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Sectoral Interests and ‘Systemic Interest’: Towards a Structural Political Economy of the Eurozone
No full textExplaining Structural Change: Actions and Transformations
Full text linkTheories of structural change identify the range of transformations that are possible under given economic structures. However, in order specify a path of change out of those which are possible, these theories need to make explicit or implicit assumptions about actions taking place within structures. This, we argue, suggests that (i) these theories can identify potential, but not actual paths of change; and (ii) structural change is to some degree open-ended, because existing structures open up a range of possibilities but do not determine the specific actions taken therein. In order to explain which path of structural change is activated under specific historical conditions, we need to study how actual actions take place within structures. The paper suggests a way to do so, pointing to the interface between theory, which highlights possibilities for structural change, and history, which may 'close' such open-endedness in different ways depending on context
Exploring Sectoral Conflicts of Interest in the Eurozone: A Structural Political Economy Approach
No full textThis paper develops a 'structural political economy' approach to two fundamental tensions that emerged as the eurozone crisis unfolded: real exchange rate misalignments and external debt build-up. The approach builds on a classical legacy going back to Francois Quesnay, who conceptualised interdependent sectors as being also socio-political groups. In the context of the European integration process, we analyse the overlapping economic and political dimensions of how sectoral interests evolved within and across countries with regard to real exchange rate adjustments and potential debt write-offs. Central to our analysis is the interplay between sectors' particular interests and their interest in preserving the 'viability' of the systems to which they belong (regional, national, supranational). The sectoral perspective developed in this paper complements, enriches and often questions results usually obtained from country-level political economy analyses. In the last section of the paper we show how sectoral and country-level interests are at play within the institutional set-up of a monetary union, and how this can lead to stances in favour of further integration or disintegration
Structural liquidity: The money-industry nexus
Full text linkThis paper addresses the relationship between liquidity and production activity. It argues that this relationship becomes fully evident only if one considers intermediate levels of aggregation, and in particular stages of production within each industrial sector and their interdependence across sectors. To illustrate this, the paper introduces the concept of structural liquidity, which denotes material funds that are endogenously formed within the productive system before one considers the provision of liquidity by means of money. Structural liquidity is analyzed by combining (i) the representation of the productive system as an arrangement of fabrication stages sequentially related in time; and (ii) the representation of the productive system as a set of interdependent industrial sectors. The analysis identifies the structural liquidity problem as the need to satisfy both a viability condition (deriving from sectoral interdependencies) and a full employment condition (deriving from the sequencing of fabrication stages). The analysis highlights previously unexplored trade-offs, which have wide-ranging implications for monetary and liquidity policy
Beyond “Austerity vs. Expansion”: Elements for a Structural Theory of Liquidity Policy
Full text linkRecent years have been marked by a sustained, often inconclusive, debate between two opposing views of economic policy. Economists mainly concerned about the economic fluctuations associated with inflationary pressures, credit bubbles and bankruptcies, have turned to "austerity policies" as ways to restore confidence and make investment decisions attractive. On the other hand, other economists worried about deflationary pressures, liquidity shortages and unemployment have turned to expansionary policies designed to create a virtuous circle of consumer and investor confidence, leading to higher overall spending and self-sustaining growth. This article argues that a conceptual shift is needed to provide an adequate explanation of the fluctuations in a modern industrial economy and to provide effective guidance for stabilization and growth policy in the short and medium term. The article draws attention to the structural theory of economic fluctuations and crises formulated at the turn of the 20th century and suggests that this theory provides the conceptual elements needed to overcome the micro-macro dichotomy and understand the differentiated response patterns to shocks characterizing industrial economies. The article lays the groundwork for future discussions, highlighting the central role of aggregation levels and sectoral interdependencies as a mechanism for generating macroeconomic relations. It then examines the structural asymmetries that characterize economic dynamics, as well as the resulting opportunities and constraints of economic policy. The article concludes with the presentation of the elements of a structural theory of liquidity policy and its implications for the relationship between austerity and stimulation as a means of stabilization
Political Economy: Outlining a Field
No full textPolitical economy has regained a central position among the academic subjects dealing with the polity and the economy. This development is not a
mere reclaiming of intellectual traditions. It is also the expression of increasing awareness that the linkage between the economy and the polity is fundamental
to the understanding of contemporary societies. This paper argues that the mutual relationship between the economy and the polity is rooted
in the collective dimension of the provision and utilization of material resources. This collective dimension presupposes the coordination of human
actions such as those entailed by the division of labour, which in turn requires multi-layered organizational arrangements and governance structures.
The organization of this field depends on the way in which the objectives of different individuals and groups relate to one another, and on the
constraints posed by the material sphere on the attainment of those objectives. Because the organization of the material sphere depends on the weights attached to the objectives of different individuals or groups, the provision and utilization of material resources are inherently political. At the same time, achievement of
objectives requires complex arrangements concerning the material sphere, which poses internally structured constraints that also depend on the specific objectives
being pursued. For example, the division of labour required for pursuing full employment may be different from that required for pursuing maximum growth.
The objectives and constraints relevant to the material needs of the polity belong to multiple levels of analysis (micro, meso and macro) and relate to
multiple levels of agency (say, individuals, productive sectors and states)
Political Economy as Theory of Society
No full textPolitical economy is concerned with the material life of the polity. It historically developed by emphasizing the interdependencies between relevant
economic units in the polity under consideration and/or the relationship between political (systemic) objectives and the means available to achieve
those objectives.The intertwining of the instrumental and positive points of view has remained a feature of economic reasoning ever since. However, the two
points of view entail a different emphasis on different features of the economy. This difference led Lionel Robbins to contrast the ‘materialist’ and
the ‘scarcity’ definition of the subject matter of economics. The split between the ‘materialist’ and the ‘scarcity’ approach relates to the point of
view adopted in addressing that issue. The scarcity approach considers the dispositional activity per se, independently of which specific objectives that
activity should achieve (the ‘de gustibus non est disputandum ’ condition is central to that point of view). The materialist approach identifies a specific
objective (how to achieve a self-sustaining economic system) and highlights the material requirements to fulfil that objective. In short, the scarcity
approach presupposes but does not investigate material (structural) conditions, while the ‘materialist’ approach presupposes but does not investigate
dispositional activity. This paper puts forward a view of political economy that brings together the attention for dispositional activity and for the
structure of material conditions within the polity
The Eurozone as a Political Economy Field
No full textThis chapter argues that the Eurozone's vicissitudes highlight multiple interfaces between economics and politics. More specifically, they reveal the manifold interdependencies at work within and across the domains of the European economy and poltical space. The recent Eurozone history highlights manifold conflicts of interest within and across levels of aggregation (supranational, national, sectoral). Overall, it exposes serious internal tensions in the constitution of the Eurozone and of the EU as a whole. The chapter outlines the format of a new approach to the political economy of the Eurozone aimed at detecting economic and political intetrdependencies across different levels of decision making within the Eurozone as an economic and political domain
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