Regulating International Finance and the Evolving Imbalance of Capitalisms Since the 1970s

Socio-Economic Review 2012; doi: 10.1093/ser/mws023

MPIfG Discussion Paper No. 11/10

28 Pages Posted: 11 Aug 2011 Last revised: 12 Nov 2012

Date Written: July 1, 2011

Abstract

In this paper, I put the ongoing G20 process of improving the regulation of international finance into a historically informed perspective. To understand the driving forces behind and obstacles to international cooperation in governing finance I combine concepts from international political economy and comparative political economy (IPE and CPE) that have previously been only loosely connected. Building on the IPE literature that highlights the historical and political embeddedness of financial regulation I depart from the IPE focus on the globalization of US-UK financial market capitalism. CPE studies show that, since the 1970s, different variations of capitalism have reacted in distinct ways to the collapse of the Bretton Woods system, lower growth rates and saturated domestic markets. Most notably, there has been a divergence between the approaches of financializing countries (US, UK) and export-oriented countries (Germany, East Asian nations). The interdependence between financialized and export-oriented variations of capitalism has contributed to the dynamics and crises of international finance for the past four decades. This “imbalance of capitalisms” also became an obstacle to international cooperation in regulating finance. Faced with the “trilemma of economic policies,” the financialized and export-oriented variants of capitalism have chosen different combinations of macroeconomic policies, currency policies, and the regulation of financial flows and financial firms. This divergence has led to conflicting preferences with regard to international cooperation to regulate finance.

A revised version of the paper has just been published in Socio-Economic Review. Kalinowski, Thomas. Regulating international finance and the diversity of capitalism, Socio-Economic Review 2012; doi: 10.1093/ser/mws023, online.

Keywords: political economy, international relations, international economic order, financialization, varieties of capitalism

JEL Classification: F59, P16, F55

Suggested Citation

Kalinowski, Thomas, Regulating International Finance and the Evolving Imbalance of Capitalisms Since the 1970s (July 1, 2011). Socio-Economic Review 2012; doi: 10.1093/ser/mws023; MPIfG Discussion Paper No. 11/10. Available at SSRN: https://ssrn.com/abstract=1907828

Thomas Kalinowski (Contact Author)

Ewha Womans University ( email )

11-1 Daehyun-dong
Seodaemun-gu
Seoul 120-750, Seoul Seoul 120
Korea, Republic of (South Korea)

HOME PAGE: http://www.thomas-kalinowski.net

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