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1. Black Intergenerational Mobility, Libertarian Capitalism, and Authoritarian Government, 1877–1941: A Case Study

Author:
Patrick L. Mason
Publication Date:
01-2025
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
There are persistent multigenerational Black-white gaps in occupational attainment. These racial differences in intergenerational mobility are not caused by differences in family values and behavior (Mason, 2007). For three decades, I have gathered evidence on my family’s intergenerational transition from enslavement to present social and economic circumstances. Charles and Susan Rollins were 32 and 29 years-old, respectively, as enslavement ended in 1865. During Reconstruction, they accumulated wealth, established a successful dairy and other farming, helped found a church and religious organizations, helped found multiple civic organizations, served on boards affiliated with the local university and high school, were elected to County and State public office, had savings and bank accounts for the entire family, and were leaders among an extensive social network. Jim Crow in the South and anti-black racism in the north stymied upward mobility for the Rollins family for the three generations after Charles and Susan, despite the fact that their descendants obtained greater education than their ancestors, displayed a willingness to relocate 100s of miles away from their home, possessed a culture of achievement (hard work, future orientation, married couple families, etc.), were blessed with exceptional social capital, and, perhaps, the relative advantage of being mulattoes.
Topic:
History, Authoritarianism, Capital, Libertarianism, and Social Mobility
Political Geography:
North America and United States of America

2. Lowering the Cost of Capital for Climate and SDG Finance in Emerging Markets and Developing Economies (EMDEs)

Author:
Jeffrey Sachs, Lisa Sachs, Ana Maria Camelo Vega, and Bradford M. Willis
Publication Date:
04-2025
Content Type:
Special Report
Institution:
Columbia Center on Sustainable Investment
Abstract:
Today, the world’s fastest-growing economies face the steepest borrowing costs — even for clean energy projects with solid fundamentals. This is not a function of global capital scarcity. Trillions are available. The problem lies in systemic barriers that prevent capital from flowing to where it’s most urgently needed. The high cost of capital in EMDEs not only undermines critical financing for the energy transition and sustainable development; it also limits the ability for US- and EU-based financial institutions to invest in and finance projects in EMDEs, despite institutional and stakeholder appetite and interest for transition finance. This paper provides a holistic diagnosis of the structural forces inflating the cost of capital in EMDEs – including sovereign credit ratings, investor risk perceptions, development finance mandates, and regulatory norms – and it outlines ten actionable solutions to unlock long-term, affordable finance for climate and sustainable development – at the speed and scale required by both global goals and national ambitions. Each of the proposed approaches deserves careful discussion, consideration, and exploration; they are presented in this paper as a roadmap for discussion, including in the context of relevant global discussions on financing climate action and sustainable development, including the UN Financing for Development Agenda, the UNFCCC COP process, and the G20 Sustainable Finance Working Group.
Topic:
Development, Emerging Markets, Climate Finance, Sustainable Development Goals, and Capital
Political Geography:
Global Focus

3. The quickly fading memory of why and when bank capital is important

Author:
Jesper Berg, Nicolas Boivin, and Hans Geeroms
Publication Date:
04-2025
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
Less than fifteen years after the global financial crisis of 2007-2008, banks and policymakers are calling for deregulation and lower capital requirements in the financial sector. They dispute that the Basel framework, the global standards for regulating large international banks, should be implemented fully in the European Union. One concern is that stricter capital regulation will affect the competitiveness of European banks compared to those in the United States and will restrict loan provision in the EU, despite Europe’s significant investment gap. However, deregulation should not be confused with reducing capital requirements for banks. On balance, there is only limited empirical evidence that respecting the capital requirements necessary to support financial stability hampers credit to the economy, investment or economic growth in the long term. Only well-capitalised banks can continue financing the economy during economic setbacks, and weakening the implementation of the Basel standards increases the risks of a new financial crisis. Bank lending and access to financing surveys also show there is no credit crunch in the euro area at present and that capital requirements are not the primary constraint on credit provision. A detailed look at current banking regulation does not support the conclusion that European banks are more strictly regulated overall than US banks. A direct comparison suggests rather the opposite. However, the compliance cost incurred by EU banks from current banking regulation can be reduced by simplifying EU rules.
Topic:
Markets, Financial Crisis, European Union, Regulation, Capital, and Banking
Political Geography:
Europe

