Eric Helleiner

Explaining the globalization of financial markets: Bringing states back in

Abstract Many accounts of the globalization of financial markets over the past three decades explain it as a product of unstoppable technological and market forces. This article emphasizes that the behaviour of states was also of central importance in encouraging and permitting the process. States are shown to have supported financial globalization in three ways: (1) granting freedom to market actors through liberalization initiatives; (2) preventing major international financial crises; and (3) choosing not to implement more effective controls on financial movements. These roles are illustrated historically through a description of five sets of episodes since the late 1950s. States are found to have increasingly embraced the globalization trend because of: a competitive deregulation dynamic, political difficulties associated with the implementation of more effective capital controls, the ‘hegemonic’ interests of the US and Britain, the growing domestic prominence of neoliberal advocates and international...

The End of an Era in International Financial Regulation? A Postcrisis Research Agenda

The global financial crisis that erupted in summer 2007 has made the reform of international prudential financial regulation one of the top priorities of global public policy. Past scholarship has usefully explained the creation and strengthening of international financial standards with reference to three policy arenas: interstate, domestic, and transnational. Despite the accomplishments of this specialist literature, the recent crisis has revealed a number of limitations in the ways scholars have understood interstate power relations, the influence of domestic politics, and the significance of transnational actors within international financial regulatory politics. Taken together, developments in each of these three arenas suggest that researchers may also need to be prepared to shift from explaining the strengthening of official international standards to analyzing their weakening in the postcrisis world. The latter task will require scholars to devote more analytical attention to a wider set of international regulatory outcomes, including “informal regulatory convergence,†“regulatory fragmentation,†and especially “cooperative regulatory decentralization.â€

Troubled futures? The global food crisis and the politics of agricultural derivatives regulation

ABSTRACT The global food crisis of 2007–08 triggered an important US-led initiative to tighten regulations over agricultural derivatives markets. The lead role of the US reflected its structural power in global finance and the influence of societal interests within the US concerned about the rapid growth of financial investment in agricultural derivatives markets over the past decade. Encouraged by market developments and deregulation in the United States, these investments represented a “financialization” of agriculture that was blamed for contributing for global food price volatility. In their push for tighter regulation, US domestic groups were able to boost their influence by allying with other domestic actors concerned about volatile energy prices and by linking their cause to the broader politics of financial reform in the wake of the 2008 financial crisis. This episode has important lessons for the literatures analyzing the IPE of both food and finance.

National Currencies and National Identities

In what ways do national currencies contribute to a sense of national identity? Building on the insights of 19th-and early 20th-century observers, the author suggests that national currencies might foster national identities in five ways: (a) providing a vehicle for nationalist imagery that constructs a sense of collective tradition and memory, (b) acting as a common medium of social communication that may facilitate the “communicative efficiency” of members of the nation and encourage similar frameworks of thought, (c) creating collective monetary experiences that can bolster the feeling of membership in a national community of shared fate, (d) contributing to a sense of popular sovereignty, at least insofar as the national currency is managed in a way that corresponds with the peoples wishes, and (e) strengthening the kind of quasi-religious faith that is associated with nationalism, especially when the currency is managed in a stable manner.

Political determinants of international currencies: What future for the US dollar?

ABSTRACT In recent years, the economic determinants of international currency status have attracted growing attention among economists. But what about the political determinants? This paper proposes a framework or taxonomy for thinking about this question. It identifies two distinct channels – one indirect and one direct – through which politics can influence the international standing of a currency. In the former category, politics is important through its impact on three key economic determinants of international currencies: confidence, liquidity, and transactional networks. In the latter category, politics matters more directly when a currencys international status is supported by states for reasons unrelated to these economic determinants. The paper explores briefly how these two channels of political influence might influence the dollars future as an international currency. This exploration is not designed to provide a new definitive answer to the question of the dollars future, but rather the goal is to highlight the various ways that political scientists can widen analyses of this topic.

Towards a New Bretton Woods? The First G20 Leaders Summit and the Regulation of Global Finance

Amid pressures from British Prime Minister Gordon Brown and French President Nicolas Sarkozy, US President George W. Bush called the leaders of the countries comprising the ‘Group of 20’ (G20) to Washington on 15 November 2008 to discuss the current global financial crisis. The meeting has been widely touted as a historic development in world politics, marking the first time the G20 had met at the leaders’ level. While the meeting marked a breakthrough at the level of form, what about its substance? In the lead-up to the meeting, many analysts – and even some leaders – hoped that it would trigger an ambitious re-building of the international financial system similar to what was achieved at the 1944 Bretton Woods conference that established the post-war international financial order. There were indeed some interesting parallels between the Bretton Woods conference and the G20 ‘Summit on Financial Markets and the World Economy’. The USA organised and hosted the Bretton Woods meeting in part to make up for policy mistakes that were widely seen to have contributed to international financial crisis of early 1930s. Likewise, in the lead-up to the Washington summit, US officials acknowledged that ‘a big proportion of what’s happened has been down to the US and we recognize our responsibility and the need for us to take the lead’. A parallel can also be drawn between Bretton Woods and the Washington meeting’s objective of widening global financial governance to be more inclusive of poorer countries by widening the G7/8 to a G20 for the first time at the leaders’ level. It is often forgotten today that over half of the countries invited to Bretton Woods were from what is now called the South and that some were assigned a significant role at the conference. US policy makers explicitly saw the conference as a way to shift post-war planning away from a strictly US–British focus (as the New Political Economy, Vol. 14, No. 2, June 2009

