DEKONSTRUKCIJA MITA O RASTROŠNOSTI KORIŠTENJEM KRITIČKE TEORIJE I SOCIJALNOG KONSTRUKTIVIZMA: SLUČAJ GRČKE I NJEGOVE ŠIRE SOCIO-EKONOMSKE I POLITIČKE POSLJEDICE

This article is aimed at deconstructing the widely spread view according to many media outlets, policy analysts and commentators that the Greek crisis and the subsequent eurocrisis is the result of generous social welfare benefits and fiscal spending irresponsibility on the part of Greek politicians and citizens. The lesson to be drawn from this analysis is multifold. In attempting to do so, I will use critical theory of international relations in order to dissect the very structure of the EMU which inevitably led to the build-up of trade and fiscal imbalances in the EU’s periphery as a first theoretical line of argumentation in contesting this view. The second theoretical line of argumentation focuses on social constructivism and its credentials in dealing with the underlying issue of “Greek profligacy”. The diffusion of conservative attitudes regarding social welfare is put into the broader context of “new constitutionalism” and neoliberal politics. The application of both theories is aimed at identifying basic culprits which brought about the deadly mix of European banking crisis and sovereign debt crisis, and thereby points to a necessary change in policy stance toward “PIIGS” countries and the very foundation of the EMU.Ovaj članak ima namjeru dekonstruirati široko rasprostranjeno mišljenje, stvoreno i perpetuirano od strane medija, političkih analitičara, političara i komentatora, da pravi uzrok grčke i naknadne eurokrize treba tražiti u velikodušnim socijalnim transferima i neodgovornoj fiskalnoj potrošnji grčkih političara i građana. U toj namjeri oslanjam se na kritičku teoriju međunarodnih odnosa kao prvi pravac teoretske argumentacije kako bih secirao samu strukturu Ekonomske i monetarne unije (EMU) koja je neizbježno vodila prema akumuliranju trgovinskih i fiskalnih neravnoteža u zemljama EU periferije. Drugi pravac teoretske argumentacije fokusiran je na teoriju socijalnog konstruktivizma kao analitičkog oruđa u svrhu poimanja teze o “grčkoj rastrošnosti”. Posljedična difuzija konzervativnih stavova vezanih uz ulogu države blagostanja stavljena je u kontekst “novog konstitucionalizma” i neoliberalne politike. Primjena obje teorije važna je zbog identifikacije krivaca u smislu aktera, struktura i procesa koji su zajedno doveli do potencijalno smrtonosne kombinacije europske bankarske i krize suverenog duga po budućnost integracijskog projekta. Stoga ovaj članak ukazuje na potrebu promjene politike prema zemljama “svinjama” (PIIGS) kao i na reformu temelja Ekonomske i monetarne unije

STRUKTURNE NERAVNOTEŽE I PROLIFERACIJA FINANCIJSKIH KRIZA

This article deals with fundamental concepts that are the prime cause of financial crises proliferation such as fractional reserve banking system, overleveraging and structural imbalances created in such a fashion. It examines these issues in a completely new manner shedding the light on their alternative interpretation which contrasts conventional wisdom. Unchecked money supply is characterized as the main problem that causes overleveraging, which in turn reinforces property bubbles. The pattern of economic growth that is heavily dependant on rising debt is completely unsustainable. Inflation and increased taxes in order to serve public debt obligations under the privately-owned fractional reserve banking system are not only its by-products but also its vital components. The very logic of the compound interest problem causes spiraling debt, which cannot be supported by constant economic growth that is limited against the finite nature of Earth’s natural resources. Pending reform of the present monetary system is key to the solution of most contentious issues in the global economy.Ovaj članak bavi se temeljnim konceptima koji se smatraju osnovnim uzrocima proliferacije financijskih kriza kao što su bankarstvo djelomičnih rezervi, pretjerano korištenje financijske poluge te strukturne neravnoteže proizašle iz njih. Pristup problematici baca novo svjetlo na povezana pitanja te nudi alternativnu interpretaciju zbivanja koje proturječi konvencionalnoj mudrosti. Nekontrolirana ponuda novca okarakterizirana je kao glavni problem koji doprinosi pretjeranom korištenju financijske poluge i pojavi imovinskih mjehura. Obrazac ekonomskog rasta koji znatno ovisi o rastućem dugu s pravom se smatra potpuno neodrživim. Inflacija i povećanje poreznog tereta s ciljem servisiranja javnog duga u okviru privatnog sustava djelomičnih bankovnih rezervi nisu samo njegovi nusprodukti, već i njegove sastavne komponente. Logika složene kamate stvara dužničku spiralu koju ne može podržati konstantan ekonomski rast zbog ograničenosti Zemljinih prirodnih resursa. Predstojeća reforma monetarnog sustava ključna je u nastojanju da se riješe najspornija pitanja globalne ekonomije

