Martin Wolf Research Articles

The Crisis of Democratic Capitalism

Doug Elmendorf of Harvard University reviews “The Crisis of Democratic Capitalism” by Martin Wolf. The EconLit abstract of this book begins: “Promotes the argument that economic disappointment is one of the chief explanations for the rise of left- and right-wing populism in high-income democracies, focusing on what can be done to restore the relationship between capitalism and democracy.”

Martin Wolf: The crisis of democratic capitalism

Martin Wolf: The crisis of democratic capitalism

Universities in the Post-COVID-19 Era: Crisis or Catharsis?

Universities in the Post-COVID-19 Era: Crisis or Catharsis?1 Ray Kinsella Introduction The COVID-19 pandemic has been an unprecedented shock to all aspects of every country’s functioning. The most visible effects have been on healthcare and the economy, with associated restrictions on freedoms of movement and worship. The consequences are truly systemic; broader and deeper than 9/11 and more pervasive than the post-2008 global economic crisis. In the fullest sense of the word, it is an existential crisis, expressing itself most explicitly in mortality rates not seen outside of war. Correspondingly, this crisis is encompassed within a broader phenomenon of ‘psychosocial scarring’, as our engagements with others are turned inside out and our way of ‘being-in-theworld ’changes, such that ‘The comfort of being in the presence of others may be replaced by a greater comfort with absence’.2 The OECD (2020) points out: ‘The COVID-19 pandemic is a global health crisis without precedent in living memory. It has triggered the most severe economic recession in nearly a century and is causing enormous damage to people’s health, jobs and wellbeing ’.3 Martin Wolf, the vastly experienced chief economics correspondent of the Financial Times, underscored the scale and systemic nature of the impact: ‘This is no ordinary recession or even depression, caused by a collapse in demand. Economic activity is being switched-off, partly because people fear contact and partly because governments have told them to stay at home. The immediate impact of these actions could be a reduction in the gross domestic product in the Group of Seven leading high-income countries between 20 and 30 per cent’.4 The pandemic has already had a 360° impact on universities and all higher education institutes (HEIs), not least in Ireland. Moreover, these events are unfolding against the backdrop of a critical time in the ongoing development of the university. Notwithstanding very different institutional and funding models, the crisis has exacerbated the considerable pre-existing financial, logistical, and operational pressures confronting universities. These events, Studies • volume 109 • number 435 252 Universities in the Post-COVID-19 Era: Crisis or Catharsis? in turn, raise questions not alone about the sustainability of their business models but even more fundamentally of their purpose. Universities now function within a new paradigm, and this issue merits reflecting on. Firstly, recent years have witnessed a convergence of the higher education sector and innovation within the technology-based, including Artificial Intelligence (AI), sectors as the fulcrum of knowledge-driven economic growth.5 At the heart of this paradigm shift is ‘knowledge’being the new form of equity, which has shaped the role of universities in the generation, transfer and commercialisation of the knowledge economy. The latent vulnerabilities that have followed on from these events pose very stark questions for universities and society, namely, are universities now essentially a training facility for Ireland Inc.? Are they a research annexe for a globalised economy that is ethically problematic, whose vulnerability has been so dramatically demonstrated by COVID-19? Secondly, there has been an exponential proliferation in the integration of learning technologies into the design and delivery of teaching and learning strategies. The digitisation of such strategies is now determining all forms of academic engagement between students and staff – including teaching, learning, and assessments. This process is occurring at a far swifter rate than even the most far-sighted institutions had anticipated, towards a near-total dependence on virtual learning environments (VLEs) and digital communication-platforms in the development and delivery of tertiary education. Even with an eventual rebalancing of teaching and learning back to a ‘blended’ model, there is no going back to the way things were even six months ago. The convergence of this digitalisation with the accelerated development of globalised societal engagement has taken universities to a different place. Itisimportanttohighlightthespeedwithwhichuniversitiesandresearchers have adapted to the emerging landscape. Equally, notwithstanding the enormity of the economic destruction arising from the pandemic, note must be taken of the opportunities that have emerged, especially in the medical and health sciences because of the pandemic, representing a new landscape for innovation and vividly illustrating Schumpeter’s paradigm of ‘creative destruction’. At the same time, there is...

