From the Republican Party's "Southern Strategy" in the U.S. to the rise of Le Pen's National Front in France, conservative politicians in the last thirty years have capitalized on voters' resentment of ethnic minorities to win votes and undermine government aid to the poor. In this book, the authors construct a theoretical model to calculate the effect of voters' attitudes about race and immigration on political parties' stances on income distribution.

Drawing on empirical data from the U.S., Britain, Denmark, and France, they use their model to show how parties choose their platforms and compete for votes. They find that the Right is able to push fiscal policies that hurt working and middle class citizens by attracting voters who may be liberal on economic issues but who hold conservative views on race or immigration. The authors estimate that if all voters held non-racist views, liberal and conservative parties alike would have proposed levels of redistribution 10 to 20 percent higher than they did. Combining historical analysis and empirical rigor with major theoretical advances, the book yields fascinating insights into how politicians exploit social issues to advance their economic agenda.

Since Ronald Reagan left office in 1989, the global community has witnessed the collapse of the Soviet Union and the integration of Europe, the War on Terror and the Arab Spring, a hot Chinese economy and a major international recession. Reagan’s Legacy in a World Transformed brings together scholars from diverse disciplines and persuasions to assess the fortieth president’s policies and their ongoing impact today, and to offer a timely retrospective on his complex legacy.

The authors consider the influence of Reagan’s free-market ideas on economic globalization, showing how deregulation succeeded in spurring economic expansion. In foreign policy, Reagan favored significant increases in military spending (“peace through strength”) and an assertive agenda abroad. His break with détente in dealing with the Soviet Union, notably expressed in his 1982 March of Freedom speech, effectively restored the early Cold War strategy of rolling back communism. More than twenty years later, President George W. Bush invoked this speech in describing his goals in the Middle East—a striking example of how Reagan’s ideas affected the post-9/11 world.

In contrast with his hawkish stance on defense, Reagan’s efforts to reduce nuclear arsenals, negotiated with Mikhail Gorbachev, constitute one of his enduring contributions to stability. Although Reagan’s policies soared on rhetoric rooted in ideological conviction, the president engaged in pragmatic internationalism when a multilateral approach served America’s interests. He believed that America had a special mission as a moral leader and beacon of freedom, a view that continues to inform U.S. foreign policy.

The wave of liberalization that swept world markets in the 1980s and 90s altered the ways that governments manage their economies. Reinventing State Capitalism analyzes the rise of new species of state capitalism in which governments interact with private investors either as majority or minority shareholders in publicly-traded corporations or as financial backers of purely private firms (the so-called “national champions”). Focusing on a detailed quantitative assessment of Brazil’s economic performance from 1976 to 2009, Aldo Musacchio and Sergio Lazzarini examine how these models of state capitalism influence corporate investment and performance.

According to one model, the state acts as a majority investor, granting the state-owned enterprise (SOE) financial autonomy and allowing professional management. This form, the authors argue, has reduced many agency problems commonly faced by state ownership. According to another hybrid model, the state uses sovereign wealth funds, holding companies, and development banks to acquire a small share of equity ownership in a corporation, thereby potentially alleviating capital constraints and leveraging latent capabilities.

Both models have benefits and costs. Yet neither model has entirely eliminated the temptation of governments to intervene in the operation of natural resource industries and other large strategic enterprises. Nevertheless, the longstanding debate over whether private ownership is superior or inferior to state capitalism has become irrelevant, Musacchio and Lazzarini conclude. Private ownership is now mingled with state capital on a global scale.

Keynesian economics, which proposed that the government could use monetary and fiscal policy to help the economy avoid the extremes of recession and inflation, held sway for thirty years after World War II. However, it was discredited after the stagflation of the 1970s, which not only proved resistant to traditional Keynesian policies but was actually thought to be caused by them. By the 1990s, the anti-Keynesian counter-revolution seemed to reach its pinnacle with the award of several Nobel Prizes in economics to its architects at the University of Chicago.

However, with the collapse of the dot-com boom in 2000 and the attacks of 9/11 a year later, the nature of macroeconomic policy debate took a turn. The collapse prompted a major shift in macroeconomic policy, as the Bush administration and other governments around the world began to resort to Keynesian measures—both monetary and fiscal policies—to stabilize the economy. The Keynesian rebirth has been most dramatically illustrated during the past year when central banks have pumped billions of dollars of liquidity into the world’s financial system to address the crises of confidence, illiquidity, and insolvency that were triggered by the sub-prime lending crisis. The Return to Keynes puts Keynesian economics in a fresh perspective in order to assess this surprising new era in economic policy making.

The financial and economic collapse that began in the United States in 2008 and spread to the rest of the world continues to burden the global economy. David Kotz, who was one of the few academic economists to predict it, argues that the ongoing economic crisis is not simply the aftermath of financial panic and an unusually severe recession but instead is a structural crisis of neoliberal, or free-market, capitalism. Consequently, continuing stagnation cannot be resolved by policy measures alone. It requires major institutional restructuring.

Kotz analyzes the reasons for the rise of free-market ideas, policies, and institutions beginning around 1980. He shows how the neoliberal capitalism that resulted was able to produce a series of long although tepid economic expansions, punctuated by relatively brief recessions, as well as a low rate of inflation. This created the impression of a “Great Moderation.” However, the very same factors that promoted long expansions and low inflation—growing inequality, an increasingly risk-seeking financial sector, and a series of large asset bubbles—were not only objectionable in themselves but also put the economy on an unsustainable trajectory. Kotz interprets the current push for austerity as an attempt to deepen and preserve neoliberal capitalism. However, both economic theory and history suggest that neither austerity measures nor other policy adjustments can bring another period of stable economic expansion. Kotz considers several possible directions of economic restructuring, concluding that significant economic change is likely in the years ahead.

The financial and economic collapse that began in the United States in 2008 and spread to the rest of the world continues to burden the global economy. David Kotz, who was one of the few academic economists to predict it, argues that the ongoing economic crisis is not simply the aftermath of financial panic and an unusually severe recession but instead is a structural crisis of neoliberal, or free-market, capitalism. Consequently, continuing stagnation cannot be resolved by policy measures alone. It requires major institutional restructuring.

“Kotz’s book will reward careful study by everyone interested in the question of
stages in the history of capitalism.”
—Edwin Dickens, Science & Society

“Whereas [others] suggest that the downfall of the postwar system in Europe and the United States is the result of the triumph of ideas, Kotz argues persuasively that it is actually the result of the exercise of power by those who benefit from the capitalist economic organization of society. The analysis and evidence he brings to bear in support of the role of power exercised by business and political leaders is a most valuable aspect of this book—one among many important contributions to our knowledge that makes it worthwhile.”
—Michael Meeropol, Challenge