Posts Tagged

Political Economy

As Joseph Schumpeter already pointed out in 1942’s Capitalism, Socialism, and Democracy “dealing with capitalism, we are dealing with an evolutionary process.” The question is in what direction is this process heading? Is the rising power and capital accumulation of FAMGA (Facebook, Apple, Microsoft, Google, Amazon) together with advances in block chains and artificial intelligence leading to the concentration of wealth in ever fewer hands, obsolescence of manual labour and even the destruction of capitalism, as Karl Marx believed in the 19th century? Or, do technological progress and innovation lead to reduced inequality and higher prosperity? Before talking about the future, its key to review the past of capitalism. Technological progress during the Industrial Revolution of the late 18th and early …

A Review of Inequality and Democratization: An Elite-Competition Approach, by Ben Ansell and David Samuels In this dense and absorbing review, Professor Ben Ansell explains how past and current models have failed to capture the paradox that development may lead to greater income inequality. He explores the roles of actors and structures in his own approach to the study of this relationship and casts a critical light on the plight of those who live in poverty despite democratization. Turning to the other end of the income spectrum, he discusses the global trend towards capital mobility and how it relates and affects different political systems. Overall, Inequality and Democratization raises a number of critical and highly relevant questions concerning the relationship between …

Ensuring soldiers have legal access to financial resources is crucial for the state to fulfil its primary mission: retain the monopoly of violence. As seen in the Democratic Republic of Congo, difficulties providing soldiers with adequate resources may result in deteriorating discipline, corruption, defection, and human rights abuses. Rwanda after the genocide faced the difficult task of paying its soldiers. The post-1994 situation made this challenge inescapable. The Rwandan Patriotic Front (RPF) took power in a ruined country. The economy was entirely destroyed, and fleeing officials of the previous regime had emptied state coffers. The resources to pay soldiers were virtually non-existent. In addition, following the RPF victory, many families returned from exile to Rwanda. Consequently, soldiers of the Rwandan Patriotic Army (RPA, the armed wing of the RPF) were not just guerrilla fighters anymore: they became fathers, husbands, or brothers again. This new financial burden on soldiers’ shoulders created a form of indiscipline largely unknown until then in the RPA’s ranks. In addition, the meagre salaries were made in cash, transported by intermediaries from the Ministry of Defence to soldiers, which multiplied the opportunities for embezzlement and the creation of ‘ghost soldiers’. Worse, the opportunities for soldiers to borrow money were extremely limited at the time. Many had no property in Rwanda and consequently no collateral to offer to the few banks still functioning.

Re-reading Plato and Aristotle has made me to realise that by neglecting ancient philosophies and being preoccupied with neo-liberal thinking stemming from utilitarian philosophies have led us to a major crisis in our political and governmental affairs. The vital institutions of our democracy are now widely held in contempt by the public because we have neglected the foundations that underlay their former respect. Having forgotten the teaching of Plato, Aristotle and many other thinkers and subscribed to only judging actions by their consequences, the result is a major crisis of confidence in our political and government systems. What have we lost?

Newly confirmed as US Secretary of State, John Kerry delivered his first policy speech last week, making the case for a renewed and proactive American diplomacy. Directing his remarks to the US Congress – and to Beijing’s leaders – more than to his actual audience at the University of Virginia, his message was urgent: “This is a time to continue to engage for the sake of the safety and the economic health of our country. This is not optional. It is a necessity.” Given the looming March 1 deadline for across-the-board sequestration which would reduce State Department operations by $850 million and foreign assistance by $1.7 billion, the US’ chief diplomat used his speech to defend the foreign policy budget against spending cuts, portraying foreign affairs as the guarantor of American economic prosperity.

Republican thinking today relies heavily on a classical conception of citizenship. Can this ever be compatible with modern commercial society? If there are resources in republicanism for re-thinking the contemporary economic order, it might be worth turning to a republican thinker who wrote on the topic of political economy. Jean-Jacques Rousseau in “A Discourse on Political Economy” articulated a key worry now held by various groups today, including the Occupy movement, dissatisfied with existing political responses on poverty, education, health care and economic opportunity.

In 1955 G.A. Campbell wrote ‘[s]o long as officials obtained the whole or part of their income from fees, the total cost of the Service remained hidden. Parliament needed to provide no money at all for salaries in some departments, and where revenue did not balance expenditure it voted only for the difference. Under the new arrangements [after 1837] Parliament saw for the first time the wages bill of the public administration. The cost seemed to members of both Houses to be enormous. […]  There has never since been a time when Parliament has not thought the Civil Service to be too costly and sought, more or less urgently, for economies in administration.’ (The Civil Service in Britain, Penguin, p. …

Much to Angela Merkel’s chagrin, international political momentum seems to have swung rather decidedly from ‘austerity’ to ‘growth’. The transformation had been underway for some time – playing out in debates across the economics blogosphere – but the elections in France and Greece clearly accelerated this evolution. The recent G8 summit communiqué – which leads with the phrase “Our imperative is to promote growth and jobs” – epitomizes the shift. In terms of our collective understanding of economics and how to fight recessions, I think there’s actually a lot less here than meets the eye, and indeed a lot of rather meaningless talk. To begin with, as Tyler Cowen has pointed out, ‘austerity’ means many different things to different people, and …