Globalization Archives

Dissecting Capitalism Season I: A Recap

By Shyam Soundararajan | Dissecting Capitalism is a recurring webinar series in the South Asia Working Group that aims to organize a webinar series on the dominant ideology/economic system – capitalism. It aims to explore the tenets of capitalism over the fabric of time and examine its influence on the economy and social classes.

Over the course of 8 webinar sessions in November and December 2021, this project has brought together scholars from various fields of academia such as economics, philosophy, social policy, and law to dissect capitalism through their unique theoretical and empirical lenses. This webinar series was organized by Sattwick Dey Biswas, Aneesha Chitgupi, and Shyam Soundararajan.

Before YSI South Asia hosts Season II of Dissecting Capitalism: Its past, present and future, here is a snapshot of the topics covered under Season I

1. Globalization as a Threat to Democracy

The introductory session of the Webinar Series featured Professor Daniel W. Bromley, a Professor of Applied Economics at the University of Wisconsin-Madison. This session was centered on globalization, international trade and democracy and was based on the book, “Possessive Individualism: A Crisis of Capitalism”.

Through this session, Professor Bromley was able to provide an interactive lecture on why globalization is a threat to democratic coherence. Through this lecture, Professor Bromley was able to unveil and demonstrate the hidden reality that globalization weakens the ability of national governments to confront economic crises.

Overall, this session displayed the problems that capitalism has imposed upon national governments, namely the inability to confront economic problems due to the issue of losing “global competitiveness”. View here

2. Multidimensional Poverty around the world: Unmasking Disparities

This session featured Dr. Sabina Alkire, the Director of the Oxford Poverty and Human Development Initiative at the University of Oxford. This session was centered around the Multidimensional Poverty Index (MPI), which measures poverty using a variety of factors.

Through this webinar, Dr. Alkire was able to explain more about the MPI by explaining its methodology. After this, Dr. Alkire presented the findings of the October 2021 global MPI report. In addition to this, Dr. Alkire discussed and dissected various disparities across ethnic groups and populations.

Overall, this webinar presented the impact of capitalism and its various endemic traits on poverty around the world. By discussing the MPI, Dr. Alkire was able to demonstrate how capitalism actively contributes to major poverty trends around the world. View here

3. Compressed Capitalism and Late Development in India

This session featured Professor Dr. Anthony P. D’Costa, an Eminent Scholar in Global Studies and Professor of Economics at the University of Alabama in Huntsville. This session was centered around the changes faced by the Indian economy and the population following the 1991 economic reforms.

Through this session, Professor D’Costa presented an alternative approach to understanding the development dynamic of India. Through the use of capitalist dynamics in developing countries and compressed capitalism, Professor D’Costa showed that wealth inequality present in India is an inherent trait of late capitalist societies.

Overall, this session explained how some of the defining flaws of a capitalist society in a developing country are not an anomaly but rather a key tenet of a late capitalist society. The findings discussed in this session led to a broader understanding of some key tenets of capitalism. View here.

This session featured Professor Dr. Einar Øverbye, a Professor in International Social Welfare and Health Policy at Oslo Metropolitan University. This session was centered around the common argument that the welfare state is detrimental to the economy as it disincentivizes work.

Through this session, Professor Øverbye was able to explain and deconstruct the arguments surrounding the idea of welfare states disincentivizing work and reducing efficiency. By deconstructing the disincentive argument, Professor Øverbye was able to put forward his argument in support of designing a pro-market social protection system. Moreover, Professor Øverbye was able to demonstrate the importance of good design in a social system, thus unraveling the challenge surrounding the construction of a pro-market social protection system.

Overall, this session explained how good design in social structures can overcome some fundamental flaws associated with a system. This session also covered the role of a welfare state in a capitalist society and was able to discuss the contribution of key tenets of capitalism to a pro-market social protection system. View here.

5. The Law is an Anagram of Wealth

This session featured Professor Dr. Benjamin Davy, a visiting professor at the Faculty of Law, University of Johannesburg, and the School of Architecture and Spatial Planning, TU Wien University. Based on the book, “Land Policy”, this session addressed the relationship between land uses, land value, and land law.

