Leo Panitch on Obama and Globalization

From the Real News Network:

This Real News segment with Professor Leo Panitch is worth watching for those that miss Obama (perhaps should be seen together with the reading of this piece on Mike Pence, for those that think that he would be much better than the orange one). At any rate, besides the fact that Obama was not even for more than a very moderate reform of the system, and that he still justifies globalization in neoliberal terms, it seems to me that Panitch (and Paul Jay) miss the main reference for Obama's speech (at least concerning the reduction in violence) which seems to be the work of Steven Pinker (his famous book on that was The Better Angels of Our Nature), and probably his new work, Enlightenment Now. And that says a lot about Obama intellectually.

It seems that Obama now embodies the famous phrase by Upton Sinclair according to which: "it is difficult to get a man to understand something, when his salary depends upon his not understanding it." Or his paid Wall Street gigs and fancy vacations with the global jet set.

Three Globalizations, Not Two: Rethinking the History and Economics of Trade and Globalization

 By Thomas Palley (Guest blogger)

The conventional wisdom is there have been two globalizations in the modern era. The first began around 1870 and ended in 1914. The second began in 1945 and is still underway. This paper challenges that view and argues there have been three globalizations, not two. The first half of the paper provides empirical evidence for the three globalizations hypothesis. The second half discusses its analytical implications. The Victorian first globalization and Keynesian era second globalization were driven by gains from trade, and those gains increased industrialized country real wages. The neoliberal third globalization has been driven by industrial reorganization motivated by distributional conflict. Trade theory does not explain the third globalization; capital’s share has increased at the expense of labor’s; and there can be no presumption of mutually beneficial country gains from the third globalization.

Read rest here.

Globalization Checkmated? Political and Geopolitical Contradictions Coming Home to Roost

By Thomas Palley (Guest blogger)

The deepening of economic globalization appears to have ground to a halt and the process may even unravel a little. The sudden stop has surprised economists, whose belief in globalization has strong parallels with Fukuyama’s (1989) flawed end of history hypothesis. The paper presents a simple analytic model that shows how economic globalization has triggered political and geopolitical contradictions. For the system to work, politics within countries and geopolitics across blocs must be supportive of the system. That is missing. The model is applied to a global economic core consisting of the US, China, and the European Union. It is revealing of multiple tensions, fracture lines, and contradictions. Within the US, globalization has delivered economic outcomes that have estranged the electoral bases of both major political parties. It has also delivered outcomes that are inconsistent with the US neocon geopolitical inclination. President Trump is a product of those forces, and he will likely prove to be a historically significant figure. That is because he has surfaced geopolitical contradictions that cannot be swept back under the rug. Ironically, his biggest impact may be on the European Union, particularly Germany, which is being compelled to recognize the neocon nature of the US and the vulnerabilities of dependence on US exports and technology. China was already aware of its vulnerabilities in those regards.

Read rest here.

Trump and the Neocons: Doing the Unilateralist Waltz

By Thomas I. Palley

Donald Trump’s first one hundred days have revealed his inclination for unilateralism in international relations. That inclination reflects his opportunistic and bullying disposition, and it also fits well with his anti-globalization pose.

Trump’s unilateralism has also spawned a dangerous waltz with Washington’s neocon establishment. The opportunistic Trump looks to gain establishment support, while the neocon establishment looks to the opportunist-in-chief to implement its own unilateralist view of the world.

Read rest here.

Trilemma or dillema: Rodrik and Palley on Globalization

As a followed up on my recent discussion on Dani Rodrik's paper, below Tom Palley's critique of Rodrik's trilemma between globalization, national sovereignty, and democratic politics. Tom argues that there is no trilemma, only a dilemma, and that democracy is not on the same plane.

From his paper "A Theory of Economic Policy Lock-in and Lock-out via Hysteresis: Rethinking Economists’ Approach to Economic Policy."

Rodrik (2011) has argued that globalization poses a trilemma between globalization, national sovereignty, and democratic politics. He argues that you can have any two, but not all three. The framework in Figure 3 qualifies that interpretation. From the perspective of the nation state there is no trilemma, only a dilemma.

