Capitalism is national & transnational, but what about the money?

This is my short response, originally posted here, to William I. Robinson's post here and Fred Magdoff's note in the comment section of that post:

While I generally agree with Robinson's and Magdoff's analyses, what is absent, specifically with respect to Robinson's discussion, is a concrete assessment of the acute variables that measure the degree to which national States have the capacity to engage in power-maximizing behavior and, thus, pursue certain responses, i.e. imperialism, to the competitive nature of the capitalist world economy. Certain material capabilities of national States generate the space to be 'constituted', whereby they embody a structural authority to shape the framework of global economic relations. This structural authority is tied to the qualification to establish and enforce a particular item, currency, as the unit of account in which global economic calculations are made, facilitating the functioning of financial markets and thus international trade. Hence, the analytical specificity of methodological nationalism, albeit in amalgamated form to cope with the forces of globalization, is still potent.

References:

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.

Fields, D. (2015). “Dollar Hegemony.” Pp. 145-147 in The Encyclopedia of Central Banking, Northampton, MA: Edward Elgar Publishing

Ingham, G. (2004), The Nature of Money, Cambridge: Polity Press.

Vernengo, M. & D. Fields (2016), “DisORIENT: Money, Technological Development and the Rise of the West.” Review of Radical Political Economics, 48(4), pp. 562–568

Kevin Gallagher on Emerging Markets and Re-regulation of Cross-Border Finance

"Since the revival of global capital markets in the 1960s, cross-border capital flows have increased by orders of magnitude, so much so that international asset positions now outstrip global economic output. Most cross-border capital flows occur among industrialized nations, but emerging markets are increasing participants in the globalization of capital flows..."

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.

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Leo Panitch on how the US still decides the future of global capitalism

Leo Panitch offers an antidote to the growing consensus that the new development bank launched by the BRICS manifests a significant challenge to US hegemony.

From The Guardian:

International attention has been diverted away from this year’s G20 meetings in Australia by the declaration from the leaders of Brazil, Russia, India, China and South Africa, at their meeting in Fortaleza Brazil this July, that they would launch a new “Brics bank”. Created by the US Treasury in the wake of the Asian financial crisis at the end of the 1990s, the G20 was designed to get the major “emerging market” states to take responsibility alongside the G7 for the “new international financial architecture”. This was seen as providing legitimacy for the continuing central role of the US in superintending a greatly expanded but increasingly volatile global capitalism

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.

A Band-Aid Solution to Economic Development: The False Promise of 'Fair Trade'

The process of economic development elicits many thoughts, analyses, speculations, suggestions, descriptions, prescriptions, and conclusions. Nevertheless, it invokes an imagined reality that is fundamentally progressive. It entails a commitment to the idea that we as human beings, in order to maximize our human potential, can, and should, try to change the world for the better. That is, it should be an attempt to reduce vast inequalities, social injustices, and hegemonic forces that intrinsically develop extensive imbalances of rights, privileges, and responsibilities across the world's population, and moreover deny many a condition of life regarded as materially, culturally, spiritually, and symbolically superior.

This paper is an exploration of the role of fair trade as an effective developmental initiative in promoting economic self-sufficiency for marginalized producers of the periphery. From Sen and Nussbaum's 'capabilities approach' for evaluating human well-being, I focus on the foundation, structure, and influence of fair trade as an alternative development model and analyze the model within the UNICEF empowerment framework. The UNICEF framework is based on the premise that empowerment involves five levels: 1) Welfare, 2) Access, 3) Conscientization, 4) Participation, and 5) Control. From this discussion, I conclude that, in the long run, fair trade fails to be a sustainable substitute for the neoliberal orthodoxy that currently dominates the institutional mechanisms addressing global poverty.

Read the rest here.