Professor Davy was able to explain and demonstrate how the concept of material wealth depends heavily on the legal system present in a country. By using land laws and values, Professor Davy was able to explain how the economic structure of a society is affected by the law, thus leading back to the title of the session

Overall, this session showed attendees how material wealth, a key component of capitalism, depends on the legal system of a country. This inter-disciplinary session was also able to display the link between two seemingly unrelated fields of the social sciences, namely economics and law. View here.

6. John Stuart Mill’s Imperialism, Protestant Work Ethic, & Global South

This session featured Professor Dr. Elizabeth Anderson, the John Dewey Distinguished University Professor of Philosophy and Women’s & Gender Studies at the University of Michigan, Ann Arbor. This session was co-organized with Diana Soeiro, an organizer at the Philosophy of Economics Working Group. This session was based on the core ideas of Professor Anderson’s upcoming book, which is focused on the history of the Protestant work ethic through the history of economics.

Through this session, Professor Anderson was able to show how John Stuart Mill’s economic theories on workers and his liberal ideas were contradictory to his stance on Imperialism. Professor Anderson was able to trace Mill’s contradictions to tensions innate to the Protestant work ethic. By doing this, Professor Anderson was able to transition to a more global discussion of the Protestant work ethic, which would be able to address the challenges faced by workers in the Global South in today’s economy.

Overall, this session presented yet another interdisciplinary focus on capitalism through philosophy and work ethic. By linking Mill’s contrarian positions to tensions in the Protestant work ethic and by globalizing the topic to factor in worker challenges in the Global South, Professor Anderson was able to provide some key insights on the often-ignored role of work ethic and philosophy in capitalism and globalization. View here.

7. Why Poverty is More Than a Lack of Income: Thoughts from China

This session featured Professor Dr. Robert Walker MBE, Professor at the Institute of Social Management/School of Sociology, Beijing Normal University under China’s ‘High-Level Foreign Talents’ program. This session was centred around the contemporary understanding of poverty beyond income and the case of China, which attempted to eradicate poverty in the 2010s.

Through this session, Professor Walker was able to highlight the disparity between policy and political reality when it comes to the concept of poverty.

By including the case of China, which eliminated absolute poverty to discover the presence of relative poverty, Professor Walker was able to shift the argument of poverty beyond the idea of low income and was able to provide psychological insights on poverty.

Overall, this session presented the need to rethink the mainstream understanding of poverty. Discussions surrounding China’s attempts to eradicate poverty presented an undocumented side of China affected by the country’s shift towards a semi-capitalist society. This session also provided an interdisciplinary outlook on poverty in China, which allowed attendees from the South Asia Working Group to be cognizant of poverty conditions in other Asian regions. View here

8. Beyond False Dilemmas in Economic Policy

The final session of the first season featured Dr. Sanjay G. Reddy, Associate Professor of Economics at The New School for Social Research. This session was centred around the discussion of false dilemmas in economic policy.

Through this session, Dr. Reddy was able to present his economic argument for dissolving and dismissing false dilemmas rather than resolving them. By using the false dilemmas of “for or against growth” and “domestic markets or globalization”, Dr. Reddy proved the logical fallacy in such dilemmas and presented alternative questions that were worth pursuing.

Overall, this session provided closure for the first season of “Dissecting Capitalism” by discussing false dilemma, a prominent element found in the discourse and dialogue surrounding capitalism and the need to rethink it. By discussing the “for or against growth” dilemma, Dr. Reddy was able to discuss a core argument presented by people opposing the need to rethink capitalism. Ultimately, this session allowed the attendees to dissect capitalism through the notion of false dilemmas present in today’s economic world. View here

Over the course of 8 webinar series held across 2 months, the South Asia Working Group was able to embark on a journey of exploration, learning and profound thinking. Moreover, the attendees were able to actively discuss core ideas of capitalism and dissect capitalist structures and norms, which enhanced discussion within the working group.

While this season did cover mainstream ideas of capitalism and other economic factors that are affected by capitalism, it did not cover the link between capitalism and heterodox fields such as climate economics and agricultural economics. This is something that Season II aims to cover. With a wide range of topics from economic thought to climate change to legal theory, Season II aims to build upon the foundations of the first season and further continue to explore the tenets of capitalism.

