The Trump administration鈥檚 ongoing attempts at manipulating US government economic data echoes controversies that have existed in the realm of development data for decades. These controversies highlight the unavoidable, intrinsically political nature of measuring social phenomena with economic statistics, and the role of economists in legitimizing (or not) such measures.

In early August, the employment report from the Bureau of Labor Statistics (BLS) showed weaker than expected job growth for July and announced downward revisions (fewer new jobs than previously reported) for the two months prior. Trump responded by . This move provoked a from other civil servants, economists, and experts on democracy, which only intensified when Trump initially nominated as the replacement E.J. Antoni, the chief economist for the right-wing think tank The Heritage Foundation. Antoni had been an jobs data altogether, and was widely perceived by critics as both and for the position. There is that the jobs report will become less reliable, even leading to the current staff at the BLS to still trust their numbers, for now. The BLS is also responsible for producing the Consumer Price Index (CPI), the central measure of inflation produced by the US government. Inflation鈥檚 centrality in recent politics, including promises from Trump to bring down prices on 鈥�,鈥� have led . There would of a degraded CPI measure,  which affects tax brackets, the value of some treasury bonds, and social security and other social insurance payments.

The 鈥淲ar on Government Statistics鈥�

The BLS firing is part of a larger pattern of manipulation and misuse of government-produced data. During the first Trump administration, , then claimed the end of poverty justified reductions to the social safety net. More recently, members of the administration and some of their supporters (including Antoni) have pointed to evidence of a massive increase in 鈥渘ative-born鈥� employment in the BLS monthly reports. This apparent increase, , is reason to ignore an overall weakening labor market since jobs are going to the 鈥渞ight鈥� people. The claims of the massive increase in employment for native-born workers, however, are such as the unemployment rate. A closer look at the data reveals that the supposed large increase in jobs for native-born Americans .

Various types of data and data collection practices inconvenient to the current administration鈥檚 political objectives altogether, including data related to race and ethnicity of federal employees, the collection of data related to sexual orientation and gender identity for disease surveillance, and from NASA鈥檚 website. Government statistical offices have also been degraded through budget cuts and staff reductions. to the BLS, the Commerce Department鈥檚 Bureau of Economic Analysis and at the Census Bureau. The sum total of these actions as a 鈥淲ar on Government Statistics.鈥�

The 鈥淎uthoritarian Playbook鈥�

Politically motivated manipulation of economic data has as mainly the domain of authoritarian, populist, or otherwise politically disfavored countries. of Trump鈥檚 BLS moves have , including some of the elite of the economics profession. Former treasury secretary and Federal Reserve chair Janet Yellen described the move as and former treasury secretary and Chief Economist of the World Bank Larry Summers

Recent history does offer some examples of this correlation. Gladstein of such regimes that influenced, or outright faked, statistics for a variety of political reasons. In 2022, Recep Tayyip Erdo臒an of Turkey , as did Argentina鈥檚 Cristina Fern谩ndez de Kirchner, leading to , and from the IMF. China has of transparency in GDP calculations, and have indicated that their economic output for political purposes.  (Though this type of direct manipulation ). Beyond such individual anecdotes, there have been some attempts to find more systematic evidence of this phenomenon.  find that governments coded as authoritarian were systematically more likely to exaggerate their economic growth in submissions to international agencies.

Development Statistics and Power

The focus on only governments deemed authoritarian, however, misses the fact that more 鈥渞espectable鈥� actors, such as multi-lateral development institutions and wealthy world governments, have also taken part in the politicization, misrepresentation, and manipulation of economic data. How social phenomena are defined, and measured, and who gets to decide the definitions and measurements, are inherently political questions. Numerical measures can be presented as unambiguous, objective empirical fact. The power relationship intrinsic to the collecting and dissemination of data and the use of technical measurements is especially clear in the domain of international development data, where these choices are often made by experts far removed from the individuals being measured, in a context in which unequal power relationships prevail.

Multi-lateral institutions such as the World Bank and United Nations agencies play a role in legitimizing false or manipulated data from member states. Jerven discrepancies between national statistics offices and international institutions such as the World Bank were often settled by political negotiations. National governments may 鈥渓aunder鈥� their false or misleading statistics; the government provides data to a multilateral institution such as the UN or World Bank, these institutions use that data to produce, say, the HDI, or reports on progress towards the SDGs, or a database on economic growth rates, and the governments in turn can point to these more 鈥渃redible鈥� sources as proof of their own success.

Multilateral development organizations have also been accused of direct manipulation in accordance with the political agendas of their member states. A change in how the Bank calculated China鈥檚 GDP in 1999, which subsequently allowed China to borrow more cheaply due to the Bank鈥檚 classification system, as 鈥渦nexplainable by anything other than political motives.鈥� the Bank鈥檚 World Development Report in 2000 was altered to lessen its focus on inequality after political pressure. At The World Bank research department, researchers were discouraged from publishing data that contradicted the dominant political economic paradigm, and that manipulation of data to similar ends may have also occurred. In 2018, the Bank鈥檚 鈥渄oing business鈥� ranking, which purports to calculate a numeric score indicating how conducive a country鈥檚 regulatory environments are for business, came under scrutiny. . Chile was governed at that time by the socialist Michelle Bachelet, yet the massive changes in ranking , and .

Aside from direct manipulation, the choices that multilateral organizations make in terms of what data to collect and measure, and what type of measurements to choose for indicators and targets, are also affected by politics and ideology. The choice of measurement , and sets standards by which . The correct way to measure global poverty, for instance, has been the subject of debate for decades, due for example to questions of whether poverty or only in a global context, or to , and . The way that the Bank was calculating global poverty rates for decades on various measurement choices, and on definitions of what constitutes poverty that were detached from real human needs. also documents how individuals from disadvantaged groups are often underrepresented in economic data globally, which both leads to an understatement of inequality, and also exacerbates such inequality when leading to political underrepresentation or under-provision of services. In , I鈥檝e shown how even the seemingly straightforward question 鈥渋s global inequality falling鈥� is highly dependent on the measurement choice, which is in turn influenced by values, moral judgements, and political imperatives. The most commonly used measures of inequality are more likely to show falling or lower global inequality when compared to other, equally plausible options.

The choices of indicators used by the international development agencies, such as for the , are influenced by politics, and also have real world effects. For . have that this choice of measurement is more politically palatable to some UN members, as compared to a measure that includes the incomes of top earners, or one that takes into account levels of inequality rather than just rates of change.

Data Manipulation in the 鈥淐ore鈥�

Wealthy democracies, and their institutions, have also not previously been innocent of such data manipulation and politically motivated measurement choices. In one example, the Obama administration to using an alternative method of calculating inflation for the purposes of determining 鈥渃ost of living adjustments鈥� to social security payments. Proponents of this change claimed, , that it would be more accurate. However, since this change would result in smaller annual increases in the payments, this change as a 鈥渂ackdoor鈥� method of achieving otherwise politically difficult cuts to social security.

Greece, from Wall Street giant Goldman Sachs, debt in order to (appear to) meet the 鈥淢aastricht鈥� criteria for joining the European Union. to lower their deficits for the Maastricht goals, this time with the help of JP Morgan, and Goldman again. Some informed observers argue that officials in Brussels and other EU countries willingly went along with the deception in order to achieve the political goal of Italy鈥檚 EU entry (See e.g. pgs. 131-2). In the years leading to the global financial crisis, in both countries, with the continued assistance of both banks, so as to avoid penalties for running afoul of EU legally required debt and deficit limits. Post-crash, when Greece鈥檚 head of national statistics updated the figures to reveal a substantially larger deficit, he was accused of lying and criminally charged.

Technocratic Development, Economists as Governors

The importance of data plays a central role in development economics partially due to the long term and to reduce poverty and induce improvement on . This dependence on statistics and data has in turn helped give economists special status in development debates. The credibility of economic or development measurements will relate to their endorsement by prominent academics or expert communities. If indicators are tools of governance, write , then those who influence the form of said indicators should be 鈥渃ounted among the governors.鈥�

Economists similarly play an outsized role in , a privileged status at times jealously guarded by elite economists. There were no shortage of legitimate criticisms of  Trump鈥檚 appointment of Antoni at the BLS, yet some in the profession chose to focus on his lack of proper credentials as an elite economist, . When Biden appointed an economic advisor deemed too politically left in some circles, she faced similar criticisms about having (working for policy advocacy think ). Such criticisms ring especially hollow when remembering that sometimes economists at even our most elite institutions , and at other times . A more compelling criticism might have acknowledged that the issue at hand is inherently political, and focused more on Antoni’s , rather than credentialist gatekeeping.

Conclusion

Trump鈥檚 attempts at influencing the economic data produced by the US government are clearly authoritarian in intent, and a degradation of current practices in the US. Condemning these actions on these terms is useful and necessary. However, a clearer understanding of the issue should acknowledge such actions as a continuation of practices that have been tolerated or ignored when politically useful or when committed by actors seen as more respectable. This pattern is especially clear in the area of development related data, which is often marked by unequal power relationships and a focus on technocratic goals with insufficient acknowledgment of the underlying politics.

Joshua Greenstein is Associate Professor of Economics at Hobart and William Smith Colleges.

The year 2025 will be the third consecutive year in which the Brazilian economy experiences sustained growth. During the first two years of his administration, economic expansion was above 3% annually, while the outlook for 2025 is for a slowdown: 2.4%, according to IPEA, one of Brazil’s leading state economic analysis agencies.

Since June-July 2024, during the U.S. presidential election and with the possibility of Trump being re-elected, Brazil, like other emerging economies, faced devaluation pressures. This led to higher inflation due to rising exchange rates and supply shocks caused by climate issues. These issues have reduced the food supply (mainly coffee, eggs, and beans), causing prices to rise.

This macroeconomic instability scenario was reloaded by the Trump-driven trade war, particularly when the 50% tariff on purchases from Brazil was announced under a mix of arguments between commercial (trade deficit), political (preventing Bolsonaro from being judged for an attempted coup d’茅tat and US bigtech鈥檚 regulation), and geopolitical (the advance of the BRICS on a possible replacement of the dollar in commercial relationships).

What was the response in terms of economic policy? The institutionalization of the inflation target led to an increase in the SELIC interest rate from 10.75% in September 2024 to 15% in June 2025, the highest level since 2006. The orthodox argument suggests that raising interest rates reduces the money supply, curbing aggregate demand and reducing inflation. From another perspective, raising interest rates promotes carry trade, which attracts foreign capital through the capital account and allows the exchange rate to appreciate. In this way, the economy partially protects itself from speculative capital outflows and reduces the prices of imports and exports, thus decreasing the inflation.

In contrast, a sharp rise in interest rates deepens the pernicious effects of financialization: it impoverishes indebted families and concentrates income. Are there any other alternatives available? The economic toolbox offers other options. Many observers have noted a striking characteristic of Lula鈥檚 third administration: the absence of open confrontation with Brazil’s powerful financial sector. This is no coincidence. The painful lessons of Dilma Rousseff’s presidency (2011-2016) and her impeachment weigh heavily on current political calculations.

To understand this, we need to analyze the historical lesson of Rousseff’s removal, its macroeconomic causes, and how this experience has limited economic policy options.

