Chapter 1 – What is an Economic Paradigm?
The central concept of this blog, that of ‘economic paradigm’, is the key to a correct understanding of our economic system and its interconnections with politics and geopolitics. This interrelation can appear daunting in its complexity but, if we look separately at the layers that form an economic paradigm, then it becomes easier to digest. An economic paradigm results from the interconnection of three major forces: world hegemonic arrangements, class conflictand technological cycles. As time goes by the system (known to its enemies as capitalism and to its friends as ‘the modern economy’, or ‘the market economy’) tends to become increasingly more complex and organised (despite claims that market forces are able to self regulate, via the mythical ‘invisible hand’), thus economic paradigms include ever thicker layers of institutional and legal arrangements (the so called ‘rule bases system’), along with more informal set-ups.
In order to understand the first layer, world hegemonic arrangements, I can recommend this very good book: ‘The Long Twentieth Century’ by Giovanni Arrighi (1994). It is rather long (although not difficult and certainly well worth the effort) but if you want to take a short cut you can read this article by the same author: ‘Capitalism and world (dis)order by G Arrighi and B Silver’ – Review of International Studies(2001) (link:http://eclectic.ss.uci.edu/~drwhite/pw/2001(Dis)Order.pdf)
From Arrighi’s work you will gain a basic understanding of the four hegemonic cycles so far occurred since the beginning of capitalism as a mode of accumulation (later evolved into a mode of production with the start of the Industrial Revolution) and of the two phases recurring in all of them: the initial rising phase featuring a major expansion of the real economy, and the later declining phase witnessing an expansion of the financial economy. Also you will see an important underlying trend: that of geographical as well as functional expansion of the world capitalist economy, accompanied by an increase in complexity; hence, the country able to expand and re-organise the system each time that it enters a major crisis, is the one that will become hegemonic in the next cycle. Another interesting and useful aspect that you will understand is the genesis of our current financial elite, tracing its origins all the way back to the merchants of Medieval times and the transnational financial networks that they started building back in those times and have been expanding and refining ever since. Another basic concept that you will learn is the dialectical interconnection between these merchant capitalists, with their ‘profit based’ logic, and the states hosting them, with their ‘territorial’ logic, a dynamic that overshadows our current opposition between the financial economy and the real economy.
The financial elite and its financial networks lead us into another major subject of this blog: the international monetary system. Something very real but whose existence is never emphasised in the economic discourse, and doesn’t tend to be assessed for what it really is: a major – only in part ‘official’- institution emanating from the hegemonic country/elite and that both embodies and perpetuates the hegemonic arrangements existing at any given time in history. A book that has the merit of talking about the international monetary system (although without explaining its genesis or its power implications) and how it evolved over time is ‘The New Case for Gold’ by James Rickards (2016).
These two books take care of the first layer of an economic paradigm: world hegemony as exercised by specific countries at any given time, the financial elites acting as major influencers of state power and the monetary system underpinning this hegemony. For what concerns the other two forces shaping economic paradigms, class conflict and technological cycles, you will have to wait until I add more chapters, in which I will trace the outlines of both.
Chapter 2 – The Chinese Challenge
This chapter mainly deals with recent history. In order to understand what China has been doing in the past few decades in economic – as well as geopolitical- terms, and why it is set to become the next leading power in the coming decades, I have used mainly these talks available on youtube (in addition to other sources quoted in the text of the chapter):
Hank Sullivan– Geopolitics and the Petrodollar – how the world really works – 15 Sept. 2016 – min. 25-59
Helga Zepp-LaRouche– The New Silk Road becomes the world land-bridge – Aug. 2016
Kevin Rudd – Linda Jacobson – on China’s rise and a new world order – 26 Oct. 2017 – La Trobe University
Nadege Rolland– China’s Eurasian century – deciphering the ‘community of common destiny’ – Centre for strategic and international studies – August 2017
Martin Jacques – When China rules the world – University of Melbourne – Sept. 2012
Martin Jacques – Why China will be a very different kind of great power – Nov. 2014
Kevin Rudd – Imagining China in 2023 – China’s domestic and foreign posture under Xi-Jinping – 18 March 2014 – Lee Kuan Yew School of Public Policy
Chapters 3 & 4 – The Keynesian Paradigm – The Neoliberal Paradigm
Yanis Varoufakis: ‘The Global Minotaur’ (2011)
Paul Mason: ‘Post Capitalism’ – chapters 1 and 4 (2015)
John Kenneth Galbraith: – ‘A History of Economics – the past and the present – Chapter xx’
Sergio Cesaratto: Sei Lezioni di Economia (Six Lessons in Economics) (2016) – Lesson 4
Mark Blyth: ‘Plenary 7- Short-term Politics Versus Long-term Returns – The Lessons from History – Sept. 2016
Chapter 6 – Money and Currencies
Charles Eisenstein: ‘Sacred Economics’ (2013) – Chapter 11