Lucky Boy in the Lucky Country: The Autobiography of Max Corden, Economist, edited by Werner MaxCorden. Published by Palgrave Macmillan, 2017, 243 pages, ISBN: 978-331965165-1, AU$ 149.00

Lucky Boy in the Lucky Country: The Autobiography of Max Corden, Economist, edited by Werner MaxCorden. Published by Palgrave Macmillan, 2017, 243 pages, ISBN: 978-331965165-1, AU$ 149.00

One Hundred Years of Chemical Warfare: Research, Deployment, Consequences. Edited by Bretislav Friedrich, Dieter Hoffmann, Jürgen Renn, Florian Schmaltz, and Martin Wolf.

Springer Open, 2017, 408 pp., hardcover, € 53.49.—ISBN 978-3319516646

The paradigm sways: Macroeconomics turns to history

In the Euro and the Battle of Ideas, Markus Brunnermeier, Harold James, and Jean-Pierre Landau show how the Eurozone Crisis reveals deep-seated and sometimes incompatible European traditions in economic policy. In The Shifts and the Shocks, Martin Wolf uses the history of the GFC to analyze the global economy and highlight its vulnerabilities. In The End of Alchemy, Mervyn King argues that the GFC challenged basic understandings of money and finance, and proposes fundamental banking reforms. Historian of science Thomas Kuhn called the failure of an explanatory model, and the emergence of a new framework that better fits the data, a “paradigm shift” (Kuhn 1970). These three books suggest that a paradigm shift may be under way in macroeconomics. As each of these books shows, narrative understandings of history inform the actions of international institutions, governments, central banks, financial institutions, firms and households. Such narrative understandings are not reducible to objective facts. Instead, they are the subjective understandings of the past that economic actors use to make conjectures about the future. Such conjectures shape decisions about interest rates, investing, saving and spending. In this view markets look less objective and efficient than classical economics has traditionally held. Macroeconomic policy may be taking a “turn to interpretation” similar to shifts in other social sciences in the last third of the 20th century. The emergence of such a paradigm would be an exciting development for the discipline.

The Paradigm Sways: Macroeconomics Turns to History

In the Euro and the Battle of Ideas, Markus Brunnermeier, Harold James, and Jean-Pierre Landau show how the Eurozone Crisis reveals deep-seated and sometimes incompatible European traditions in economic policy. In The Shifts and the Shocks, Martin Wolf uses the history of the GFC to analyze the global economy and highlight its vulnerabilities. In The End of Alchemy, Mervyn King argues that the GFC challenged basic understandings of money and finance, and proposes fundamental banking reforms. Historian of science Thomas Kuhn called the failure of an explanatory model, and the emergence of a new framework that better fits the data, a “paradigm shift” (Kuhn 1970). These three books suggest that a paradigm shift may be under way in macroeconomics. As each of these books shows, narrative understandings of history inform the actions of international institutions, governments, central banks, financial institutions, firms and households. Such narrative understandings are not reducible to objective facts. Instead, they are the subjective understandings of the past that economic actors use to make conjectures about the future. Such conjectures shape decisions about interest rates, investing, saving and spending. In this view markets look less objective and efficient than classical economics has traditionally held. Macroeconomic policy may be taking a “turn to interpretation” similar to shifts in other social sciences in the last third of the 20th century. The emergence of such a paradigm would be an exciting development for the discipline.