The Wisdom of Classical Realism In International Relations

The epistemological practicality of theory is to draw a unifying essence, a sensibility of coherence, to latent functions alleged to govern manifested social phenomena, so as to strive to apperceive a richer, fuller, more comprehensive view of our social world. In this sense, theory establishes the appropriate consciousness needed to untie the Gordian knot of social complexity, in order to surpass rudimentary assumptions concerning the nature of human social interaction. Accordingly, this invokes perspicacity, which is concerned with elucidating the intrinsic underlying causal relationships that ultimately rest on tendentious conceptions of what is to be determined as socially significant—the Hegelian ‘notion’ of truth submerged and contained within the confines of appeared ‘being’— that furnishes meaning and understandability. As Steve Smith (1996) argues, ‘theories do not simply explain or predict, they tell us what possibilities exist for human action and intervention; they define not merely our explanatory possibilities, but also our ethical and practical horizons’. 

The reason we must be concerned with theory [is because] all discussions of international politics […] proceed upon theoretical assumptions which we should acknowledge and investigate rather than ignore or leave unchallenged. The enterprise of theoretical investigation is […] towards identifying, formulating, refining, and questioning the general assumptions on which the everyday discussion of international politics proceeds. At its maximum, the enterprise is concerned with theoretical construction: with establishing that certain assumptions are true while others are false, certain arguments valid while others are invalid, and so proceeding to erect a firm structure of knowledge (Bull, 1972).

Social scientists develop, consider, and use, various theoretical orientations as ideational frameworks to provide explanatory accounts of social phenomena. Assumptions concerning the nature of social reality are thus fundamental; theory the perceivance of social reality via the process of social inquiry is not antonymous. Hence, theoretical lenses are structured by deeper philosophical commitments, and, as a result, will produce different types of stories, narratives, and debates that reflect those commitments (Sterling-Folker, 2009).  Theory is intrinsically normative for it incorporates a set of ‘prescriptions as to how men should conduct themselves’ (Bull, 1976). What Joseph Schumpeter labeled as ‘pre-analytical visions’ dictate modes of examination and inquisition. Second-order questions of ontology concerning the nature human agency, and its relationship to social structures, lies at the beginning of any theoretically induced social-scientific enquiry. The implication is that it is merely impossible to define a social problem without considering what is to be determined as problematic (Cox, 1992: 132). ‘Pre-analytical visions’ will lead to entirely different attitudes towards social settings, and, as such, will have pertinent implications for normative assessments of social phenomena. 

This then begs the question of whether or not one can accurately actually make reference to a single systematic body of knowledge when approaching the nature of social reality, given the likelihood of problems arising from explanatory specificity, scope, and intellectual nuance. Despite this caveat, however, it is possible to be pragmatic and place theories into Procrustean beds, especially when the context is the peculiar social apparatus of world politics.  With this mind, the rest of this essay examines the sociology of knowledge that underpins Realist theorizing in order to asses to what degree the tradition has rendered the field of international relations intelligible. 

The Wisdom of Classical Realism

Realism attempts to explicate perceived structures and tendencies of relations among nation-states in an objective state of anarchy.   An international authority, or world government, a superstructure of ‘political society’, in the Neo-Gramscian sense, which acts as universally socially legitimate magistracy, does not exist. That is, an institution uniquely concerned with the consideration, generation, and transformation of global common interests and understandings, so as to provide a broadly shared forum of appropriate rules and procedures, such that a democratic sociological imagination is universally manifested, is absent. 

The international community is without government, without a central authority to preserve law and order, and it does not guarantee the member states either their territorial integrity, their political independence, or their rights under international law. States exist, therefore, primarily in terms of their own strength or that of their protector states and, if they wish to maintain their independence, they must make the preservation or improvement of their power position the principal objective of foreign policy (Spykman, 1942: 446; cited in Parent & Baron, 2011).

