included in discussions. These settings have produced policy programmes that helped address the immediate, ‘fast‐burning’ elements of the crisis, but have so far failed to put together a comprehensive reform programme.     

Revisiting the trade and unemployment nexus: Empirical evidence from the Nigerian economy

The recent exacerbation of unemployment crisis in Nigeria stands to be a serious threat to both socio‐economic stability and progress of the country just as the report from the Bureau of Statistics shows that at least over 8.5 million people had no gainful employment at all as at the last quarter of the year 2017. It is on the above premise, that the present study explores the link between trade and unemployment for the case of Nigeria with the intention of exploring how the unemployment crisis has been impacted within the dynamics of the country's trade performance. The empirical evidence shows that the nation's terms of trade were insignificant to unemployment rate, while trade openness and domestic investment, on the other hand, have significant opposing impacts on unemployment in Nigeria over the period of the study. Further breakdowns from the empirical analysis also revealed that the Philips curves proposition is valid within the Nigerian economic context, while the evidences for the validity of Okun's law only exist in the short‐run scenario. Based on the empirical results, we recommend that concerted effort should be geared toward stimulating domestic investment by providing adequate financial and infrastructural facilities that will promote ease of doing business while utmost precautions are taken to ensure that unemployment crisis is not exacerbated when combating inflation in the economy in the wake of dynamic trade relations.     

The impact of EU intervention on political parties’ politicisation of Europe following the financial crisis

Abstract

This article examines the effect of the financial crisis and economic intervention by the European Union on political parties’ politicisation of the EU within national elections. Data from the Manifesto Project for elections between 2002 and 2017 in 12 Eurozone countries is used to assess how the crisis and intervention altered the saliency, position and clarity of parties’ EU policies. The analysis shows that the crisis only led to an increase in EU saliency in those states not subjected to intervention whilst intervention is actually associated with a decrease in the saliency of the EU. In terms of increasing Euroscepticism, intervention appears to exhibit a greater effect than the crisis although the results display marked asymmetry between different parties on the left and right. The same is observed to be the case for the level of blurring that parties are engaged in to mask their EU positions. The implications of the findings suggest that economic intervention within the EU has negatively impacted democracy in intervened-in member states by reducing the manoeuvrability of parties to provide voters with clear choices on the direction of European integration.     

The relationships between public and private pension schemes: an introductory overview

Only recently have social insurance and private pensions, collectively, come to be thought of in terms of a total social security benefit package. The economic problems brought on by the 1974 oil crisis initially triggered consideration of a common, integrated role for the two systems. The second oil crisis reinforced the relative expansion in private pension programs, as a supplement to social security. Before these events, private and public pension programs interacted in only a limited number of ways, confined to relatively few countries. These interactions were largely confined to collective bargaining, whereby private pensions were gradually extended to nearly all employees in France and Sweden; mandating, or legally requiring private supplementation of social security, debated in several countries in the early 1970's, but postponed by the 1974 oil crisis; and contracting out, or covering a part of the social security benefit under a private plan, as in the United Kingdom. Overall, the tradition of private pensions was not very strong or broadbased. The current debate centers on which public/private pension mix is desirable from the point of view of an old-age income-maintenance program. A new element is the rising support for a "third pillar"--individual tax-encouraged savings--not only as a supplement, but as an alternative to social insurance.     

Thalidomide, BSE and the single market: An historical-institutionalist approach to regulatory regimes in the European Union

Abstract.  The success of the European Union in regulating the safety of products in the single market differs widely. In the last decade, the regulatory regime for pharmaceuticals has functioned without raising public concerns. The establishment of a European agency for pharmaceuticals in the early 1990s has been evaluated positively by both producers and consumers, and there have been no large scandals so far. At the same time, the food sector was subject to a whole range of crises, of which the BSE scandal was certainly the most significant one. In reaction to this, the regulatory regime for foodstuffs was reformed by setting up the European Food Safety Agency in 2002. This article adopts an historical-institutionalist approach, and thus tries to give an explanation for the striking differences between the two regulatory regimes. Accordingly, the development of supranational regulatory regimes is distinguished by two critical junctures: a crisis of consumer confidence and the establishment of a single market. It is crucial which of these occurred first. If a crisis of consumer confidence leads to the establishment of national regulatory authorities, these authorities act as stakeholders, which could be an obstacle for harmonization, but also ensures a necessary commitment to health and consumer protection once a single market is set up. If national regulatory authorities are missing, it might be easier to set up a single market, but a regulatory deficit is more likely to occur and, in case of a crisis, the whole regulatory regime has to be established at the supranational level.     