The Eurozone's Crisis Conundrum and the Role of Macroeconomic Theory

In the years before the global financial crisis (GFC), macroeconomic profession converged on many points of how financial markets work and how they should be regulated. However, the course of events mired the majority of European Union (EU) economies in the state of prolonged lower output, higher unemployment and ever-increasing levels of both private and public debt. They have marked an end to the economics profession honeymoon. Afterward, the main debate in the process of designing the crisis management response started to revolve around two opposed macroeconomic views: the New Keynesian and the New Classical/supply-side view. The New Keynesian view relies on the expansionary policy targeted to boost aggregate demand. However, New Classicals/supply-siders advocate structural reforms and austerity as the path out of the current state of economic malaise. We provide an analysis of how those opposing views fail to appreciate the fundamental tenets of our monetary economy and inspire ineffective policies

FINANCIALIZATION, INCOME INEQUALITY AND GDP STRUCTURE: INTERACTION BETWEEN FINANCIAL INSTITUTIONS AND POLITICAL ELITES IN PEOPLE'S REPUBLIC OF CHINA

Financijsko produbljivanje u ekonomiji razvoja i političkoj ekonomiji odnosi se na pojam koji obuhvaća porast financijske aktive, novčanih agregata i kreditne aktivnosti u odnosu na cjelokupnu ekonomsku aktivnost u nekoj ekonomiji mjereno bruto domaćim proizvodom. Standardna pretpostavka koja se veže uz financijsko produbljivanje odnosi se na smanjivanje dohodovne nejednakosti kroz efekt lakšeg pristupa rastućoj likvidnosti. Ipak, u posljednja tri desetljeća porast dohodovne nejednakosti u većini zemalja OECD-a i zemalja u razvoju poput NR Kine proturječi spomenutoj pretpostavci, usprkos značajnom trendu financijskog produbljivanja. U naprednijem stadiju ekonomskog razvoja na trend financijskog produbljivanja nadovezuje se fenomen financijalizacije i recentna evolucija kineskog financijskog sustava pokazuje prisutnost njezinih elemenata u dizajnu institucionalnog uređenja i strategijama ključnih aktera. Osim toga, u posljednjih trideset godina zabilježeno je značajno smanjenje udjela nadnica u BDP-u u slučaju većine razvijenih i zemalja u razvoju kao rezultat politika koje se popularno karakteriziraju kao neoliberalne, a što se svakako ne bi smjelo promatrati izolirano u odnosu na trend rasta dohodovne nejednakosti. Ipak, ova doktorska disertacija nije usmjerena na primjenu i analizu pojma 'neoliberalizam' u slučaju NR Kine. Komparativna politička ekonomija s posebnim naglaskom na funkcioniranje financijskih institucija i njihovom ulogom u stjecanju i očuvanju političke i ekonomske moći kroz teorijski pristup historijskog institucionalizma te heterodoksan pristup analizi monetarne teorije, zajedno predstavljaju teorijski okvir disertacije. Ova disertacija namjerava testirati tri glavne i tri pomoćne hipoteze. Glavne hipoteze ovog istraživanja tvrde da: financijsko produbljivanje kineske ekonomije predstavlja faktor koji je povezan sa porastom dohodovne nejednakosti u NR Kini (HG1); da uska povezanost političke i financijske elite značajno doprinosi porastu dohodovne nejednakosti (HG2) i da novi savez između političke i šire definirane ekonomske elite prkosi osnovnoj pretpostavci modernizacijske teorije Seymoura Lipseta koja naglašava da ekonomska modernizacija sadržava snažan demokratizacijski potencijal (HG3). Osim toga, pomoćne hipoteze tvrde kako