On Dilma Rousseff鈥檚 impeachment lessons

Dilma鈥檚 presidencies (2011鈥�2016) were interrupted by what many analysts鈥攊ncluding myself鈥攃onsider a parliamentary coup. The formal justification for her removal from office was the use of financial resources from decentralized public entities (with fiscal surpluses) to pay for central government expenses (a fiscal deficit)鈥攅ssentially, a financial maneuver to ensure the continuity of state expenditures. Ironically, a few months later, Congress approved a law that allowed up to 15% of similar transfers.

While this was a legal argument, the political environment was shaped by broader narratives of corruption surrounding the Workers鈥� Party (PT). Scandals such as the 尘别苍蝉补濒茫辞, the misuse of Petrobras funds, and eventually the Lava Jato operation led by judge S茅rgio Moro (which gained international visibility) all created fertile terrain for political destabilization. The economic slowdown also contributed to Dilma鈥檚 declining popularity and created an opening for her opponents to press for her removal shortly after she won re-election.

While the present government has not directly challenged financial capital as Dilma once attempted, perhaps we could draw a line connecting the lessons of her government to the current dilemmas of the Lula government.

Dilma鈥檚 first administration (2011-2014) faced direct conflict with the financial banking sector. She attempted to lower interest rates from 12.5% to 7% to reduce financing costs and encourage productive capital. However, when commodity prices fell internationally in 2012, this led to reduced capital inflows and a depreciation of the exchange rate (1,69 to 2,03 BRL/USD in a six-month period). Alongside the deregulation of the electrical system, this caused inflation to increase from 6.0% to 7.3% (IBGE).

The increased inflation created widespread discontent and raised doubts about the economic viability of the Workers’ Party’s political projects. The response was to increase the interest rate from 7.25% to 11%, which benefited the financial banking sector and led to fiscal cuts. As lowering the interest rate failed, a new economic plan was introduced to boost (private) investment by giving tax breaks to certain industries. This caused a significant drop in tax revenue, leading to cuts in public spending. As a result, overall demand fell, and private investments did not increase, as expected. There was no expected substitution between public and private investment.

The severe economic crisis increased, with GDP dropping by six points between 2015 and 2016. The crisis worsened Dilma’s reputation and gave the opposition in Congress the opportunity to push for impeachment using false claims, which they did.

Lula 3.0: Strategic trade-off or missed opportunity?

Learning from past experiences, Lula’s new government decided not to confront the financial banking sector or reduce the Central Bank’s interest rate. Instead, they maintained the institution’s independence in monetary policy and partially revived the social agenda based on Lula’s first two terms.

First, they encouraged gradual increases in the minimum wage to boost economic growth and improve income distribution. Second, they renegotiated family debt to ease financial burdens by rescheduling and reducing the debt amounts. Third, they relaunched the housing program, Minha Casa Minha Vida, with subsidized interest rates, which led to a 15% increase in contracts at the beginning of 2025.

Public spending management deserves separate consideration. On the one hand, the institutional framework of fiscal rules was maintained, initially with the spending ceiling inherited from Michel Temer’s administration and its reformulation through the New Fiscal Regime (Novo Arcabou莽o Fiscal), which allows for spending expansion of up to 2.5% annually to consolidate fiscal balance in the medium term. In parallel, several parliamentary amendments were approved to overcome these limits, notably the transitional reform that enabled the reinstatement of the Bolsa Fam铆lia program and the relief spending package for Rio Grande do Sul due to major floods in 2024. The first two years of administration involved a 5% increase. However, a significant contingency and spending freeze is expected for 2025: approximately $2 billion (0.1% of GDP).

From 2023 to 2024, household consumption and exports were the main drivers of Brazil鈥檚 economic growth. Gross capital formation (investments) only began to increase in the final quarter of 2024 and fell again in the second quarter of 2025 (IBGE, 2025). Ultimately, it is unclear whether these fragmented factors will ensure continued growth in the future. Rising interest rates are expected to slow economic growth to less than 3%, possibly close to 2%, with the sole objective of containing inflation. However, it remains unclear whether these factors ensure continuous growth in the long term. The increase in interest rates is expected to slow economic growth to less than 3%, possibly even below 2%, to reduce inflation.

As inflation is not always caused by higher demand, there is debate on whether this will work. Higher interest rates can strengthen the currency, which may lower the cost of imported goods and ease inflationary pressure. However, environmental issues continue to cause supply problems, and maintaining high interest rates incurs social costs. First, private investments decrease because borrowing becomes too expensive, and public investment through SOEs, such as Petrobras, would not be enough to stimulate aggregate demand. Second, higher interest rates increase government bond returns. More public money is allocated to bondholders, leading to regressive income distribution.

The New Fiscal Scheme (NFS) limits public spending by 2.5% per year and does not provide significant room for large-scale projects such as the Growth Acceleration Program (PAC) initiated after the 2008 financial crisis. The only way to create additional fiscal space is through tax increases. As taxing billionaires has not been completely successful, no public investment will be encouraged, and more public money will be in the hands of the wealthiest Brazilian families.

The current debate within the Workers鈥� Party is about the success of its economic plans. On the one hand, they choose not to challenge the financial banking system and its usual beneficiaries. However, they ignored the social demands for more public spending on education, infrastructure, health, and social rights. These issues have long been present in Brazilian democracy, particularly for the most disadvantaged groups.

Lula, Brazilian economy and democratic perspectives

With elections approaching the following year, the question is whether the Workers’ Party government can sustain its political project. Although unemployment is historically low, the achievements of Lula’s third term remain uncertain. Although there has been slight economic growth and income improvement, deep social transformation goals remain unfulfilled.

Trump’s presidency has created international instability and has fostered the approach of Brazil to the BRICS. In this sense, the unilateral imposition of 50% tariffs has been considered a direct attack by dominant nationalist sectors, which has resulted in unexpected support for Lula (particularly, large financial and banking conglomerates). However, this support is likely to be diluted by 2026.

In a previous article, we outlined three possible scenarios for 2026 .

1. Lula鈥檚 continuum: This scenario envisions a continued mandate for Lula or a successor, enabling deeper transformations that significantly enhance the masses鈥� quality of life. However, economic results would ideally follow a path of gradual improvement, partially satisfying the basis of popular support.

2. Great political moderation. In this scenario, the outcome of Lula’s third term fell short of maintaining popular support. This could create a political space for conservative sectors to promote a candidate from the economic and financial establishment that is not necessarily linked to the ultra-right or Bolsonaro movement.
3. Polarization and Discontent: This scenario posits a complete disagreement with the results of Lula’s third term, leading to increased polarization between PT’s ideological supporters and a new leadership emerging from the extreme right, possibly figures such as S茫o Paulo Governor Tarc铆sio de Freitas or members of Jair Bolsonaro’s family.

After Bolsonaro sentenced to 27 years in prison, the involvement of part of the military leadership in the attempted coup d’茅tat, and the Trump effect, the economic and political results seem to be heading towards a bifurcation between scenarios 1 and 2. Recent history reminds us of how quickly unexpected shocks鈥� geopolitical, climatic, or domestic鈥攃an alter this picture.

Sergio Martin P谩ez is a Professor of Macroeconomics and Economic Development at the Institute of Urban and Regional Research and Planning (UFRJ-Brazil). Postdoctoral researcher at the same university with financial support from FAPERJ.

By Jacob Assa and Marc Morgan

鈥淭he purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists.鈥�
鈥� Joan Robinson

Recent years have seen a proliferation of debates on the shrinking of fiscal space in both industrialized and developing countries. In the former, the discussion often takes the form of agonizing over fiscal 鈥樷��, whereas in the latter it is usually presented in the context of 鈥樷��.

In reality, the real black holes, or blind spots, are those found in neoclassical economic models underlying such debates, rather than in the real economy (Table 1). We describe three such neoclassical fiscal black holes, based on our recent paper 鈥樷��.

Table 1. Overview of fiscal black holes in the neoclassical paradigm.

Source: Authors鈥� elaboration. Shaded in black are the black holes of the neoclassical fiscal paradigm.

We show how fiscal space is not the absolute sum of taxes and borrowing, but rather relative in several ways. It depends on macroeconomic conditions, such as unemployment and inflation, countries鈥� degree of monetary sovereignty, and their level of productive capacity. Furthermore, fiscal space is relative to what governments do with it, expanding or contracting depending on the function of public spending.

Neoclassical Black Hole #1:            A Gilded Cage

Mainstream economic models rely on an anachronistic view of public finances dating back to the gold-standard era, or at least to the quasi-gold-standard post-war period of the Bretton Woods system, when the US dollar was pegged to gold, and all other major currencies were fixed vis-a-vis the US dollar.

In that reality, fiscal space was absolute – the sum of tax revenue and government borrowing. This was the case since, while a country could always issue more of its own currency, the peg to gold or another currency forced it to obtain that external currency to protect the agreed exchange rate, or risk depreciation.

This situation ended in 1971, when the United States forfeited the link to gold, making the US dollar a fiat currency, one whose value is determined by decree (fiat in Latin) rather than being based on its relationship to a commodity like gold or silver. All other major currencies were likewise floated and their exchange rates have since been determined by market dynamics.

In a fiat-money world, nothing limits the ability of a currency-issuing government from creating as much money as it needs. Alan Greenspan, chairman of the US Federal Reserve from 1987 to 2006, to a congressional committee. We have seen this in action after the 2007-8 recession, the COVID-19 pandemic, several rounds of quantitative easing, and every time countries go to war.

However, while the public supply of money in a fiat system is infinite, real resources in the economy – labor, capital equipment and nature – are finite. Therefore, how and where the money is spent matters. This leads us to the next two black holes.

Neoclassical Black Hole #2:            The Invisible Private Sector

Mainstream economics is of two minds about the private sector. In theory, it sings its praises as the source of all innovation and growth, positing that the invisible hand of the market can lead to optimal social outcomes. In practice, in modelling fiscal and debt sustainability, it is the private sector itself which is invisible.

This paradox is the result of the twin-deficit theory, which claims that increased public (domestic) deficits lead to larger external deficits, since higher government spending 鈥榗rowds out鈥� private savings. Public spending in this view has to come at the expense of private spending, since money is seen to be a scarce resource, limited by the fixed amount of currency (e.g. US dollars) or precious metal (in the bygone era) a country has.

In reality, the economy has three institutional sectors – public, private and external. Furthermore, the balances of all three sectors must add up to zero by accounting identity. This has been recognized in the , the of Wynne Godley, as well as by leading investment banks such as and .

Looking at the sectoral balances of the US economy (Figure 2) reveals two different aspects of the second black hole of neoclassical theory.

Figure 1. Sectoral balances in the US, 1960-2024

First, holding the external balance constant, the public sector鈥檚 deficit is equal to the private sector鈥檚 surplus. That is, domestic government spending does not simply disappear into a black hole but is spent into the private sector (hiring teachers, doctors, building bridges and roads, and so forth). Accumulated public deficits constitute the public debt, but that is also by definition the stock of private wealth (held in cash, deposits, bonds, or another form of financial or non-financial asset). Looking at only one side of this is incomplete and misleading.

Second, private deficits are the real danger. In contrast to a currency-issuing government which can never run out of its own money, private households and businesses cannot create money to self-finance. Private banks (under license by the government) create money as loans but the new assets (deposits) are equal to the new liabilities (loans) so there is no increase in the private sector鈥檚 net financial position. Private deficits increase private debt and the risk of insolvency. In the lead-up to the 2007-8 crisis this was ignored by most economists (who use neoclassical equilibrium models), except for those using such three-dimensional (3D) . In fact, reducing fiscal deficits (i.e. increasing private sector deficits and debt ceteris paribus) in the US has led in every single case to a major .

