The global imbalances and the contradictions of US monetary hegemony

Over the last decade, the world economy has been characterised by escalating global current account imbalances between the United States (US) and East Asia in particular. This article argues that US monetary hegemony has been a necessary condition for the emergence of these imbalances. It is contended that the notion of structural power is indispensable to understanding the nature of US monetary hegemony and its relation to the imbalances. US monetary structural power has both induced East Asian states to increase their accumulation of dollar-denominated assets and allowed the US to decrease its savings. The article also shows that the mechanisms of US structural monetary power contain several contradictory dynamics that are able to undermine its own purpose, which is to avoid the burden of adjustment to balance-of-payments disequilibria. Journal of International Relations and Development (2010) 13, 105-135. doi:10.1057/jird.2009.3

Money for Nothing: Everyday Actors and Monetary Crises

Why do monetary unions fail? Structural approaches that focus on shifts in the distribution of capabilities ascribe non-elites limited agency to influence large-scale political and economic change. Existing agent-centred approaches tend to simplify the social dynamics of the everyday politics of money by concentrating on how elites determine formal changes within monetary systems. Answers to this question from a material-based perspective often point to a breakdown in elite political support, driven by actors’ material incentives to cheat on their multilateral commitments rather than cooperate to overcome the collective action problem that a monetary union entails. Recent ideational perspectives have focused on the role of shared economic ideas among elites, as well as elite struggles over national identity, as crucial ingredients in the construction, maintenance, or failure of a monetary union. While drawing on the insights of rationalist and constructivist theories, this article uses a historical sociology approach to argue that the everyday actions taken by non-elites as survival strategies in a monetary crisis provide an important additional ingredient for understanding monetary system change. This approach is illustrated through a case study of the collapse of the ruble zone monetary union over 1991–1993