postoji negativna povezanost između udjela nadnica u BDP-u kao mjere funkcionalne raspodjele dohotka i porasta dohodovne nejednakosti (HP1); da financijske institucije s obzirom na njihovu inherentnu logiku funkcioniranja (stvaranje kreditnog novca) predstavljaju važan izvor dohodovne nejednakosti (HP2) i kako kineski autokratski sustav pokazuje simptome financijalizacije u provođenju reformi vlastitog financijskog sustava (HP3).Financial deepening in development economics as well as political economy refers to the notion which encompasses an increase in financial assets, monetary aggregates and credit activity in relation to the overall economic activity as measured by GDP. The standard assumption which is attachted to the understanding of financial deepening perceives a decrease in income inequality as its obvious consequence due to easier access to rising liquidity. However, in the last three decades rising income inequality in most OECD countries as well as developing countries such as the PRC oppose the aforementioned assumption. In the more advanced stage of economic development, apart from financial deepening, emerges the phenomenon of financialization. The recent evolution of the Chinese financial system shows the presence of its most important defining features in the institutional framework design and key actors' strategies. On top of that, in the last three decades one can observe a falling share of wages as a proportion of GDP in the case of developed as well as developing countries. This is often seen by many observers as a result of policies which they characterize as neoliberal and which ought to be viewed as tightly interconnected with the aforementioned increase in income inequality. Nevertheless, this dissertation does not aim at the use and the analysis of the notion 'neoliberalism' in the case of China. Comparative political economy with a special emphasis on how financial institutions work and their impact on the acquisition and the preservation of political and economic power under the theoretical framework of historical institutionalism, as well as a heterodox approach to the analysis of monetary theory, represent a key theoretical framework to this dissertation. This dissertation aims to test three main and three auxilliary hypotheses. Three main hypotheses of this research claim that: the financial deepening of China's economy represents a factor that correlates with rising income inequality (HG1); that the close interconnectedness between political and financial elite significantly contributes to rising income inequality in China (HG2) and that a new alliance between the political and the broader defined economic elites defies the basic assumption of Seymour Lipset's modernization theory which posits that economic modernization bears the strong potential for democratization (HG3). On the other side, auxilliary hypotheses claim that there is a negative relationship between the wage share as a percentage of GDP (measure of functional income distribution) and the rising income inequality (HP1), that financial institutions represent an important source of income inequality with regard to their inherent modus operandi (credit money creation) (HP2) and that the China's autocratic political system also displays symptoms of financialization in the implementation of financial sector reforms (HP3)

FINANCIALIZATION, INCOME INEQUALITY AND GDP STRUCTURE: INTERACTION BETWEEN FINANCIAL INSTITUTIONS AND POLITICAL ELITES IN PEOPLE'S REPUBLIC OF CHINA

