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The United States is unrepaired and still vulnerable; Europe is hobbled and encumbered by the patchwork straitjacket of its political economy. The rest of the world, less directly affected by the crisis, is actively searching for something different.

For at least a decade, many have argued that the predominance of the dollar as the world's currency will gradually erode, and give way to a more multipolar international monetary order. The four papers in this special issue challenge this conventional wisdom, and hold that the hegemony of the dollar remains irresistible and unchallenged. Looking carefully at available evidence, each paper argues forcefully that the dollar remains predominant, and that expectations of its decline are greatly exaggerated. Nevertheless, although the dollar stands unrivaled at the moment, the pillars of support that have historically sustained its hegemony are eroding. Three warning signs loom especially large: regarding the trajectory of American power and international influence, the role of international politics in shaping the international monetary order, and the outcomes generated by the U.S. political system. Each of these should give pause about the sustainability of unrivaled dollar hegemony indefinitely into...

Exorbitant Privilege: The Rise and Fall of the Dollar and the Future of the International Monetary System B. Eichengreen (Oxford: Oxford University Press, 2011) This is a most welcome book: an asse...

As President Nixon once observed, “we are all Keynesians.” And we do indeed live in a macroeconomic world, essentially, as defined and elucidated by Keynes. But Keynes himself is underrepresented in both political science and in mainstream economics. This is a costly intellectual error. Keynes’ prodigious writings, as well as his actions, offer a treasure trove of inspiration, analysis, and insight. This article considers four themes in Keynes’ oeuvre that are especially worthy of revisiting: the importance of economic inequality, the potentially fragile underpinnings of international economic order, the inherent dysfunctions of the international monetary economy, and, perhaps most important, Keynes’ philosophy and its relationship to economic inquiry.

While the demise of the dollar has been predicted in the past, expectations of a fundamental change in the international role of the dollar are increasingly widespread, and eminently plausible. From a situation where the dollar was the undisputed and dominant international currency, one likely scenario is that it will become one of several key currencies that could be characterized as ‘peer competitors’. This raises the question: does it matter? In particular, does it matter for US power? This paper reviews why the dollar's status might change, from that of a ‘top’ to a ‘negotiated’ currency. It then considers the consequences–the loss of economic benefits and structural power, and the costs associated with managing a currency in (relative) decline and eroding international prestige. I conclude that, even as the dollar is likely to remain the world's most widely used international currency, the vulnerability of the greenback presents a potentially significant and underappreciated restraint on con...

What are the politics of inflation? This question is usually raised solely when inflation rates are high. All levels of inflation, however, high and low, are the outcome of political conflicts. But no current approach to the study of inflation--sociological, neoclassical, modern political economy--adequately captures the full range of political issues at stake, and this leads to problems for both theory and policy. This paper critiques the existing perspectives on inflation and then focuses on three theoretical issues raised by those critiques: the economic costs of inflation; the concept of monetary neutrality from economic and political perspectives; and the importance of disaggregating economic growth statistics. Finally, the paper introduces and explores a contending approach to the analysis of the political economy of inflation: a "micro-politics" perspective. This approach is the only one to address the politics of low inflation, which is of great significance for contemporary political economy. Copyright 2001 by Blackwell Publishers Ltd

This article argues that in an era characterized by increased practical and analytical concern for the domestic consequences of international market forces, through the study of Keynes' own writing we can better understand the significance of the contemporary challenges to the compromise of embedded liberalism and the consequences of the possible unraveling of that order. A Keynesian interpretation of the Asian financial crisis illustrates both the application of Keynes' philosophy of political economy and its continuing relevance.

There exists a deflationary bias in the contemporary international economy, and this has significant domestic distributional consequences for all states in the system. After investigating its sources, I consider the consequences of and possible solutions to this bias. I review the modern debate over inflation and macroeconomic policy and argue that some small but positive rate of inflation is necessary to achieve optimal economic growth. This is demonstrated to be consistent with most otherwise competing schools of economic thought, such as Keynesianism and monetarism. However, public dissatisfaction with the inflation of the 1970s, coupled with the rise of conservative governments (and new economic theories), allowed highly disinflationary structural and institutional changes to take place without sufficient attention to political consequences. Those changes privilege sectors in society willing to sacrifice some economic growth to assure very low levels of inflation. International financial deregulation reinforces a nominally apolitical anti-inflation coalition by limiting macroeconomic policy autonomy, which reduces the viability of relatively expansionary policies, while at the same time helping to sustain the view that such measures are inherently flawed. Greater sensitivity to the distributional consequences of inflation, and reform in the international financial system, such as the introduction of a Tobin tax, could mitigate the existing deflationary bias.

(1997). The microfoundations of economic sanctions. Security Studies: Vol. 6, No. 3, pp. 32-64.

Twenty-five years ago, in Sterling and British Policy, Susan Strange (1971) set forth a taxonomy of the essential types of international currencies. By distinguishing among currency types, Strange hoped to get at two important issues: the political (as opposed to economic) circumstances under which people start to use a currency controlled by another state, and the political (again as opposed to economic) consequences of such usage. Her approach was innovative and thoughtful. Her book helped open a new era of scholarship on the relationship between power and wealth in international affairs.