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25 results

Page 1 of 2

  • 5 - Constructing the Great Stagflation: From Accommodation to Transformation

  • from Part II - The Construction, Conversion, and Collapse of the Keynesian Order
  • Wesley W. Widmaier, Griffith University, Queensland
  • Book:
    Economic Ideas in Political Time
    Published online:
    05 July 2016
    Print publication:
    14 July 2016, pp 109-132

  • Summary

    In chapter five, I argue that policy overconfidence obscured the accumulation of market power, as the accommodation of wage-price spirals driving stagflation led to the collapse of the Keynesian order. In a first stagflation, Nixon attempts at monetary “gradualism” over 1969-1971 would be abandoned in favor of monetary and regulatory accommodation of wage and price pressures. While the Ford administration briefly imposed austerity in 1974, the 1975 recession led to its policy retreat and the Carter administration’s accommodation of a second stagflation –which set the stage for the abandonment of gradualism in favor of unqualified austerity.

  • 6 - Constructing the Neoliberal Order: Breaking Labor and Boosting Finance

  • from Part III - The Construction, Conversion, and Crisis of the Neoliberal Order
  • Wesley W. Widmaier, Griffith University, Queensland
  • Book:
    Economic Ideas in Political Time
    Published online:
    05 July 2016
    Print publication:
    14 July 2016, pp 135-156

  • Summary

    In chapter six, I address the Reagan construction of the Great Stagflation and legitimation of a neoliberal order, premised on the breaking of labor and bolstering of finance. Abandoning gradualist fine tuning, Reagan’s firing of striking air traffic controllers combined with Volcker’s monetary restraint to limit wage pressures for a generation. Bolstering financial interests, Volcker set the template for subsequent crisis-management as he convened private financial agents to contain the Latin American debt crisis, and as his successor Alan Greenspan managed the 1987 “Black Monday” crash.

  • 1 - Economic Ideas in Political Time: Construction, Conversion, and Crisis

  • from Part I - Theoretical and Historical Foundations
  • Wesley W. Widmaier, Griffith University, Queensland
  • Book:
    Economic Ideas in Political Time
    Published online:
    05 July 2016
    Print publication:
    14 July 2016, pp 3-28

  • Summary

    What explains the rise and fall of economic policy orders – defined by commitments to shared ideas and interests – and to what extent is stability itself a cause of instability? In recent decades, Political Economy frameworks have stressed the efficiency with which agents use information, obscuring the ways in which such stability can over time fuel overconfidence and crisis. To redress these oversights, I more formally integrate constructivist and discursive institutionalist insights in a social psychological institutionalist model of the principled construction of orders, their intellectual conversion which spurs overconfidence, and the onset of crises which renew debate.

  • 7 - Converting the Neoliberal Order: Toward the New Keynesianism

  • from Part III - The Construction, Conversion, and Crisis of the Neoliberal Order
  • Wesley W. Widmaier, Griffith University, Queensland
  • Book:
    Economic Ideas in Political Time
    Published online:
    05 July 2016
    Print publication:
    14 July 2016, pp 157-178

  • Summary

    In chapter seven, I address the conversion of this order in the rise of the Federal Reserve and its use of monetary fine tuning, guided by a New Keynesian consensus on a Taylor Rule trade-off between the volatility of growth and inflation. Over the 1990s, this monetary consensus would be strengthened at two moments of crisis: over the 1994-1995 Federal Reserve tightening and Mexican peso crisis; and over the scope for monetary accommodation in the 1997-1999 crises. Ultimately, monetary policymakers would come to see their role as enabling “soft landings,” mopping up after financial crises, and promoting financial deregulation.

  • 3 - Constructing the Keynesian Order: Breaking Finance and Boosting Labor

  • from Part II - The Construction, Conversion, and Collapse of the Keynesian Order
  • Wesley W. Widmaier, Griffith University, Queensland
  • Book:
    Economic Ideas in Political Time
    Published online:
    05 July 2016
    Print publication:
    14 July 2016, pp 51-76

  • Summary

    What explains the rise and fall of economic policy orders – defined by commitments to shared ideas and interests – and to what extent is stability itself a cause of instability? In recent decades, Political Economy frameworks have stressed the efficiency with which agents use information, obscuring the ways in which such stability can over time fuel overconfidence and crisis. To redress these oversights, I more formally integrate constructivist and discursive institutionalist insights in a social psychological institutionalist model of the principled construction of orders, their intellectual conversion which spurs overconfidence, and the onset of crises which renew debate.