It is presumed world politics is a dangerous jungle of insecurity. Given this precariousness, issues of survival are of import as they relate to rational behavior under less than ideal conditions—a predicament of coercion-by-force-of-circumstance that begets fear of besiegement at the behest of power-hungry competing nations. Chaos is the ‘form of control’ (Gilpin, 1981: 27), so to speak, that institutionalizes a mode of inter-state interaction which is, ipso facto, fundamentally aggressive. As a result, supreme political authority lies only at the level of the nation-state, as it is deemed the most functional institution of civil society for providing the public good of collective security; it is the secure monopolization over the means of violence at the micro-level which allows the ‘rule of law’ to seemingly reconcile palpable collective costs owing to potential clashes of interests among social classes (Carr, 1939: 296-297; Morgenthau, 1978:10-11). This betokens the incapacitation to envisage international relations as embodying a common stock of shared conventions, values, and cultural practices that can be readily drawn upon for purposes of solving global coordination problems, which if not solved, eventually lead to war between states. Hence, to ideate an undisputed social capacity of enlightened self-interest, which can be utilized for establishing an empyrean Lockean rational contractual world social order to eclipse the imperiousness of state solipsism, is a clear testament of naiveté. 

States do not perceive themselves as essential parts of a larger interconnected and interdependent social whole—Durkheimian ‘organic solidarity’—by which the essence of philosophical idealism can, over time and space, eschew the disharmony of world politics. States are Robinson Crusoe’s up against incontrovertible forces of insecurity as they interact with each other ; the “highest wisdom lies in accepting, and adapting to these forces” (Carr, 1939: 14). 

[...] the essence of all social reality [with respect to world politics] is the [state]. The building blocks and ultimate units of [international] political life are not the individuals of liberal through nor the classes of Marxism […] Realism […] holds that the foundation of [international] political life [is] [uncongenial relationships between states] (Gilpin, 1986: 304-205). 

International relations is thus what social theorist Karl Polanyi described as a disembedded market, that is, a one-shot prisoner’s dilemma game of how to achieve Machiavellian prudence, such that that the adverse effects of predation, due to the lack of escrow mechanisms to ensure collective confidence, are deterred. Hence, an acute sensitivity to a ‘security dilemma’—the collective action problem of ‘balance of power’ amidst a Clausewitzian ‘fog of war’—is presupposed. If any form of righteousness is espoused, it ultimately rests on the degree to a state harbors “the quality of power to compel, and that in fact the strong do what they have to power to do and the weak what they have to accept” (Thucydides, 1854: 360-365).

A classic text of the Realist paradigm is Hans Morgenthau's Politics Among Nations. The author attests that in a social world where conflicts of interests are endemic, moral principles of ethical justice, particularly with respect to modern social norms of convivial peace and cooperation, can never be fully concretized. Preponderating forces to govern interstate relations in order to tame the biopower of ‘human nature’, which asseverates that man is essentially ‘evil’ and ‘barbaric’—a ‘savage’—, are nil. In this sense, the ‘first image’ of world politics consists of a pandemonium of Hobbesian brutes galvanized by lust, diffidence, and pride, in which the quest for paramountcy fosters a war of all against all to continue indefinitely (Waltz 1991: 35). The bedlam conditions states to be indubitably hostile. The implication is that states are obsequious to a competitive strife of maximizing their sway. Esprit de corps is inconceivable; a dynamic is set in motion permitting states to pursue callous foreign policy objectives of Messianic fervor (Morgenthau, 1978: 338). 

For one to posit ecumenical jus naturae et gentium of a ‘Grotian conception of international society’, a Vatellian ‘law of nations’ , if you will, so as to inexorably extricate the means by which to achieve, teleologically, Kantian ‘perpetual peace’ premised on the elements of pacta sunt servanda is to not only engage in contrivance, but heedlessly lose oneself in pure fantasy. That is, such phenomenological aloofness ultimately amounts to a red herring of ‘hypothetical imperative’, in order to bolster a Platonic archetype that “presupposes [an] existence […] which actually does not exist” (Morgenthau, 1978: 559).  “There is something spectacular in the radical simplicity of a formula that with one sweep seems to dispose the problem of war once and for all” (Morgenthau, 1978: 558). “It is […] important not to make greater demands on human nature than its frailty can satisfy” (Treitschke, 1916: 590). The basis upon which one can view international relations as something less than bellum omnium contra omnes is chimerical; the essence of animus dominandi nullifies the ‘possible world’ of appetitus societatis. The supposition that a relatively pacifistic global commonwealth can be institutionalized is absurd. Ergo, despite illusory aspirations of catholic righteous indignation, “the ethics of international politics reverts to the politics and morality of tribalism [...]” (Morgenthau, 1978: 262). More the point, “when a nation invokes […] ‘the conscience of mankind’ […] it appeals to nothing real. It only […] only serves to underline the [unprincipledness] of the appeal” (Morgenthau, 1978: 279). Hence, “it is profitless to imagine a hypothetical world in which [states] no longer organize themselves […] for purposes of conflict (Carr, 1946: 231).

