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In the aftermath of recent crisis, national governments across the global south increasingly see state ownership and control of finance as a vital public policy tool. What explains variation in state control of finance in the wake of crisis? Interventionist policies can elicit disinvestment or exit threats from private financial actors if they limit profitability. When disinvestment threats are credible, policymakers may rule out reform for fear of devastating economic consequences. I argue that the credibility of disinvestment threats is conditioned by two key variables, the resilience of the national economy to capital flight, which affects the level of damage capital flight will inflict, and global financial liquidity, which can be used to undercut domestic disinvestment threats. These arguments are developed through comparative case studies of cross-national and over-time variation in the scale and scope of public development banking in Brazil and South Africa in the wake of the 2008 crisis. [ABSTRACT FROM AUTHOR]

Financial sanctions have become a major component of American foreign policy. Since 2015, the number of blacklisted actors has nearly tripled, coinciding with US financial campaigns against Iran, North Korea, and Russia. This paper centers an under-examined paradox of this proliferation: the complexity of lifting financial sanctions. Indeed, successful sanctions regimes necessitate both sticks (punitive sanctions) and carrots (economic incentives). Yet financial sanctions often limit the economic benefits promised to target states, as banks and other financial institutions risk hefty material and reputational costs if they are to cooperate with previously sanctioned actors. Thus, while financial sanctions are effective at producing negative market reactions against a target, they can be hugely damaging if market actors do not cooperate with the lifting of sanctions. To capture this dynamic, this paper leverages process-tracing to observe financial market reactions to sanctions relief in three key cases—Iran (2010–2015), North Korea (2002–2007), and Libya (1996–2008). It finds that in each case, the presence or absence of US Treasury blacklisting corresponds to the post-sanction willingness of financial actors to extend sanctions relief to targeted states. In doing so, this study identifies "reputational risk" as the primary causal mechanism limiting a target's reintegration into the global economy. [ABSTRACT FROM AUTHOR]

How should we theorize about international political economy in an era of complex interdependence? The global economy is much more interdependent today than it was 40 years ago. As a result, there is a widening appreciation that we need new theoretical tools to understand how complex interdependence arose, how it operates, and where it might be headed. I argue that to develop such tools, we must embrace new theoretical logics that more readily accommodate and explain change. I develop this point by drawing on complexity theories, ecology, and information theory. I first develop the core elements of a complexity-based approach and contrast it to the central assumptions of the Open Economy Politics approach. I then illustrate this complexity-oriented approach by using the logic of coevolution and the information–entropy cycle to explain key elements in the development of the 2008 global financial crisis. [ABSTRACT FROM AUTHOR]

The co-evolution of democratic politics and mass, financialized wealth has destabilized highly integrated financial systems and the socio-political underpinnings of neoliberal policy norms at domestic and global levels. Over the long run, it has increased the political pressure on governments to undertake bailouts during major banking crises and, by raising voters' attentiveness to wealth losses and distributional inequities, has sharply raised the bar for government performance. The result has been more costly bailouts, greater political instability and the sustained politicization of wealth cleavages in crisis aftermaths. We underline the crucial importance and modernity of this phenomenon by showing how the high concentration of wealth in pre-1914 Britain and America among elites was associated with limited crisis interventions and surprisingly tranquil political aftermaths. By contrast, the 2007–2009 crises in both countries epitomise the political dilemmas facing elected governments in a new world of mass financialized wealth and the impact on political polarization and democratic politics. We show that these dilemmas were embryonic in the interwar period and highlight how the evolutionary forces shaping policy and political outcomes reveal the importance of time, context and the effects of long cycles in the world economy and global politics. [ABSTRACT FROM AUTHOR]

This article offers new theoretical and empirical insights to explain the resilience of US Treasury securities as the world’s premier safe or “risk-free” asset. The standard explanation of resilience emphasizes the relative safety of US Treasuries due to a shortage of safe assets in the global political economy. The analysis here goes beyond the standard explanation to highlight the importance of domestic politics in reinforcing the safe status of US Treasury securities. In particular, the research shows how a formidable “bond” of interests unites domestic and foreign owners of the public debt and works to sustain US power in global finance. Foreigners, who now own roughly half of the US public debt, have something to gain from their domestic counterparts. The top 1% of US households, which dominate domestic ownership of US Treasuries, has considerable political clout, thus alleviating foreign concerns about the creditworthiness of the US federal government. Domestic owners, in turn, benefit from the seemingly insatiable foreign appetite for US Treasury securities. In supplying the US federal government and US households with cheap credit, foreign investors in US Treasuries help to deflect challenges to the top 1% within the wealth and income hierarchy. [ABSTRACT FROM AUTHOR]

