This is the second webinar as part of our virtual series, Contested Reproduction of States and Societies in Financialized Capitalism: Comparative Views from Turkey, in partnership with Dr. Pınar Bedirhanoğlu (Associate Professor, Middle East Technical University, Turkey) and Dr. Ali Rıza Güngen (Visiting Professor, York University, Canada). Find more from the series here: webinar #1 and webinar #3.
Financialization, Labour and the State: Turkey, Poland and the U.S. Compared
Fed-sponsored financialization from the 2008 GFC to the 2020 Covid-19 shock
Dr. Özgür Orhangazi, Professor, Kadir Has University, Turkey
The actions of the US Federal Reserve (the Fed) such as the organization of the Long Term Capital Management (LTCM) bailout in 1998, sharp interest rate cuts following the collapse of the dot.com bubble in 2001 had been instrumental in the continuous expansion of financial markets. Financial markets began using the concept of a “Greenspan put” (named after the Fed chairman from 1987-2007) which came to mean that the Fed would not allow the prices of financial assets to fall below a certain level. The 2008 crash led to not only a reduction of the interest rates to 0 but a mobilization of a series of other instruments as well as new mechanisms of expanding liquidity in financial markets. In the 2010s, financial asset prices reached historically high levels due to both Fed’s QE policies and the continuous stock buybacks of large corporations. In fact, even before the Covid-19 crisis, towards the end of 2019, signs of fragility began emerging in US markets to which the Fed’s answer was to further increase liquidity and try to extend the financial expansion as long as it could. While the contribution of Fed’s measures to the real economy is debatable, the 2020 Covid-19 crisis brought Fed back into action at yet another unprecedented scale. In this talk, I will discuss the policy actions in the US in 2020, their role in sustaining the financial expansion through the “Greenspan put” and their likely consequences for both the US and the world economy.
Does the crisis in the 'center' account for widening the policy space in the ‘periphery’? Reflections from Turkey and Poland
Dr. Ümit Akçay, Visiting Professor, Berlin School of Economics and Law, Germany
Poland did not experience a recession during the Global Financial Crisis (GFC) and Turkey’s 2018-2019 crisis did not end up with the implementation of a new IMF program. Indian and Chinese economies continued to grow quite strongly in the aftermath of the GFC. These unusual divergencies, as symptoms of the widening policy space of the semi-periphery, have correlated with the global hegemonic crisis, which I will redefine as the global interregnum. This presentation will engage in the policy space debate from a critical international political economy perspective. It will discuss three main questions: Why and how these semi-peripheral countries were able to avoid the 1990s style austerity (Poland, Turkey, and India) or even developed a divergent variety of capitalism (China)? What is the relation between financialization, which emerged as a result of the crisis of major capitalist countries, and the increasing policy space of the periphery? To what extent is an updated version of the dependency school’s understanding of center-periphery may be helpful to understand this phenomenon?