[…] realism refuses to identify the moral aspirations of a particular nation with […] moral laws that govern the universe […] The lighthearted equation between a particular nationalism and the counsels of Providence is morally indefensible, for it is that very sin of pride against which the Greek tragedians and the Biblical prophets have warned rulers and ruled. The equation is also politically pernicious, for it is liable to engender the distortion in judgment which, in the blindness of crusading frenzy, destroys nations and civilizations (Morgenthau, 1978:11).

The presumption of a fecundity to mechanically yield harmonious Elysian ‘right reason’ cannot apply “to the actions of states in their abstract universal formulation […]” (Morgenthau, 1978: 10). As duly noted above, the natural condition of international relations is inherently antagonistic, that is, it is perpetually riotous and tumultuous—a fracas of animosity of national vengeance. Accordingly, it is foolish to assume that reason privileges humankind the competency to construct a cosmopolitan Roussseauan ‘general will’. Hence, to ideationally concede some amicable intercontinental ‘imagined community’ is to regrettably fall prey to blinded optimism.

The immediate perceptible indication is that the substance of international relations is driven by a “desire for power-oriented prestige”, which “means [that] in [the] general practice [of world affairs] the glory of power over other [states]” reigns supreme. ‘Nationalistic universalism’ is a constant social force that “drives [states] to pose its own valuations and standards of action upon all other nations” (Morgenthau, 1978: 337). 

In a surrounding circumscribed by “opposing interests and of conflict among them” (Morgenthau, 1978:3), voraciousness undoubtedly structures the role expectations of states. Thusly, states are prompted to attach a certain subjective meaning to their world political acts, which is sociologically educed by reckoning that states are bounded by the stigma of of what Max Weber framed as instrumental rationality (zwekrational). That is, they interact with each other insofar as it is purposeful, in the sense described above, and, as such, is impelled by positional means-ends goal oriented behavior. World politics is Daniel Kahneman's laboratory of constrained optimization, whereby the motivations of states, with respect to how they approach matters of foreign policy, stem from innate desires to avoid subjection. As an Aristotelian fait social total, the aura of world politics is plagued by the Nietzschean metaphysics of an unrestrained ‘will to power’.  As such, the state must have, at all times, the means by which it can repel ‘external forces of wrongdoing, which can systematically undermine its ability to persevere in a nihilist world where ‘gladiators are fixed on one another’ in an invariable ‘posture of war’. The primary of the aim of states is to do the utmost in order to escape the possibility of being at the mercy of rivals. 

And since no nation can foresee […] miscalculations [of power dynamics], all nations must ultimately seek the maximum of power obtainable under the circumstances. Only thus can they hope to attain the maximum margin of safety commensurate with the maximum of errors they might commit. The limitless aspiration for power, potentially always present … in the power drives of nations, finds in the balance of power a mighty incentive to transform itself into an actuality (Morgenthau, 1978: 215).

Balance of power’ is the Mandevillian (or Poreto optimal, if you will) solution. That is, it is essential that states not put themselves in a position from which it cannot retreat without losing face, from which it cannot maneuver, without grave risks (Morgenthau, 1978: 550-558)—si vis pacem, para bellum. Beset by the constraining conditions, states are obliged arrange feasible plans to ensure preservation, namely, it is of due diligence that statesmen be blessed with virtù of raison d'État -- the Machiavellian notion of strategic prowess -- such that, ceteris paribus, the health and strength of the state is preserved.  It is primary that statesmen have the autonomy, as well as the flexibility to discern suitable foreign policy objectives germane to the national interest, which is upholding the independence and territorial integrity of the state to the fullest extent.  

