History teaches us important lessons, provided we can discern its patterns. Multi-Polar Capitalism applies this insight to the crucial, yet often underappreciated issue of international monetary relations. When international monetary systems get first put into place successfully, such as the “classic” gold standard in 1879, Bretton Woods in 1945, or the dollar standard in 1982, they structure relations between the system’s centre and the rest of the world so that others can catch up to the leader. But this growth-promoting constellation, a vector for accelerating globalization, runs its course eventually amidst mounting overproduction conditions in key sectors and spreading financial instability. Such periods of global crisis, from the Great Depression of the 1930s to stagflation in the 1970s and creeping deflation during much of the 2010s, force restructuring and policy reforms until conditions are ripe for a renewed phase of sustained expansion.
We are facing such a turning point now. As we are moving from a US-dominated world economy towards a multi-polar configuration, we will also see the longstanding dollar standard give way to a multi-currency system. Three currency blocs rooted in the dollar, euro, and yuan will be dominated respectively by the United States, the European Union, and China, each a power centre representing a distinct variant of capitalism. Their complex mix of competition and cooperation necessitates new “rules of the game” promoting the shared pursuit of global public goods, in particular the impending zero-carbon transition, lest we allow fragmentation and conflict shape this next chapter of our history.
Multi-Polar Capitalism adds to a century of research and debate on long waves, those roughly half-century cycles first identified by the great Soviet economist Nikolai Kondratiev in the early 1920s, by highlighting the role of the international monetary system in this distinct boom-and-bust pattern.
Author(s): Robert Guttmann
Publisher: Palgrave Macmillan
Year: 2021
Language: English
Pages: 329
City: Cham
Acknowledgments
Contents
List of Tables
1 International Money in Motion
1.1 Money as Good, Money as Asset
1.1.1 Mainstream View of Money as Good
1.1.2 Keynesian View of Money as Asset
1.1.3 International Liquidity Preference
1.1.4 The Eurocurrencies Market
1.2 Functions of International Money
1.2.1 International Medium of Exchange
1.2.2 International Unit of Account
1.2.3 International Store of Value
1.2.4 International Means of Payment
1.3 Currency Shares Per International-Money Function
1.3.1 The International Currency Pyramid
1.3.2 World-Money Market Shares (by Function)
1.4 Why the US Dollar’s World-Money Status Has Endured
1.4.1 Preference for a Single World-Money Standard
1.4.2 America’s “Exorbitant Privilege”
1.4.3 The “Dollar Trap”
1.5 Characteristics of World-Money Issuers
1.5.1 Financial and Geopolitical Dimensions of Power
1.5.2 The “Soft Power” of Multilateralism
1.6 The Triffin Dilemma Revisited
1.6.1 The 1960 Crisis
1.6.2 America’s Trade Deficits and Asset Bubbles
1.6.3 The Triffin Dilemma as Structural Flaw
References
2 Long Waves and Accumulation Regimes
2.1 Long Waves
2.1.1 Nikolai Kondratiev’s Long Waves
2.1.2 The Marxist Argument
2.1.3 Joseph Schumpeter’s Technological Dimension
2.1.4 Hyman Minsky’s Financial Dimension
2.2 The French “Théorie de la Régulation” (RT)
2.2.1 Accumulation Regime
2.2.2 Mode of Régulation
2.2.3 PostWar Fordism
2.2.4 Types of Crises
2.3 The International Dimension
