Political Organization Matters:Comparing the Responses to the 2008 Crisis of the US Federal State,the Fuzzy EU Governance and the Chinese Party-State
Friday, 3 July 2015: 8:30 AM-10:00 AM
TW1.1.01 (Tower One)
The new classical macroeconomic theory and the past Washington Consensus had made popular the idea of a canonical form of capitalism that would imply "the same for all" policies. Comparing the formation of economic policies and trajectories after the Lehman Brothers collapse casts many doubts about the relevance of this vision. Not only do the United States, China and the European Union explore quite different growth regimes and development models but also the precise organization of political processes play a decisive role in the final outcome i.e. the policy mix adopted, more or less innovative. The empirical analysis points out the following distinctive features: the degree of centralization of the State, the reactivity to citizens' demands, the ability to actually implement the intended policy, the capacity to react to radical uncertainty, especially facing the threat of a world depression, the number of veto points and actors, the coherence in the design of the competences among the various actors. Ex post, some governments were able to innovate- Quantitative Easing for instance- and reply quickly (the the European Union), whereas still others were torn between the requirements of short term economic stabilization- using the tools of the past- and the implementation of a new development strategy by signaling that past practices- massive public investment- were over ( China).
If time and space allows, the same analysis could be repeated for some key Member States of the European Union: the UK, France and Germany. Actually, they have followed quite contrasted strategies from 2008 to 2014, because they belong to three different brands of capitalism and the access to power by financiers, industrialists and unions is specific to each of the three societies. The adoption of contrasted rationales and theories for justifying their policies is amplifying but not creating these differences. A striking divergence of macroeconomic performances follows and call for a more systematic investigation about the political economy of macroeconomics and economic policies.