Randall Germain

Global politics and financial governance

Preface and Acknowledgments Financial Governance and the State Forging Financial Governance Extending Financial Governance Financial Governance and the Great Freeze Global Politics and Financial Governance Power and Governance in the Global Financial System Conclusion: Global Governance and National Responsibility Guide to Further Reading Select Chronology of Financial Crises and Collapses

The political economy of failure: The euro as an international currency

ABSTRACT How do international currencies get established and consolidated? What domestic and international political foundations support an international currency? And what kinds of macro-economic flows enable an international currency? In this essay we consider these perennial questions of modern IPE scholarship in reverse order to ask whether the euro could ever have become, or seek to become, a true international currency rivalling the US dollar, used not only for passive foreign exchange reserves but also as a major commercial currency outside the EU. We argue that the EU lacks the will, the ideas and the capacity to promote the euro into the status of an international currency. In this article, we concentrate on this final issue of capacity, as the will and ideas issues have already been well explored. Capacity is an issue coeval with, if not prior to, the first two issues. The EUs current institutional arrangements and its economic geography create macro-economic consequences that diminish the euros capacity to operate as a top currency. These conflicts go beyond the well-recognized issue that the euro-zone is not an optimum currency area. Examining the euros debilities sheds light not only on the euros (in)capacity to rival the dollar as an international currency, but also on the future of both the euro and the dollar in the aftermath of the euro-zone crisis.

Globalising Accountability within the International Organisation of Credit: Financial Governance and the Public Sphere

Recent developments concerning the international financial architecture have drawn attention to what many perceive to be an accountability deficit at the level of global decision making. This problem is explored here within the framework of an increasingly globalised structure of financial governance, drawing attention to the institutional barriers that stand in the way of operationalising traditional forms of accountability. In order to strengthen a global form of accountability in the absence of traditional democratic links between citizens and decision-making institutions, it is argued that accountability needs to be better internalised within those institutions that actually make decisions with global consequences. To be effective, however, this form of accountability demands the formation of a global financial public sphere, where norms of inclusion and publicness can be established and progressively instantiated. The first step towards realising such a development must be to understand accountability itself in terms of what can be called a logic of participation. This article therefore considers how such a logic can be formulated and grafted onto the existing foundations of global financial governance, and advances several strategies to strengthen accountability framed in this way.

‘Critical’ Political Economy, Historical Materialism and Adam Morton

In response to Adam Mortons survey of ‘critical’ IPE in the January 2006 issue of this journal, I argue that we should resist the call to privilege the question of class struggle when considering the political economy of world order. This question, although not unimportant, draws upon an overly narrow and austere conception of historical materialism. Instead, I consider a more fulsome – but decidedly non-Marxist – tradition of historical materialism in order to move beyond the monological tendency that continues to mar much Marxist historiography, especially when the question of class struggle is elevated as the principal lens through which our understanding of capitalism is organised. I do this by considering the importance of historical idealism in the work of Robert W. Cox, a key interlocutor of much so-called ‘critical’ IPE. Although I agree with Morton that class struggle should not be effaced, I make the counter-claim that understanding the political economy of world order demands an attention to the formation of collective human subjectivities if we are adequately to grasp its contemporary dynamics.

Governing global finance and banking

Some five years on from the onset of a wide-ranging and deep-seated crisis in the international organization of the world’s banking and financial system, scholarly research into the political economy of global finance is buoyant. This research has been pre-occupied in turn with the meaning of the crisis as a crisis (see Gamble, 2009), with its origins and course (see Germain, 2010), with its impact on the global financial and monetary system (see Eichengreen, 2011), with its impact on international financial institutions (see Moschella, 2010), even with the future research agenda for global finance (see Helleiner and Pagliari, 2011). The articles in this issue mark yet another turn in this scholarship, towards a deeper appreciation of the political economy of international regulatory reform. The rescue in September 2007 of Northern Rock, a distressed British mortgage lender, moved the issue of regulating banks from a public backwater – of concern mainly to regulators and bankers along with a few parliamentarians, academics and professional naysayers1 – to the status of front page news. But equally critical was the increased attention this now brought to bear on the international or global component of financial governance. As financial institutions wobbled and then collapsed, first individually and then seemingly en mass, it became clear that the regulatory apparatus which oversaw their operations not only needed to be envisioned as part of a relatively seamless web, but it had also to be reformulated in a manner that would more adequately and securely anchor financial governance on an international scale. The efforts to do this, and the extent to which it has been successful (or not), form the backdrop to these articles. To adopt a modified Rumsfeldian quotation, these articles not only traverse the ‘known knowns’ and the ‘known unknowns’ of global finance, but they also hint at what might be termed some ‘unknown unknowns’. These correspond to the macro, meso and micro dimensions of financial

