Political Economy and Political Power: The American State and Finance in the Neoliberal Era

Abstract

Understanding the role of the American state in the era of neoliberal finance requires a scale of analysis that can identify not only the domestic but also the international role of the informal empire the US established in the middle of the twentieth century for superintending capitalism on a world scale. This article demonstrates that it was not so much neoliberal ideology that broke the old system of financial regulations, as it was the latter’s increasingly dysfunctional effects as finance outgrew the New Deal incubator through the post-war decades. Through the Bretton Woods crisis and the stagflation of the 1970s, institutional reform in the financial sector became a key dimension of broader competitive capitalist strategies for innovation and expansion. While this certainly involved extensive leveraging and speculation, it met the hedging needs not only of financial institutions but also of the many corporations seeking protection from the rapidly evolving vulnerabilities associated with global trade and investment. Yet the financial volatility that inevitably resulted from those very transformations meant that the Federal Reserve’s function as lender of last resort was increasingly called upon, just as the Treasury came to define its role as that of ‘failure containment’ on a global scale. On the basis of this theoretical and historical perspective, the article analyses the causes and consequences of the 2007–8 financial crisis and the ‘old/new practice of failure containment’ that has characterized the American state’s response to it.

Africa's Next Debt Crisis: A Relational Comparison of Chinese and Western Lending to Zambia

“…The frame of lending and borrowing that covered Africa in debt by the 1980s has its roots in the consolidation of US hegemony post-World War Two-its histories tracing back to the privatisation and liberalisation of finance within an Americanled global economy (Panitch and Gindin 2004). By the 1960s contradictions in international production had started to fracture the Keynesian class compromise (Cleaver 1989), as working-class struggles erupted over a variety of frictions in an already globally diversified sphere of production (Braverman 1974;Swyngedouw 1992).…”

“…With most economies across sub-Saharan Africa entwined into the global economic system, there was no yielding to capital's hold and poor countries resorted to unrestrained borrowing as they bought into the modernisation myth (Corbridge and Thrift 1994). Countries like Zambia committed to new loans in support for consumption, against the background of declining export commodities prices, and exposed themselves to interest payments that would prove unsustainable-lending that consolidated the US control of the international monetary system (Brooks 2017;Ferguson 1999;Panitch and Gindin 2004). Control, wrought through consent and coercion, extended to other capitalist economies, where American penetration "determined that inter-state tensions were limited to renegotiating the terms of the imperial relationship, not questioning its essence" (Panitch and Gindin 2004:59).…”

“…They render it important and vital, and consolidate Chinese political influence, rather than loans and socio‐technologies being passively adopted, although the individual beneficial arrangements between local elites and Beijing often remain obscured to the wider populace (Dobler 2008). Where for the US financial mechanisms under the banner of transparency and reform heralded in the new age of imperialism (Panitch and Gindin 2014), Chinese hegemony then becomes constituted through related, but further obscured, indebted relations (Meulbroek 2022). As Chris Alden (2019:283) thus notes, China's development finance is a direct and often secretive procedure with many African countries actively adopting “Look East” policies that fit China's “alternative model of modernization without necessarily subscribing to liberal democracy”.…”

Class, Power and the Structural Dependence Thesis: Distributive Conflict in the UK, 1892–2018

“…This persistent ineffectiveness, compounded by the electoral decline of socialist parties across Europe, has led even prominent social democratic theorists to emphasize the structural limits that capitalism places on redistributive policies and reforms (Streeck, 2014). But the structural power of business has also played a central role in analyses of financialization and globalization (Bell, 2012;Krippner, 2011;Panitch and Gindin, 2014;Roos, 2019;Starr, 2019). 'Indeed, the financial crisis revived the structural power debate' (Woll, 2016: 375).…”

Introduction: Neglecting, Rediscovering and Thinking Again about Power in Finance

“…Johal et al (2014), starting with the orthodox language of power analysis in political science, seek to extend that, in the British context, to the broader conceptions of power associated with the work of Foucault. In their turn, Panitch and Gindin (2014) connect the special issue to a distinguished tradition of radical international political economy. Finally, Nesvetailova’s article (2014) introduces into the issue a new conceptual language for analysing power and money that is growing in importance in the theoretical analysis of international political economy.…”