... And the shocks keep coming.
Back in January 2022, I introduced this course with references to the Covid-19 pandemic and its global economic impact. Then on 24 February 2022, Vladimir Putin's invasion of Ukraine unleashed another profound shock notably to the economies of Europe, but more generally to the international system. The post-Cold-War world began with the fall of the Berlin Wall in November 1989 and led to Eastern Europe transitioning to mixed economies and democracy (on the whole). There followed the age of rapid globalisation, as vast regions of the globe entered the international market economy, essentially integrating the international economic order set up after World War II, based on international trading rules, and overseen by the major international institutions like the IMF, World Bank and World Trade Organisation. As many countries was faster growth, and as China developed most notably and most spectacularly, billions of people across the world were lifted out of absolute poverty, although the middle classes of the West have experienced much more modest progress.
These trends took a knock with the global financial crisis and Great Recession (2007-2009), which in some ways was unexpected - an unexpected market failure for the high-priests of free market economics. The policy response was in essence to create cheap money in almost unlimited quantities. Things really were different, and when the Covid-19 pandemic went global in March 2020, the new monetary regime was supercharged by further money creation. Not surprisingly, given the major supply-side bottlenecks caused by the pandemic on the one hand, and the huge rise in quantitative easing along with public and private sector indebtedness on the other hand, inflation picked up strongly in 2021 - well before the war in Ukraine pushed energy prices up further.
These new uncertain times are far from over. In December 2022, it looks as is inflationary tensions are easing a little. But interest rates, although rising, remain remarkably low when compared to inflation: i.e. real interest rates are negative in the advanced capitalist economies, or as I often call them in this class "the old industrialised countries", or what has once again become the "West" as the war in Ukraine continues. This war is a tragedy, most obviously for the people of Ukraine, but its consequences are broader as it weakens possibilities for international cooperation that is most urgently needed for tackling climate change in particular, to say nothing of the less visible but still enormous challenges of reducing global poverty. Precious resources across many parts of the world will now be diverted into military spending.
Surprisingly perhaps, the political and economic liberalism of the West seems so far to be coping with these new challenges. Domestically, national populist movements remain strong but they were contained in 2022, say in France where the hard-right did not win the spring elections and in the United States where the Republicans did not sweep the board in the November mid-term elections. While Russia appears to be weathering sanctions - so far - its immediate allies, Iran and China, are facing substantial domestic problems. At the end of 2022, under pressure from widespread public demonstrations, the Chinese authorities rapidly dropped their draconian zero-Covid policy restrictions, allowing people to move much more freely, even though this seems likely to lead to a substantial rise in Covid cases. What this means of the "workshop of the world" and global supply chains in 2023 is an open question. As for Iran, its theocratic regime is now completely bankrupt as it seeks brutally to suppress a revolution led by its youth and especially by young women, with the inspiring slogan of "Woman-Life-Liberty".
The aim of this course is to try to identify and understand some of the key underlying issues and trends shaping the ongoing evolution of capitalism and economics. This was the quest of the original political economists. It is of course hopelessly ambitious, pretentious perhaps. But the idea is to bring together some key concepts in economic theory and some of the lessons of contemporary economic history to see how these may be used to better understand a number of the major issues affecting the global economy today. The course concludes with a section that tries to summarise some of the ideas of the significant, but often overlooked contribution of women in economics.
17 December 2022
What is Political Economy?
Wikipedia gives quite a good, broad definition of what Political Economy is. Academics are usually sceptical about Wikipedia, although some students have told me it is their most trusted source of information. Wikipedia does have the advantage of being permanently reviewed, and it is of course incredibly international. You can read more here: https://en.wikipedia.org/wiki/Political_economy
The following is a course outline of what we will look at in class, and more detail is given in the sections of this Epi below. These will be steadily amended during the semester, which lasts for twelve weeks. Each section will therefore be covered in two weeks. 1/ Economics in times of crisis:
is economics? What is capitalism? How do they respond to crises?
1b) The contribution of complexity theory to understanding crises: an introduction
Brief introductions to major crises: From World War II to the stagflation in the 1970s; French Regulation theory and crises
global financial crisis (GFC, 2007-2009), and the Covid-crisis, the Ukraine War and the energy crisis.
2/ The neoliberal paradigm
1a) "Tax revolts" and the primacy of monetary policy, and the Jackson Hole consensus;
1b) Market deregulation, privatisation and the weakening of labour;
2a) Why does public spending tend to rise?
2b) New Public Management.3/ The "Washington Consensus", the "End of history" and "varieties of capitalism"
1a) From dependency theory and alternative development theories to the Washington Consensus.
1b) The "End of History" and the emergence of "varieties of capitalism" literature.
2a) The traditional literature on "varieties of capitalism".
2b) New varieties of capitalism across the globe.
4/ Money, financial globalisation and financial crises
i) A return to the history and nature of money: the forgotten core of capitalism in the study of economics;
ii) The rise of global finance;
iiI) The 2007-2008 global financial crisis (GFC), "secular stagnation", the Covid-19 shock.
5/ The changing International Political Economy (IPE)
i) A review of the historical concepts of IPE (the American, British and radical schools);
ii) Dany Rodrik's "Globalisation Paradox";
iii) Brexit, Trump, Covid-19 and the new disorder.
6/ The contributions of some women economists
i) The challenges of inequality and global warming;
ii) Some possible avenues suggested by women economists;
iii) A brief introduction to feminist economics.