Abstract
In Aftermath: A New Global Economic Order?, editors Craig Calhoun and Georgi Derluguian provide readers with 10 chapters that raise questions, present empirical findings, and make predictions about global economic relations, inequality, and development in a post(?)-crisis world. The third volume in the Possible Futures series (which focuses on the actors, factors, and systems that led to the global financial crisis), Aftermath builds upon the previous books, but looks toward the future of economic growth and development. The titular question mark is echoed throughout the book, as the authors attempt to make recommendations contingent on an uncertain future of our phenomenally complex international political economy. In his chapter, Wong concisely summarizes the current moment and the space in which this book fits: ‘Now that faith in the strength and sensibility of unfettered markets has waned without the expression of clear and coherent alternatives to the global order we have lost, policymakers, business people, and scholars wonder where we might be headed’ (p. 149).
The authors are sociologists, economists, historians, and political scientists, and Calhoun and Derluguian argue that this multidisciplinarity – especially in the face of the disastrous consequences that economics orthodoxy helped perpetrate – is essential to fully see the nature of the global system and the way ahead. The book is useful for scholars and students of international political economy and provides a comprehensive overview of the effects of the crisis, but in too technical a manner to be an accessible introduction to those outside of or very new to the field.
Saskia Sassen’s chapter provides a good introduction to the book, describing contemporary capitalism and its logics. Her inquiry into the ‘savage sorting of winners and losers’ guides her analysis of the new global economy, which is rooted in the logic of privatization and centered in global firms and, especially, financialization. She outlines the inherent flaws of financialization, like its tendency toward speculation and crisis, and its façade of stability and growth that in fact benefits only a very few. The opacity and complexity of financial instruments, the masking of financialization’s social underpinnings, and the rerouting of capital into finance and away from productive large-scale investments all lead to her strong critique and her recommendation to ‘make finance less invasive and aggressive’ (p. 35). More fundamentally, we need to ‘change the logics through which we understand profitability and what is genuine prosperity,’ perhaps the best recommendation of the entire book (p. 38).
The fourth chapter, by Jomo Kwame Sundaram and Felice Noelle Rodriguez, should instead have followed Sassen’s, as they also set the stage. They offer a clear, accessible history (one that could be used as a teaching tool) of the Bretton Woods system, as key to understanding causes of the crisis. Not only was Bretton Woods specifically created to address and stave off crises, but the roots of the current crisis lie at least in part in the flaws, failures, and replacement of this system. The failure to make a new international financial infrastructure, along with the parallel process of deregulation/neoliberalism, led to an extremely unequal division of labor and rampant oligopolistic financialization that still holds economic performance ‘hostage’ (p. 97). Their solutions involve at the least a ‘broader commitment to inclusive multilateralism’ (p. 114).
Ha-Joon Chang, along with Manuel Montes and Vladimir Popov, in chapters 2 and 5 do a similar stage-setting for inequalities between nations. Chang indicts the North for the ways in which it ‘kicks away the ladder’ for poorer countries by prescribing them very different policies than what they do themselves. Rich countries discourage and forbid poor countries to use the very mechanisms that enabled their own development (i.e. infant industry protections that helped build the British and later American empires), and this same disparity is reflected in responses to the crisis (i.e. the North using low interest rates, budget deficits, and bailouts/nationalization of banks). Chang emphasizes the need for powerful countries to relax neoliberal policies and allow ‘policy space’ for developing countries.
Montes and Popov trace the history of North–South economic relations and the gaps between them, with an eye toward ‘bridging the gap.’ They focus on the China model of growth and argue that applying this model in developing countries, along with the continued democratization of international economic relations, has potential for making globalization more equitably favorable. They give a thorough delineation of the areas and ways in which the interests of the North and South diverge, and what might be done (their discussion of protectionism, intellectual property regulations, and migration are especially welcome here). Their vision and hypotheses about the future rest not only on the North but also on the ability of the South to self-organize, especially in creating and maintaining new structures that will serve their interests.
R. Bin Wong also focuses on the significance and applicability of China’s growth. Wong specifically takes issue with the assumption that ‘European history has supplied the narratives of successful political and economic development [from which] we can distill the guidelines and goals relevant to other parts of the world’ (p. 153). Given China’s meteoric rise and especially its resilience in the face of the crisis, Wong asks what (if), instead, the West and the rest of the world could learn from China? By examining the Chinese response to the crisis, Wong points out some lessons to be learned: fiscal policies are better than monetary at promoting growth, and strong coordination and implementation of policy goals, as well as less interference from global financial markets, can greatly facilitate development. The future of the economic order depends on responses from the East as well as the West.