Season II will feature Jayati Ghosh, Barbara Harris-White, Shailaja Fennell, Katharina Pistor, and K V Subramanian. Join us live!

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The YSI South Asia Working Group provides a platform for young scholars from South Asia -or those interested in the region- to select an issue they wish to work on, collaborate and discuss for better conceptualization of the problem and, debate, critique and improve upon solutions. We also invite scholars to suggest the most pressing problems and challenges to better guide the path for this working group. Join us!

About the organizers:

Sattwick Dey Biswas is an affiliated Research Fellow at the Institute of Public Policy, Bangalore, India. In 2019, he has earned Doctor rerum politicarum at the School of Spatial Planning, TU Dortmund University, Germany. He has published his doctoral thesis as a book titled, “Land acquisition and compensation in India: Mysteries of valuation” (2020) with Palgrave Macmillan. He is interested in the areas of Land Policy, Social Policy, and Political Economy.

Shyam Soundararajan is a high school student from Dubai, UAE. His research interests include economic development, poverty and wealth inequality. He has published articles in the Harvard International Review and has contributed vastly to his school’s social science curriculum. Shyam aspires to major in Mathematical Economics with a minor in South Asian Studies.

Aneesha Chitgupi is a research fellow at the XKDR-Forum -Chennai Mathematical Institute. She received her PhD in 2020 from Institute for Social and Economic Change affiliated to University of Mysore. Her thesis analysed the economic determinants of India’s external stabilisation under the balance of payments framework. Her current research interests are public finance, government debt and liabilities management.

Coronavirus Needs Not Kill Globalization

By Jack Gao | The COVID19 crisis is shaping up to be the most severe challenge the world has to confront since World War II. At present, almost 800,000 cases have been reported from virtually every country in the world, with the death toll nearing 40,000. Not only is much of the global economy frozen as we fight the virus, but national borders are also being shut down to contain its spread. As this battle goes on, many are already predicting that the world may never be the same again.

The knee-jerk reaction is to substantially roll back on the current globalization regime, so global pandemics may be eliminated for once and for all. But this reflex towards nationalism completely misses the point. Crises like this one reflect on the perversion of current globalization, not on globalization per se. We should not throw the baby out with the bathwater, but instead, take the crisis as an opportunity to improve on the version of globalization that prioritized some objectives but neglected others.

First of all, a more divided world in no way guarantees global pandemics will no longer happen. One only needs to turn to the 1918 Spanish flu pandemic that claimed 100 million lives or the even more lethal Black Death episode, both when the world was more divided, for some evidence. Periodic outbreaks of infectious diseases have plagued humanity throughout history, and, more than anything, it was progressing in science and healthcare that accounted for the gradual decline in fatality and damages, in spite of advances in globalization. In fact, we could reasonably argue that better health outcomes, nutrition access, sanitation facilities wrought by economic development are important reasons we have fewer and less deadly pandemics today, thanks to globalization. It’s wishful thinking that less globalization will result in fewer pandemics.

Second, when crises do strike, we are much better positioned to respond to them as a globally connected community. Although leaving much to be desired, information sharing has proved key to containing the coronavirus outbreak. China alerted the WHO by the end of last year of unusual pneumonia in Wuhan; within days, Chinese scientists posted the genome of the new virus, allowing virologists in Berlin to produce the diagnostic test of the disease for worldwide access. We often take for granted communications of this kind today, which we can ill-afford if balkanization was to rule the day.

Even as borders are shut to reduce human flow at the moment, global commerce continues to play a crucial role to ensure the supply of medical products and equipment as we fight the pandemic. For instance, the crisis may have already subsided in China, but Chinese companies are currently working around the clock as ventilator orders pour in from the rest of the world. Similarly, at least a few dozen pharmaceutical companies from around the world are racing to develop vaccines and treatments for the virus, knowing that they’ll have ready access to a global marketplace to recoup their investments. Just imagine how much harder this battle would be if countries were left to their domestic supply chains or scientific knowledge.