The practical function of a theory of international relations has this in common with all political theory that it depends very much on the political environment in which it operates. In other words, political thinking is, as German sociology puts it, ‘standortgebunden’, that is to say, it is tied to a particular social situation (Morgenthau, [1961]1962: 72–3)

According to Morgenthau (1978: 5), “we must put ourselves in the position of statesman who [are forced to choose a given path of ] foreign policy under [anarchic] circumstances, and [as such] we [must] ask ourselves what we pursue if we were placed under the circumstances and had to choose from alternatives from which to successfully ensure the protection of the state in feral terrain".  Hence, what is primary is to interpret inter-state actions in world politics as not necessarily being derived by strict forces of social determinism, like the Neorealism of Kenneth Waltz, for instance, but from the angle of situational human agency. Morgenthau’s standortgebunden, as such, is intended, despite that that it can be interpreted as being psychologically-reductionist, to envisage the quagmires of international relations on the terms of those who are directly involved in shaping its dynamics - those statesmen embodied with the wherewithal to formulate geopolitical circumstantial determinations. In hindsight, it is not erroneous to cogitate that the essence of Realism is strikingly similar to the sociology of knowledge that mainstream neoclassical economics is predicated on. 

Reference list will be added

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.

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Austerity: The History of a Dangerous Idea

Professor Mark Blyth's new book: 'Austerity: The History of a Dangerous Idea'

"Conservatives in both Europe and the United States have succeeded in casting government spending as reckless wastefulness that has made the economy worse, and have advanced a policy of draconian budget cuts--austerity--to solve the financial crisis. We are told that we have all lived beyond our means and now need to tighten our belts, but this view conveniently "forgets" where all that debt came from. Not from an orgy of government spending, but as the direct result of bailing out, recapitalizing, and adding liquidity to the broken banking system. Private debt has thus been rechristened government debt, and those responsible for generating it have got off scot-free, placing the blame on the state and the burden on the taxpayer."

Read rest here.

Culture and Symbolic Violence

Culture entails models of social reality that humans take for granted. It encompasses shared understandings of ways of seeing and feeling that comprise the social roles by which humans connect with each other to form society, which, in the Durkheimian sense, is a suis generis enity that embodies a mutual social consciousness. Culture calls attention to the ways social norms establish social identity, which inherently reflects the ways in which humans present themselves in social life, and the means by which they actively organize themselves for collective purposes; it is the capacity to socially determine what is defined as 'responsible' human activity (Meyer & Jepperson, 2000). Culture, thus, is a shared pattern of socialization combined with an implicit system of reinforcement of certain values of prescribed behavior.

In this sense, culture is related to the process by which human activity comes to be normatively held in place—institutionalization. It defines the “the way in which [...] cultural rules define the meaning [...] of [social] activity” (Meyer et. al. 1987). This sense of meaning is not found in mere objective social reality, but rather is contingent on the extent to which cognition is constructed by the social surroundings with in which individuals function (Meyer et. al. 1987) As such, it does not take humans as a priori entities, but as reified 'subjects' with internalized understandings of social action. Pierre Bourdieu (1991: 250) defines this process as a 'mode of existence'.

Culture elucidates the essence of subconscious cognitive 'scripts', which are inscribed in 'common sense' descriptions of how humans behave (Meyer et. Al: 1997). Pierre Bourdieu (1984:468) identifies these 'scripts' as 'embodied social structures'. These 'embodied social structures' are a totality in the form of a symbolic system that channels deep social structural comprehensions (Swartz 1997: 83), to such an extent that human behavior can befittingly be comprehended and understood specifically in terms of the interrelationship what constitutes actors and whose subjectively meaningful behavior, in turn, constitute society (Krasner, 2009: 95). As such, culture “organize[s] human masses, [and] form[s] the terrain on which [they] move [...]” (Gramsci, 1988: 199).

It must be noted, however, that culture is not just the formation of an identity, and thus the means by which humans are social integrated, but also can serve as an instrument of domination. In this sense, it is a source of manipulation that serves as a legitimation of unjust social relations. Accordingly, culture fundamentally rests on intrinsic processes that manufacture s ‘logic of difference’, of differential deviation' (Swartz, 1997: 96), a classification complex of inclusion and exclusion.