National sovereignty can be identified with national policy space. Globalization creates a trade-off between national policy space and the degree of globalization, with national policy space declining as globalization deepens. Democracy is not at issue. Countries can be outside of globalization and democratic, or they can be engaged in globalization and democratic. Democratic politics is always viable. The problem is globalization diminishes the “content” of democratic politics, as measured by the achievable range of the policy target.

It is these type of concerns that motivate criticism of trade agreements like the Trans-Pacific Partnership. Whereas trade agreements fifty years ago were about reducing tariffs and quotas, today they are “global governance agreements (Palley, 2016)” that are writing the rules of a new world order. These global governance agreements fundamentally impact national policy space. A clear example of this is the new system governing disputes between governments and foreign-based corporate investors, which involves an extra-legal investor – state dispute settlement (ISDS) process that is outside of nations’ own legal systems. As Renato Ruggerio (1996), the first General Secretary of the World Trade Organization observed at its onset: “We are no longer writing the rules of interaction among separate national economies. We are writing the constitution of a single global economy.”

In fact, the problem is likely more complex than illustrated in Figure 3 because a country that seeks to avoid globalization may still find its policy space impacted by globalization. This is illustrated in Figure 4. As globalization increases in the rest of the world (G*0 < G*1), policy space decreases in country i despite unchanged local engagement with globalization (Pi,0(Gi,0, G*0) > Pi,0(Gi,0, G*1)), which reduces the achievable range of the policy target (Xi,0+( Gi,0, G*0) > Xi,0+( Gi,0, G*1)). That is because globalization is relational. When other countries deepen their globalization, that imposes additional constraints on countries that do not follow suit because it negatively impacts the latter’s network of relations. The exact nature of this shift will depend on the type of globalization adopted by the rest of the world.

Read full paper here.

New Book By Eric Helleiner - Forgotten Foundations of Bretton Woods, Int. Dev. & Making of Postwar Order

Professor Helleiner is an astounding international political economist and economic historian. His archival research is impressive, and his explications and understandings of international finance are not only lucid and prolific, but extensively articulate & eloquent. His new book on Bretton Woods, like many of his other works, is certainly a tour de force.

Eric Helleiner's new book provides a powerful corrective to conventional accounts of the negotiations at Bretton Woods, New Hampshire, in 1944. These negotiations resulted in the creation of the International Monetary Fund and the World Bank—the key international financial institutions of the postwar global economic order. Critics of Bretton Woods have argued that its architects devoted little attention to international development issues or the concerns of poorer countries. On the basis of extensive historical research and access to new archival sources, Helleiner challenges these assumptions, providing a major reinterpretation that will interest all those concerned with the politics and history of the global economy, North-South relations, and international development. The Bretton Woods architects—who included many officials and analysts from poorer regions of the world—discussed innovative proposals that anticipated more contemporary debates about how to reconcile the existing liberal global economic order with the development aspirations of emerging powers such as India, China, and Brazil. Alongside the much-studied Anglo-American relationship was an overlooked but pioneering North-South dialogue. Helleiner’s unconventional history brings to light not only these forgotten foundations of the Bretton Woods system but also their subsequent neglect after World War II.

See rest here.

Mundell-Fleming, Independent Central Banks, Inflation and Openness

Bucknell's Academic West (Bertrand Library in the background)

Teaching international finance this semester, after a long while. At Utah I taught mostly intermediate macro and Latin American Development for undergrads (and macro and history of thought for graduate students), and the eventual elective. But here the course was up for grabs, so to speak. Decided to use Peter Montiel's International Macroeconomics, since his books always provide competent presentations of the mainstream views, plus having worked at the IMF and World Bank, he always tries to cover real problems with plenty of developing country examples.