Finally, while much is still unclear about how the current outbreak unfolded, from the evidence we do have, it is national mishandling or in some cases deglobalization factors that contributed the lion’s share to its unbridled spread. China’s earlier misstep on information reporting, America’s testing debacle and obsession with travel bans, and UK’s initial flirtation with herd immunity are just a few examples of national blunders that hastened the transmission of the virus, which have little to do with globalization. Meanwhile, in a bid to have America go it alone, Trump’s elimination of epistemologist based in China, staff cuts at the CDC, and heightened tariffs on Chinese medical products may well have made this health crisis worse than it has to be.

Each crisis is an opportunity in disguise, the coronavirus is no different. It should be taken as a reminder that our disregard to some objectives and narrow-minded pursuit of others have tilted the world off-balance. In a globalization solely focused on promoting international trade and financial flows and centered around organizations such as the World Bank and the IMF, this outbreak caught the incumbent international regime completely off-guard. Either in funding, capacity, or power, the World Health Organization has been no match to its counterparts charged with commercial and financial affairs. Seen in this light, the outbreak should serve as a rude awakening to a world economy that prioritizes economic integration over public health, environmental, and climate concerns.

As the fight to contain the coronavirus continues, many believe this crisis will bring an end to globalization as we know it, some may even work hard to make sure this is so out of self-interest. However, it bears emphasizing that a balkanized and disintegrated world is neither feasible nor desirable. The coronavirus does not have to kill globalization, instead, it is our chance to rebalance the world economy to better serve collective social goals and tackle future challenges as a coordinated global community.

Jack Gao is a Program Economist at the Institute for New Economic Thinking. He is interested in international economics and finance, energy policy, economic development, and the Chinese economy. He previously worked in financial product and data departments in Bloomberg Singapore, and reported on Asian financial markets in Bloomberg News from Shanghai. Jack holds a MPA in International Development from Harvard Kennedy School, and a B.S. in Economics from Singapore Management University. He has published articles on China Policy Review and Harvard Kennedy School Review.

The financial crisis was a Minsky moment but we live in Strange times

This is the story of Susan Strange and Hyman Minsky, two renegade economists who spent a lifetime warning of a global financial crisis. When it hit in 2008, a decade after their deaths, only one rocketed to stardom.

By Nat Dyer.

When Lehman Brothers went belly up and the world’s financial markets froze in the great crash of 2008, the profession of economics was thrown into crisis along with the economy. Mainstream, neo-classical economists had largely left finance and debt out of their models. They had assumed that Western financial systems were too sophisticated to fail. It was a catastrophic mistake. The rare economists who had studied financial instability suddenly became gurus. None more so than Hyman Minsky.

Minsky died in 1996 a relatively obscure post-Keynesian academic. He was only mentioned once by The Economist in his lifetime. After 2008, his writings were pored over by economists and included in the standard economics textbooks. Although not a household name, Minsky is today an economic rockstar named checked by the Chair of the Federal Reserve and Governors of the Bank of England. One economist summed it up when he said, “We’re all Minskites now”. The global financial crisis itself is often called a “Minsky moment”. But not all radical economic thinkers were lifted by the same tide.

Susan Strange was more well-known than Minsky in her lifetime (see Google ngram graph below). One of the founders of the field of international political economy, she taught for decades at the London School of Economics. Alongside her academic work, she raised six children and wrote books for the general public warning of the growing systemic risks in financial markets. When she died in 1998 The Times, The Guardian and The Independent all published an obituary for this “world-leading thinker”.

The two renegade economic thinkers, although working in different disciplines, had much in common. They both gleefully swam against the tide their entire careers by studying financial instability. They were both outspoken outsiders who preferred to teach economics with words rather than equations and were skeptical of the elegant economic models of the day. They were big thinkers haunted by the shadow of the 1930s Great Depression. They both died a decade before being vindicated by the 2008 financial crisis. And, they read each other’s work.

The New York Times called Susan Strange’s 1986 Casino Capitalism “a polemic in the best sense of the word.” Calling attention to financial innovation and the boom in derivatives, the book argued that, “The Western financial system is rapidly coming to resemble nothing as much as a vast casino.” Minsky, in his review, said that the title was an “apt label” for Western economies. Strange provided a much-needed antidote, he said, to economists “comfortable wearing the blinders of neoclassical theory” by showing that markets cannot work without political authority. He probably liked the part where Strange praised his ideas too.

