The financial market turmoil in 2007 and 2008 has led to the most severe financial crisis since the Great Depression and threatens to have large repercussions on the real economy The bursting of the housing bubble forced banks to write down several hundred billion dollars in bad loans caused by mortgage delinquencies At the same time, the stock market capitalization of the major banks declined by more than twice as much While the overall mortgage losses are large on an absolute scale, they are still relatively modest compared to the $8 trillion of US stock market wealth lost between October 2007, when the stock market reached an all-time high, and October 2008 This paper attempts to explain the economic mechanisms that caused losses in the mortgage market to amplify into such large dislocations and turmoil in the financial markets, and describes common economic threads that explain the plethora of market declines, liquidity dry-ups, defaults, and bailouts that occurred after the crisis broke in summer 2007 To understand these threads, it is useful to recall some key factors leading up to the housing bubble The US economy was experiencing a low interest rate environment, both because of large capital inflows from abroad, especially from Asian countries, and because the Federal Reserve had adopted a lax interest rate policy Asian countries bought US securities both to peg the exchange rates at an export-friendly level and to hedge against a depreciation of their own currencies against the dollar, a lesson learned from the Southeast Asian crisis of the late 1990s The Federal Reserve Bank feared a deflationary period after the bursting of the Internet bubble and thus did not counteract the buildup of the housing bubble At the same time, the banking system underwent an important transformation The

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Deciphering the Liquidity and Credit Crunch 2007-2008

The newest “new institutionalism,” discursive institutionalism, lends insight into the role of ideas and discourse in politics while providing a more dynamic approach to institutional change than the older three new institutionalisms. Ideas are the substantive content of discourse. They exist at three levels—policies, programs, and philosophies—and can be categorized into two types, cognitive and normative. Discourse is the interactive process of conveying ideas. It comes in two forms: the coordinative discourse among policy actors and the communicative discourse between political actors and the public. These forms differ in two formal institutional contexts; simple polities have a stronger communicative discourse and compound polities a stronger coordinative discourse. The institutions of discursive institutionalism, moreover, are not external-rule-following structures but rather are simultaneously structures and constructs internal to agents whose “background ideational abilities” within a given “meanin...

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Discursive Institutionalism: The Explanatory Power of Ideas and Discourse

The third way: the renewal of social democracy

Across the broad field of heterodox political economy, ‘neoliberalism’ appears to have become a rascal concept – promiscuously pervasive, yet inconsistently defined, empirically imprecise and frequently contested. Controversies regarding its precise meaning are more than merely semantic. They generally flow from underlying disagreements regarding the sources, expressions and implications of contemporary regulatory transformations. In this article, we consider the handling of ‘neoliberalism’ within three influential strands of heterodox political economy – the varieties of capitalism approach; historical materialist international political economy; and governmentality approaches. While each of these research traditions sheds light on contemporary processes of market-oriented regulatory restructuring, we argue that each also underplays and/or misreads the systemically uneven, or ‘variegated’, character of these processes. Enabled by a critical interrogation of how each approach interprets the geographies, modalities and pathways of neoliberalization processes, we argue that the problematic of variegation must be central to any adequate account of marketized forms of regulatory restructuring and their alternatives under post-1970s capitalism. Our approach emphasizes the cumulative impacts of successive ‘waves’ of neoliberalization upon uneven institutional landscapes, in particular: (a) their establishment of interconnected, mutually recursive policy relays within an increasingly transnational field of market-oriented regulatory transfer; and (b) their infiltration and reworking of the geoinstitutional frameworks, or ‘rule regimes’, within which regulatory experimentation unfolds. This mode of analysis has significant implications for interpreting the current global economic crisis.