[...] all agents in a given social formation share a set of basic perceptual schemes, which receive the beginnings of objectification in the pairs of antagonistic adjectives commonly used to classify and qualify persons or objects in the most varied of practice. The network of oppositions between high (sublime, elevated, pure) and low (vulgar, low, modest), spiritual, and material, fine (refined, elegant) and coarse (heavy, fat, crude, brutal), light (subtle, lively, sharp, adroit) and heavy (slow, thick, blunt laborious clumsy), free and forced, broad and narrow, or, in other another dimension, between unique (rare, different, distinguished, exclusive singular, novel) and common (ordinary, banal, commonplace, trivial, routine), brilliant (intelligent) and dull (obscure, gray, mediocre) is the matrix of all commonplaces which find such ready acceptance because behind them lies the whole social order (Bourdieu 1984: 468)

Culture is a mechanism of producing homologies through which meanings are obtained via contrastive relations that constitute an objective existence of social oppositions. According to Bourdieu (1984: 468), while all agents in given social formation share a set of basic perceptual schemes, the essence of contrast predisposes humans to organize the social world according to a logic of polarity; this is what Bourdieu (1984) defines as symbolic power, which is the simultaneous act of constructing conceptual and social discrimination.

[...] if one takes seriously both the Durkheimian hypothesis of the social origins of schemes of thought, perception, apperception, and action and the fact of class divisions, one is necessarily driven to the hypothesis that a correspondence exists between social structures (strictly speaking, power structures) and mental structures (Bourdieu, 1991).

Symbolic power is, hence, a 'world-making power', whereby the essential material differentiating social contexts are ‘naturalized’. Symbolic power generates symbolic violence:

To say it more rigorously: social agents are knowing agents who, even when they are subjected to [some form of] determinism, contribute to producing the efficacy of that which determines them insofar as they structure what determines them. And it is almost always in the “fit” between determinants and the categories of perception that constitute them as such that the effect of domination arises (Bourdieu & Wacquant, 1992).

[This] presupposes on the part of those who are subjected to it a form of complicity which is neither a passive submission to an external constraint nor a free adherence to values [...] The specificity of symbolic violence resides precisely in the fact that it requires of the person who undergoes it a [certain] [manifested social] attitude [...] (Bourdieu 1982:36).

[As such, social] [l]egitimation of the social world is not [...] the product of a deliberate and purposive action of propaganda [..]; it results, rather, from the fact that agents apply to the objective structures of the social world structures of perception and appreciation which are issued out of these very structures and which tend to picture the world as evident (Bourdieu 1982: 36).

In this sense, symbolic violence involves misrecognition, which is the mechanism by which symbolic power forces humans to objectify their social world and accept as is, with all its apparent disparities (Bourdieu & Wacquant: 1992). Culture incorporates socially understood dispositions that formulate structures of perception by which humans accept “postulates [and] axioms [that] go without saying and require no inculcating” (Bourdieu & Wacquant 1992). It is akin to the Marxian idea of 'false conscientiousness', introduced by Mannheim (1959 [1936]: 340), in which “[...] knowledge is distorted [...] when [...] it attempts to conceal [reality] by thinking of [it] in categories that are inappropriate [...].” Thus, “persons falsify to themselves the elementary facts of human existence by deifying, romanticizing, or idealizing them, conjuring up [delusionary] interpretations of [social] experience (Mannheim 1959 [1936]: 340).

This is similar to the Gramscian idea of ideological or 'expansive hegemony', by which a “multiplicity of dispersed wills, with heterogeneous aims, are welded together with a single aim, on the basis of an equal and common conception of the [social] world” (quoted in Jones 2006: 53). Symbolic violence is thus suppression of alternative world-views through the establishment of parameters that define what is socially deemed as reasonable, sane, practical, good, and ‘true’. Fundamentally, it promotes an unquestioning canonical 'idea system' (Wallerstein, 2000: 272).

