Dimensions of the global crisis

Neoliberalism, Financial Crises and Authoritarian Liberalism

The paper hopes to contribute to a reading of the political economy of the current global crisis with a focus on four interrelated themes. First, we discuss the ''constitutive'' role and ''functional'' character of crises in the evolution of neo-liberalism in particular and in capitalist reproduction in general. Second, we investigate the mechanisms by which financial crises recur by highlighting the ''structure-agency dynamics'' in finance capitalism, specifically, the structural tendency of financial markets to disintegrate that has been exacerbated by misbehavior of economic agents. Third, we look at opposing crisis responses—from multilaterals to regional organisations to global civil society—and realise that responses from either pro-neoliberal or anti-neoliberal forces are ''fundamentally the same'' through the years, simply re-articulating analyses and programmes that they have respectively pursued and advocated long before the global crisis. And fourth, in the context of East and Southeast Asia, we examine the tendencies of the global crisis vis-à-vis the strengthening and even acceleration of emergent ''authoritarian liberalism'' in the region despite and because of the global crisis.

From the Crisis of Distribution to the Distribution of the Costs of the Crisis

The paper analyzes the possible distributional consequences of the global crisis based on the lessons of the past crises experiences. The decline in the labor share -the increase in the rate of exploitation- across the globe has been a major factor that led to the current global crisis. What we are going through is a crisis of distribution, and similarly the policy reactions to the crisis are part of a distributional struggle. The paper presents the effects of the former crises in the developing countries and in Japan on labor share, wages, and unemployment. This comparison is important not only because it compares developing vs. developed country cases, but also because it highlights the differences of the currency crises vs. domestic financial crises regarding the distributional consequences. However despite differences, the cumulative effect is in both cases a dramatic pro-capital redistribution. Building on these lessons, the paper discusses the possible different effects of the current global crisis in the developed countries, Eastern Europe, and developing countries, and concludes with policy alternatives to avoid the socialization of the costs of the crisis.

Outsourcing and the Crisis

Much attention is being given to how ‘financialisation’ led to the global economic crisis. Scarcely explored is the connection between both of these and 'outsourcing', the 'global shift' of production processes to low-wage countries.

This paper contends that financialisation and outsourcing, which have proceeded in tandem during recent decades, interact so powerfully that neither process can be understood separately from the other.

Through its effect on financialisation, outsourcing is an important antecedent of the crisis. It is also a factor in its own right: the trillions of dollars in hard currency reserves accumulated by China and other manufactures-exporting countries and the corresponding hyper-indebtedness of the USA is a direct effect of the 'global shift' of production to low-wage nations.

By exploring the visible and less-visible connections outsourcing and financialisation, this paper counters the tendency in recent Marxist and heterodox literature to see the crisis as financial rather than systemic.