The limitation of the book is, as it should be expected, that the mainstream analytical view is, as Montiel's (p. x) says: "a generalized and modernized [sic] version of the original Mundell-Fleming model." The book does present in the last chapter the 'modern' intertemporal approach to the current account. In a later post I'll discuss the limitations of the Mundell-Fleming model, but for those interested check this paper by Serrano and Summa. In other words, Montiel's book can present the mainstream views, but lacks any critical perspective, which is not uncommon, but certainly problematic given the poor state of the mainstream understanding of how the economy works.

It is illustrative of the lack of alternatives in the book, the presentation of the relation between openness and inflation. Montiel's follows the evidence on an inverse relation between openness (that can be measured in many ways: import share, imports plus exports over GDP, etc.) and inflation presented in David Romer's well-known paper (see here). Montiel argues that in closed economies governments might tend to run fiscal deficits, that if monetized, would lead to inflation. In a more open economy, the higher deficits and inflation would lead to higher rates of interest, since international creditors faced with a risky government would demand a higher premium. In this context, "the higher interest rates that the government has to pay would tend to discourage excessively expansionary fiscal policies, thus reducing pressures on central banks to expand the money supply." If the central bank is more autonomous or independent from the Treasury then you should expect also less inflation (that would be Bernanke's explanation for the Great Moderation; here).

Many problems, as you can see. Yes, for Montiel inflation is caused by excess demand (fiscal deficits) and by increasing money supply, which seems to be what the central bank controls (let alone that all central banks control really the rate of interest). Worse, in a sense, is the notion that fiscal deficits in domestic currency (presumably, since nothing is said), may cause foreign investors to punish the government. Note that what should have investors concerned would be the current account surplus (which provides foreign reserves) and the amount of foreign reserves held by the central bank. The evidence on interest rates and fiscal deficits, by the way, is less than forthcoming for Montiel's story (see here).

A simple alternative suggests that inflation more often than not is caused by cost pressures, rather than excess demand, and that two of the main sources of cost pressures are the prices of imported goods and wage pressures. In a more open economy, in which firms are faced with competition from foreign firms, and workers might be afraid of losing their jobs, then wage resistance might be subdued. Note that over the last few decades unionization rates have declined and that also constrains the ability of workers to demand higher wages (see here). In this case, lower inflation in the globalized economy has been predicated on a weaker labor force that faces more international competition, and is more willing to accept stagnant wages. Inequality and stagnant wages, rather then well-behaved governments and independent central banks are behind the Great Moderation in this story.

Two ex-graduate students of mine, Perry and Cline (yes, someone was paying attention after all), teamed up and provided some empirical evidence in favor of the alternative story (go here). If you want to see alternative views on inflation, implicit in this discussion, go to the linked posts and papers here.

The theory of global imbalances: mainstream economics vs. structural Keynesianism

By Tom Palley

Prior to the 2008 financial crisis there was much debate about global trade imbalances. Prima facie, the imbalances seem a significant problem. However, acknowledging that would question mainstream economics’ celebratory stance toward globalization. That tension prompted an array of explanations which explained the imbalances while retaining the claim that globalization is economically beneficial. This paper surveys those new theories. It contrasts them with the structural Keynesian explanation that views the imbalances as an inevitable consequence of neoliberal globalization. The paper also describes how globalization created a political economy that supported the system despite its proclivity to generate trade imbalances.

Read more here.

Jeff Faux on Brad DeLong’s Defense of NAFTA

By Jeff Faux

Brad DeLong recently criticized an op-ed I wrote about the negative impact of the twenty-year-old North American Free Trade Agreement on American workers. The stakes here are higher and more immediate than the rehash of an old ideological dispute. This is not so much about the past as about the future. Corporate lobbyists are pushing President Obama and congressional Republicans to pass the NAFTA-like eleven-country Trans-Pacific Partnership” (TPP)—right after the November election. Since it took effect in 1994, NAFTA has been the template for the subsequent series of trade agreements that have accelerated the globalization of the U.S. economy. But its failure to deliver as promised has soured the public and many in Congress on so-called “free trade.” Getting lawmakers to swallow the TPP will be easier if its promoters can somehow make lemonade out of the NAFTA lemon. To start with, DeLong fails to tell the reader that he is evaluating a law he helped to produce. He worked on NAFTA when he was a deputy assistant secretary in Bill Clinton’s Treasury Department...