Political Transformation in Ireland: Boom, Bust, and Beyond*

Political Transformation in Ireland:Boom, Bust, and Beyond* Theresa Reidy (bio) and Timothy J. White (bio) Ireland's journey from the booming Celtic Tiger economy to a poor man of Europe was based primarily on a property boom and bust that made international headlines from 2008 to 2011. The country's financial collapse, while prompted by unique Irish causes and circumstances, was rooted in the global financial crisis that especially affected several European states and was linked to the U.S. financial crisis and contraction. Ireland had experienced a period of rapid economic growth in the late 1990s, based on impressive productivity gains from investment in information technology, pharmaceuticals, and medical devices. In the early 2000s speculation in housing led to a property bubble or a "confidence trap." Martin Wolf claims that economic theorists should be considered culpable for their inability to predict or explain financial crises like the one that came to Ireland and many other states in 2008.1 But we contend that the financial crisis was as much political as it was economic. One must appreciate the political circumstances that allowed and perhaps encouraged the kind of financial speculation that brought on the crisis. David Runciman's theory about advanced democracies suggests that these types of governments muddle from crisis to crisis, and this tendency explains the confidence that the Irish possessed as their economy boomed on the back of a property bubble in the early 2000s. Oblivious to this confidence trap, Irish government policies tended to facilitate the economic bubble rather than to heed warnings of an inevitable [End Page 101] correction in the housing market.2 The confidence trap might also explain the lack of more significant protest behavior, as Irish voters were quite ready to wait for elections to indicate their dissatisfaction with the fiscal-retrenchment policies that came in the wake of the bust.3 This article documents the economic policies that led to the boom and also addresses the policies that have been enacted by successive Irish governments to respond to the economic crisis that emerged in 2008. We contend that the economic crisis has fractured the party cartel that has governed Ireland since independence. The politics of how the Irish government created and reacted to the financial crisis can best be understood through an examination of Ireland's unusual recent economic history and of contemporary politics in both the domestic and the European Union arenas.4 While Ireland's own policies played a critical role in its economic successes and failures, the integration of national economies within the euro area created a tug and pull within Europe. This factor can most easily be seen in the difference between creditor and debtor states. Ireland joined the latter category after its financial crash. Germany, as the principal creditor state in Europe, dealt incrementally with the burgeoning debt crisis. This meant that the economic institutions created to facilitate an integration of European economies managed the economic crisis but did not solve it.5 For the Irish, their financial collapse meant a bailout by the European Commission, the European Central Bank, and the International Monetary Fund (IMF) in late 2010. These three institutions, known as the troika, [End Page 102] defined the means by which the Irish could access the capital necessary to finance their burgeoning debt and deficit. For many in Ireland, having these institutions control Irish economic policy signified a loss of sovereignty and marked a new nadir in Irish political and economic life. A few short months after the negotiations that brought Ireland to its knees in December 2010, the Fianna Fáil government was replaced in an election in February 2011 that was the third most volatile in Western Europe since the Second World War.6 The crushing defeat of the dominant Fianna Fáil party in the 2011 general election created new dynamics in the party system.7 The coalition government of Fine Gael and Labour that came to power had the largest governing majority in the Dáil in the history of the state. After several years of higher taxes and frozen or reduced public services and spending, the Irish economy began to recover, and by 2015 it...

Book Review - CAPITAL IN THE 21ST CENTURY, BY THOMAS PIKETTY

Only few books of economy in the recent past years have had a similar effect on public opinion as the work of Professor Thomas Piketty from Paris School of Economics, in which he attempts to explain the dynamics of the last two centuries income inequality in developed countries. Shortly after the release of the English version, appeared excellent reviews from some major economists like Robert Solow, Paul Krugman, Robert Shiller, all three Nobel Prize winners, as we all know. "It is the most important book of the century" concluded Esquire magazine, and Paul Krugman, Nobel Prize winner for Economics, described it as "a volume really superb" and "an extraordinary work [...] certainly the most economic important book of the year if not the decade." In turn, Martin Wolf, one of the most influential writers on economic issues worldwide, says that the work of Piketty is "extremely important" and Branko Milanovic, a former World Bank economist, said it is "one of the primary work of economic thought ".