4. The Gendered Impact of Social Norms on Financial Access and Capital Misallocation

Author:
Arti Grover and Mariana Viollaz
Publication Date:
01-2025
Content Type:
Working Paper
Institution:
Center for Distributive, Labor and Social Studies (CEDLAS)
Abstract:
This paper provides evidence on the nature of financial constraints faced by women entrepreneurs, especially in contexts of stringent social norms. Using micro-data from the World Bank Enterprise Surveys for 61 countries, the analysis shows that formal firms managed by women do not face credit constraints on the extensive margin. They are equally likely to apply for credit as their male counterparts and experience lower rates of credit rejection, with a higher likelihood of opening credit lines. However, on the intensive margin, firms managed by women receive lower credit amounts, indicating signs of credit constraints. This disparity in access to credit cannot be explained by gender differences in risk profiles, profitability, or productivity. However, firms managed by women have lower sales per worker, suggesting challenges in accessing product and labor markets. The paper finds suggestive evidence of capital misallocation based on gender, particularly in countries with more restrictive gender and cultural norms. Firms managed by women demonstrate a 15 percent higher average return on capital compared to firms managed by men, indicating the potential benefits of increased access to credit for women-led businesses. These findings emphasize the importance of addressing gender-specific constraints to accessing finance and promoting gender-inclusive policies to enhance firm growth and reduce capital misallocation.
Topic:
Culture, Fiscal Policy, Credit, Capital, Gender, and Social Norms
Political Geography:
Global Focus

5. The Profitability of Bank Capital and Household Debt

Author:
Hyun Woong Park
Publication Date:
08-2024
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
When does the banking sector profitability exceed the industrial sector profitability? In a benchmark, counterfactual scenario where banks lend to industrial firms only, the industrial profitability exceeds the bank profitability unless the banks’ financial intermediation technology is sufficiently advanced and the industrial sector’s leverage ratio is sufficiently high. In a more realistic scenario where the banks lend not only to the industrial firms and but also to households, which rely on bank loans for housing, vehicle, education, etc., the bank profitability exceeds the industrial profitability when the household sector’s total debt services are sufficiently large, regardless of the levels of the banks’ financial technology and the industrial sector’s leverage ratio. It suggests that the households’ debt and interest payments are potentially a important source of the bank profitability exceeding the industrial profitability. That is, the bank capital beat the industrial capital in terms of profitability by exploiting the households’ financial conditions that force them to rely on debt for their full reproduction. Lastly, this result is empirically confirmed through the ARDL cointegration analysis with the U.S. quarterly data for 1984–2020.
Topic:
Debt, Economy, Capital, and Banking
Political Geography:
Global Focus

6. Hidden Champions of the Chinese Economy: Implications for Korea

Author:
Seungshin Lee
Publication Date:
08-2024
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
This paper reviews China's policy of nurturing small and medium sized enterprises. The Chinese government is expanding its establishment of national manufacturing innovation centers necessary to promote national strategies. It plays a very important role in the financial support process for these hidden champions. This is because the government certification process to identify hidden champions is linked to direct and indirect financial support using government and private capital. This paper attempted to analyze the management situation and export competitiveness of listed hidden champions. As a result of analyzing the trade statistics of materials, parts, and equipment from 2012 to 2022, when China's policy of cultivating foster hidden champions was fully implemented, the global trade balance of the China's materials, parts, and equipment industry increased significantly from a deficit of $55.6 billion in 2012 to a surplus of $264.1 billion in 2022. The improvement of China's competitiveness in the fields of materials, parts, and equipment can also be seen as a change in the trade specialization index (TSI) of these industries. Looking at China's global trade specialization index for materials, parts, and equipment, it was import-specialized at -0.033 in 2012, but rose to 0.100 in 2022, improving export competitiveness. Korea should recognize the changes in the trade and industrial structure between Korea and China and form a new paradigm of economic cooperation to overcome the limitations of economic exchanges between the two countries. China, which used to be seen as a manufacturing base for other countries, must now be seen as an advanced country in new industries with which the current structure of economic cooperation structure must be modified accordingly.
Topic:
Economy, Business, Innovation, Trade, and Capital
Political Geography:
China, Asia, and South Korea