Global Finance, Risk and Governance

This article puts forward three linked sets of claims. First, it argues that Robert W. Coxs framework of historical materialism can be adapted to articulate a suitable conceptual schema for understanding financial governance at the global level. Second, it emphasises how globally oriented financial institutions have increasingly become purveyors of “risk products”, with the effect that modalities of financial governance have been altered towards a more market-oriented and globalised form. Finally, it considers the extent to which Coxs claim that the structure of world order is becoming non-hegemonic can be illustrated with respect to the implications of governance outlined above. The argument pursued in the article is that institutional changes make possible a shift in the modalities of financial regulation, away from an emphasis on rules geared towards specific activities and more towards procedures targeted at the actual capacities of financial institutions and towards the development of a more fully globalised policy framework. The future of financial governance has thus become more globalised in scope and our conceptual understanding of governance should reflect this development more adequately.

The ‘American’ school of IPE? A dissenting view

ABSTRACT This article challenges three aspects of the ‘American’ school of international political economy (IPE) as presented by Benjamin Cohen and further elaborated by Dan Maliniak and Michael Tierney in this special issue. First, I question whether their depiction of the field is accurate. What they describe is not so much the ‘American’ school of IPE, but the ‘Harvard’ school. IPE in America is a rich and varied enterprise; not so the ‘Harvard’ school. Second, and unfortunately, IPE in America is also highly centralized and hierarchical, and this gives the ‘Harvard’ school enormous latitude to influence the self-depiction of the field and in some ways also its trajectory. This is not healthy, either for IPE scholarship in America or beyond. Finally, notwithstanding the power and authority of the ‘Harvard’ school, we outside of America cannot abandon IPE to its grip. My suggested course of action is to continue engaging with those of our colleagues (both within and outside of this school) who are receptive to the wide-ranging pursuit of knowledge and who recognize that IPE is a field defined by its subject matter rather than by its commitment to a particular methodology.

E.H. Carr and the Historical Mode of Thought

E.H. Carr occupies a most peculiar position among the handful of scholars whose intellectual legacies dominate the discipline of International Relations. He is first and foremost associated with the initial articulation of realism in the twentieth century, and his seminal text in this regard — The Twenty Years’ Crisis — is read everywhere as one of the earliest and clearest expositions of a self-conscious realist discourse. For most International Relations scholars and teachers, therefore, he is intimately bound up with the origins of the discipline as a distinct field of inquiry. Yet, as a scholar Carr refused throughout his long working life to return to the themes marked out in The Twenty Years’ Crisis, preferring instead to treat that part of his intellectual development as a closed book. Indeed, from 1944 until his death nearly 40 years later, his primary preoccupation — one might even call it a fixation — was either writing about history (in his case Soviet history in the 1920s) or reflecting about the nature of the historical enterprise.

Robert W. Cox and the Idea of History: Political Economy as Philosophy

Abstract Within the discipline of international political economy (IPE), the work of Robert Cox is usually associated with the tradition of historical materialism, especially its Gramscian-inspired version. In this paper, however, I explore some of the less visible elements of Coxs thought. In particular, I highlight a variant of historicism which, although not without a connection to Gramscis conception of the philosophy of praxis and absolute historicism, is more fully aligned with the work of Collingwood, Vico, Braudel, and Carr. I identify this as a variant of historical idealism, and I suggest that it is this element of his thought which provides a deep intellectual coherence to his work across the different stages of his career. Furthermore, I argue that this use of the idea of history distinguishes Coxs approach from more radical and constructivist accounts of world order, and allows him to connect his framework of historical structures to his method of diachronic change, which centres ultimately on his conception of intersubjectivity. I close by suggesting that Coxs interest in civilizations is deeply connected to these formative historicist influences, which in turn helps to account for why his later work resonates less well with much contemporary historical materialist IPE analysis.

Regionalism and Finance: A Conceptual Approach

There is a widespread debate within the field of international political economy (IPE) regarding the causes and consequences of regionalism in world politics. Rarely, however, has this debate considered the effects of regionalism on finance. This article contributes to this debate by reaching beyond conventional categories of political economy to explore the way in which the organization of finance is being shaped by regionalism in Europe. By employing a theoretical framework adapted from the work of Fernand Braudel, it locales the effects of regionalism within the context of the market economy, or what Braudel identifies as the domain of transparent commercial exchange. It explores the changing nature of identity among selected financial institutions in order to ask how far a regional dimension is emerging within the organization of finance, and concludes that what may be called regional finance is in fact emerging in Europe. Such an approach contributes to existing debates on regionalism in world politics by drawing our attention to the changing motivations, practices and dynamics of finance in Europe, and the way in which this may be seen as part of the overarching structure of the contemporary world-economy.