Year: 2012

Categories
Business and Finance

Niall Ferguson: Can Europe Fail and Is America Next?

Niall Ferguson
Niall Ferguson. Image: The Aspen Institute//flickr

Probably no questions are more relevant today than those Niall Ferguson considered in his lecture on Monday (30 January 2012), hosted by the Swiss Institute of International Studies, at the University of Zurich.  Fresh from the World Economic Forum (WEF) in Davos, the answers he gave were far from comforting:  Can Europe collapse? Of course it can.  Is America next?  Maybe.

But more importantly, Ferguson told us, we should have seen this coming. Ten years ago, in an article he co-authored in Foreign Affairs, he predicted that Europe’s newly minted Economic and Monetary Union (EMU) was doomed without a fiscal union to accompany it.  Indeed, Ferguson was one of the original ‘Cassandras’ of the project, warning as early as 2000 that “monetary unions can be undone by fiscal imbalances.”  This, he told us, was one of the lessons of history.  The closest precedent of the EMU, after all, was the obscure Latin Monetary Union, comprising France, Belgium, Switzerland, Italy, and Greece between 1865 and 1927.  Why is it so obscure?  Because it was destroyed by “asymmetric fiscal problems” – by the divergence between French fiscal probity, on the one hand, and Italian and Greek fiscal laxity on the other.

Continue reading “Niall Ferguson: Can Europe Fail and Is America Next?”

Financialization: When Money Took Over

Bankers walking into the City of London, one of the symbols of financialization. Image: Chris Brown/flickr

Money was invented to facilitate economic transactions and thus serve the real economy. Over the past 30 years or so, this relationship has been reversed: the real economy now appears to serve financial markets with financial crises bringing down economies. “Financialization” is the term experts use to describe this phenomenon.

As part of our Editorial Plan’s focus on international economics and finance, yesterday we described the history of the international monetary system.  On Monday the ISN speculated that the growing importance of foreign direct investment and global  financial markets makes the most recent wave of globalization the most impressive. What follows is a critical analysis of the evolution of financialization, which has pernicious side-effects that remain difficult to resolve.

Continue reading “Financialization: When Money Took Over”

Perpetual War, Perpetual Peace

Kant's shadow looms large. image: erepublik

In another foray into the realm of theory, to complement our Editorial Plan’s discussion of international norms and laws, we turn to a giant in the history of thought, the German philosopher Immanuel Kant. Though known primarily as a moral philosopher, Kant also wrote on topics germane to international relations and international political theory, in works such as Idea for a Universal History (1784) and Perpetual Peace (1795). Today we look briefly at what Kant had to say about international law, through Amanda Perreau-Sassine’s interpretive essay in The Philosophy of International Law, edited by Samantha Besson and John Tasioulas. Kant’s view of international law, it turns out, has important implications for contemporary discussions.

Continue reading “Perpetual War, Perpetual Peace”

The International Economic and Financial Systems

Image: 401kcalculator.org/flickr

Phase 1 of our Editorial Plan – a phase dedicated to tracing the structural changes occurring in the international system – has thus far mostly looked at intangibles. In other words, we at the ISN have explored, in a prism-like way, the roles of future forecasting; geopolitical thought; globalization, multiculturalism, and nationalism; evolving international norms and laws, etc., in shaping the international system. Indeed, these frameworks, processes and, yes, even ideologies may be to one degree or another ephemeral, but they have all contributed to the systemic changes we have seen in the last 20-30 years. (Even future forecasting can have a self-fulfilling prophecy component to it.) Influential as all these topics have been, however, a critic might ask when are we going to get “real” – i.e., when are we going to deal with the facts-on-the-ground reality of politics and its relationship to economics? The answer is “now.” Over the next several weeks, we will look at the past, present and future of the international economic and financial systems, we will then explore their relationship to global economic development, and we will close our enquiry by analyzing the current dynamics that exist between economics, politics and war. By looking at our three-part subject again in a prism-like way, we hope to highlight how economic and financial forces do indeed provide an impetus to wholesale change in the international system.

Peace Through ‘Good Enough’ Justice?

Celebration honoring the grand opening of a justice center in Nawa, Afghanistan. Photo: isafmedia/flickr

In his article ‘Why Developing Countries Prove so Resistant to the Rule of Law’, Barry Weingast notes that transplanting institutions and policies directly from developed societies into developing ones rarely helps to produce the long-term economic growth and rule of law that western donors want these countries to attain. As part of this week’s editorial plan focus on international public law in action, this blog will suggest that traditional justice systems can help build sustainable peace in post-conflict situations.

Weingast explains that the reason why western ideals of constructing fully fledged democracies under the rule of law fail to materialize lies in the fact that reform efforts do not understand the role of violence in structuring the ‘natural state’ (generally referred to as fragile state). In natural states – which most post conflict countries belong to – access to state privileges is limited to the elite, and the provision of services is limited to those that support the elite. Order and the absence of violence rest upon a system of rights and privileges that provides elites incentives to cooperate rather than fight. For those sections of society that do not belong to the elite, incentives like the provision of basic services are often used to quell unrest and maintain a semblance of stability. In such countries, the constitution is easily pushed aside for the sake of political leaders’ interests.

Continue reading “Peace Through ‘Good Enough’ Justice?”