Read rest here.

What is 'Dollar Hegemony'?

Fields, David (Forthcoming), “Dollar Hegemony,” Edward Elgar Encyclopedia on Central Banking, edited by L.P. Rochon et. al, Edward Elgar

Today, the world economy operates under the artifice of US hegemony, fortified by the US dollar as an international reserve and vehicle currency. How did the United States arrive at achieving such pre-eminence?

From 1944 to 1973, the financial architecture of the world economy centered on a US engineered Keynesian accumulation agenda as a response to the devastation wrought by the Great Depression. The capitalist institutional structure, or social structure of accumulation (see Kotz et al., 1994), rested on finance being subservient to the promotion of industrial enterprise.

With socially-engineered capital–labour compromises in developed countries, neo-colonial governing institutions in the Third World, active State regulation in decisions with respect to capacity utilization, and a co-respective form of competition among large corporations set by regulations that brought together monetary authorities, large banks as well as large industrial capitalists, the post-World-War-II system was the era of “regulated capitalism”. Altogether, the world system was underpinned by the Bretton Woods arrangement, which called for globally fixed exchange rates against the US dollar tied to the price of gold and capital controls.

The international political-economic conditions were such that domestic macroeconomic autonomy, specifically with respect to monetary policy, for aggregate demand management could be feasible. Capital controls were seen as essential to reduce the volatility of capital flows and allow for low interest rates with the objective of pursuing full employment. As Keynes (1980, p. 276) argued, “we cannot hope to control rates of interest at home if movements of capital moneys out of the country are unrestricted.”

By the 1960s, however, US officials began to actively encouraging the growth of the Euromarket, that is, the pool of unregulated US dollar reserves concentrated in the City of London (Helleiner, 1994). With traditionally marginalized segments of the population in developed countries, particularly in the United States and in Western Europe, demanding social, political, and economic rights, and with national liberation movements in the Third World overthrowing US-supported oppressive governments, calls for an expanded role of the State in meeting citizens’ needs dramatically circumscribed global capital accumulation owing to heightened nominal wage–price spirals. Consequently, the global capitalist rate of profit fell (Duménil and Levy, 2004, p. 24). The Euromarket thus became the means for international financial markets to re-establish their influence, lost as a result of the Great Depression, and allow industrial enterprise to rebuild the conditions for future profitability via offshoring.

Speculative capital flows, however, began to undermine the capacity for the United States to guarantee the convertibility of US dollars into gold at fixed parity (Triffin, 1960). Even though the US dollar was the key international currency, it was fixed to gold. As such, debt was ultimately redeemable in an asset that was not directly controlled by the US monetary authority. Default was a possibility, even if a remote one, since through manipulation of the rate of interest, and through coercion and cooperation with other central banks in the world economy, the stability of the system could be maintained. With the globalization of finance via the Euromarket, nevertheless, speculation against the gold–dollar parity proliferated, making functional finance on a worldwide basis difficult to manage.

In 1971, Nixon closed the gold window and loosened capital controls. American officials concluded that it was no longer in their interests to maintain the linchpin relation between gold and the US dollar, and ipso facto withdrew support for the Bretton Woods system by which exchange rates were fixed and flows of capital were to a large degree controlled (see Helleiner, 1994; Vernengo, 2003; Ingham, 2008). The deregulation of financial markets established a global market of mobile financial capital, and the US dollar established itself as a global fiat-money standard. The world economy moved from a fixed dollar standard to a flexible dollar standard (Serrano, 2003).

For the first time in history, it is possible for the hegemonic country, in this case the United States, to be a global debtor, as national States are within their domestic economies, and to provide a default-risk-free asset to facilitate global capital accumulation. The risk that the United States would be unable to expand demand globally, because it is forced to maintain a fixed exchange rate between its currency and an external asset, is thus non-existent. It is true, however, that foreign countries and agents may show unwillingness to hold US-dollar-denominated assets, but, as in the domestic case, the US Federal Reserve (Fed) can always monetize public debt. This would be inflationary and lead to a run on the US dollar only if there is currency substitution on a massive scale, which would require a credible alternative to the US dollar (which does not exist yet). As such, the United States can therefore incur foreign debt without any reasonable limit.