Macroeconomic accounting models thus allow us to go beyond the market/state dichotomy, since public deficits fund private surpluses (as long as public spending is not feeding the external account directly), which then translate into profits, investment and .

Let us illustrate this black hole with an example. An absolute approach would likely evaluate a 5% public deficit as too big, passing targets conventionally believed to be good practice such as a balance at 0% or a deficit limit of 3% of GDP. By contrast, the fact that the private sector cannot run a deficit for long determines the minimum public sector deficit as being equal to or greater than the external sector balance (at least over a medium term horizon and conditional on public socio-economic objectives). In other words:

Absolute fiscal space: public deficit 5% > (0% 娄 3%) – too big

Relative fiscal space: public deficit 5% < 6% external deficit – too small

This is true not just for the advanced economies but also for developing economies. A neoclassical twin-deficit view would struggle to explain how China, a country running public deficits in 26 of the last 27 years (Figure 3), could become the workshop of the world. The 3D view of sectoral balances, however, shows the massive benefits to China鈥檚 private sector of these productive public deficits, which increased after the current account surplus declined precipitously following the 2007-8 global financial crisis.

Figure 2. Sectoral balances in China, 1997-2024.

Source: .

Public deficits do only help to create private surpluses, but also affect real economic activities such as production. Thus they impact the general utilization of real resources, affecting the unemployment rate and the rate of inflation. When there are more unemployed (or underemployed) resources, public deficits can stimulate their employment without stoking inflation, compared to an economy with fully employed resources.

Repeating the example above:

Absolute fiscal space: public deficit 5% > (0% 娄 3%) – too big

Relative fiscal space: public deficit 5% < 6% external deficit – too small

Relative fiscal space: public deficit 6% >= 6 % external deficit and low unemployment – sufficient

Relative fiscal space: public deficit 6% >= 6 % external deficit and high unemployment – too small

These were the key insights of and , among others. However, as they were based in and writing about industrialized economies (the UK and US, respectively), we consider this a special case of fiscal relativity, applying only to developed countries. To examine fiscal space in developing countries, we need to to account for their lower levels of productive capacity and monetary sovereignty.

Neoclassical Black Hole #3:            Monetary Sovereignty and Productive Capacity

Compared to the world before World War II, most countries today are politically sovereign having achieved their independence through the process of decolonization in the post-war decades. However, many former colonies are still economically dependent on advanced economies, for several reasons.

First, they have low productive capacity and typically export low-value added raw materials and minerals, while importing high-value added machinery. This leads to negative terms of trade, persistent trade deficits, and high external (foreign-currency) debt.

Second, and related to this, indebtedness in foreign currency is far more complex than domestic currency debt. The former requires the borrowing country to have sufficient foreign exchange reserves, and also exposes it to exchange-rate volatility. If its currency depreciates against the foreign currency of its debt (e.g. dollar or Euro), it owes more in local currency terms. Default in foreign currency is possible and not infrequent.

In contrast, domestic public 鈥榙ebt鈥�, as seen above, is the same as domestic wealth. Where the government sells bonds to private investors, it can always pay the principal and interest without default or exchange rate risks. Most of the more successful developing countries have thus reduced the share of foreign currency debt in their total borrowing over time (Figure 4).

Figure 3. Foreign currency public debt as a share of total public debt.

Source: IMF World Economic Outlook.

Other factors reducing the monetary sovereignty of countries include not having their own currency at all (e.g. the CFA countries in Africa or Euro countries in Europe), fixed exchange rates, a high degree of inelastic imports (e.g. food and fuel imports), and not having a liquid currency. The following chart ranks regions by our .

Figure 4. Monetary Sovereignty Index Across World Regions.

Source: .

One notable finding in this graph is that Euro countries are ranked third from the bottom, below non-CFA African countries. The latter have more monetary sovereignty than the former, since they issue their own currency. The former rely on an external issuer (the ECB) for money creation.

However, European countries have higher productive capacity than African countries, and can thus absorb more public spending before inflation starts to kick in. And again, the level of unemployment in each country matters too. Combining these four elements together we arrive at a general relativity of fiscal space, applicable for all countries, and operationalized in our . Figure 6 shows the five countries with the highest index of fiscal space, and its decomposition.

Figure 5. Fiscal Space Index in the top 5 countries, 2022.

Source: .

An important implication of the relativity of fiscal space is not how much a country has at any particular moment. It is the fact that it can contract or expand its fiscal space depending on what it spends on. This can be seen in several counterintuitive general examples.

In the mainstream interpretation, public deficits are thought to create 鈥榖lack holes鈥� by increasing the public debt to supposedly unsustainable levels. But targeting public spending on utilizing unemployed resources can lead to economic growth which is faster than the growth rate of debt. This in fact would reduce the economy’s debt burden.

Deficits are also expected to increase inflation in the twin-deficit view. But if the spending is directed to creating more productive capacity, especially of food and energy, this would reduce the need to import these strategic inputs. Since global commodity prices of food and energy are volatile, and tend to rise during global crises, such 鈥榩roductive deficits鈥� would reduce the potential for pass-through inflation from abroad, thus enhancing fiscal space for the future.

Another example is choosing to finance infrastructure projects with domestic (deficit) spending rather than with borrowed foreign debt. After spending, the government can sell bonds to drain the additional liquidity created through its spending. This requires a sufficiently developed domestic financial market. Alternatively, the government could just spend and tax the additional liquidity instead of issuing bonds. The newly created domestic 鈥榙ebt鈥� is also newly created private sector wealth in the form of differently held assets and additionally has no exchange rate risk or default risk. By increasing its monetary sovereignty, the country has increased its future fiscal space, despite (or because of) functional deficit spending.

To take a concrete example, let鈥檚 look at China. As Figure 6 shows, China is the country with the fifth highest fiscal space according to our estimates (for 2022). Table 2 breaks China鈥檚 record down further, showing how it scores highly on components that positively impact fiscal space and lowly for components that negatively impact fiscal space. The country has recognized the importance of exercising its sovereignty over domestic policy, meaning it has made institutional choices that has given it the fiscal space to attain its economic objectives – it issues its own currency, it operates a (managed) flexible exchange rate (aided by a tightly regulated capital account), it prioritizes issuing public debt in its domestic currency, it targets a high utilization of resources and a high domestic productive capacity that forgoes excessive dependence on food and fuel imports. There is a blueprint in this record, one in which all the determinants of fiscal space are taken seriously.^[1]

There is also the consideration of international sovereignty over domestic policy, in which institutional choices made collectively by the global community impinge on national fiscal space. Among the variables included in our analysis, this concerns the convention of foreign exchange reserves (dependent on foreign demand for the country鈥檚 production and on the international monetary system more generally – for example the existence of an international central bank operating a global unit of account), and currency liquidity (dependent on foreign demand to hold the country鈥檚 currency, which would be aided by requiring payment of trade in the currency of the importing country or by requiring foreign direct investment into the importing country鈥檚 economy, subject to transparent legal frameworks). China has been acutely aware of these asymmetric interdependencies, hence its strategic moves to not be subject to their worst side-effects (e.g. currency and balance of payments crises). An increasing cohort of smaller developing countries are seeing eye to eye on this, demanding reform to the international monetary system in these directions to better aid their chances at development. 

Table 2. Decomposition of fiscal space in China, 2022

Source: . Shown are the four components of our fiscal space index by the positive or negative impact each has on the overall index, the Chinese values of each component, and how the Chinese values rank compared to other countries, as well as the global weights of each component in the principal component analysis (PCA) for the 150 countries.

These ideas may seem to go against the current of mainstream economic policy, which encourages countries, both developed and developing, to balance their budgets, borrow in global capital markets, and hope for their private sector to fund the public sphere.

This approach is not just cautious; it is incoherent and reckless given the framework presented above. Keeping in mind the three-dimensionality of sectoral balances, their link to the real economy鈥檚 productive capacity, and the global dimensions of monetary sovereignty, the opposite approach – strategic, targeted public spending to achieve concrete developmental objectives – is what should become the new conventional wisdom.

Audentes fortuna iuvat

Jacob Assa holds a PhD in Economics from The New School for Social Research.

is a Research and Teaching Fellow in the Department of History, Economics and Society and the Paul Bairoch Institute of Economic History at the University of Geneva (UNIGE).

Notes

^[1] For comparison, South Africa鈥檚 high fiscal space estimate in Figure 6 is predominantly the result of its excessive unemployment rate of between one quarter and one third of the labour force.

I met Professor Jorge Miglioli in 2000, the year I started my undergraduate studies in Economics at UNESP, Araraquara 鈥� Brazil, fully convinced it was the right path if you wanted to change the world. I did briefly consider Sociology too, but my mum (like any another mum who dreams of their children doing better than they did) put her foot down: I didn鈥檛 work this hard to give you a good education just so you could become a schoolteacher! That settled it.

Just a little over a month into the course, I found myself in the middle of one of the longest national university strikes in Brazil. For context: Brazilian universities are publicly funded by both national and state governments, and higher education is tuition-free. That strike, so early in my academic journey, made me question whether I had chosen the right course. Most of my peers simply returned to their hometowns instead of staying and engaging with what was happening. It wouldn鈥檛 be fair to say they were against the strike; they just didn鈥檛 care. Many of them came from the Brazilian middle class or up, which reflects the schizophrenia of our tuition-free higher education system. They were on a clear path to join the elite, working in banks, big corporations, and so on, and the strike had simply disrupted that trajectory. They just wanted to get back to their normal lives. Things were even worse in my department, the Department of Economics, where only two, maybe three professors supported the strike. The majority made it clear they were against it and disappeared for the entire duration, which lasted nearly four months

On the bright side, that moment introduced me to fellow Economics students who stayed, supported the strike, and opened the door to an economics that actually mattered 鈥� they would also become dear friends. It was through them that I first encountered Karl Marx. I also met Renata Belzunces, the student leading the strike in my campus, admired by many, including Professor Jorge Miglioli, and who went to become one of the most inspiring role models I鈥檝e ever had.[1] And it was in this moment that I met Professor Jorge Miglioli too.

Miglioli, who eventually became 鈥淢iglis鈥� to me, a nickname he never fully liked but accepted nonetheless (I鈥檓 not sure I ever gave him much choice!), was different. There were no 鈥榖uts鈥� with Miglioli when it came to the strike. I remember him saying something like How else do you expect capitalists and the government to hear us? But it wasn鈥檛 just what he said, it was how he said it. There was no attempt to convince, no rhetorical flourish. It was more like: why are we even debating this? His tone carried a kind of quiet certainty, and beneath it, a deep frustration and disillusionment with the fact that this even needed to be explained.

Later on, I found out that, back in 1962, almost 40 years before these conversations were taking place, Miglioli had written a short book titled Como s茫o feitas as greves no Brasil? (How Strikes Are Carried Out in Brazil?). He was in his late twenties at the time, and the book was part of the Cadernos do Povo Brasileiro (Notebooks of the Brazilian People) collection. The collection鈥檚 mission said it all: 

The major problems facing our country are studied in this series clearly and without any sectarianism; its main objective is to inform. Only when well-informed can the people emancipate themselves. (my translation[2])

That book was probably the first time I saw economics so clearly and eloquently interwoven with politics, social classes, terms like capitalism, and concepts like imperialism. I remember saying 鈥測es!鈥� out loud right at the beginning, when Miglioli wrote that strikes are meant to paralyse production so if they don鈥檛 hurt capitalists, they serve no purpose; they鈥檙e not effective. And then I remember being puzzled, trying to process what came next: Yet, a strike is not carried out with the intention of hurting capitalists, but to benefit workers (Miglioli, 1962, p.11; my translation)

I later also came to know that Miglioli鈥檚 distinguished academic trajectory was deeply intertwined with his commitment to the communist struggle. A long-standing member of the Brazilian Communist Party (PCB), he contributed to the Revista Estudos Sociais, a Party publication aimed at shaping discourse around Brazil鈥檚 most pressing issues. Within the PCB, Miglioli is recognised for advancing the Party鈥檚 understanding of class struggle, the dynamics of the capitalist economy, and the possibilities for building socialism in Brazil.

