Within the broad remit of following trends in the global economy, and our often feeble attempts to govern it, we pay particular attention to the following five themes:
Capitalism at a crossroads
The global financial crisis led to serious doubts over the self-regulating forces of the market as the key capitalist institution. After the financial crisis followed the Eurozone crisis and the economic slowdown in hitherto dynamic emerging market economics. Is the world economy coming to a halt? Where is tomorrow’s growth, jobs and income going to come from? How can a transition to clean technologies and green growth be achieved, as quickly as possible? Inequality, stagnation, and unsustainability: capitalism is challenged in multiple ways. So where are we headed now? Our work provides insight into the choices that countries, institutions and social groups make and the roles they play in the continuous reshaping of capitalist societies.
The dynamic emerging market economies are still growing. But much less so now than before the financial crisis – although still on average considerably more than the barely growing Eurozone countries. Underneath the slowing growth lurks a somber reality. From China to Brazil, from India to Russia, runs a red thread: the high rates of economic growth have to large extent been export-driven, based on rising commodity prices and cheap access to international credit. With these preconditions now dead and gone, then what? Emerging economies are struggling to rethink and reshape their growth models, while simultaneously dealing with domestic challenges that grow larger as growth declines: poverty, inequality, polarization. We study how economic organization in emerging economies change under the cross-pressures of decreasing economic growth and increasing political unrest.
Global economic governance
The world economy is limping. There is constant reference to a recovery – and yet, economic growth and job creation remain elusive. From the Eurozone to the emerging market economies, the question is the same: how can we get economic growth back on track? Intellectually, there are signs of dislocation and bewilderment, not least in terms of economic policy. Whereas before, there was widespread consensus on what constitutes good economic policy, now more and more questions are asked. Ironically, it is often the IMF taking a leading role: Are we certain that austerity policy is good policy, in demand-constrained economies? And how about capital controls; might such policies not be quite sensible, under certain circumstances? We examine how conventional ideas about ‘proper’ economic policy are challenged and evolve in response.
In the immediate aftermath of the global financial crisis criticism and introspection was astonishingly deep. Many proclaimed that we had witnessed the end of ‘light touch’ regulation of finance. Just a few years further down the road, researchers, regulators and observers are in profound disagreement: has the regulation of finance changed radically and irrevocably, or are the changes so small that everything continues, in a more or less business-as-usual mode? We follow attempts to improve the regulation of finance in several specific areas: from new international standards for equity capital requirements on banks to efforts to attempts made by a group of Eurozone countries to introduce a European tax on financial transactions.
The world is currently experiencing a tumultuous rebalancing of international relations, as dynamic emerging market economies grow in economic weight and importance. But how about our multilateral institutions for global economic governance, are they adapting to this new world order? Not really. Instead, several non-multilateral organizations are emerging to challenge them, from the G20 Leaders’ Forum to the newly established BRICS development bank. The inertia of our existing multilateral system stands in sharp contrast to an economic reality in which economic governance must increasingly be global to be effective, whether we are dealing with tax evasion, carbon emissions or regulation of large international banks. We follow attempts to reform our global institutions, from the World Bank and the International Monetary Fund to UNCTAD.