Variegated neoliberalization: geographies, modalities, pathways

The concept of power is central to international relations. Yet disciplin- ary discussions tend to privilege only one, albeit important, form: an actor control- ling another to do what that other would not otherwise do. By showing conceptual favoritism, the discipline not only overlooks the different forms of power in inter- national politics, but also fails to develop sophisticated understandings of how global outcomes are produced and how actors are differentially enabled and constrained to determine their fates. We argue that scholars of international relations should employ multiple conceptions of power and develop a conceptual framework that encourages rigorous attention to power in its different forms. We first begin by producing a tax- onomy of power. Power is the production, in and through social relations, of effects that shape the capacities of actors to determine their circumstances and fate. This general concept entails two crucial, analytical dimensions: the kinds of social rela- tions through which power works (in relations of interaction or in social relations of constitution); and the specificity of social relations through which effects are pro- duced (specific/direct or diffuse/indirect). These distinctions generate our taxonomy and four concepts of power: compulsory, institutional, structural, and productive. We then illustrate how attention to the multiple forms of power matters for the analysis of global governance and American empire. We conclude by urging scholars to beware of the idea that the multiple concepts are competing, and instead to see connections between them in order to generate more robust understandings of how power works in international politics.

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Power in international politics

1. Introduction 2. The unfolding of the crisis - in three waves 3. A fiscal crisis of and for the state? 4. The Anglo-liberal growth model 5. From bubble burst to austerity 6. Getting what went wrong right ... and putting it right 7. Conclusion: Crisis, what crisis?

The Failure of Anglo-liberal Capitalism

Introduction: Theories of the State

Globalisation, in both the popular and academic vernacular, is presented as a non-negotiable external economic constraint, which must simply be accommodated. Consequently, it is a process whose content, nature and consequences are not amenable--either in practice or in principle--to political, far less democratic, deliberation. It is not at all surprising, then, that the invocation of globalisation should be associated with the logic of economic compulsion and the absence of political choice. This paper argues that the perception of the non-negotiable character of globalisation is both misleading and, at the same time, intimately connected to its depiction as a causal 'process without a subject'. For it is only by failing to specify the mechanisms of complex change, in which agents are necessarily implicated, that generic and agentless processes such as globalisation acquire their necessitarian, non-negotiable and apolitical character. Restoring subjects to the process of globalisation and assessing the e...

Globalisation as a Problem of Political Analysis: Restoring Agents to a 'Process without a Subject' and Politics to a Logic of Economic Compulsion*

The appeal to globalization as a non-negotiable external economic constraint plays an increasingly significant role in the linked politics of expectation suppression and welfare reform in contemporary Europe. Yet, although it threatens to become something of a self- fulfilling prophecy, the thesis that globalization entails welfare retrenchment and convergence is empirically suspect. In this paper it is argued that there is little evidence of convergence amongst European social models and that, although common trajectories can be identified, these have tended to be implemented more or less enthusiastically and at different paces to produce, to date, divergent outcomes. Second, I suggest that it is difficult to see globalization as the principal agent determining the path on which European social models are embarked since the empirical evidence points if anything to de-globalization rather than globalization. The implications of this for the future of the welfare state in Europe and for the USA as a model welfare state regime are explored.

https://www.cambridge.org/core/services/aop-cambridge-core/content/view/S0017257X00001925

What's Globalization Got to Do with It? Economic Interdependence and the Future of European Welfare States

In recent years a substantial body of literature has grown up around the application of the theorectical insights of regulation theory to the evolution of patterns of local governance and the structures of the local state (Geddes 1988: Goodwin, Duncan and Halford 1993; Painter 1991: Peck and Tickell 1992: Stocker 1989 inter alia). These new patterns of local governance are characteristically seen to be associated with the replacement of the formallly accountable, democracitcally elected structures of local government with a plethora of unaccountable and non-elected agencies involving public-private sector ‘part-nership’, Within this literature the emergence of new patterns of local governance is accounted for in terms of a response to the crisis of Fordism. In this article it is argued that regulation theory's principal analytical strength lies in its analysis of the internal contradictions and dynamics of modes of regulation, but that it has thus far failed to develop an adequate explanation of the trans...

Colin Hay

Papers

The Failure of Anglo-liberal Capitalism

Introduction: Theories of the State

Globalisation as a Problem of Political Analysis: Restoring Agents to a 'Process without a Subject' and Politics to a Logic of Economic Compulsion*

What's Globalization Got to Do with It? Economic Interdependence and the Future of European Welfare States

Re-Stating the problem of regulation and re-regulating the local state