Documents Blyth, Mark 8 results

"The Future of the Euro is an attempt by political economists to analyze the fundamental causes of the euro crisis, determine how it can be fixed, and consider what likely futures lie ahead for the currency. The book makes three interrelated arguments that emphasize the primacy of political over economic factors. First, the 'euro problem' is discussed as the result of the single currency's fundamental lack of institutional embeddedness, insofar as its original design omitted three 'forgotten unions' alongside of monetary union: a financial and banking union, mutually supporting institutions of fiscal union and economic government, and a political union holding similar legitimacy to the nation-state. Second, the 'euro experience' shows how the euro's unfinished design led to economic divergence - quietly altering the existing distribution of economic and political power within Europe prior to the crisis - which in turn determined the EU's crisis response. The book highlights how the euro's four most important members - Germany, France, Italy and Spain - each changed once they adopted the euro, why the crisis affected them so differently, and how each has since struggled to live with the commitments the euro necessitates. Third, the book examines three possible 'euro futures' through the lens of the politics of its reluctant leader Germany; through the lens of the EU's capacity to 'move forward' through crises; and through the geopolitical lens of the international monetary system. The book concludes that any successful long-term solution to the euro's predicament needs to start with the political foundations of markets."

"A set of state of the art empirical analyses at the country, regional, and global level that work from a new theoretical framework that analyzes the politics of growth and stagnation.

As highlighted by the recent debate on 'secular stagnation,' economic growth has slowed down considerably, and this has given rise to a host of new problems, from financial instability to the collapse of mainstream parties. What happens when growth—the main mechanism of capitalist legitimation—is harder to come by and less broadly shared? And how should we think about capitalist diversity in the context of global stagnation?

In Diminishing Returns, Lucio Baccaro, Mark Blyth, and Jonas Pontusson address these questions by bringing together a number of comparative and international political economists with expertise across many different countries and regions. Going beyond the methodological nationalism common in most comparative research, each author departs from a common theoretical framework, the Growth Model Perspective, and contributes to develop it further. The outcome is a new theoretical framework to help social scientists, policymakers, and opinion makers, understand the politics of growth and stagnation, which offers state of the art empirical analyses at the country, regional, and global level."

"The EU institutions must diagnose the crisis that Brexit and Trump have brought to the fore as an economic crisis that is malleable to policy, and they must forcibly sell that diagnosis to the member states if they want to halt the further disintegration of the EU. Doing so would give member states room to experiment with locally appropriate policies rather than simply accept "one size fits none" policy rules. Such a diagnosis would be nothing less than an explicit political intervention by a supposedly technocratic set of institutions. But technocracies work best in good times, and these are not good times."

"This article argues that the Europe's continuing economic underperformance, particularly in the eurozone, is neither a function of insufficient information (policymakers do not know the right policies) nor ideology (policymakers are unable to recognize the right policies due to ideological priors). Rather, this article places the continuation of policies that cause stagnation in a longer historical context. Building upon the insights of Kalecki (1943) regarding the political limits of full employment policies, it is argued that the shift from a regime that generated inflation, low profitability, and a high degree of equality to one that generates deflation, high profitability, and inequality has hamstrung the ability of policymakers to respond positively to the situation at hand. This has generated structural pressures for political realignment across cases that compound the economic problems of stagnation while exacerbating tensions between different European ‘Varieties of Capitalism.' The result is a set of ‘second-best' strategies that lead to second-best outcomes in both politics and economics that further stress the already stressed economies and polities of Europe."

"Unable to take constructive action toward any common end, the U.S. Congress has recently been reduced to playing an ongoing game of chicken with the American economy. The debt-ceiling debacle gave way to the “fiscal cliff,” which morphed into the across-the-board cuts in military and discretionary spending known as “sequestration.” Whatever happens next on the tax front, further cuts in spending seem likely. And so a modified form of the austerity that has characterized policymaking in Europe since 2010 is coming to the United States as well; the only questions are how big the hit will end up being and who will bear the brunt. What makes all this so absurd is that the European experience has shown yet again why joining the austerity club is exactly the wrong thing for a struggling economy to do.
The eurozone countries, the United Kingdom, and the Baltic states have volunteered as subjects in a grand experiment that aims to find out if it is possible for an economically stagnant country to cut its way to prosperity. Austerity -- the deliberate deflation of domestic wages and prices through cuts to public spending -- is designed to reduce a state's debts and deficits, increase its economic competitiveness, and restore what is vaguely referred to as “business confidence.” The last point is key: advocates of austerity believe that slashing spending spurs private investment, since it signals that the government will neither be crowding out the market for investment with its own stimulus efforts nor be adding to its debt burden. Consumers and producers, the argument goes, will feel confident about the future and will spend more, allowing the economy to grow again..."

"Governments today in both Europe and the United States have succeeded in casting government spending as reckless wastefulness that has made the economy worse. In contrast, they have advanced a policy of draconian budget cuts--austerity--to solve the financial crisis. We are told that we have all lived beyond our means and now need to tighten our belts. This view conveniently forgets where all that debt came from. Not from an orgy of government spending, but as the direct result of bailing out, recapitalizing, and adding liquidity to the broken banking system. Through these actions private debt was rechristened as government debt while those responsible for generating it walked away scot free, placing the blame on the state, and the burden on the taxpayer.

That burden now takes the form of a global turn to austerity, the policy of reducing domestic wages and prices to restore competitiveness and balance the budget. The problem, according to political economist Mark Blyth, is that austerity is a very dangerous idea. First of all, it doesn't work. As the past four years and countless historical examples from the last 100 years show, while it makes sense for any one state to try and cut its way to growth, it simply cannot work when all states try it simultaneously: all we do is shrink the economy. In the worst case, austerity policies worsened the Great Depression and created the conditions for seizures of power by the forces responsible for the Second World War: the Nazis and the Japanese military establishment. As Blyth amply demonstrates, the arguments for austerity are tenuous and the evidence thin. Rather than expanding growth and opportunity, the repeated revival of this dead economic idea has almost always led to low growth along with increases in wealth and income inequality. Austerity demolishes the conventional wisdom, marshaling an army of facts to demand that we recognize austerity for what it is, and what it costs us."

"Advanced capitalist societies seem to limp from one existential crisis to the next, becoming ever more fragile and unstable as a result. Yet the dominant theoretical frameworks in political economy view capitalism as fundamentally stable or, at most, subject to incremental change. In a recent volume published by Oxford University Press, Diminishing Returns: The New Politics of Growth and Stagnation, we develop a more dynamic framework that places disequilibrium, aggregate demand and distributive conflict centre stage. The result of a collaborative effort involving European and North American scholars, our volume emphasises the diversity of capitalist trajectories, which we reframe as a diversity of growth models. We do not stop at mapping diversity, however. We seek systematically to link country-level and regional developments to cross-cutting trends in the international economy, such as liberalisation, financialisation and the rise of inequality. In this short article, we present the approach and articulate the implications of the growth models perspective for our understanding of the role of labour and ‘green growth' in the current moment."