It has been more than a century since Ambedkar鈥檚 second disquisition in the discipline of economics was published; The problem of the rupee: its origin and its solution was published in the year 1923. Ambedkar was awarded a Doctor of Science (D. Sc) upon completion of the aforementioned dissertation from the London School of Economics. Later, during the same year, it was published as a book (Jadhav 2015, p. 39).
This essay is fundamentally a tribute to The problem of the rupee; it aims to serve as a primer by discussing the theoretical gravitas and intellectual depth that Ambedkar鈥檚 second disquisition entails. While it is well-recognized that Ambedkar was trained in economics鈥攈olding two doctoral degrees[1]鈥攁nd made significant contributions to law and politics, this essay sheds light upon a few interactions with different economists and economic conditions that Ambedkar鈥檚The problem of the rupee engages with and subsequently invites for more extensive and nuanced engagement with the monograph.
Earlier, there have been multiple scholarly contributions that engaged with The problem of the rupee. However, they present only the overarching arguments i.e., the arguments are void of the details that explain the intellectual brilliance that is present in Ambedkar (1923). For instance, Jadhav claims that, after evaluating the Indian monetary system and operations, Ambedkar was in favour of a gold-standard rather than a gold-exchange standard (1991, p. 980). In a rudimentary sense, what gold standard and a gold-exchange standard mean is that the former indicates a monetary practice where gold is the direct form of currency that would be available for circulation. On the other hand, the latter i.e., the gold exchange standard is a condition where gold would not be a medium of exchange, but another form of currency would be the medium of exchange as gold would be held for reserve exchanges.
, International Monetary Fund (IMF) states that 鈥榌t]he dollar鈥檚 share of global foreign-exchange reserves fell below 59 percent in the final quarter of last year, extending a two-decade decline鈥�. However, surprisingly, the decline in the dollar is not associated with the 鈥榠ncrease in the shares of the pound sterling, yen, euro, and other long-standing reserve currencies.鈥� Instead, the shift in the dollar鈥檚 share in the reserve currency system went in two directions鈥攁 quarter into the Chinese renminbi and three-quarters into the currencies of smaller countries that have historically played a limited role as reserve currencies. This piece examines the shifts underlying this trend with a focus on increased regional alliances in trade and payment systems technology. We conclude with forecasts and implications for a more multipolar monetary order and 鈥榙ollar diplomacy.鈥�
Since the onset of the Covid-19 pandemic, geopolitical tensions and economic stagnation have led to fragmentation in cross-border trade and payment systems. The ongoing Ukraine-Russia conflict and international sanctions imposed by the Western economies have also contributed to this situation by causing disruptions for countries with trade relationships with Russia, particularly for essential commodities like fuel, grain, and oilseed. Moreover, many countries are running low on U.S. dollar reserves amidst inflation, prompting them to consider alternative currencies for cross-border trade settlements. This is further exacerbated by the aggressive rate hikes by the Federal Reserve in an attempt to contain domestic inflation within the U.S. The historical correlation between the U.S. dollar and commodity prices has been disrupted for the first time. As a result, evidence suggests a degree of regional fragmentation in trade-related activities and the use of alternative currencies, leading to a shift away from the U.S. dollar as the primary currency for international trade. For instance, in March 2023, the yuan was the most widely used global currency, surpassing the U.S. dollar and euro.
Further, central banks from emerging markets and developing economies seek to diversify their foreign currency reserve composition. The shift began in April 2022, after key Russian banks were removed from SWIFT following Russia鈥檚 invasion of Ukraine. China increasingly uses the yuan to buy Russian commodities, such as oil, coal, and metals, settling their bilateral trade with Russia in Chinese currency instead of dollars. In a similar effort, India has made several initiatives to create bilateral trade relationships with countries like Bangladesh, the United Arab Emirates, and Malaysia to internationalize the rupee and use it to settle cross-border trades. This trend toward exploring alternative currencies may affect the global financial landscape. Still, its impact about newer currencies鈥� volatility and regulatory systems.
Over the past decade, two, intertwined research agendas on (IFS) and (SF) have proposed to identify how an increasingly finance-dominated global capitalism incorporates the (Semi-)Peripheries.