Miglioli had a profound knowledge of Karl Marx and , and was unapologetically anti-capitalist 鈥� though, not all Marxists in Brazil agreed with the latter (and the fact that he drove a Toyota Corolla didn’t play well with the left!). For Miglioli, Marxists had spent too much time studying the working class and not enough time studying the bourgeoisie. Yet, social classes, labour, and workers鈥� struggles were always central to his work, his worldview, and his concerns. The fact that economists and economics as a discipline were increasingly moving away from these issues wasn鈥檛 just frustrating to him, it was defeating. And that defeat often turned into a deep sadness, a kind of quiet nostalgia that I only began to understand better as we became friends.

He had similar frustrations with sociologists. For Miglioli, the post鈥揃erlin Wall era and the collapse of the Soviet Union ushered in a kind of triumphant haze: the idea that capitalism had won, definitively and heroically. This vibe didn鈥檛 just make the theme of 鈥渢he end of capitalism鈥� seem outdated, it also gave rise to an overwhelming body of literature celebrating the supposed merits of this socioeconomic system now liberalised and globalised, and apparently here to stay until the end of time (Miglioli, 2007, p.97; my translation). Miglioli had little patience for this literature on 鈥減ost-industrial societies,鈥� 鈥減ost-capitalist societies,鈥� and 鈥渢he end of labour鈥�. For him:

鈥lmost all of this literature does not actually deal with the end of capitalism as a socioeconomic system (or as a 鈥榤ode of production,鈥� in Marxist language), but only with changes, some more or less profound, that occurred within this system, and not infrequently, several of them are more imaginary than real (such as the 鈥榚nd of labour鈥�). (Miglioli, 2007, p.98; my translation)

In fact, much of this literature, he argued, simply repackaged contemporary capitalism under new names, presenting it as somehow better than the 鈥渙ld capitalism鈥� studied by Marx. And 鈥渂etter鈥� could mean anything: more efficient, more equitable, more emancipatory, whatever the author needed it to be (Miglioli, 2002, p. 98; my translation[3]).

When the strike ended, I realised I鈥檇 be seeing Miglioli every week for an entire semester, as he taught Introduction to Social Sciences to economics students (yes, I did a BA in Economics where one of the courses was Introduction to Social Sciences!). My entire first year was actually quite amazing: I had Institutions of Law, History of Economic Thought, History of Political Thought, and even Accounting! But Miglioli鈥檚 course was, without question, the highlight. If anything, he鈥檇 walk into the classroom, sit down at the desk, open his notebook (its yellowed pages suggesting it had been with him for decades) light a cigarette, and start speaking. He never stood up. And he smoked, well, at least ten cigarettes per lecture, I reckon.

My memory of those classes is a rich mix of anecdotes from Miglioli鈥檚 life, which was basically a living history of Brazilian political and economic thought. His lectures wove together the history of sociology as a bourgeois, anti-Marxist science, and a constant, sharp, and often poignant critique of the discipline of economics. It wasn鈥檛 just teaching, it was storytelling, political analysis, and a kind of intellectual resistance, all rolled into one.

It was in one of those classes that Miglioli asked us: Do you know what statistics is for economists? The usual student-awkward silence followed. Miglioli waited and then said: It鈥檚 a way to beat up the numbers until they say what you want. That was Miglioli鈥檚 style: transmitting knowledge through sharp, witty anecdotes and jokes, always punctuated with porra 鈥� a swear word unacceptable to most Brazilians, except, of course, to cariocas. His lectures were never conventional, but they were memorable. He taught with a kind of irreverent brilliance that made you laugh, think, and question everything you thought you knew about economics.

After class, I鈥檇 often chase after Miglioli with the excuse of asking a question about the lecture when really, I just wanted to keep listening to him talk about economics. Soon, I learned from friends that Jorge Miglioli was the economist in Brazil. He had been member of the (ISEB), an institute founded in 1955 in Rio de Janeiro to engage critically with developmentalism, aiming at a shaping a national development strategy and construct an ideological framework that could steer the bourgeoisie to lead Brazil鈥檚 economic, social, and cultural transformation.[4] He had done his PhD with Micha艂 Kalecki in Poland. He was also the one who introduced Kalecki and the concept of effective demand to Brazilian audience. He had been exiled. He had worked with and .

However, I never sensed any of that 鈥榞randiosity鈥� from him, quite the opposite. He always made time for students, for me. Coming from a non-academic family or the kind of well-educated, wealthy background that often dominates university spaces in Brazil, I found the academic environment unapproachable. But with Miglioli, I never had to worry about any of that. Talking with him was always fun, always encouraging, and I always walked away having learned something new.

It didn鈥檛 take long before I started wondering why Miglioli wasn鈥檛 teaching us macroeconomics. I never really found out why. When I asked him, he couldn鈥檛 care less, simply saying he wanted nothing to do with economics. Miglioli had done a bachelor in Social Sciences, a master in Planning, and a PhD in Economics. And yes, he was indeed supervised by Micha艂 Kalecki in Poland. Under Kalecki鈥檚 supervision at the Warsaw School of Statistics and Planning, he immersed himself in the study of socialist economic planning, a body of work that later became the book Introdu莽茫o ao planejamento econ么mico (Introduction to economic planning), published in 1982. This contribution positioned him as a key figure in shaping the debate on economic planning in Brazil, bridging theory and practice in the pursuit of a more just economic order. His post-doc work, Acumula莽茫o de Capital e Demanda Efetiva (Capital Accumulation and Effective Demand), was published as a book in 1981, and is considered a benchmark for the introduction of macroeconomics in Brazil.

Interestingly, Miglioli doesn鈥檛 really engage with Keynes in the book. Sure, there are references, but no real discussion. I never asked him why, and in our conversations, Keynes was never present. The big umbrella was always political economy, Marx, and Kalecki. And honestly, with what the book offers, it鈥檚 hard to feel like Keynes is missing. Part I deals with Say鈥檚 Law (the foundation of classical and neoclassical economics) and critiques from Malthus and Sismondi. Then there鈥檚 an entire section dedicated to Marx, deep dives into Russian Marxists like , and a whole part on . It鈥檚 a rich, layered work that reflects Miglioli鈥檚 intellectual commitments, and his refusal to dilute them.

If Joan Robinson argued that it鈥檚 possible to see an incipient theory of effective demand in Marx (Robinson, 1966; Alves, 2022), Miglioli went further. Using of one his great strengths, didactic clarity, he exposed and explained Marx鈥檚 and Marxists鈥� theory of effective demand, known in a Marxist language as the theory of realisation. In his own original way, he demonstrated how supply in capitalist economies always tends to exceed demand, pushing forward what Marx identified as one of the core contradictions of capitalism: production outpacing the monetary demand needed to absorb the output, leading to crises of overproduction 鈥� or, more broadly, disproportionality. In other words, the realisation problem.

His engagement with the authors mentioned above was always guided by this problem, whether through the Russian Marxists and their debates on underconsumption, international trade, and unproductive labour, or through Rosa Luxemburg鈥檚 underconsumptionist approach. Miglioli took no prisoners when defending Luxemburg and Marx. He argued they were spot on in identifying underconsumption in the short run, rooted in the contradiction between growing productive capacity and the narrow limits of consumption (Miglioli, 1981). For him, this was the reason behind crises of disproportionality, and the fundamental problem of effective demand.

That was my introduction to macroeconomics, via Marx, Luxemburg, Kalecki and economic planning! All thanks to Miglioli. Fast forward almost to 2018, I said I was a macroeconomist at the Department of Economics at the University of Cambridge, England, but was met with scepticism because I couldn’t not name the model I used. I felt intimidated, didn鈥檛 know how to respond and thought I better start saying I am a political economist.  But today, writing this piece, I wish I had said to myself back then: Porra, Carolina, para de tentar conversar com economistas!

Looking back, I now think that Miglioli鈥檚 decision to leave Keynes out was deliberate. He wanted to introduce effective demand through Marx. My understanding of macroeconomics has never been shaped by IS-LM-MP neoclassical synthesis, DSGE models or equilibrium frameworks. It鈥檚 been shaped by development economists, dependency theorists and Miglioli. His insistence on discussing capitalism, surplus value, what determines profits and wages, capital accumulation, all while considering social classes, imperialism, and economic development, and drawing on thinkers like Rosa Luxemburg. That鈥檚 what macroeconomics means to me, even if everything around me says otherwise.

From that first meeting as a first-year undergrad, we went on to become friends. Miglioli also became my supervisor for my undergraduate dissertation. I told him I wanted to study financial capital, and he replied: Before getting into the world of finance, you need to learn that capital is, first and foremost, a social relation. I struggled to read and write but he basically babysat me. We spent hours discussing every author he told me to read, and he would force me to sit at his desk and write. I wouldn鈥檛 exist as a scholar if it weren鈥檛 for him. I wasn鈥檛 the brightest student in the room. I didn鈥檛 look like most of the academics in Brazil. I didn鈥檛 speak another language, wasn鈥檛 good at maths, hadn鈥檛 travelled abroad, and couldn鈥檛 quote from memory. But Miglioli saw potential in my perspective. He encouraged me constantly. He made me feel clever.

Our friendship didn鈥檛 end when I finished my undergrad. Miglioli supported my decision to pursue an MPhil in Sociology. While teaching in Araraquara, a city 181 km from his home in Campinas, he shared a house with me and three other friends. He did this to help us when we wanted to take a small step up the ladder, to live somewhere less 鈥榮tudent-like鈥�, more suited to preparing for the master鈥檚 entry exams. He also let me ride with him to Campinas and open his house to me when I was auditing postgraduate modules at the University of Campinas to prepare for my MPhil. I could never have afforded those trips on my own.

He was by my side throughout the two years of my MPhil, even if he never stopped criticising my theoretical choices: and the Ontology of Social Being (Labour). He was one of my MPhil examiners, and during my viva in 2007, he couldn鈥檛 help himself: Porra, Carolina, I told you all this 鈥楬egel鈥� stuff wouldn鈥檛 help! That said, two years before he had given me my first book about Hegel. He also strongly supported my decision to travel abroad to learn English in 2007. And when I wanted to return to Brazil in 2010, he said firmly: No. Things in Brazil are taking a very bad turn. It鈥檚 not the moment to come back. Pursue your PhD there. He was adamant, and so certain that Brazil was heading into economic and political decline. Today, I wonder: how did he know?

He was humble. Simple. Coming from S茫o Carlos, a university town, my image of professors was shaped by those living in posh houses in rich neighbourhoods 鈥� arrogant, distant, superior. But that was never the case with Miglioli or his family, whom I came to know well and loved. His house felt like a cross between a laid-back beach house and a 1960s bungalow. No luxury, no etiquette. Just cozy. His home office/library, the first 鈥榩rivate鈥� library I ever stepped into, wasn鈥檛 intimidating at all, despite having what felt like zillions of books. It was simple, messy in its own organised way. Inviting. Cozy. The kind of space that made you want to sit down, read, and stay for hours. It鈥檚 the office/library I dream of having in my own house one day.

