Geopolitical Economy and Competing Capitalist Blocs in the EU Post-Crisis Financial Regulation: Two Cases from the Reform of the Banking Sector

Giuseppe Montalbano Giuseppe Montalbano

doi:10.13169/worlrevipoliecon.6.4.0498

Abstract

In this contribution I will test the geopolitical-economic approach as formulated by Desai (2013) in the analysis of the EU's regulatory response to the financial crisis by focusing on two relevant pieces of legislation in the post-crisis reform of banking governance: the adaptation of the Basel III agreement to the package on Capital requirements, composed of a regulation and a directive, and the ongoing legislative process concerning the structural reform of banks. As I try to show, the concept of “competing geopolitical bloc” derived from the work of Desai, but even detectable in some recent Neo-Gramscian literature, is useful in analysing the shortcomings of the European regulatory response to the 2007/8 economic and financial crisis.

Highlights

In the first part I will contend that the concept of the uneven and combined dynamic of the capitalist system, as reformulated in geopolitical-economic theory (Desai 2013), allows scholars to develop an adequate analysis of EU economic governance as a regional field of struggle among competing capitalisms supported by different class and national economic constituencies, mirrored in the asymmetrical power relationships among member states
In the second part I will test the above theoretical scheme through an analysis of the two elements of the EU’s reform of banking governance mentioned above: (1) the issues concerning the minimum capital requirements and the introduction of a non-risk-based leverage ratio to ensure the resilience and stability of financial institutions in stress situations, and (2) the separation of trading-related activities from the deposit-taking function in the universal banks contained in the proposal for Bank Structural Reform still under debate in the European Parliament and the Council
Against a “cosmopolitan” Marxism conceptualizing capitalism as a globally unified whole, as do the approaches based on the concepts of Globalization and Empire, geopolitical economy brings the theoretical focus back on the role of nation-states as primary agencies of capitalist accumulation and expansion

Summary

Introduction

In the second part I will test the above theoretical scheme through an analysis of the two elements of the EU’s reform of banking governance mentioned above: (1) the issues concerning the minimum capital requirements and the introduction of a non-risk-based leverage ratio to ensure the resilience and stability of financial institutions in stress situations, and (2) the separation of trading-related activities from the deposit-taking function in the universal banks contained in the proposal for Bank Structural Reform still under debate in the European Parliament and the Council.

Results

Conclusion