The IFS research agenda recognizes that a 鈥渟ubordinate鈥� national currency comes with a risk premium increasing the costs of financing public debt 鈥� in other words, the current, US dollar-based currency hierarchy acts as a structural fiscal constraint in the Global South, limiting the scope for badly needed public investments. Foreign capital 鈥� in the form of foreign currency-denominated sovereign and private debt-, foreign aid, and foreign direct investment – is then to this artificial and unfair developmental constraint.
The SF agenda examines how this straightjacket on fiscal space has been further compounded with the liberalization of global capital mobility over the past forty years, diffusing credit-based accumulation strategies from the Core to the Peripheries: from socially and environmentally vital public goods and transformative industrial policies towards developmentally regressive strategies of accumulation driven by speculation and asset-price inflation.
Programmatic visions for liberating (semi-) peripheral economies from the dual constraints of a national fiscal space suffocated by the global currency hierarchy and globally mobile capital flows which deepen financialization are underdeveloped. Two scales of action are plausible: At the international level, , but it remains uncertain what forms of international financial solidarity and collaboration, if any, will materialize under its aegis. The national level comprises an alternative scale as the State continues to be perceived as the most likely candidate for ringfencing domestic social, environmental, and developmental objectives from the pressures of global capital mobility and the structural constraints of the global currency hierarchy.
In a with P谋nar E. 顿枚苍尘别锄, we study the politics governing the management of money in Hungary and Turkey, two semi-peripheral economies where the executive has built a vast array of direct and indirect tools to intervene in monetary policy, retail banking and credit allocation to manage financial subordination.
The surge of right-wing populism in East-Central Europe is often portrayed as an unforeseen shift from the earlier post-1989 liberalization path. The 鈥渋lliberal transformation鈥� narrative underlines stark differences between the policy arsenals that informed democratization and marketization reforms in the early 1990s and those fueling current 鈥�.鈥� Yet this framing conceals the analytical maneuver of disconnecting the political sphere from its socioeconomic counterpart, thereby limiting democracy to the former and defining democratic participation based on electoral competition.
It was precisely this separation, which at the dawn of post-communist transformation, tended to align democratization not with leveling erstwhile power and wealth disparities, but with by the lingering elements of Soviet bureaucracy. Conceived in this way, democratization was deemed to be an engine of market reforms. Insofar as much of the 鈥渢ransitology鈥� scholarship operated with a parochial 鈥渄emocracy鈥� versus 鈥渁uthoritarianism鈥� dichotomy, it repeatedly obscured authoritarian tendencies in consolidating democratic systems.
In the recently published article , I argue that the corpus on 鈥渁uthoritarian neoliberalism鈥� is well-positioned to instigate a much-needed departure from this externalization of 鈥減olitical鈥� and 鈥渟ocioeconomic鈥� spheres when revisiting the intricacies of post-communist transformation in general and monetary reforms in the Baltic states in particular.
In collaboration with EADI and King鈥檚 College, London, 黑料社区 has launched Season of the Hierarchies of Development podcast.听The podcast offers long format interviews focusing on enduring global inequalities. Conversations focus on contemporary research projects by critical scholars and help us understand how and why structural hierarchies persist. Join hosts Ingrid Kvangraven (KCL/DE) and Basile Boulay (EADI) for this series of discussions on pressing issues in the social sciences.
The podcast was developed with editing support from Jonas Bauhof. Listen to old episodes and subscribe to get updates on new episodes听(you can choose your preferred platform).
In the first episode is on monetary hierarchies we speak to Karina Patricio Ferreira Lima (University of Leeds, UK) about hierarchies in money and finance, core-periphery dynamics of inflation, the role of the International Monetary Fund in assessing debt sustainability, and much more. Listen on Spotify with the link below.
鈥淥ne of the chief contributions to peace that the Bretton Woods program offers is that it will free the small and even the middle-sized nations from the danger of economic aggression by more powerful neighbours. The lesser nation will no longer be obliged to look to a single powerful country for monetary support or capital for development, and have to make dangerous political and economic concessions in the process. Political independence in the past has often proved to be sham when economic independence did not go with it.鈥� 鈥擧enry Morgenthou Jr (1945)
The world economy has a Dollar problem. Reliance on the currency of a single country as the world鈥檚 chief way to organise trade, carry out financial settlements, and store value creates a series of inequitable economic imbalances and policy tensions鈥攂oth within the US and across the global economy. It bestows disproportionate economic and political power on the US government and financial institutions; exposes world trade and finance to听听originating in the Dollar zone; imposes huge costs on the world鈥檚 small and even middle-sized nations; and fuels听听in the US financial sector, bolstering its influence in that country鈥檚 political economy.