Martin Wolf. The Shifts and the Shocks. What we’ve Learned – and Have Still to Learn – from the Financial Crisis

Martin Wolf. The Shifts and the Shocks. What we’ve Learned – and Have Still to Learn – from the Financial Crisis

Energy 360: Invited Perspective: The Notion of a Carbon Bubble

President’s column According to the Intergovernmental Panel on Climate Change (IPCC), the concept that Earth can only handle a certain amount of cumulative carbon dioxide (CO2) emissions over a certain time period is referred to as a “carbon bubble.” If this amount is exceeded, Earth would possibly (it is all about probabilities) warm by more than 2°C (over the pre-industrial temperature level). Scientists suggest we should not cross over this threshold since it could lead to runaway climate change. This could have dire consequences, adding material costs because of more frequent and intense extreme weather, along with rising sea levels. From the maximum allowable cumulative CO2 emissions (to stay below +2°C), one can back-calculate the maximum amount of fossil fuels that can be burned. On 17 June 2014, Martin Wolf, associate editor at The Financial Times, cautioned investors that exploration and production (E&P) companies might lose value if and when two-thirds of the oil companies’ current reserves become unburnable or “stranded reserves” because of the limit of cumulative CO2 emissions being reached after the first third was burned. [Martin Wolf, “A Climate Fix Would Ruin Investors,” Financial Times, June 17, 2014.] This is a timely topic for an enhanced understanding among SPE members and the E&P industry. The discussion fits perfectly into the larger, important issue of sustainability. Statoil’s chief economist, Eirik Wærness wrote “The Double Energy Challenge,” on 22 December 2014 in Sysla magazine. He shares his perspective here. How and when do you see the phasing out of oil and gas and the growth of renewables really taking center stage? The world’s fossil fuel resources are enormous, but far from everything will be produced. The age of sail in global shipping did not end because of lack of wind. Coal, oil, and gas will still be available in the ground after we have replaced fossil fuels in the energy mix. Some of the resources will be too expensive to find, develop, and produce, compared with other alternatives. In addition, climate change considerations suggest that some of the resources should and will be left in the ground.

Montreal SfNIRS conference shines light on the brain.

Montreal SfNIRS conference shines light on the brain.

In Praise of Expansionary Fiscal Contraction

AbstractTextbook orthodoxy maintains that increases in the cyclically adjusted budget balance (i.e. reductions in the deficit) withdraw demand from an economy. Those Keynesian economists who believe that fiscal policy is the most powerful single influence on changes in demand expect ‘fiscal contraction’ to be accompanied by below‐trend growth or even declines in output. This article, a response to Martin Wolf's 2013 Wincott Memorial Lecture, considers this Keynesian view. Using a database prepared by the International Monetary Fund, it shows that since the 1980s ‘expansionary fiscal contractions’ have been the norm and not the exception in the USA and the UK. Keynesian support for fiscal activism is unsupported by a large body of recent evidence.

Social Mobility: Fixed or Pattern?

Currently there is a significant discussion in academia and the popular press over the present amount of inequality, the history of inequality and the negative effects on economies of inequality. Typical of this debate was a recent article by Martin Wolf in the Financial Times, (30 Sept 2014, “Why inequality is such a drag”). Here we discuss another aspect of inequality as a social phenomenon related to inherited status, wealth and privilege. The mechanisms of sustaining inequalities by elites are many, including producing generational disabilities in underclasses to prevent upward mobility and the development of achieved statuses.

Crisis perception in financial media discourse:a concrete application using the Minskian/mainstream opposition

