Professor Robert Wade reviews book by DIIS researcherA review of ‘Discipline in the Global Economy?' by Jakob VestergaardJakob Vestergaard's book ‘Discipline in the Global Economy?' has been reviewed by Robert Wade, Professor at London School of Economics: Today, as something like a second Great Depression courses through the world economy and economic agents are lost in cognitive fog, this book could scarcely be more pertinent. It shines a searchlight on the multilateral effort to construct a "new financial architecture" (IFA) in the wake of the East Asian/Brazilian/Russian crises of 1997-99, a set of organizational procedures and standards of best practice intended to curb the propensity of the financial sector to generate booms and busts. Through standards of best practice the IFA established a homogeneous model of "normal" or "proper" capitalism to which the whole world was expected to move, and through organizational procedures the IMF and several other organizations were charged with continually surveilling economies in order to determine how well they were meeting the standards and then to release the information to "the markets" so that the markets could reward economies which complied and punish those which deviated. The standards were derived from an idealized model of how the US and the UK economies operate, and they constitute a remarkable and little noticed imperial push through the use of "soft power". Using a novel perspective derived from the writings of, among others, Michel Foucault, Discipline in the World Economy? shows how the resulting global financial regime had perverse effects. The IFA tended to amplify the subsequent boom, and is now amplifying the bust. But it also had highly desirable effects for some - it redistributed income to the financial sector and to the top percentile of US and UK national income distributions on a massive scale, in the context of democratic (rather than authoritarian) polities. For people in these segments it was bliss to be alive during the era of the IFA. Best of all, now, in the bust, governments are forced to step in to socialize the losses while allowing the profits to remain securely privatized, so that most of those who earlier took the giant profits remain fabulously rich. To have created and operated such a powerfully unequalizing regime in a democratic framework constitutes political artifice of the highest order. Those who benefited handsomely from the IFA will fight tooth and claw to preserve something close to it in the wake of the current crisis, while making symbolic or easily evaded moves to "tighter regulation". Those who try to "think for the world" had better have a clear understanding of the logic and modalities of the regime that ushered in the current crisis, as the basis for framing a new approach. Discipline in the Global Economy? is a fascinating and original guide. Links: 1. Wade's personal website at LSE http://www.lse.ac.uk/collections/DESTIN/whosWho/wader.htm 2. Jakob Vestergaard's book ‘Discipline in the Global Economy?' www.discipline-globaleconomy.com |
Top