To provide an illustration, it is useful to relate symbolic violence to ideal-type human being as that of the instrumentally rational single-minded seeker of maximum utility. According to this ideological conviction, the surrounding within which social action takes place is conceived as an endless array of opportunity costs. Individuals are not seen as to perceive themselves as parts of larger interconnected and interdependent social wholes, but instead as fable bees that are up against incontrovertible forces of the impersonal social institution of the capitalist market, which is characteristically governed by the modus operandi of selfishness. Social positions with respect to income and prestige is a matter of natural law; if individuals have appropriate moral virtues and exercise responsibility, jurisprudence, self-control, and unremitting hard work, it is socialy believed they can easily become capitalist entrepreneurs if the so-called Protestant ethic is taken seriously. In relating 'individuals' to ‘nation-states’, Wallerstein (2000: 283) writes:

All states can develop, all states shall develop [...] if some states have developed earlier and faster than others, it is because they […] been more individualistic […] or in some way more 'modern'. If other states have developed more slowly, it is because there is something in their [innate characteristics] which prevents them or has thus far prevented them from becoming as [progressed] as other states.

Symbolic violence fosters obeisance to competitive strife as a form of natural social harmony. Culture, as such, is an apocryphal sense of 'moral discipline' that convinces humans that they are nothing but atoms with no authentic ties that extend deeper and beyond moments of economic exchange. It serves as deceptive palliative in which social location has no affectation on social outcomes.

[The strong are deemed] more [instrumentally] rational, more disciplined, more hard-working, more self-controlled, more independent, while the [weak] are more [...] self-indulgent, more lazy, [...] more dependent (Wallerstein, 2000: 277).

The question is how is symbolic power that is translated into symbolic violence altogether socially produced? Bourdieu answers the question by developing the concept of symbolic labor, which he defines as those 'intellectual specialists, e.g. writers, teachers, professors, philosophers, etc. who advance the theoretical formulations, apparatuses, and ideations that in turn prescribe the cognitive distinctions that mask social inequalities” (Swartz, 1997: 93). They are the authorized agents, or generalized 'others', (Meyer & Jepperson, 2000) who coordinate the institutionalization of shared understandings and beliefs that ultimately transform unequal social relations into socially 'legitimate' social relations.

To what extent can 'world society theory' as developed by John W. Meyer et. al (1997) be construed as a form symbolic violence? According to the theory the social world is a society that embodies a global collective social consciousness, and, thus, a worldwide cultural cosmology of shared understandings of rational social action. Subconscious cognitive 'scripts' are international in nature, and represent institutionalizations that define the meaning and identity of actors in the international arena... They specify 'the way things' ought to work' in the international context and frames the global 'mode of existence'.

The nation state is the internationally collectively understood fundamental unit of rational social action. Hence, they are isomorphic in terms of structure and organization due to generalized implicit inculcation of what is regarded as necessary for legitimate recognition in world affairs. This is routinely represented by common taken-for-granted assumptions with respect to nation-state law-based control systems, professionalization, citizenship, and the means to accomplish goals in regards to processes like economic development. These assumptions are derived from exogenous world cultural rules of what defines purposiveness in world society, and they are spread and diffused via global symbolic labor involved in international associations like the United Nations, World Bank, IMF, UNESCO, etc.

Symbolic labor involved in the diffusion of worldwide cultural rules lead to what Meyer et. al (1997) note as ‘expansive structuration’, whereby nation-states ceremonially advertise some meaningful identity in the international political economy. The inherent problem is that many nation-states suffer from a variety of inequalities with respect to the resources needed for such ‘expansive structuration’. The diffusion of world-wide cultural models of social action engenders contradiction.