Financial industry groups' adaptation to the post‐crisis regulatory environment: Changing approaches to the policy cycle

This article explores the advocacy efforts of financial industry groups since the financial crisis. I describe key changes in the post‐crisis financial regulatory environment and argue that financial industry groups have adapted their advocacy strategies to these new conditions in innovative ways. Faced with a more challenging environment, financial industry groups have shifted their emphasis along the different stages of the policy cycle. Specifically, increased issue salience and a strained policy network have weakened financial industry groups' capacity to veto regulatory proposals at the stage of actual policy formulation. Focusing on the advocacy strategies of the global banking and derivatives industries, I show evidence that the response has been to invest in more subtle advocacy strategies which focus on other stages of the policymaking cycle. Self‐regulatory moves attempt to affect the agenda setting stage of policymaking, and a strong focus on the timing, rather than the content of new regulations, has attempted to affect the implementation stage. Such a transformation of advocacy strategies differs sharply from most depictions of financial industry groups simply “blocking” regulatory change since the global financial crisis.     

From Crisis to Opportunity: Human Resource Challenges for the Public Sector in the Twenty-First Century

A great deal of attention has been focused on the human capital crisis in the public sector since the mid-1990s. Experts and practitioners give many reasons why the current crisis emerged. This article examines the important factors that led to the crisis, what is being done about them through presidential agendas, legislators, oversight agencies, professional societies, and public policy think tanks. Concerns are many in terms of a large number of upcoming retirements, early retirements, unplanned downsizing, difficulty in attracting new generations to public service, and the changing nature of public service. However, the human resource crisis also presents an opportunity to fundamentally change those features of public sector human resource management practices that have become outdated for contemporary organizations and position government agencies for the twenty-first century by meaningfully reforming the civil service. This transformation would require public sector organizations to take a more strategic view of human resource management and to give greater policy attention to human capital issues.     

Not All Housing GSEs Are Alike: An Analysis of the Federal Home Loan Bank System and the Foreclosure Crisis

While the financial crisis of 2008 ultimately affected the range of U.S. financial institutions, it began with practices in home ownership finance. The Federal Home Loan Bank (FHLBank) System was the first instrumentality created by the U.S. government, in 1932, to sustain affordable home ownership finance. In this article, the authors ask what role, if any, the FHLBanks played in the subprime lending and securitization practices that precipitated the current crisis. The authors analyze publicly available FHLBank financial data in terms of a framework focused on the System's assets: advances; mortgage loans acquired from members; and investments, particularly in mortgage-backed-securities. They conclude that the FHLBanks did not contribute significantly to problematic practices. Nonetheless, they recommend consideration of three reforms to the FHLBanks to ensure a return to effective regulation and responsible, affordable home ownership finance.     

Protest participation and economic crisis: The conditioning role of political opportunities

The economic crisis that started in 2008 has negatively affected European nations to different degrees. The sudden rise in demonstrations particularly in those countries most hard hit by the crisis suggests that grievance theories, dismissed in favour of resource‐based models since the 1970s, might have a role to play in explaining protest behaviour. While most previous studies have tested these theories at the individual or contextual levels, it is likely that mechanisms at both levels are interrelated. To fill this lacuna, this article examines the ways in which individual‐level grievances interact with macro‐level factors to impact on protest behaviour. In particular, it examines whether the impact of individual subjective feelings of deprivation is conditional on contextual macroeconomic and policy factors. It is found that while individual‐level relative deprivation has a direct effect on the propensity to have protested in the last year, this effect is greater under certain macroeconomic and political conditions. Both significant results for the cross‐level interactions are interpreted in terms of their role for opening up political opportunities for protest among those who feel they have been most deprived in the current crisis. These findings suggest that the interaction of the contextual and individual levels should continue to be explored in future studies in order to further clarify the mechanisms underlying protest behaviour.     

Britain and Europe

Britain decided to join the European Community because its postwar, postimperial policies had failed and successive Governments saw no viable alternative. After ten years of being denied entry by De Gaulle, Britain joined on disadvantageous terms and with the British political parties, and the British people, deeply divided. Accession did not resolve the underlying issues and Britain's first year of membership saw an unprecedented oil crisis, bad relations between Britain and the United States and the demise of the British government led by Edward Heath. The underlying issues which had not been resolved in the accession negotiations were reopened by Harold Wilson and later by Margaret Thatcher. Some of them remain unresolved in British politics to this day.