Global imbalances, in particular the large US current account deficits that reflect their so-called “exorbitant privilege”, are instrumental for the functioning of the world economy, as evidenced by the dominance of the US dollar in international trade (Fields and Vernengo, 2013). An important part of this is associated to the fact that key commodities, like oil, are priced in US dollars in international markets. This not only implies that there cannot be an insufficient amount of dollars for the United States to import key commodities, but also that a depreciation of the US dollar does not reduce US imports necessarily (Parboni, 1981).

In fact, the Fed is the world economy’s central bank, which acts as the safety valve for mass amounts of international liquidity (Arrighi, 1999). The hegemonic position of the US dollar structures the world economy in such a fashion that the United States determines the international transmission mechanism for global economic activity. Hence, the role of the US dollar in international markets, and the advantages that come with it, are the spoils of structural power. The provision of this asset allows the United States to become the source of global demand, and to insulate itself from fluctuations and contradictions of perilous cumulative disequilibria that may arise in the world economy. The US dollar enables the United States to set the global social, political, and economic conditions, within which the transmission of misery (contagion) between countries, and between global and national levels, is essentially regulated.


REFERENCES:

Arrighi, G. (1999), “The global market”, Journal of World Systems Research, 5 (2), pp. 217–51.

Duménil, G. and D. Lévy (2004), Capital Resurgent: Roots of the Neoliberal Revolution, Boston: Harvard University Press.

Fields, D. and M. Vernengo (2013), “Hegemonic currencies during the crisis: the dollar versus the euro in a Cartalist perspective”, Review of International Political Economy, 20 (4), pp. 740–59.

Helleiner, E. (1994), States and the Reemergence of Global Finance: From Bretton Woods to the 1990s, Ithaca: Cornell University Press.

Ingham, G. (2008), Capitalism, Cambridge: Polity Press.

Keynes, J.M. (1980), The Collected Writings of John Maynard Keynes, Vol. XXV: Activities 1940–1944. Shaping the Post-War World: The Clearing Union, London and Cambridge: Macmillan and Cambridge University Press.

Kotz, D., T. McDonough and M. Reich (eds) (1994), Social Structures of Accumulation: The Political Economy of Growth and Crisis, Cambridge: Cambridge University Press.

Parboni, R. (1981), The Dollar and Its Rivals: Recession, Inflation, and International Finance, London: Verso.

Serrano, F. (2003), “From static gold to floating dollar”, Contributions to Political Economy, 22 (1), pp. 87–102.

Triffin, R. (1960), Gold and the Dollar Crisis: The Future of Convertibility, New Haven: Yale University Press.

Vernengo, M. (2003), “Bretton Woods”, in J. King (ed.), The Elgar Companion to Post Keynesian Economics, Cheltenham, UK and Northampton, MA, USA: Edward Elgar, pp. 30–34.

Real wage growth around the world

The new edition of the International Labour Organization's Global Wage Report (2012/13) has been published. The figure below shows the rates of growth in real wages by region.

Note that real wages have basically stagnated in the developed world, and have fallen in the Middle East, while they have grown in the rest of the world. One should take with a grain of salt the incredible increase in Eastern Europe. For example, the graph below, showing Russia's real wages, gives a more accurate picture.

Real wages are now slightly above the levels associated with the pre-liberalization, and market reform period. In other words, the commodity boom and the Natural Resource Nationalism have allowed a significant recovery in real wages. Not dissimilar to the Latin American story, by the way.

In Asia a lot of the growth in real wages is explained by the vast migration of rural workers to urban areas in China.

Note that without China the rate of growth in real wages has been considerably less impressive. At any rate, as always, the ILO report provides a wealth of data, which is worth to take into consideration.