Casino Capitalism hailed Minsky’s ‘Financial Instability Hypothesis’ way before it was fashionable. Strange singled out Minsky as one of a “rare few who have spent a lifetime trying to teach students about the working of the financial and banking system” and whose ideas might allow us to anticipate and moderate a future financial crisis. Minsky’s concept of ‘money manager capitalism’ has been compared to ‘casino capitalism’.

But, put Susan Strange’s name into Google News today or ask participants at meetings on economics about her and you don’t get much back. They will sometimes recognise her name but not much more. Outside a small group, she’s a historical footnote, better remembered for helping to create a new field than the force or originality of her ideas. It is as if two people tipped the police off about a criminal on the run but only one of them got the reward money.

So, why did Strange’s reputation sink after the global financial crisis when Minsky’s soared?

Professor Anastasia Nesvetailova of City, University of London, one of the few academics who has studied both thinkers, believes it is due, in part, to their academic departments. “Minsky may have been a critical economist but he was still an economist,” she told me. Strange studied economics, but then worked as a financial journalist before helping to create the field of international political economy, now considered – against Strange’s wishes – a sub-discipline of international relations. Economics is simply a more prestigious field in politics, the media and on university campuses, Nesvetailova said, and Minsky benefited from that. “Unfortunately, [Strange] remains that kind of dot in between different places.”

As we live through a political backlash to the 2008 crisis and the IMF warns another one might be on the way, Strange’s broader global political perspective is a bonus. In States and Markets, she sets outs a model for global structural power which brings in finance, production, security and knowledge. Her writings predicted the network of international currency swaps set up by the Federal Reserve after the global financial crisis, according to the only book written about Strange since 2008. Her work foreshadowed the global financial crime wave. And, she argued repeatedly that volatile financial markets and a growing gap between rich and poor would lead to volatile politics and resurgent nationalism, which is embarrassingly relevant today. The financial crisis may have been a ‘Minsky moment’ but we live in Strange times.

This global political economic view explains why Strange criticised Minsky and other post-Keynesians for thinking in “single economy terms”. Most of their models look at the workings of one economy, usually the United States, not how economies are woven together across the world. This allows Strange to consider “contagion”: how financial crises can flow across borders. It’s a more real-world vision of what happens with global finance and national regulation. Her greatest strength, however, also reduced her appeal in some quarters as it means Strange’s work is less easy to model and express in mathematics.

Minsky found fault in Strange too. She should have more squarely based her analysis on Keynes, he said and showed the trade-off between speculation and investment. Tellingly, his critique is at its weakest when engaging with global politics. Strange unfairly blamed the United States for the global financial mess, Minsky wrote, even though it was no longer the premier world power. Minsky was only repeating the conventional view when he wrote that in 1987 but it was bad timing: two years later the Berlin Wall fell ushering in unprecedented US dominance.

In her last, unfinished paper in 1998 Strange was still banging the drum for Minsky’s “nearly-forgotten elaboration of [John Maynard] Keynes’ analysis”. Now it’s her rich and insightful work that is nearly forgotten outside international relations courses. A jewel trodden into the mud. Just as Minsky is read to understand how “economic stability breeds instability”, let’s also read Strange to appreciate her core message that while financial markets are good servants, they are bad masters.

About the author

Nat Dyer is a freelance writer based in London. He has an MSc in International and European Politics from Edinburgh University. He was previously a campaigner with Global Witness, an anti-corruption group. He tweets at @natjdyer.

Google Ngram showing the frequency of references to Susan Strange (red) and Hyman Minsky (blue) from 1940 to 2008

Strange was more referenced in her lifetime than Hyman Minsky. Google Ngram’s search only goes up to 2008. After 2008, we would likely see a hockey stick spike for Minsky and Strange continuing to fall.

International Trade and Globalization: Are Benefits Truly Mutual?

By Aabid Firdausi.