  • 4 - Converting the Keynesian Order: Toward the Neoclassical Synthesis

  • from Part II - The Construction, Conversion, and Collapse of the Keynesian Order
  • Wesley W. Widmaier, Griffith University, Queensland
  • Book:
    Economic Ideas in Political Time
    Published online:
    05 July 2016
    Print publication:
    14 July 2016, pp 77-108

  • Summary

    In chapter four, I address the intellectual conversion of this order and rise of the Council of Economic Advisers, as a postwar intellectual aversion to public appeals spurred calls for an “end of ideology.” With respect to authority, the Council of Economic Advisers would increasingly oppose presidential exhortation and wage guideposts. Instead, in policy terms, fiscal fine tuning of a Phillips Curve trade-off between inflation and unemployment would displace wage-price regulation. Such priorities were advanced as the Council criticized wage guidelines in the 1962 Kennedy steel dispute, Johnson debates over Vietnam War spending, and anticipated Nixon calls for a macroeconomic “gradualism.”

  • 2 - The Construction, Conversion, and Collapse of the Progressive Order

  • from Part I - Theoretical and Historical Foundations
  • Wesley W. Widmaier, Griffith University, Queensland
  • Book:
    Economic Ideas in Political Time
    Published online:
    05 July 2016
    Print publication:
    14 July 2016, pp 29-48

  • Summary

    In chapter two, I address an early manifestation of these dynamics, tracing the principled construction, intellectual conversion, and onset of misplaced certainty and collapse of the Progressive era: First, as to order construction, while Theodore Roosevelt played a key role in advancing a view of the president as a rhetorical leader, he also foreshadowed future difficulties in the construction of crises, as the Panic of 1907 saw his efforts to enable a J.P. Morgan-led recovery limit the scope for reform. Secondly, in terms of conversion, the Wilson administration established the foundations of modern fiscal and monetary policy in the Revenue Act of 1913, the Federal Reserve Act of 1913, and its postwar dismantling of the Commerce Department’s Industrial Board. Thirdly, as to order crisis, monetary hubris obscured the onset of a 1920s asset-price bubble, enabling the Great Crash.

  • 9 - Theoretical, Historical, and Policy Implications

  • from Part IV - Conclusions
  • Wesley W. Widmaier, Griffith University, Queensland
  • Book:
    Economic Ideas in Political Time
    Published online:
    05 July 2016
    Print publication:
    14 July 2016, pp 205-212

  • Summary

    First, in theoretical terms, this analysis moves beyond a theoretical commitment to rationalism as it offers a constructivist-institutionalist analysis of the inefficiencies which cause crises. Secondly, in historical terms, its shows how stability has caused instability, as the Progressive, Keynesian and neoliberal orders were undermined by an overconfidence which presaged the Great Depression, Great Stagflation, and Global Financial Crisis. Thirdly, in policy terms, it directs attention to the regulatory prerequisites to wage, price or asset stability, and so accords with contemporary arguments for the “macroprudential” regulation of financial markets.

  • 8 - Constructing the Global Financial Crisis: From Accommodation to Iteration

  • from Part III - The Construction, Conversion, and Crisis of the Neoliberal Order
  • Wesley W. Widmaier, Griffith University, Queensland
  • Book:
    Economic Ideas in Political Time
    Published online:
    05 July 2016
    Print publication:
    14 July 2016, pp 179-202

  • Summary

    In chapter eight, I argue that overconfidence in a “Great Moderation” of ideas and market trends spurred the accommodation of financial power over the 2000s, leading to the collapse of the neoliberal order in the Global Financial Crisis. First, after the dot-com crash of 2000-2001, fiscal, monetary, and regulatory accommodation would be reinforced by a consensus on the ability of policymakers to stabilize the subprime bubble. Secondly, while the Global Financial Crisis would witness an initial repudiation of this consensus, the scope for reform would also be limited by the need for fiscal, monetary and regulatory accommodation to enable recovery. Subsequently, an incomplete transformation would see the continued support for asset-price bubbles and “Too Big to Fail” institutions maintained alongside incremental efforts at promoting competition in the shadow banking system and advancing macroprudential reform.

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