7. Rethinking Monopoly as a Power Relation: The Shift from Market to Intellectual Monopoly

Author:
Cecilia Rikap
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
City Political Economy Research Centre (CITYPERC), University of London
Abstract:
The critical literature on monopolies, from monopoly capital to recent contributions, focuses on the organization that concentrates either market power, capital or property rights. I complement this literature by conceptualizing monopolies as a power relation, which enables me to integrate different ways in which the term is used, from capitalists’ monopoly over the means of production to intellectual monopolization. As I explain here, some firms have developed greater capacities to systematically monopolize intangibles that are essential for organizing labour beyond their owned assets and for controlling demand. Coupled with institutional, political and technological changes, larger absorptive and management capacities to produce and capture knowledge and information resulted in firms’ technological differentiation. The systematic winners of the innovation race hold persistent intellectual monopolies while other firms become subordinate due to their lack of technical autonomy. From this perspective, (intellectual) monopoly power is essential for understanding the distribution of value in capitalism.
Topic:
Political Economy, Labor Issues, Capitalism, Monopoly, Capital, Power Relations, and Value Capture
Political Geography:
Global Focus

8. The Fate of the State in a Changing World

Author:
V. Yegorov
Publication Date:
12-2023
Content Type:
Journal Article
Journal:
International Affairs: A Russian Journal of World Politics, Diplomacy and International Relations
Institution:
East View Information Services
Abstract:
The main phenomenon of the social mainstream is the institution of the state and its evolution (“shrinking”), associated with the increased activity of civil society and a reevaluation of the role of the market. Postmodernists have no faith in the future of the state. They presuppose that institutions of social organization will be replaced by a network organization of individuals tied together culturally, informationally, and spiritually, with a higher level of identities.1 Their camp includes liberal thinkers who believe in the inevitable “supplanting [of] the primacy of the nation-state by transnational corporations and organizations, and eroding [of] local cultures and traditions through a global culture.”2 The social nature of humans is deeply rooted in the past, when collective forms of human existence were a sine qua none of survival, while the state was a “product” of social organization. In the pre-state era, it was supported by the “cage of norms” (customs, traditions, etc.).3 According to Thomas Hobbes, a main factor of the emergence of states was the “war of every man against every man,” as well as the implementation of the institution of private property. The legal space and the state ensure its inviolability. The liberal order invariably produced a dichotomy between the interests of society and the institutions represented by the state on the one hand, and the rights and freedoms of the individual on the other. The logic of this social order in its extreme form is Libertarianism, with its slogan of “less government.” The dichotomy of the interests of the state and of the individual crops up in a dialectical contradiction resolved with the help of effective mechanisms of mutual obligations of individuals and society as a whole (the “ethical state,” according to Paul Collier).
Topic:
Sovereignty, Networks, State, and Capital
Political Geography:
Global Focus

9. Dependency and Super-exploitation: The Relationship between Foreign Capital and Social Struggles in Latin America

Author:
Tricontinental: Institute for Social Research
Publication Date:
08-2023
Content Type:
Working Paper
Institution:
Tricontinental: Institute for Social Research
Abstract:
This dossier analyses the role of Marxist dependency theory today as an important scientific tool to understand the current anti-democratic and fascist trends and emancipation processes in the Global South.
Topic:
Capital, Exploitation, Dependency, and Marxism
Political Geography:
Latin America and Global South

10. State Aid, R&D, and the Digital Content of Trade

Author:
Chiara Castelli, Dario Guarascio, Stefan Jestl, and Robert Stehrer
Publication Date:
11-2023
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
We test for the role of state aid as a driver of digital competitiveness at the industry level, focusing on the digital factor content of trade. Results show that state aid may increase digital competitiveness, particularly in R&D-intensive industries and in relation to the export of (digital) capital-intensive goods and services. Interestingly, aggregate state aid appears to be more effective than specific R&D funds in explaining the performance of country-industries in foreign markets.
Topic:
International Trade and Finance, European Union, Trade, Industry, Capital, and Research and Development
Political Geography:
Europe