Dani Rodrik focuses on the dampening effect the crisis has had on growth. Slower growth rates have a direct impact on rates of trade, external finance, and current account balances; what do these changes mean for developing countries? He recommends spurring growth in both consumption and production of tradables, since ‘poor countries become rich by producing what rich countries produce’ (p. 69). Through industrial policies like investment subsidies, reducing input costs, and repressing finance, developing countries can foster economic growth, even in the face of the post-crisis changes.
Alexis Habiyaremye and Luc Soete examine the ‘immiserizing’ resource wealth of Africa; although Africa is resource-rich, it has remained underdeveloped. Habiyaremye and Soete argue that these natural resources are actually contributing to underdevelopment since their presence hinders diversification, contributes to corruption and conflict, causes economic instability, degrades the environment and agriculture, and so on. They especially criticize the role of foreign governments and transnational corporations because their presence inhibits or precludes local knowledge about production. The authors argue that ‘production knowledge is ultimately the only long-term source of power’ and growth and recommend an overhaul of African education systems and technology policies to recognize ‘the primacy of the tree that bears fruit (creative knowledge) over the fruit itself (wealth)’ (pp. 177, 179).
With the chapter by Piotr Dutkiewicz and Grzegorz Gorzelak, the focus shifts to another regional case study. By comparing the different responses to the crisis from countries in Central and Eastern Europe (CEE), Dutkiewicz and Gorzelak hope to shed light on actual outcomes of specific policies and judge their effectiveness. They emphasize that outcomes are dependent on initial conditions, the types of policies implemented, and the strength of the state and institutional capacity to carry out those policies. They find that the more successful CEE countries were those that were less connected to the international system.
Georgi Derluguian also examines Eastern Europe, specifically Russia. What seems like a very specific case study actually raises some striking questions about the future of the global economy; by tracing the history of successive cycles of modernization in Russia, Derluguian poses questions about the very character of modern states. Despite the shortcomings and, in many ways, decreasing relevance of states, ‘each economic crisis or security or environmental emergency provides the reminder that we still have no realistic substitute for states’ (p. 233). Derluguian asks more questions than he answers (not necessarily a negative observation), but his chapter does, notably since it is the only one to do so, address the importance of civil society and the role that it can play in effecting change.
In a strong final chapter, James K. Galbraith raises a series of questions for different disciplines, which point to not only the roots of the crisis but also the need for change. Policymakers need to be able to distinguish between normal conditions and those that lead to crisis and be able to act against crisis conditions, though here and throughout the book, it is unclear whether crisis is inherent to capitalism or can actually be avoided. For economists and lawyers, the lesson is that ‘market discipline’ does not actually enforce rules; Galbraith describes the crisis in criminal terms and warns that ‘the line between bankers and crooks can be quite thin’ (p. 238). Similarly, he examines the role of banking and finance in politics, asking political scientists ‘by whom exactly are we ruled?’ Finally, economics receives the strongest indictment, for its alignment with predatory financial power. Galbraith advocates an ‘objective, dispassionate, thorough and scholarly inquiry into the sociopathology of modern academic economics,’ performed by sociologists; this inquiry is indeed long overdue (p. 240).
These chapters represent a wide variety of analyses, offering a number of useful characterizations of the crisis and, especially, recommendations for the future. A few common themes, useful for continued study of contemporary capitalism and global politics, emerge, such as: the importance of history and historical contingency, the fundamental flaws and negative effects of neoliberalism and financialization, and the role of the state in regulation and protection, particularly in the global South. There are a few shortcomings, however. Editorially, the chapters could have been reordered and reoriented around clearer concepts, and the index is essentially unusable. Substantively, there are some important omissions. No chapter focuses on Latin America, and there is little mention of the ongoing climate crisis, its relationship to global capitalism, and the impact it will have on the future of development and daily life. There is little about class and class relations, even though these inequalities are arguably an integral component of capitalism, likewise for resistance against neoliberalism, which could have direct and significant impacts on the future of the economic order. Finally, there is little about the effects of the crisis on everyday life, and the role that any new economic order would have on people’s lives across the globe. In short, the book is lacking a strong sociological viewpoint.