World culture reflects ideals that are more often than not beyond what is practicable for most countries. This is leads to what is known as 'decoupling'. For example, economically weaker nation-states are likely to import specific principles of internationally recognized forms of economic advancement, yet on-the ground realities make such formal presentation a matter of 'organized hypocrisy'.
It is at this point that one can invoke the concept symbolic violence to 'world society theory'. The seemingly universal ethos of ‘economic progress’ ignores socially-specific factors particular within geographical and historical contexts that set nation-states on adverse path-dependencies. Symbolic violence would be evidenced by the international community, including leaders of the deprived country, interpreting the condition as a reflection of ‘economic backwardness’. The end result would be the proliferation of judgments in the international community that deem country as culturally incapable of recognizing what is appropriate to escape their deprivation. The international community would respond with an assessment of the nation state's condition and provide assistance to correct its underdevelopment (Myer et. al, 1997), however, in actuality, it would be motivated by ideologies that are meant to stain global inequalities (Wallerstein, 2000: 278), rather than rectify them.

By way of conclusion, culture is a catch-22. On the one hand, it tries to make sense of the social work, yet on the other hand, it acts as a protective shrubbery of society with inherent actualities of social injustice. Symbolic violence which culture precipitates essentializes social reality by denying it edification. This leads to, in the final instance, confusion, distortion, and intellectual ambiguity.

Bibliography:

Bourdieu, Pierre (1982), Ce que parler vent dire. L'economie des echanges linguistiques. Paris: Artheme Fayard

Bourdieu, Pierre (1984), Distinction. A Social Critique of the Judgment of Taste. Cambridge, MA: Harvard University Press

Bourdieu, Pierre (1987), “On what makes a social class? On the theoretical and practical existence of groups,” Berkeley Journal of Sociology (32): 1-18

Bourdieu, Pierre (1991), Language and Symbolic Power. Cambridge, MA: Harvard University Press

Bourdieu, Pierre (1991), “Genesis and Structure of the Religious Field”. Comparative Social Research (13): 1-43

Bourdieu, Pierre & Loic Wacquant (2004) “Symbolic Violence,” in Nancy Scheper-Hughes and Philipp Bourgois (eds.) Violence in War and Peace. Malden, MA: Blackwell Publishing

Gramsci, Antonio (1988), Selected Writings 1916-1935. New York: Shocken Books

Jones, Steve (2006), Antonio Gramsci. New York: Routledge.

Krasner, Steven D. (2009), Power, the Sate, and Sovereignty. New York: Routledge

Mannheim, Karl. (1959 [1936]) Ideology and Utopia New York: Harcourt Brace.

Meyer, John W, John Boli, & George M. Thomas (1987), “Ontology and Rationalization in the Western Cultural Account” in George M. Thomas, John W. Meyer, Francisco O. Ramirez, and John Boli (eds.) Constituting State, Society, and The Individual. London: Sage

Meyer, John W., John Boli, & Francisco Ramirez (1997), “World Society and the Nation-State”. American Journal of Sociology (103): 144-81

Meyer, John W. & Ronald L. Jepperson (2000), “The 'Actors' of Modern Society: The Cultural Construction of Social Agency. Sociological Theory (18): 100-120

Sallach, David L (1974), “Class Domination and Ideological Hegemony”. The Sociological Quarterly (15): 38-50

Swartz, David (1997), Culture & Power: The Sociology of Pierre Bourdieu. Chicago: The University of Chicago Press.

Wallerstein, Immanuel. (2000), The Essential Wallerstein. New York: The New Press.

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.

Hegemonic currencies during the crisis

The paper "Hegemonic currencies during the crisis: The dollar versus the euro in a Cartalist perspective," discussed here before, has been published in the Review of International Political Economy (subscription required). A previous version here. The paper suggests that the dollar is not threatened as the hegemonic international currency, and that most analysts are incapable of understanding the resilience of the dollar, not only because they ignore the theories of monetary hegemonic stability or what, more recently, has been termed the geography of money, but also as a result of an incomplete understanding of what a monetary hegemon does. The paper argues that the dominant view on the international position of the dollar has been based on a Metallist view of money. In the alternative Cartalist (or Chartalist) view of money, the hegemon is not required to maintain credible macroeconomic policies (i.e., fiscally contractionary policies to maintain the value of the currency), but to provide an asset free of the risk of default. Further, it is argued that the current crisis in Europe shows why the euro is not a real contender for hegemony in the near future.