Tokunaga & Epstein - Endogenous Finance of a Dollar-Based World-System: A Minskian Approach

Junji Tokunaga & Gerald Epstein 

From the Abstract:

Global financing patterns have been at the center of debates on the global financial crisis in recent years. The global imbalance view, a prominent hypothesis, attributes the financial crisis to excess saving over investment in emerging market countries which have run current account surplus since the end of the 1990s. The excess saving flowed into advanced countries running current account deficits, particularly the U.S., thus depressing long-term interest rates and fuelling a credit boom there in the 2000s. According to this view, the financial crisis was triggered by an external and exogenous shock that resulted from excess saving in emerging market countries, not the shadow banking system in advanced countries which was the epicenter of the financial crisis. Instead, we argue that a key cause of the global financial crisis was the dynamic expansion of balance sheets at large complex financial institutions (LCFIs)(Borio and Disyatat [2011] and Shin [2012]), driven by the endogenously elastic finance of global dollar funding in the global shadow banking system. The endogenously elastic finance of the global dollar contributed to the buildup of global financial fragility that led to the global financial crisis. Importantly, the supreme position of U.S. dollar as debt- financing currency, underpinned by the dominant role of the dollar in the development of new financial innovations and instruments, and was a driving force in this endogenously dynamic and ultimately destructive process.

Read rest here 

Ernesto Screpanti: Global Imperialism and the Great Crisis - The Uncertain Future of Capitalism

 

 From Monthly Review

In this provocative study, economist Ernesto Screpanti argues that imperialism—far from disappearing or mutating into a benign “globalization”—has in fact entered a new phase, which he terms “global imperialism.” This is a phase defined by multinational firms cut loose from the nation-state framework and free to chase profits over the entire surface of the globe. No longer dependent on nation-states for building a political consensus that accommodates capital accumulation, these firms seek to bend governments to their will and destroy barriers to the free movement of capital. And while military force continues to play an important role in imperial strategy, it is the discipline of the global market that keeps workers in check by pitting them against each other no matter what their national origin. This is a world in which the so-called “labor aristocracies” of the rich nations are demolished, the power of states to enforce checks on capital is sapped, and global firms are free to pursue their monomaniacal quest for profits unfettered by national allegiance. 

See rest here

State of Power 2014 and Davos Man

Global elites are meeting in Davos this week. Davos Man is all for 'stakelholder' society, meaning corporate self-rule. New Report State of Power 2014 exposes the abuses of the Davos elites. Above the graph showing the 25 biggest corporations by revenue and by asset value.

 

The perils of China-centric globalization

By Thomas Palley

The last thirty years have witnessed the creation of an integrated global economy. However, what began as a project for globalization has gradually been transformed into a project of “China-centric globalization.” This phenomenon has grave economic and geo-political implications for the US. China-centric globalization has been allowed to develop with great rapidity and little public discussion of its implications and consequences. There is a conceit that there are no security dangers inherent in it because economic links will turn China into a democracy and democracies do not go to war with each other. History shows that conceit to be very dangerous.

Read more.

New Book From Monthly Review Press: 'Capitalist Globalization - Consequences, Resistance, and Alternatives'

Globalization, surely one of the most used and abused buzzwords of recent decades, describes a phenomenon that is typically considered to be a neutral and inevitable expansion of market forces across the planet. Nearly all economists, politicians, business leaders, and mainstream journalists view globalization as the natural result of economic development, and a beneficial one at that. But, as noted economist Martin Hart-Landsberg argues, this perception does not match the reality of globalization. The rise of transnational corporations and their global production chains was the result of intentional and political acts, decisions made at the highest levels of power. Their aim—to increase profits by seeking the cheapest sources of labor and raw materials—was facilitated through policy-making at the national and international levels, and was largely successful. But workers in every nation have paid the costs, in the form of increased inequality and poverty, the destruction of social welfare provisions and labor unions, and an erratic global economy prone to bubbles, busts, and crises.