The euphoria around international trade and the general consensus regarding capitalism’s inevitable sustenance among countries of the Global South is at least partly due to the absence of an alternative after the collapse of the Soviet Union. The politics of capitalism, with its expansionary dynamics, has assumed a truly “global” avatar by aggressively pursuing a neoliberal globalization agenda. Thus, we see much hype around the numerous trade treaties that governments around the world sign, claiming they would boost economic growth and create jobs. However, a critical examination of mainstream trade theories reveals several insights as to why there has been a hegemony of thought when it comes to attitudes around globalization.

The idea that “free” trade and globalization imply mutual benefits and prosperity for all the parties involved is simply accepted as common sense. Mainstream trade theories argue that if nations engage in international exchange, then all parties will be better off. Although this seemingly innocuous assumption is based on an unrealistic worldview, it has deep implications when translated into practice. This article provides a basic understanding of some of the areas that theories in mainstream international economics conveniently ignore.

It is pertinent that we pause and critically question what we are told, taught, and made to believe – for nothing that is promoted with such great fanfare by economic elites can be free of costs. When it comes to trade treaties, the devil often lies in the details, which often reveal policies that lead to the further immiseration of the working class and the peasantry, especially in the Global South. First, it is extremely important to understand trade in a historical perspective and how it has changed with different epochs within capitalism. The North-South trade in many instances was first a colonial tragedy (the British colonization of India, for example) and has now become a neo-colonial farce. This manifests itself in the myriad ways in how multinationals shape spheres of public and private actions from land-grabbing to a homogenization of consumption patterns.

Secondly, international trade theories blatantly disregard the asymmetric power relations that exist in the global political economy. Despite the dichotomous classification of nations on the basis of the degree of development, trade theories often assume that transactions between two unequal nations tend to benefit both. While it is naïve to discard any benefits at all from the process, it is essential that we ask who frames these trade policies and what sections of society receives the lion’s share of the benefits.

Third, mainstream theories often categorize labor and capital as homogenous and lump them together as factors of production. In reality, as it is obvious, labor and capital are far from homogenous. A critical reader looking at these flawed assumptions that most theories rest upon could easily conclude they would better suit interregional trade on an extremely local basis, than an international basis! The variations in factors on a local level would be significantly smaller than the variations and imbalances that exist on a broader scale.

Fourth, I would argue that trade theories commit a grave injustice in its treatment of labor, which shows the class nature of most theories and the subsequent policies that are influenced by it. Cheap labor is often hailed as a virtue of the Global South – and this is projected as an open invitation to set up sweatshops for global capital in the name of manufacturing competitiveness. Thus, the hegemonic narrative around the potential for trade is essentially dehumanizing in nature. Such trends that have been persistent since the vigorous promotion of mathematical economics have largely dissociated the discipline from the wider branch of social science.

Fifth, there exists a systematic misdiagnosis of the power relation between capital and labor. This is perhaps most evident in the asymmetries observed in the globalization of capital and the globalization of labor. While the former has largely been internationally mobile, the latter has not been so. Though this can be partially explained by the existence of the state and its territorial boundaries, it would be foolish to discard the class dynamics of this asymmetric transnational mobility.

Finally, the after-effects of (primitive) accumulation have largely been ignored in mainstream theories. The presence of regional endowments that creates a fertile land for foreign capital and the subsequent invitation of the so-called job-creating corporations ignore the displacement of the livelihoods of the peasantry. This dispossession that Marx referred to as the primitive accumulation has been rampant in the Global South. However, the compensation and rehabilitation provided to the dispossessed have largely been inadequate. This raises larger questions about what development actually is and whose interests it serves.

Thus, it is important that we see through the haze and understand the basis and implications of mainstream theories on trade, and who they truly favor. What is taught in classrooms shapes to a large extent convictions and the worldview of a large number of students. There is a pressing need to promote and develop alternative streams of thought that are “social” in nature amidst the contemporary backlash against capitalist globalization. It is necessary that an interdisciplinary perspective on globalization in general and international trade, in particular, is cultivated in academic institutions in the Global North and South. Only then can we undo the hegemony of the “globalization benefits all” narrative.

Aabid Firdausi is from India and is a Master’s student at the Department of Economics, University of Kerala. He is interested in understanding the socio-spatial dynamics of capitalism from an interdisciplinary perspective.