Think Globally, Transact Locally: Green Political Economy and the Local Currency Movement

During the 1980s and 1990s, a neoliberalismo has emerged as the dominant economic ideology across the world. Like 19th-century economic liberals, contemporary neoliberals advocate global economic integration through the liberalisation of trade and investment ̄ ows. They also seek to narrow the possibilities for various kinds of political intervention in the domestic economy through deregulatory initiatives and a neo-constitutionalisto measures such as the creation of independent central banks. 2 Promoted by thinkers such as Friedrich Hayek and Milton Friedman, neoliberal ideology conceives of society as a collection of individuals pursing their economic self-interest. 3 As this ideology has gained in ̄ uence, it has become increasingly common to view individuals primarily as private consumers rather than as public citizens when economic issues are discussed. In this new context, it is perhaps not surprising that those who oppose neoliberalism have begun to focus on the potential role of consumption as a political tool. If votes at the ballot box have been unable to redirect economic policy, perhaps people’ s a voteso in the economyÐ that is, their consumption choices Ð can promote different values in the economic realm from neoliberal ones. One example of such a consumption-based oppositional movement is the fair trade movement which seeks to link Northern consumers to a progressiveo producers in the South. A second includes the various consumer boycott campaigns targeting products made by ® rms or countries that are violating human rights or environmental standards. A third is the voluntary simplicity movement which seeks to encourage the more af ̄ uent of the world to reduce their levels of consumption and reject the materialistic values of the emerging transnational consumer culture. In this paper, I focus on a fourth such consumption-based oppositional

The Strange Story of Bush and the Argentine Debt Crisis

When the government of Argentina declared itself unable to pay its debts in December 2001, the world witnessed the largest sovereign default in history. While international investors were predictably upset, the response of the USA was more unusual. Instead of supporting foreign private creditors as it had during most sovereign debt crises of the 1980s and 1990s, the US government did very little. Indeed, since the initial default, US policy makers even went out of their way to express support for the Argentine governments tough negotiating stance vis-à-vis these creditors and the imf. The Argentine governments stance culminated in early 2005 in the most dramatic private debt restructuring of recent years, under which investors took a cut of roughly 70% on the value of their bond holdings. Although US policy towards the Argentine debt default and restructuring contrasted sharply with the Bush administrations aggressive broader foreign policy since September 2001, this article shows that it reflects familiar influences: strategic goals, neoliberal ideology and conservative anti-internationalist sentiments. The article concludes with a brief discussion of the implications of this US policy for the broader politics of international debt.

Economic liberalism and its critics: the past as prologue?

If neoliberal ideology was quite globally dominant at the time of RIPEs creation, it is much less so ten years later. But what is replacing the ‘Washington consensus’? This question is difficult to answer in part because the critiques of neoliberalism have come from such varied ideological sources. Some opponents of neoliberalism draw inspiration from the three ideologies which presented the most prominent critiques of nineteenth-century classical economic liberalism: economic nationalism, Marxism and embedded liberalism. But history is not simply repeating itself. These ‘old’ critiques of economic liberalism have been reworked and updated in various ways to meet the neoliberal challenge. Equally important, other oppositional movements today present ‘newer’ critiques of economic liberalism, most notably those inspired by feminist thought, green ideology, and ‘civilizational’ perspectives on political economy.

Freeing money: Why have states been more willing to liberalize capital controls than trade barriers?

This article investigates why advanced industrial states have chosen to dismantle their postwar capital controls during a period — the 1970s and 1980s — when they became less enthusiastic about eliminating trade restrictions. Four explanations are presented. First, the unique mobility and fungibility of money was important in both encouraging competitive deregulation pressures and making the control of financial movements difficult, each of which created differing collective action dynamics in the financial sector than existed in the trade field. Second, the US and Britain played a leading role in encouraging financial liberalization because they held distinct ‘hegemonic’ interests in finance that did not exist to the same degree in the trade sector. Third, domestic coalitions of neo-liberal advocates and internationally-oriented corporate interests encountered relatively little domestic political resistance to their demands for financial liberalization because of the low domestic political visibility of international financial issues. Finally, financial liberalization and trade protectionism may in fact have been directly related: it has proven difficult for states to maintain liberal practices in finance and trade at the same time.