Financijsko produbljivanje u ekonomiji razvoja i političkoj ekonomiji odnosi se na pojam koji obuhvaća porast financijske aktive, novčanih agregata i kreditne aktivnosti u odnosu na cjelokupnu ekonomsku aktivnost u nekoj ekonomiji mjereno bruto domaćim proizvodom. Standardna pretpostavka koja se veže uz financijsko produbljivanje odnosi se na smanjivanje dohodovne nejednakosti kroz efekt lakšeg pristupa rastućoj likvidnosti. Ipak, u posljednja tri desetljeća porast dohodovne nejednakosti u većini zemalja OECD-a i zemalja u razvoju poput NR Kine proturječi spomenutoj pretpostavci, usprkos značajnom trendu financijskog produbljivanja. U naprednijem stadiju ekonomskog razvoja na trend financijskog produbljivanja nadovezuje se fenomen financijalizacije i recentna evolucija kineskog financijskog sustava pokazuje prisutnost njezinih elemenata u dizajnu institucionalnog uređenja i strategijama ključnih aktera. Osim toga, u posljednjih trideset godina zabilježeno je značajno smanjenje udjela nadnica u BDP-u u slučaju većine razvijenih i zemalja u razvoju kao rezultat politika koje se popularno karakteriziraju kao neoliberalne, a što se svakako ne bi smjelo promatrati izolirano u odnosu na trend rasta dohodovne nejednakosti. Ipak, ova doktorska disertacija nije usmjerena na primjenu i analizu pojma 'neoliberalizam' u slučaju NR Kine. Komparativna politička ekonomija s posebnim naglaskom na funkcioniranje financijskih institucija i njihovom ulogom u stjecanju i očuvanju političke i ekonomske moći kroz teorijski pristup historijskog institucionalizma te heterodoksan pristup analizi monetarne teorije, zajedno predstavljaju teorijski okvir disertacije. Ova disertacija namjerava testirati tri glavne i tri pomoćne hipoteze. Glavne hipoteze ovog istraživanja tvrde da: financijsko produbljivanje kineske ekonomije predstavlja faktor koji je povezan sa porastom dohodovne nejednakosti u NR Kini (HG1); da uska povezanost političke i financijske elite značajno doprinosi porastu dohodovne nejednakosti (HG2) i da novi savez između političke i šire definirane ekonomske elite prkosi osnovnoj pretpostavci modernizacijske teorije Seymoura Lipseta koja naglašava da ekonomska modernizacija sadržava snažan demokratizacijski potencijal (HG3). Osim toga, pomoćne hipoteze tvrde kako postoji negativna povezanost između udjela nadnica u BDP-u kao mjere funkcionalne raspodjele dohotka i porasta dohodovne nejednakosti (HP1); da financijske institucije s obzirom na njihovu inherentnu logiku funkcioniranja (stvaranje kreditnog novca) predstavljaju važan izvor dohodovne nejednakosti (HP2) i kako kineski autokratski sustav pokazuje simptome financijalizacije u provođenju reformi vlastitog financijskog sustava (HP3).Financial deepening in development economics as well as political economy refers to the notion which encompasses an increase in financial assets, monetary aggregates and credit activity in relation to the overall economic activity as measured by GDP. The standard assumption which is attachted to the understanding of financial deepening perceives a decrease in income inequality as its obvious consequence due to easier access to rising liquidity. However, in the last three decades rising income inequality in most OECD countries as well as developing countries such as the PRC oppose the aforementioned assumption. In the more advanced stage of economic development, apart from financial deepening, emerges the phenomenon of financialization. The recent evolution of the Chinese financial system shows the presence of its most important defining features in the institutional framework design and key actors' strategies. On top of that, in the last three decades one can observe a falling share of wages as a proportion of GDP in the case of developed as well as developing countries. This is often seen by many observers as a result of policies which they characterize as neoliberal and which ought to be viewed as tightly interconnected with the aforementioned increase in income inequality. Nevertheless, this dissertation does not aim at the use and the analysis of the notion 'neoliberalism' in the case of China. Comparative political economy with a special emphasis on how financial institutions work and their impact on the acquisition and the preservation of political and economic power under the theoretical framework of historical institutionalism, as well as a heterodox approach to the analysis of monetary theory, represent a key theoretical framework to this dissertation. This dissertation aims to test three main and three auxilliary hypotheses. Three main hypotheses of this research claim that: the financial deepening of China's economy represents a factor that correlates with rising income inequality (HG1); that the close interconnectedness between political and financial elite significantly contributes to rising income inequality in China (HG2) and that a new alliance between the political and the broader defined economic elites defies the basic assumption of Seymour Lipset's modernization theory which posits that economic modernization bears the strong potential for democratization (HG3). On the other side, auxilliary hypotheses claim that there is a negative relationship between the wage share as a percentage of GDP (measure of functional income distribution) and the rising income inequality (HP1), that financial institutions represent an important source of income inequality with regard to their inherent modus operandi (credit money creation) (HP2) and that the China's autocratic political system also displays symptoms of financialization in the implementation of financial sector reforms (HP3)