Purpose– The purpose of this article is to highlight the need for renewed collaborative efforts between linguists and economists to develop a multidisciplinary approach to discourse studies to single out, in the case at hand, how financial media discourse might reflect either a prevailing mainstream or a Minskian conceptual apparatus in financial crisis related papers.Design/methodology/approach– The paper conducts exploratory research by focusing on semantic analysis, so as to indicate how the latter might possibly indicate a shift in the prevailing framework in contemporary financial media discourse. After a clear exposition of a theoretical dichotomy between the Minskian and mainstream approaches, it relies on Tropes software to conduct applied discourse analysis and discover evidence for the aforementioned shift. It exploits a set of three crisis-related articles from the Financial Times written by Martin Wolf. The selected corpora consist of opinion articles, a genre believed to be both emblematic of financial media discourse and subject to the influence of underlying theoretical frameworks.Findings– The paper has identified a convincing Minskian vs mainstream dichotomy that may be substantiated by a set of disciplinary criteria. It argues that these criteria can be further used in applied discourse analysis. It demonstrates the relevance of our methodology from the exploratory test conducted. Eventually, these exploratory results, although they remain embryonic, suggest that a shift in the conceptual frameworks underlying the media discourses has taken place, from the Mainstream in fair weather conditions to (possibly) a more Minskian framework in times of crisis and financial instability.Research limitations/implications– The sample size is extremely restricted (albeit acceptable in an exploratory research context); these limitations are inherent in exploratory research and do not preclude the validity of the broader interdisciplinary research agenda. In our proposed theoretical dichotomy, the mainstream approach is subject to caution insofar as no single and consensual definition of the latter exists to date in the literature.Social implications– This article has highlighted the need for further multidisciplinary collaborative research endeavors (in particular, linguistics and economics). It has also touched the issue of crisis prevention and early warning systems, which may include financial press monitoring.Originality/value– There exists a powerful media sphere within which financial discourse may exert an influence on decision-makers through the influence of underlying theoretical frameworks, eventually shaping real economic outcomes. The research program initiated, by combining the insights of economics and linguistics; therefore, aims to uncover the modus operandi of financial media discourse.

Globalization and Forced Migration over the Last 20 Years

Over the past twenty years there have been loud declarations that a new era of world integration is bringing increased prosperity and harmony. As part of the process of globalization, it is said that obstacles to the movement of capital, information and people are being radically reduced. The liberating powers of the market are bringing benefits for all – there is a general advance of economy and society, and reduction of political tension and of conflict. The old polarities-the First World against the Third World, the North against the South – are becoming less and less relevant. On this view, the dominant, neo-liberal account of globalization, mass displacement of people is likely to become less significant and the refugee tragedies of the twentieth century will be remembered as a mark of the tortured decades that proceeded a new era. For the financial times (2004), a journal which ardently supports such views, globalization is the most effective tool we have to make the world not just more prosperous, but also a freer and more peaceful place according to Mittelman. For its chief economist Martin Wolf the challenge is to spread the opportunities presented by market integration: He refers to it as he world needs more globalization, not less.

University governance

In a conversation between Francis Fukuyama, the Stanford-based political scientist, to publicise his new book The Origins of Political Order, and Martin Wolf, the distinguished financial journalist...

2011 Triennial Surveillance Review - External Commentary - Surveillance by the International Monetary Fund

Commentary prepared by Martin Wolf, Associate Editor & Chief Economics Commentator, Financial Times, London: "With countries naturally reluctant to cede any control over their own monetary and fiscal policies, it is likely that the IMF will have as instruments only the powers of analysis, persuasion, and, in Keynes" own favourite words, "ruthless truth-telling". That phrase does not conjure up many memories of any of the many international meetings I have attended. But unless the IMF has the self-confidence to play that role, its deliberations and statements will carry little weight. The Fund requires an independent, respected and clear voice." Mervyn King, 2006.

Review of "Fixing Global Finance," by Martin Wolf

Review of "Fixing Global Finance," by Martin Wolf

Free Trade Agreements and the Neo-Liberal Economic Paradigm: Economic, Ecological, and Moral Consequences

Since signing and implementing the North American Free Trade Agreement (FTA) in the early 1990s, the United States has pursued other free trade agreements with nations in Latin America and Asia. The premise undergirding FTAs is that trade liberalization within the neo-liberal global economy produces economic growth and development among all parties, and reduces poverty in poor nations. We examine arguments of proponents of free trade and the neo-liberal economy— particularly those of Martin Wolf, author of Why Globalization Works— to test these claims. We explore alternatives that center on norms of ecological sustainability and social justice, holding these two as inseparable. The central moral question of how to achieve needed socioeconomic development in the Global South in ways that are both ecologically sustainable and socially just frames our analysis. We conclude by proposing five principles for an alternative, more sustainable and equitable economic paradigm.