A Historical Problem
This problem is not new. In fact, the inability to develop an equitable and genuinely multilateral international monetary system is one of capitalism鈥檚 most striking institutional failures, going back to the early days of the industrial revolution. The gold standard of that time and its successors have always some economies at the expense of others, and created favouring the interests of creditors and capital, at the expense of debtors and wage earners.
Only once in the history of capitalism did policy-makers from leading capitalist powers even consider the possibility of building a genuinely multilateral, equitable system: during the on the post-World-War-II economic order. But despite the aspirations and statements of participants like John M Keynes and then-US Treasury Secretary Henry Morgenthou Jr, the Bretton Woods conference led to the creation of , under which foreign central banks could present dollars to the Federal Reserve for exchange into gold.
That system effectively charged US authorities with the supply of the world鈥檚 ultimate international reserves. In this task they were constrained only by the willingness of central banks in other states to hold Dollars instead of gold. As French Finance Minister Giscard d鈥橢staing put it in the 1960s, this arrangement defined an for the US economy, which enjoyed a lot of space for effectively issuing Dollars to acquire goods and assets overseas.
By the late 1960s, it became clear that the US economy under the Bretton Woods system. Its steady in international trade, fiscal pressures from its protracted, losing war in Vietnam, and increases in social spending in response to domestic political turmoil, led to growing trade deficits, mass outflows of Dollars, and concerns that US authorities would not be able to meet foreign demand for convertibility of greenbacks into gold. In response, the US unilaterally abandoned its commitment to convertibility in 1971.
Coming amidst a series of successful national liberation and anti-colonial struggles across the world, the US鈥檚 inability to sustain the Bretton Woods system fed hopes that a new, equitable international monetary order could be constructed. The 1974听听for a New International Economic Order explicitly pointed to the need for a new monetary system centered on the 鈥減romotion of the development of the developing countries and the adequate flow of real resources to them鈥� as means to dismantle 鈥渢he remaining vestiges of colonial domination鈥� and removing the obstacles in the way of international convergence in measures of economic development and living standards.
In his , Zimbabwe鈥檚 Finance and Economic Development Minister, Hon. Prof. Mthuli Ncube identified rising inflation and currency depreciation as the major challenges requiring 鈥渢he support of all stakeholders and citizens鈥�. Zimbabwe is failing to ward off persistent inflation. According to Ncube鈥檚 mid-term budget report, headline inflation increased from 60.7% in January to 191.6% in June 2022.
In this post, I will argue that whilst price and the exchange rate have some importance, preoccupation with them can constrain economic development. I start off by giving a brief background of inflation in Zimbabwe as well as inflation targeting policies, before arguing that sheepishly pursuing currency and price stability equates to commodity fetishism. I then look at the real beneficiaries of price and currency stabilisation policies. Finally, I attempt to demystify value and price in Zimbabwe鈥檚 context.
This听interview听was originally听published in German in the special issue on听financialisation听and development policies of the journal听Peripherie, September 2021, No. 162/163. Frauke Banse and Anil Shah听(both based at Kassel University)听spoke with political听economist听Ilias Alami听(Maastricht听University)听about听some of his recent work听on the relationship between geopolitics, financial flows for development and emerging forms of听鈥榮tate capitalism,鈥櫶齛s well as related new imperialist formations. The听interview was conducted via email in May 2021.听听
The interview covers a听series听of听International Political Economy听topics.听Ilias听first locates the emergence of the听Wall Street Consensus in the long and turbulent histories of the relation between finance and development听as well as in听secular听capitalist transformations. He then听outlines听some of the conceptual tools he鈥檚 developed听in his work听in order to make sense of the听contemporary听interconnections听of money and finance听and the reproduction of听imperialism and race/coloniality.听Next,听he situates these interconnections within broader scholarly debates about听financialisation听and听highlights听the similarities and differences between ongoing sovereign debt crises in the global South and the so-called 1980s 鈥楾hird World debt crisis.鈥� Finally,听Ilias听discusses the听recent听emergence of new forms of听鈥榮tate capitalism鈥櫶齛nd their听complex relation听to the extension听and deepening听of market-based finance.听
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