He was never full of himself because of his past. He never brought up Kalecki unless someone asked. And even then, he鈥檇 always begin with Kalecki was a gentleman. At some point, he鈥檇 inevitably add, I wasn鈥檛 the only one there. I wasn鈥檛 special. I believe that for Miglioli, it felt important to remind us that Kalecki had welcomed many Brazilians fleeing the dictatorship. Names like would come up casually, almost offhandedly, as he reminisced about pre-coup Rio de Janeiro; a time that, in his telling, was not only politically vibrant but also full of long, sunny days at the beach with friends such as, Leandro! It was the same with Nelson (Nelson Werneck Sodr茅). Miglioli would mostly mention him when complaining, half-jokingly, about how he wanted to sleep in the office after long nights out, but couldn鈥檛 because he shared the office with Nelson who was always there, religiously, typing away at his perfectly organised desk. Clickety-clack, all day long.

Whenever Miglioli spoke about his role in founding what is now one of Brazil鈥檚 鈥� and arguably the world鈥檚 鈥� most important heterodox economics hubs, the Institute of Economics at UNICAMP (originally the Department of Economics and Economic Planning, DEPE), his words were often tinged with disappointment. You could hear in his voice both the hope he once had and the deep, poignant disillusionment with what the Institute, and economics more broadly, was becoming. Yet, he would brighten when we visited the Institute. Old friends, administrative and academic, would hug him, and soon stories, family updates, and laughter would flow. Especially with (those two could talk for hours. Truly, no exaggeration!)

It was the same when he talked about Brazil in the pre-1964 coup years. The way he described the energy, the certainty of change, the belief in emancipation, in ending dependency and inequality. It was as if he were passing on both a sense of life and a sense of loss at the same time. Recently, while revisiting 鈥檚 work and reading Celso Furtado, Correspond锚ncia intelectual: 1949-2004 (Celso Furtado, correspond锚ncia intelectual: 1949鈥�2004) by Rosa Freire D鈥橝guiar, I noticed in Furtado for the first time the same poignant, defeated feeling that was always present in Miglioli. I can only imagine what it must have felt like: to stand at the edge of real change, to believe that Brazil could become a developed and independent nation, and then to face a coup d鈥櫭﹖at, go into exile, and return years later only to realise that you couldn鈥檛 pick up where you left off. Worse still, to witness the corruption of friends and comrades. Miglioli would speak about this often, especially when reflecting on .  Yet, when his friend died in 2009, that same defeated, poignant voice softened. For Miglioli, Tam谩s鈥檚 academic and political integrity stood in stark contrast to the disillusionment he felt elsewhere.

He loved tango, samba, and Italian films. And he educated me on all three (he put me through what I think was every film ever made by ). But more than that, he indirectly and unintentionally helped me rebuild my relationship with my mum due two reasons: his deep love and admiration for his own mother, and the challenges he faced as a parent; challenges that mirrored my mum鈥檚. With him, I could finally see the other side. Every now and then, Miglioli would recount the story of his mother, gripped by fear as rumours of the coup spread, burning all his books in a desperate attempt to protect him. She left only one untouched Capital by Karl Marx, mistaking ‘capital’ for a reference to a government centre, and assuming the book posed no threat!

Whenever I visited Brazil and managed to see Miglioli, I鈥檇 leave with a heavy pain in my chest, thinking it might be the last time. And when his son told me he no longer remembered me, that same pain came rushing back. But today, it feels different. It鈥檚 not just the ache of goodbye, it鈥檚 the feeling that a light I didn鈥檛 even realise was on has been quietly turned off. His absence leaves a silence that is both personal and collective.

Rest in power, Miglioli.

Miglioli passed away peacefully at home on Sunday morning, 24 August 2025, at the age of 89. He is survived by his two sons, Rafael and Daniel, and his daughter, Aline.

Carolina Alves, Cambridge, 25^th August 2025.

References

Alves, C. (2022.) 鈥楯oan Robinson on Karl Marx: “His Sense of Reality Is Far Stronger”.鈥� Journal of Economic Perspectives 36 (2): 247鈥�64.

D’Aguia, R. F. (2021) Celso Furtado, Correspond锚ncia intelectual: 1949-2004.  S茫o Paulo: Companhia das Letras.

Miglioli, J. 2004 [1981] Acumula莽茫o de Capital e Demanda Efetiva. 2^nd Edition. S茫o Paulo: Hucitec.

Miglioli, J. (1982) Introdu莽茫o ao planejamento econ么mico. S茫o Paulo: Editorial Brasiliense.

Miglioli, J. (1962) Rio de Janeiro: Editora Civiliza莽茫o Brasileira.

Miglioli, J. (2007) . Estudos de Sociologia, v. 7, n. 12.

Robinson, J. (1966) [1942] An Essay in Marxian Economics. 2^nd ed. New York: Macmillan, St Martin鈥檚 Press.

Notes

[1] Renata was pursuing degrees in both Economics and Sociology when she served as our campus director of the UNESP-FATEC ‘Helenira Resende’ Central Student Directory (DCE-HR or just DCE), the political body representing all UNESP and FATEC students. Named after , a guerrilla fighter, member of the Communist Party of Brazil (PCdoB) and member of the Araguaia Guerrilla, the DCE carries a powerful legacy of resistance. Helenira has been listed as a victim of political forced disappearance since 1972. You might call it our student union, but it鈥檚 more than that. The DCE is a space of genuine political engagement with Brazil socioeconomic issues, collective memory, and solidarity.

[2] Os grandes problemas do nosso Pa铆s s茫o estudados nessa s茅rie com clareza e sem qualquer sectarismo; seu objetivo principal 茅 o de informar. Somente quando bem informado 茅 que o povo consegue emancipar-se.

[3] 鈥淢as quase toda essa literatura n茫o trata efetivamente do fim do capitalismo como sistema  socioecon么mico  (ou  como  “modo de produ莽茫o”, na linguagem  marxista), mas apenas de algumas mudan莽as mais ou menos profundas ocorridas dentro desse sistema, sendo que, n茫o raramente, diversas s茫o mais imagin谩rias do que reais (como o “fim do mundo do trabalho”) 鈥�. Na  verdade,  grande  parte  dessa literatura  pretende  apenas mostrar, sob diversificadas denomina莽玫es, um capitalismo contempor芒neo diferente do “velho capitalismo” estudado por Marx, introduzindo-lhe  ou  retirando-lhe  certos  elementos  de  maior  ou  menor  relev芒ncia,  脿s  vezes  com  a  finalidade  de  apresentar  esse  “novo capitalismo” (qualquer que seja o nome que se lhe d锚) como um sistema melhor, e esse “melhor” pode significar mais eficiente, mais  eq眉itativo,  mais  libert谩rio,  ou  mais  qualquer  outra  coisa  a  gosto do autor鈥�.

[4] Linked to the Ministry of Education and Culture, the Higher Institute of Brazilian Studies (ISEB) operated with administrative autonomy and intellectual freedom. Its mission was to advance the social sciences – especially philosophy, sociology, economics, and politics – by applying their categories to the Brazilian context. ISEB was not just about academic inquiry; it was about shaping a framework for understanding and transforming Brazilian reality (Wikipedia, my translation/paraphrasing).

Photo by Rafael Miglioli.

The Shanghai Cooperation Organisation (SCO鈥檚) 2025 summit in Tianjin produced a series of outcomes that, although modest in appearance, are strategically significant. The most prominent developments were the agreement in principle to establish an , seeded with approximately 楼2 billion in grants and a further 楼10鈥�14 billion in concessional loans from China. The summit also saw Beijing extend access to its , enhancing both civilian and defence applications from aviation and port logistics to military procurement. On the security side, leaders condemned the  in India, a diplomatic win for India that underscores China鈥檚 effort to align with India at a moment when the U.S. has imposed tariffs of up to 50% on Indian exports, citing India鈥檚 purchases of Russian oil. These headline measures were complemented by  on counter-terrorism through RATS (the Regional Anti-Terrorist Structure) and a set of intensified SCO security-council meetings, together signalling a broadening of the organisation鈥檚 remit from finance into hard security enablers.

An additional dimension, often overlooked, is the SCO鈥檚 latent potential to serve as a platform for India鈥揚akistan rapprochement. Much as Beijing successfully mediated the Iran鈥揝audi d茅tente in 2023, the SCO framework offers a structured environment in which India and Pakistan are compelled to engage on shared issues such as counter-terrorism, energy connectivity, and infrastructure finance, under the auspices of a formal multilateralism rather than crude bilateral confrontation. The Tianjin summit鈥檚 emphasis on regional security cooperation, and its explicit condemnation of the Pahalgam attack, is already a small step in this direction, reflecting a willingness to acknowledge Indian concerns in a joint forum. With signs that India-China relations have modestly stabilised following high-level military disengagement talks along the LAC, there is space for Beijing to use the SCO to nudge India and Pakistan toward functional cooperation. This is not purely hypothetical: emergent trilateral conversations between India, Pakistan, and Bangladesh around trade corridors and energy-grid integration suggest that South Asia鈥檚 major economies are beginning to see value in pragmatic coordination despite unresolved disputes. In this sense, the SCO could provide an institutional ecosystem for gradual confidence-building between New Delhi and Islamabad, where shared participation in multilateral projects lowers the political cost of engagement, much as regional institutions elsewhere have historically diluted bilateral rivalries.

In line with a broader shift in global governance,  by Xinhua portrays the SCO as emblematic of Eurasian agency and multipolar resonance; 鈥�a living expression of multipolarity,鈥� bringing together diverse actors under a shared framework of non鈥慽nterference, counter鈥憈errorism, and connectivity. The enrolment of rivals within a single institutional ecosystem, makes the SCO, less of a confrontational bloc and closer to a practical architecture for regional autonomy and development.

Literature on the international financial architecture, has often highlighted the tension between established Western institutions and the alternative arrangements that have grown around them with much of the scholarship focusing on institutional challenges such as the creation of the Asian Infrastructure Investment Bank (AIIB) or the New Development Bank (NDB). Yet the more subtle processes of institutional layering, where new mechanisms grow alongside existing ones, gradually altering the balance of power have received far less attention.

The Shanghai Cooperation Organisation鈥檚 recent summit in Tianjin has very explicitly focused on incremental innovation. Rather than issuing headline-grabbing declarations of dramatic breaks with the Western-led order, the summit dealt with the methodologies of how parallel institutions can be built to enhance member-state autonomy, whilst retaining surface compatibility with existing arrangements. This outcome reflects Beijing鈥檚 preference for a global legal system based within existing . What emerges is a model of global governance founded less on open confrontation than on institutional consolidation and the gradual aggregation of alternative practices and mechanisms that, incrementally rather than immediately, seek to recalibrate existing systems. Rather than replacement or displacement, the SCO is engaged in a process of layering; creating additional arrangements that coexist with but subtly undermine the dominance of the incumbent system.