Read rest here.
Other books by Hart-Landsberg, see here

New Book: 'The Clash of Globalizations' by Kevin P. Gallagher

 

Collecting and synthesizing a series of essays on the political economy of trade and development policy, this book explores the following research questions: to what extent is the global trading regime reducing the ability of nation-states to pursue policies for financial stability and economic growth; and what political factors explain such changes in policy space over time, across different types of trade treaties and across nations? Gallagher presents intriguing findings on the policy constraints on the Uruguay Round, as well as the significant restrictions that the USA places upon the ability of developing nations to deploy a range of development strategies for stability and growth.

See rest here.

Neoliberal Theory of Society

Neoliberalism has been one of the most discussed topics of the 21st century. In many respects, the concept has been used as a ubiquitous catchphrase conveying a sense fundamental transformation of various dimensions of social life. It is espoused that given the intensification of integration, through the proliferation of capital mobility and the aggrandizement of transnational corporations (TNC’s), countries are forced into ‘prisoner’s dilemma’ type situations in which the capacity for progressive reform along Keynesian lines is limited, if nonexistent. The assumption is that the capacity is strained to  sustain welfare-state institutions. This culturally hegemonic social construction is nothing but an ideological mask; the foregone conclusion is a self-fulfilling mythology. An excellent paper that expounds this is Simon Clarke's 'The Neoliberal Theory of Society" (see here).

In general, neoliberals contend that financial liberalization and privatization guarantee the most efficient utilization of capital by freeing up the market mechanism for long term sustainable growth, bringing convergence in development across countries.  Through the Washington Consensus and the institutionalization of neoliberal economic doctrine via the co-ordination of the World Bank, IMF and the US treasury department, measures across the globe, however, has resulted in the majority of the world’s population being denied the human right of commanding the productive resources necessary for sustaining adequate standards of living. Social outcomes like distributive justice, gender equity, basic access to socially acceptable housing, nutritious food, education, freedom from poverty and discrimination, and social inclusion have been far from reached. 

Neoliberalism propels governments to adopt policies aimed at maintaining credibility in financial markets for the attraction and retainment of short-term capital. The recipe for disaster is fiscal restraint, tight monetary policy, and the protection of high interest rates to prevent inflationary pressures from undermining the value of real return on financial assets. Macroeconomic policy is supposed to be designed in such a way that the interests of those who own financial assets (wealthy households) are prioritized over those who are forced to sell their labor power for sustenance.  As a result, the trigger threat of capital fight significantly limits the space for attention to social welfare to be embedded. 

Interestingly, given already present gender inequalities in labour markets and unequal power relationships within the household, neoliberalism forces women to assume greater responsibilities in cushioning families from economic insecurity, which has had the unintended consequence of pushing them into the informal sector of employment, maximizing susceptibility to egregious labor rights violations and physical abuse.

In response to the widespread social dislocation caused by neoliberal dogma, the Post-Washington consensus has initiated a new outlook under the rubric of ‘New Institutional Economics' (NIE).  NIE  proposes the wider role of government to guarantee the conditions for markets to in fact work as they supposedly should through the promotion of market-friendly civil societies and the encouraging of a democratic political culture. The Post-Washington consensus, like the Washington consensus, however, still promotes highly regressive macroeconomic policy. The only real difference is the facilitation of appropriate assessments, and the proliferation of that pathetic euphemism 'social capital', rather than forced upon structural adjustments, such that the institutions that do support free trade, liberalization, and deregulation are implanted such that disproportionate effects on the poor do not egregiously materialize. In the final instance, however, this is just window-washing. 

For an excellent paper by Ben Fine (see here).

A Second Note on Globalization

One aspect of globalization, however, that should be taken seriously is the way in which innovative forms of informational dissemination through associational interaction create the means by which actors become embedded in abstract organizational fields of taken-granted-for models of social action. According this logic, iinstitutionalised ‘myths’ (Meyer & Rowan, 1977), or ‘cognitive scripts’ (Meyer et. al, 1997), define, in highly standardized fashion, as exemplified by the mission statements of globally accepted INGO’s (Meyer et. al, 1997; Boli & Thomas, 1997), properties, structures, and perceived limitations of understood rights, duties, and expectations, delineating how actors should ‘legitimately’ act in world affairs.