The 2007/2008 financial crisis was widely expected to usher in a shift toward a post-neoliberal regime that would be more actively concerned with system-level risk and impose restrictive regulations on financial institutions and markets. Such a shift, it is now widely recognized, has failed to materialize. Commentators have tended to point to the “capture” of policymaking processes by financial elites to account for the failure of reform. This argument represents the continuation of a problematic trend in critical perspectives on neoliberalism — namely, to rely on an instrumentalist understanding of institutional power and to view the survival of neoliberalism as dependent on external interventions. That line of critique, it is argued, is rather one-sided in downplaying the internal sources of cohesion that neoliberalism commands. Taking its cue from Foucault’s comments on neoliberalism in his late lectures at the Collège de France and the methodological innovations that he introduced in that context, the article explores the logic of governance through risk and the specific way in which neoliberalism intervenes in this relationship. In this way, it moves beyond an understanding of neoliberalism that views it in terms of the neglect of system-level governance and offers an account of the distinctive modalities of neoliberal financial governance. The article suggests that we should not view developments since the crisis in purely negative terms (the failure of progressive reform), but consider the ways in which they represent a continuation of the distinctive rationality of neoliberal financial governance. [ABSTRACT FROM AUTHOR]

Why do states cooperate during international financial crises? A prominent account of such phenomena is provided by the Open Economy Politics approach, which advocates a methodological reductionism that focuses on domestic interests and institutions as explanatory drivers of foreign economic policy. I argue that the appropriateness and utility of this approach diminishes in two important contexts: when levels of economic interdependence and international institutionalization are both high; and when international insecurity is rising. Since the second condition has greater generality in international relations, I test it by focusing on a period when international economic institutionalization was much lower than today: the pre-1914 gold standard system. I show that as levels of interstate rivalry and insecurity rose in the years before 1914, so too did the role of strategic considerations in the international financial policies of the major European powers. The utility of the Open Economy Politics approach for explaining foreign financial policy is therefore contingent on an evolving international context. The argument is of considerable relevance to the contemporary era, when a rapidly evolving international political environment is again reshaping international financial policies. [ABSTRACT FROM AUTHOR]

Why do countries liberalize capital controls? The literature identifies a range of possible reasons. Yet, despite considerable advances, the impact of international non-governmental organizations has yet to be considered. In fact, surprisingly, systematic analysis of the role of international non-governmental organizations in the diffusion of economic openness, financial or otherwise, has not been pursued previously. We offer the first such analysis by advancing the idea of ‘climatic mimesis,’ which refers to the cultural climate for policymaking that results from country ties to international non-governmental organizations. International non-governmental organizations shape capital account regulation by altering the cultural climate in a country such that liberalization becomes a more problematic policy choice. Our statistical analysis of data from developing countries reveals that international non-governmental organization ties inhibited liberalization, as did relatively high public debt and concentrated domestic banking sectors. The presence of an International Monetary Fund program and liberalization by economic competitors encouraged it. We suggest that these findings have important implications for understanding the potential for convergence and divergence in an era of globalization. [ABSTRACT FROM PUBLISHER]

There is substantial evidence that International Monetary Fund policies are driven by the powerful states which intervene to align policy with their preferences. In particular, many have argued that the United States uses its position as the Fund’s largest shareholder to achieve its foreign policy objectives. As a result, a substantial volume of literature argues and presents evidence to support the claim that International Monetary Fund decisions faithfully reflect US interests. My findings extend these claims. Using a new dataset on the presence in International Monetary Fund agreements of binding conditions, which cause the agreement to be suspended or terminated if they are not met, I demonstrate that International Monetary Fund agreements contain fewer binding conditions when a suspension of International Monetary Fund lending plausibly would impose greater hardship on creditor country banks and exporters. [ABSTRACT FROM PUBLISHER]