The Sanction-Resilient Financial Agenda

President Trump鈥檚 on-going weaponisation of finance through sanctions and  has given states strong incentives to seek resilience. Although dollar dominance remains structurally entrenched, each episode of coercion serves to catalyse efforts to construct alternative financial conduits and channels. The decision to establish an SCO Development Bank is an obvious illustration. Chinese commitments amount to only a few billion dollars in seed capital, which is negligible when compared to the immense balance sheets of the China Development Bank, the EXIM Bank of China, or the AIIB. However, the significance of the SCO-DB lies in its ownership structure rather than in issues of scale. Unlike the AIIB, which deliberately incorporated European stakeholders to seek international legitimacy, the SCO鈥檚 bank membership includes sanctioned states such as Russia and Iran, as well as large emerging economies like India and the Central Asian Republics. For those under the pressures of sanctions, this creates the possibility of channelling funds through a multilateral institution that conveys legitimacy, reducing the appearance of direct bilateral evasion and resultant forums for confrontation. In another sense, the legitimacy conferred by institutional internationalisation is more significant, and indeed ultimately more constructive and conciliatory, than the bank鈥檚 raw financial scale.

The Tianjin summit went further in embedding sanction-resilience into its agenda. While the public language was couched in the rhetoric of multipolarity and non-interference, the details were more revealing. Putin called for , precisely the kind of infrastructure that sanctioned actors are lacking. Xi Jinping鈥檚 focus on local-currency settlement, digital payments and energy corridors pointed to the construction of transactional ecosystems that would remain outside the reach of dollar-clearing. Here the likely rise in RMB-centric invoicing for energy and infrastructure (the so-called 鈥渆lectro-yuan鈥�) is especially notable, supported by expanded liquidity lines via Chinese banks and the CIPS clearing system, even if limits to convertibility and the risk of secondary sanctions continue to cap volumes. None of these initiatives dismantle the structural advantages of the dollar, but they provide members with fallback options and a measure of insulation.

The tariff environment reinforces this logic. For SCO members, especially China, the rise of US tariffs justified in terms of 鈥渙vercapacity鈥� and the like, functions in practice much like sanctions. Both restrict access to the core markets upon which development models once depended. Thus, there is a palpable convergence of interests between sanctioned and non-sanctioned members, both of both require new financial and trade channels. The SCO becomes a forum for tariff mitigation as much as for sanction resilience, through local-currency invoicing, joint lending, and alternative corridors that bypass Western chokepoints.

De-dollarisation remains the most debated dimension, with the repeated refrain that despite repeated announcements, the renminbi鈥檚 share of global reserves and transactions remains modest. The Tianjin summit did however deliver some palpability, with RMB-denominated settlement mechanisms, proposals for SCO bonds, and moves toward digital payments infrastructure. These may look incremental but are so by design. Reserve currency competition is defined by powerful network effects and the incumbency advantages are immense, as dollar dominance demonstrates. The SCO鈥檚 strategy is not to overturn the dollar but to consolidate and solidify enclosed networks where RMB usage achieves critical mass. As members accumulate RMB for project finance and trade settlement, particularly in energy and grid integration projects across Central Asia, (already tilting towards yuan-denominated contracts) its utility rises, encouraging reserve managers to hold more of it, in an ongoing process that is cumulative rather than dramatic. This dynamic is not confined to SCO members. Recent reporting shows that countries as varied as Kenya, Sri Lanka and Panama are seeking to convert existing dollar debts into  in response to the sharp rise in U.S. interest rates. Such cases highlight both the appeal of non-dollar financing in an era of high Fed rates and the limits of RMB internationalisation, which often proceeds on a bilateral, case-by-case basis rather than through systemic market uptake.

Contours of SCO鈥檚 Green Finance Cooperation

Perhaps the most intriguing element of the summit was its emphasis on green energy cooperation. Considered cynically, this could be construed as a kind of greenwashing, with climate rhetoric deployed to justify financial mechanisms that serve sanction and tariff resilience. Renewable corridors and green bonds provide normative cover for what might otherwise be seen as bloc-building. Nevertheless, to attribute such initiatives to camouflage alone would be misleading. According to  by Carbon Monitor, a global emissions tracker, between January 1 and June 30 2025, U.S. emissions rose 4.2% while China鈥檚 fell 2.7%. Without reading too much into China鈥檚 long-term global carbon emissions, this reduction promises commitment and viability in an ecologically threatened global scenario. On an international front, Central Asia鈥檚 energy system is in genuine need of integration and decarbonisation, and Chinese capital is already flowing into . The green platform arguably therefore serves a dual function of responding to real developmental needs, whilst simultaneously offering a discursive shield for sensitive financial innovation.

Not de-dollarisation but strategic alliances?

A larger implication of the 2025 SCO Summit and the potential framing of the development bank could be that the bloc does not seek a direct challenge to the .

It is instead contributing to financial fragmentation, providing states with choices, reducing economic vulnerabilities and uncertainties of a tariff-laden US-based order. The SCO bank could offer countries institutional and economic resilience without provoking an immediate counter-response. At the same time, the SCO鈥檚 heterogeneous membership, including India鈥檚 divergent threat perceptions and Central Asian concerns about Chinese dominance, ensures that the organisation cannot credibly be presented or indeed perceived, as a monolithic anti-Western bloc. This diversity is a constraint, but also an asset, in that it forces the organisation to proceed with a technocratic, issue-by-issue approach that appears less threatening.

In aggregate, the Tianjin summit exemplifies a strategy of institutional layering in global financial governance. The SCO is constructing parallel arrangements that expand autonomy without severing ties to existing systems. This approach may ultimately prove more resilient than overtly confrontational strategies. Rather than seeking dramatic breaks, it combines incremental security cooperation with the quiet construction of financial and institutional infrastructure that reduces dependence, positioning members to benefit from the gradual erosion of the contemporary imperial order.

Farwa Sial聽is a Research Associate at the Department of Economics, School of Oriental and African Studies (SOAS).

This blog was first published by .

Why do so many people who claim to 鈥渟ee the whole system鈥� remain blind to power?

This question struck me while listening to a recent episode of Planet Critical. The guest was Joseph Tainter, best known for The Collapse of Complex Societies. Tainter is celebrated as a pioneer of collapse studies and systems thinking. Yet when the conversation turned to the genocide in Gaza, his framing reduced it to Israel鈥檚 鈥渉istorical fear of Arabs.鈥� The structural realities of colonialism, imperialism, and resource politics 鈥� central to understanding both Gaza and the Middle East more broadly 鈥� disappeared. Here was a thinker revered for complexity, offering an analysis that was Eurocentric, ahistorical, and politically na茂ve.

This is not about Tainter alone. Similar patterns appear in the work of figures like Nate Hagens and Daniel Schmachtenberger, both of whom have influenced me personally. Their mission is helping people make sense of the complex issues: Nate by weaving ecology, energy, financial systems and human behavior into accessible frameworks; Daniel by building sweeping syntheses across cognitive science, culture, and existential risk.

The often criticise most disciplines for their blindness. But their critique of blindness has its own blindness. Across their work, capitalism, imperialism, colonialism, and class power rarely appear as sustained focal points. Yes, Daniel sometimes critiques modernity and gestures toward indigenous knowledge, and Nate occasionally hosts guests who reference colonial history. But overall, the crisis is cast as a species-level problem 鈥� as though 鈥渉umanity鈥� collectively overshoots limits 鈥� rather than as the outcome of specific, historically rooted systems of exploitation with identifiable beneficiaries and victims.

A Larger Pattern

And this is not just about three individuals. They exemplify a broader tendency in the systems thinking and complexity science intelligentsia, especially in the Global North over the past half-century:

• Neutral meta-framing 鈥� presenting systems theory as above politics, which in practice avoids confronting entrenched power.
• Universalist problem definitions 鈥� describing crises as 鈥渉uman鈥� or 鈥渃ivilizational,鈥� obscuring vast inequalities in responsibility and vulnerability.
• Institutional safety 鈥� work that fits comfortably within universities, think tanks, or even corporate boardrooms, where radical critique is unwelcome. Systems thinking has become a staple of business schools.
• Selective canons and guest lists 鈥� political economists and sociologists are rarely invited into the conversation, despite the centrality of their disciplines to systemic change.

Even the Club of Rome鈥檚 Limits to Growth 鈥� groundbreaking in modeling planetary boundaries 鈥� exemplified this pattern: technocratic in tone, light on political economy, and silent on power. Many newer frameworks, like Doughnut Economics, while valuable as communicative tools, can replicate the same blind spots when applied in mainstream policy or corporate contexts without a critical power analysis.

This pattern has been noted by others (see Farwa Sial and Guney Isikara), including critiques of the 鈥減olycrisis鈥� framing itself, which warn that it risks flattening distinct crises into a vague meta-narrative that sidelines capitalism鈥檚 role as the structuring force behind them.

What鈥檚 Missing

In my view, at least two key layers are consistently underdeveloped in mainstream systems analysis.

1. Political Economy
Both Hagens and Schmachtenberger sometimes reference Marvin Harris鈥� cultural materialism, which builds on the Marxist base鈥搒uperstructure model. Harris divides societies into three layers: infrastructure (material and economic base), structure (social and political organization), and superstructure (ideology and culture).

In this framework, the infrastructure is precisely where political economy belongs 鈥� not in a narrow reductionist sense, but as the deep motor of systemic dynamics. Here historical materialism, dependency theory, world-systems theory, and the historical forms of capitalism鈥搃mperialism must be engaged.

What鈥檚 striking is that if you trace any strand of the polycrisis downward, you hit the same roots: exploitation and expropriation, concentration of power, accumulation of capital, and systems of unequal exchange within and between the Global North and South. These dynamics have been rigorously analyzed for generations within heterodox political economy.

So how can systems thinkers discuss polarization and anxiety in the attention economy without naming these forces? How can they map ecological overshoot without addressing the capital鈥搉ature contradiction? How can they talk about wars without situating them in the machinery of empire? If your framework claims to operate across layers but sidesteps these traditions, you are not mapping the system 鈥� you are mapping around it.

2. Sociology
A second blind spot lies in the leap from psychology to planetary scale. Most of these thinkers jump from individual behavior and neuroscience directly to global civilization, skipping over the ways societies shape human subjectivity. The result is an essentialist and ahistorical story of 鈥渉uman nature,鈥� as though competitive and extractive behavior were timeless traits rather than products of specific social and economic arrangements.

Sociology offers a crucial counterpoint: our subjectivities are formed historically, collectively, and institutionally. To ignore this is to miss how power reproduces itself not only in structures and infrastructures, but in the very ways we see ourselves and others.

Politicising The System Thinking

Leaving out political economy and sociology produces an analysis that may look comprehensive 鈥� rich in data, patterns, and correlations 鈥� but remains incomplete and non-transformative. As Callum Cant has , this kind of analysis lingers at the level of symptoms, describing overlapping crises without tracing them to structural roots. It often treats data as neutral and universal, overlooking how knowledge itself is shaped by power. The risk is that systems thinking, in trying to describe 鈥渢he whole,鈥� ends up naturalizing the current order, offering solutions that stabilize rather than challenge the relations of production.

If systems thinking is to fulfill its emancipatory potential, its lens must widen. Biophysical limits, cultural narratives, and human psychology must be placed in dialectical relation to the structural realities of power: capitalism, imperialism, colonialism, class, and social formation at both national and international scales.

Only then can our analysis become both diagnostically complete and strategically transformative 鈥� able not just to map the mess, but to chart a way out of it. Otherwise, we risk becoming ever more sophisticated in describing the problem while still orbiting within the gravitational pull of the very system we claim to oppose.

Mohsen Anvaari聽has a PhD in IT from NTNU and is an IT consultant, photographer and activist based in Oslo. He explores the politics of digitalization, degrowth, and environmental justice.