2.3.1 World-System Theory
2.3.2 The International Monetary System
References
3 A Short History of the Dollar Standard
3.1 The Era of Bretton Woods (1945–1971)
3.1.1 Turning the US Dollar into World Money
3.1.2 Fueling the Postwar Boom
3.1.3 Postwar Wave of Globalization
3.2 The Stagflation Crisis 1969–1982
3.2.1 Cost-Push Inflation
3.2.2 The End of Bretton Woods
3.2.3 The Eurocurrency Market Revisited
3.2.4 Saving the US Dollar as World Money
3.3 The Rise of Finance-Led Capitalism
3.3.1 The Reagan Revolution
3.3.2 The “Washington Consensus” as the Global Dimension of the Reagan Revolution
3.3.3 The Transformation of Finance
3.3.4 Three Consecutive Asset Bubbles
3.4 The Great Recession, a Systemic Crisis
3.4.1 Bursting of America’s Real Estate Bubble
3.4.2 The Collapse of Lehman Brothers
3.4.3 The Great Recession of 2008/09
3.5 The Federal Reserve’s Crisis Management
3.5.1 The Fed’s Section 13(3) Emergency Lending
3.5.2 The Fed’s FX Swap Lines
3.5.3 Quantitative Easing
References
4 The New Deflation: From Great Recession to Global Pandemic
4.1 The Great Recession as Structural Crisis
4.1.1 The Re-regulation of Finance
4.1.2 Liquidity Traps and Savings Gluts
4.2 Currency Wars
4.2.1 A Distinct Pattern
4.2.2 The Eurozone Crisis 2009–2012
4.2.3 China’s Currency Challenge
4.3 Commodities and Currencies
4.3.1 The Commodity Super Cycle
4.3.2 An Inverse Price Relation
4.3.3 Commodity Currencies and Carry Trade
4.4 A Dangerous Turn in US Trade Policy
4.4.1 Trump and America’s Trade Deficits
4.4.2 Trump’s Opposition to Regional Trade Deals
4.4.3 Trump’s Trade Wars
4.4.4 Financial Warfare
4.5 Additional De-globalization Trends
4.5.1 Slowdown of Trade
4.5.2 Squeezing Global Value Chains
4.5.3 Pullback of Cross-Border Investments
4.5.4 Regionalization
References
5 The Great Interruption
5.1 “A Perfect Storm”
5.2 Locking Down the World
5.2.1 Missing the Chance for Initial Containment
5.2.2 The World Shuts Down
5.3 A Test of Governance and Leadership
5.3.1 Highly Varied Responses
5.3.2 Trump’s Mismanagement of the Pandemic
5.4 The Balancing Acts of Virus Economics
5.4.1 Initial Containment Response
5.4.2 Mitigation and Public Health
5.4.3 Macro-Economic Stabilization
5.4.4 A Terrifying Moment in the US Treasuries Market
5.4.5 Central Banks as Market Makers of Last Resort
5.4.6 Operating in a Pandemic
5.5 Trend Accelerations, Shifts, and Ruptures
5.5.1 Health Care
5.5.2 The Digital Economy
5.5.3 Growing Inequality
5.6 The International Crisis Context
5.6.1 A Massive Shock to Cross-Border Activity
5.6.2 A Stress Test for the Dollar Standard
5.6.3 Poorer Countries Get Hit Harder
5.6.4 The Global Vaccination Challenge
References
6 Transition and Triad
6.1 Post-Pandemic America
6.1.1 The American Rescue Plan
6.1.2 The Fed’s New Policy Framework
6.1.3 Biden’s “Build Back Better” Agenda
6.1.4 “Bidenomics” as Paradigm Shift
6.1.5 America’s “Flawed” Democracy in Crisis
6.1.6 A New “New Deal?”
6.2 The Rise of China as Challenger
6.2.1 China’s “Dual Circulation” Strategy
6.2.2 China’s Belt and Road Initiative
6.2.3 Debt and Currency
6.2.4 From RMB to CNY
6.3 Making the Eurozone Work
6.3.1 Post-Crisis Reforms and Recovery
6.3.2 The EU’s Management of the Pandemic
6.3.3 The EU’s Broader Quest for “Strategic Autonomy”
References
7 Cooperation vs. Competition in a World of Adversarial Power Centers
7.1 Triadic Configuration
7.2 Redefining Globalization
7.3 Zero-Carbon Transition as Vector of a New Accumulation Regime
7.4 The End of the Dollar Standard
References
Index