On the surface, this ‘constructivist’ emphasis on intersubjectivity regards social action in the international political economy as purposive; it is bounded by differentiating aspects of a ‘general ethos’, which creates the space, opportunity, and impulse for actors to engage the world per a ‘sacred canopy’ of universalized responsibilities, norms if you will, which, in the final instance, manufacture an ‘imagined community’ of ‘world citizenship’ (Boli & Thomas, 1997).

The implication is that actors are treated not as mere brutish ‘givens’, but as non-predetermined social entities motivated by enveloping frames of structurated meaning in a Goffmanian game of perceivance and interpretation, emphasizing dramaturgical processes in place of preconceived Weberian instrumental rationality (Meyer et. al, 1997). This allows for a conception of collective action in the world economy not as a problem of psychologically reductionist selfishness, but as a process of self definition, constituting a world society, sot so speak, of mutual recognition. How else could one explain the seemingly transcendental metaphysical essence of notions of equality, justice, and human welfare?

From a critical perspective, however, we can determine that such globalization as the formulation of a global collective social conscientiousness, in the Durkheimian sense, is resolutely a form of what anthropologist Allen Feldman terms 'cultural anesthesia'. The mass dissemination of globalized knowledge is based on techniques that mold subject and perception, whereby the senses are essentially commodified and stratified; that is, a 'magical realism' is fabricated that binds the material domain to aspects of what Marx described as 'commodity fetishism, such that the underlying relations that give rise to manifest phenomena are denied recognizable sentience and historical possibility.

In this sense, globalization is what sociologist George Ritzer calls 'McDonaldization,' the erection of a universal Weberian Iron Cage of intellectual colonization, which soothes the mind, body, and soul in order to deny the individual the capacity to critically untangle objective reality,  so as to be swept into a flummox of superficial mutual political agency, what Gramsci expounded as a bourgeois Weltanschauung.

Globalization: A Fetish of (Post) Modernity

Throughout the enormous literature on ‘globalization’ there is a common theme that worldwide social, political, and economic transformations have contributed to reconfigurations and re-articulations of the world-system. The contention is that due to to recent technological revolutions in communication, media, and transportation, a ‘new international division of labor' has ensued a unique 'global' sociological imagination; the national 'state' as a principle of structuration is unsatisfactory for the social scientist - the 'space of flows' has replaced the 'space of places' (Ruggie, 1993). Dynamic connective configurations beget 'transnational' corporations omnipresent vertically disintegrated and horizontally integrated in an irresistible Gramscian transnational historic bloc of 'neoliberalism'.

This approach downplays the primary force driving globalization, which is financialization - the international transformation of future streams of (profit, dividend, or interest) income into tradeable financial assets.  The systemic power and importance of financial markets, financial motives, financial institutions, and financial élites manifestly delink the national state from perceived social, political, and economic processes. Given US hegemony in the world-system (cf. Fields & Vernengo, 2012),  however, the US Federal Reserve (along with the US Treasury and Wall Street) sets the conditions for financialization, since it acts as a safety valve for mass amounts of international liquidity necessary the transnationalisation of corporate power (Arrighi, 1999: 223).

US monetary policy is the international transmission mechanism for global economic activity. As such, to suggest that methodological nationalism is not befitting, because it blinds social science to the multi-dimensional process of change that has irreversibly transformed the very nature of the social world and the place of states within it, is a ‘just so’ story of prejudgement that overlooks how the world-system operates within a particular institutional setting.

As Bertell Ollman (see here) notes:

"There is also a related tendency to overestimate the speed of change, along with a corresponding tendency to underestimate all that is holding it back. Thus, relatively minor cracks on the surface of capitalist reality are too easily mistaken for gaping chasms on the verge of becoming earthquakes. [...] non-dialectical thinking leads people to be surprised whenever a major change occurs, because they aren't looking for it and don't expect it, because it isn't an internal part of how they conceive of the world at this moment [...]"