In the past two decades, global health governance has undergone a quiet revolution, shaped less by sovereign states and more by the growing influence of private capital. The World Health Organisation (WHO), once envisioned as the democratic engine of international public health, has increasingly come to rely on large-scale philanthropic foundations. This shift toward what is now commonly termed 鈥攚here billionaire-funded entities use business strategies and methods to tackle social and environmental challenges鈥攈as profound implications. It is not just a matter of money, but of power, accountability and legitimacy. Amid what many now describe as a , the WHO鈥檚 growing dependence on a handful of wealthy private actors has exposed deep cracks in the system of multilateralism upon which it was founded. Thus, philanthrocapitalism is undermining democratic global health governance by concentrating power in the hands of the wealthy and eroding public accountability.

Philanthrocapitalism and WHO鈥檚 Financial Shift

When the WHO was established in 1948, its financing rested primarily on 鈥攎andatory payments from member states calculated by metrics such as GDP and population. These payments formed the backbone of its budget and enabled the organisation to pursue independent, needs-based global health priorities. But by the 1990s, austerity-driven reforms and dwindling political interest in global public goods led to a freeze鈥攁nd in some cases, a rollback鈥攐f these core state contributions. Into this vacuum stepped philanthropic foundations, corporate-linked charities and other non-state actors, who began offering voluntary contributions. Today, these voluntary funds make up . The vast majority are earmarked鈥攎eaning that donors, not WHO, decide how and where the money is spent.

This is where the logic of philanthrocapitalism takes hold. According to the WHO鈥檚 , the Gates Foundation is currently the largest donor, providing over $763 million or 13.16% of voluntary contributions to the WHO. The second largest contributor is another private actor, the GAVI Alliance which contributed $645 million or 11.61%. Notably, over 90% of the Gates Foundation鈥檚 donations were earmarked for specific diseases or technical programs, rather than the WHO鈥檚 core functions. In May 2025, the to the WHO. Through its holding company Novo Holdings, the Denmark based Novo Nordisk Foundation owns Novo Nordisk, which made from drugs like Ozempic and Wegovy, using the profits to fund scientific, social and humanitarian grants.

To regulate these interactions, the WHO adopted the in 2016. It was designed to establish guardrails for interactions with philanthropic and corporate entities. But FENSA has proven largely toothless. The framework has been inadequate for managing the vast power asymmetries between sovereign governments and mega-donors like Gates or the Rockefeller Foundation. In effect, it treats all 鈥渘on-state actors鈥� equally, even though only a handful control the majority of voluntary financing.

Funding Gaps and the Distortion of Global Health Priorities

This structural imbalance now sits at the heart of the WHO鈥檚 growing crisis. The WHO revealed it is falling nearly , with an additional $600 million deficit projected through the end of 2025. These resources are needed to support essential global health functions such as disease surveillance, regulatory coordination and health system strengthening. At the same time, its earmarked programmes鈥攖argeting diseases like polio, malaria and COVID-19鈥攁re flush with resources. The result is a misaligned institution, overfunded for technical verticals and underfunded for horizontal public health priorities. This distortion is not an accident鈥攊t is a direct outcome of the political economy of philanthrocapitalism.

Philanthropic foundations, under the guise of neutrality and technical problem-solving, increasingly undermine democracy by using their wealth to shape development agendas, weaken public institutions, depoliticize structural issues like poverty and bypass democratic accountability鈥攁ll while benefiting from tax privileges and promoting a corporate-driven vision of global change.

Philanthropic foundations tend to favour technical, vertical programs with measurable results鈥攕uch as eradicating polio or developing a vaccine for a specific disease鈥攐ver systemic, long-term investments like public health workforce training or community-based care. The Gates Foundation鈥檚 focus on malaria, polio and tuberculosis exemplifies this. GAVI鈥檚 funding model follows suit, focusing heavily on vaccine procurement and delivery while underemphasising the broader ecosystem of primary healthcare infrastructure.

The Political Risks of Philanthrocapitalist Dependency

Moreover, the ideologies embedded within philanthrocapitalist giving emphasise efficiency metrics and public-private partnerships鈥攃oncepts borrowed from business strategy rather than social justice. Thus, philanthrocapitalism is entrenching a neoliberal development agenda by enabling elites to dominate and direct global policy priorities. GAVI, largely created and funded by Gates, has promoted a model of vaccine distribution that relies on corporate manufacturers and intellectual property protections. During the COVID-19 pandemic, , a global vaccine-sharing initiative intended to ensure equitable distribution. Yet COVAX was criticised for failing to deliver on its promises, as high-income countries hoarded early vaccine stocks and patent waivers were fiercely resisted.

Beyond the structural distortions, there are real political risks. The rise of philanthrocapitalism and impact investing reflects a broader shift in development financing, where public aid is increasingly privatised and aligned with financial sector interests, allowing elites to reshape global development agendas under the guise of innovation and efficiency. As more governments retreat from public financing, the WHO becomes even more dependent on philanthropic largesse. This can become a vicious cycle. Governments, seeing the WHO鈥檚 needs met through private donors, feel less obligated to contribute themselves. But when philanthropic funding priorities shift鈥攁s they inevitably do鈥攖he WHO is left vulnerable. Its ability to respond to emerging crises, strengthen health systems or tackle neglected areas like mental health and climate-related diseases is hobbled.

Conclusion

None of this is to say that philanthropic contributions are inherently harmful. The generosity of donors like Gates, Wellcome and Bloomberg has undeniably saved lives and accelerated innovation. But the political consequences of allowing billionaire-backed foundations to shape the priorities of a multilateral public institution must be confronted honestly. These actors operate with minimal transparency, are not subject to democratic oversight and often mirror corporate values that are ill-suited to addressing the structural inequalities at the heart of global health.

Ultimately, the WHO鈥檚 crisis is not merely financial鈥攊t is a crisis of governance, of legitimacy and of global solidarity. Philanthrocapitalism may provide resources, but it cannot replace the foundational idea that global health is a public good, to be protected and promoted through democratic multilateralism. The more the WHO becomes a vehicle for donor-defined agendas, the more it drifts from the universal mission upon which it was founded.

Vivek N.D. is an adjunct faculty at the School of Legal Studies and Governance, Vidyashilp University, Bangalore. He holds a PhD in Political Science from the University of Hyderabad. His research focuses on global health governance and international relations.

In June, 1,200 scholars and activists from around the world gathered in Norway for a historic convergence of two movements: degrowth and ecological economics. During the closing plenary session, I listened to three speakers, two of whom鈥擪ate Raworth and Max Ajl鈥攔epresented radically different approaches to our current crises. Though Raworth and Ajl engaged in respectful dialogue, the tension in the room became almost palpable when Raworth’s polished slides on doughnut economics gave way to Ajl’s anti-imperialist critique: Can an apolitical reform tool truly coexist with the Global South’s demand for systemic revolution?

The image shows three countries’ positions within the doughnut framework. As clearly visible, Norway faces a significant problem with exceeding planetary boundaries.

The Blindness to Power

Raworth’s doughnut model is undeniably seductive鈥攁 colorful infographic balancing “social needs” against “ecological boundaries.” Cities like Amsterdam have adopted it to measure how badly they’re failing to meet the doughnut’s requirements, and several Nordic municipalities are now considering using the model.

The image shows three countries’ positions within the doughnut framework. As clearly visible, Norway faces a significant problem with exceeding planetary boundaries.

The model’s fundamental weakness is its faith in data as an engine of change. It’s built on an information-deficit model that assumes lack of scientific knowledge is the main barrier to societal transformation. This makes it blind to power. It presupposes that when wealthy nations are confronted with a graph showing “planetary overshoot,” they’ll voluntarily dismantle the very systems that grant them wealth and privilege. But history teaches us one thing: No ruling class willingly surrenders its advantages without a fight.

Consider what lies beneath Norway’s “green” facade:

1. The renewable energy transition depends on lithium from Bolivia and cobalt from Congo, where Western-backed militias enable exploitation.
2. Norwegian wind farms threaten S谩mi territories, repeating colonial patterns with a sustainable veneer.
3. Norway’s peace rhetoric accompanies pension funds investing billions in Israeli surveillance technology.

This isn’t just ecological “overshoot”鈥攊t’s imperialism in greenwashed disguise. No doughnut chart can measure the systemic violence required to maintain Norwegian comfort. For Oslo鈥攁 city financed by oil exports and NATO’s war machine鈥攁dopting the doughnut is like an arsonist installing smoke detectors while stockpiling gasoline.

The Two Faces of Struggle

Ajl’s critique revealed a divide often ignored in Northern environmental debates. He showed that the fight for a just future must be waged on two distinct but intertwined fronts:

The Global North’s Task: Decommodification of essential services, support for anti-imperialism, demilitarization, and payment of climate debt.
The Global South’s Task: Sovereign industrialization, ecological planning, and resistance to imperialism.

This asymmetry is no accident. A “degrowth” future for Norway, as a Northern example, must involve dismantling the war industry and a genuine reckoning with investments in extractive economies of the Global South. Moreover, reduced extractivism for Norway would require transforming her entire way of life. For instance, 43% of Norwegian households consist of a single person鈥攖he highest rate in the world鈥攈ighlighting how deeply individualism is embedded in the society and how much housing needs to be decommodified, with greater emphasis on sharing and community. This represents a profound economic and cultural upheaval. Will it happen voluntarily? I strongly doubt it. As one audience member remarked during the plenary, this transition will most likely be forced upon the Global North through anti-imperialist struggles in the South. Our task in the North is to support these struggles.

Beyond Dashboards

We’ve already had our ESG workshops, SDG dashboards, and sustainability reports. We’ve made colorful posters and measured everything measurable. We’ve consulted, designed, and modeled. But has Norway stopped investing in war, or withdrawn from fossil capital’s violent infrastructure? No. What about the live-streamed genocide in Gaza鈥攚asn’t that the most obvious dashboard revealing the imperialist system we’re part of? Has this changed Norway’s systematic complicity? No.

What we need now isn’t better indicators or prettier dashboards鈥攚e need clearer alliances between academics rejecting NATO-funded climate security research and focusing instead on Norwegian extraction in S谩pmi, South America, and Africa; and labor unions demanding divestment from companies violating human rights and destroying nature in Gaza and beyond.

The doughnut’s appeal lies in its promise of a painless transition. But we must remind ourselves鈥攁nd each other鈥攐f one thing: Justice isn’t achieved by appealing to the oppressor’s spreadsheets.

Mohsen Anvaari has a PhD in IT from NTNU and is an IT consultant, photographer and activist based in Oslo. He explores the politics of digitalization, degrowth, and environmental justice.

the Chilean government confirmed a report published earlier that morning: Chinese companies BYD and Yongqing Technology (Tsingshan Group) had abandoned their planned lithium cathode production facilities in Chile. This announcement dealt a significant blow to the ambitions of a country with a longstanding mining tradition, now striving to build industrial capabilities and develop value-added products from its mineral resources amid the global energy transition. However, just one day later, the Chinese embassy in Chile both the initial report and the Chilean government’s confirmation. After consultations with both companies, the embassy clarified that neither had officially withdrawn their investment plans. Instead, they reaffirmed ongoing interest in maintaining dialogue with Chilean authorities. The embassy further emphasized Chile’s continuing attractiveness to Chinese businesses, highlighting the numerous firms eager to participate in the country鈥檚 National Lithium Strategy. the Chinese embassy鈥檚 statement鈥攊ssued amidst escalating trade tensions and shifts in the international order鈥攕uggests this chapter is far from concluded.

This episode highlights the complexity and uncertainty confronting peripheral economies attempting to industrialize by leveraging their comparative advantages amidst the so-called energy transition and broader geopolitical tensions marked by trade wars. While significant global attention remains focused on the socio-environmental impacts of critical mineral extraction, less consideration has been given to examining how peripheral economies鈥攃ountries heavily reliant on natural resource extraction鈥攁re strategically navigating or capitalizing on this 鈥渃ritical minerals moment鈥� in relation to their own ambitions to industrialize.

Critical minerals鈥� role in peripheral industrialization

Industrialized countries are actively formulating ambitious plans aimed at reshoring production networks and securing mineral supplies鈥攊llustrated by initiatives such as the Inflation Reduction Act in the U.S., the EU’s Green Industrial Plan, and the Net-Zero Industry Act. Meanwhile, mineral-rich peripheral economies are also increasingly implementing their own policy interventions. indicate that export restriction measures have increased fivefold over the last decade, with approximately 20% of critical mineral trade now subjected to at least one form of export restriction. Although these measures vary widely in their specific objectives, they generally aim to enhance rent capture or foster industrial upgrading further downstream within global production networks.

While some analysts interpret these interventions as a setback for free trade 鈥攑articularly prior to the introduction of protectionist tariffs by the United States鈥攁nd a resurgence of, mainstream international organizations such as IEA or UN are gradually beginning to acknowledge鈥攁nd in some cases even endorse鈥攕uch policies as strategic tools for Regardless of differing perspectives, the growing significance of critical mineral policies in peripheral economies is undoubtedly .

A crucial question emerging from these developments is whether such policy measures might serve as for peripheral economies, or whether they merely reinforce rentier dynamics. The notion of a 鈥済reen ladder鈥� refers to the potential of industrial policies, implemented in the context of the energy transition, to foster new productive capabilities in peripheral economies. While traditional rentier states focus primarily on capturing resource rents to fund general public spending, many contemporary export restriction measures pursue more ambitious objectives, such as advancing down the value chains associated with energy transition technologies reliant on their minerals. Notable examples include , which banned nickel ore exports to stimulate domestic processing and move downstream into stainless steel production, , which established clauses in lithium extraction contracts mandating producers to offer 25% of their output at preferential prices to companies committed to developing value-added products domestically.

The (latest) failed attempt to industrialize via lithium in Chile

In 2023, both BYD and Tsingshan had been selected through a competitive process overseen by the Chilean state agency CORFO to receive preferential quotas of domestically extracted and processed lithium, specifically intended for local value-added manufacturing. According to information , these projects were expected to supply lithium cathodes primarily for the Brazilian market. Indeed, Brazil had recently emerged as BYD鈥檚 largest market for electric vehicles (EVs) outside China, prompting the company to initiate construction of an EV assembly and components manufacturing plant in Bahia (Brazil). This scenario appeared highly favorable for Chile, as it promised integration into a regional value chain within South America, potentially overcoming the country’s historical geographic disadvantage concerning access to competitive markets. Momentarily, the plan seemed strategically sound.

However, the announcement on May 7th acknowledged this policy’s failure. provided was the significant decline in global lithium prices, rendering preferential pricing agreements far less attractive to producers. Additionally, specific complications arose regarding the corporate structure of Tsingshan鈥攑articularly its subsidiary Yongqing鈥攁nd internal challenges faced by BYD.

This latest setback, reflecting the difficulties inherent in industrial policies leveraging competitive advantages in critical minerals, echoes a similar . At that time, CORFO selected three lithium-processing projects under analogous conditions鈥擬olymet, Posco-Samsung SDI, and Sichuan Fulin. None of these projects materialized, largely due to contractual disputes with lithium producer Albemarle regarding the definition , as well as unmet expectations related to Albemarle鈥檚 intended production of 鈥攁 critical component used in certain types of cathodes.

Why is industrialization via critical minerals a struggle in the periphery?

Despite Chile’s efforts to develop value-added products derived from mineral processing, this episode serves as a reminder that it is not easy for peripheral economies to challenge their position within the international division of labor. One of the most evident obstacles relates to the limited state capacity often observed in peripheral contexts鈥攂oth in general terms and specifically for industrial policy鈥攊s typically lacking in peripheral economies. emerge from goodwill or strategic vision alone. Instead, it requires sustained governmental efforts to build institutional capacities and cultivate technocrats and bureaucrats who deeply understand both policy and industry dynamics. Chile exemplifies this point clearly: the country鈥檚 scope for industrial policy has been constrained since the dictatorship era. Lithium became politically salient in Chile around 2009, and although the state has since acquired knowledge about the industry, its learning curve has lagged significantly behind industry developments. This disparity partly explains the contractual issues observed during the first tender aimed at attracting specialized lithium processors鈥攊ssues which Albemarle leveraged to its advantage. Additionally, the Chilean state has become embroiled in legal disputes with both major lithium producers (Albemarle and SQM), primarily over taxation. Likewise, 鈥攅ven before announcing its withdrawal from the quota allocation鈥攃iting uncertainties in the existing agreement for developing value-added products, particularly regarding lithium supply and the mechanism for determining the preferential rate. Thus, peripheral economies must realistically assess and acknowledge their institutional capacities when crafting industrial policies for critical minerals.

However, peripheral economies must also contend with the profound power asymmetries that structure the global economy. In this context, multinational corporations from developed countries often have limited incentives to align with the policy objectives of host states. Their primary objective remains profit maximization; if they perceive conditions as unfavorable, they simply will not invest. In this regard, the limited availability of productive capabilities in peripheral economies, the relatively weak domestic markets, and the strategic control maintained by developed economies over technological capacities are likely more decisive factors than preferential pricing for strategic minerals. . However, equally important is exploring complementary mechanisms that incentivize or compel multinational corporations to cooperate. A potentially transformative path involves rethinking the global governance of the energy transition, promoting cooperation between developed nations and peripheral economies in pursuit of shared policy goals. Current discourse around a just energy transition predominantly emphasizes local socio-environmental impacts, but it rarely addresses, with equal urgency, the need for global actors to support industrial policy ambitions of peripheral economies.

From this perspective, the Chinese embassy’s recent message in Chile is notable, especially in the context of the contemporary upheavals reshaping the international order. Nothing comes freely in the global economy鈥攏either before nor during the energy transition. Chile’s longstanding diplomatic relations with the United States and the European Union have not advanced its industrial policy goals; quite the contrary, policies such as the U.S. Inflation Reduction Act and the EU鈥檚 Green Industrial Plan explicitly focus on reshoring value chains within their borders, merely securing mineral supplies from abroad. Far from it, the EU-Chile FTA restricted measures such as preferential rates. Such protectionist policies effectively China, thus far, has not demonstrated significantly different behavior from the U.S. or EU. However, with the global economy navigating troubled waters in 2025, the Chinese embassy’s recent message to Chile represents the first explicit diplomatic signal toward supporting mining policy in the country鈥攁n intriguing development given the broader geopolitical context.

Felipe Irarrazaval is Assistant Professor at Universidad Mayor, Chile.

The effectiveness of private equity has been a subject of ongoing debate in countries of the Global North. There is substantial evidence highlighting the extractive practices associated with private equity operations across Western nations. Examples include the decline of the  and the financial instability of local councils in the UK, particularly in the provision of . Similarly, in the United States, private equity has been linked to the attrition of an already fragile . In ., its influence has contributed to the deterioration of care homes, raising significant concerns about its broader social and economic impact.

In a recent blog, Michael Roberts characterized private equity as 鈥溾��, encapsulating the widely recognized critique that private equity firms function through a rentier model. These firms are frequently associated with practices such as asset stripping, worker lay-offs, and opting for excess leverage that increases the debt burdens of their acquisitions, all while failing to provide compelling evidence of value creation. This perspective aligns closely with earlier criticisms of private equity. During the 2000s, private equity operations were similarly likened to a swarm of , reflecting widespread disapproval of their extractive and often detrimental economic practices.

In summary, such analogies emphasize the aftermath of private equity operations, leaving behind 鈥渃arcasses and barren landscapes.鈥� Nevertheless, the evidence of a hollowed-out socio-economic landscape in the Global North has not deterred the international expansion of private equity into countries of the Global South. On the contrary,  have emerged in tandem with the globalization of Western private equity. In so-called 鈥渆merging markets,鈥� this expansion manifests in various forms, including an enthusiasm for deploying 鈥渕oral money鈥� through international development initiatives.

This article examines the role of private equity in Global South countries, focusing on three key characteristics: the escalation of indebtedness, the weakening of public markets, and the public subsidy function of development finance in facilitating private equity investments.

What is Private Equity?

Private equity refers to a class of alternative investments comprising capital that is not listed or traded on public exchanges. It involves funds and investors who

Public markets. Most private equity capital is sourced from institutional investors and high-net-worth individuals capable of committing substantial sums of money for extended durations.

Private equity investments are typically employed to fund new technologies, expand working capital, execute acquisitions (including buyouts of publicly traded companies that are subsequently privatized), and improve balance sheets. The primary participants in a standard private equity operation include a General Partner (GP), a set of Limited Partners (LPs), and the private equity fund. The GP provides management expertise and allocates investor capital, the LPs serve as the providers and owners of private capital, and the private equity fund is the instrument for acquisition of various investments.

 Figure 1: How Private Equity Works

Private Equity in Global South

Private Equity (PE) in so-called 鈥渆merging economies,鈥� led by countries such as Brazil, China, and India, emerged during the 1990s alongside the wave of global liberalization. By 2011, fundraising in these economies was estimated to have risen to approximately 20% of global private equity fundraising before stabilizing at around 10% (see ). However, since 2015, growth in these markets has been marked by volatility, and the global private equity landscape has experienced significant downturns in the wake of the COVID-19 pandemic.

Estimates regarding the size, scale, and number of private equity deals in niche 鈥渆merging markets鈥� are predominantly produced by private research firms. The empirical analyses and trend forecasts from these firms are often intertwined with the private equity business cycle, which poses a challenge to efforts to determine the true size of the market due to variations in research methodologies. Nevertheless, available empirical data offer insights into broader trends that extend beyond the economies of the Global North.

In 2023, PE fundraising in the Asia-Pacific region reached , according to Bain & Company. In contrast, African PE fundraising totalled , with an aggregate deal value of $5.9 billion, as reported by African Private Capital. In Latin America, the aggregate deal value for private equity in Q3 2023 was , according to Preqin.  And, in the Middle East, private equity deals were valued at  in 2023 in data from S&P Global.

Private equity investors are predominantly based in the Global North, with the majority originating from the United States (Figure 2). However, regionally significant PE funds have emerged in countries such as India, Brazil, China, Kenya, and South Africa. Additionally, institutional investors in the Global South, including pension funds, high-net-worth individuals, and family offices, have also been directly investing in private equity. Globally, PE investors are primarily concentrated in the US, Europe, and Australia. Furthermore, most domestic and regional funds often include consortia involving Global North PE investors.

As countries revise domestic financial regulations to accommodate the growth of private equity and establish frameworks for alternative investment financing and non-banking financial institutions, the role of private equity is poised to evolve. This could potentially reshape financial institutions in these regions, akin to the transformative impact observed in the United States with entities such as . As noted in the , the potential saturation of businesses and dematerialisation of wealth in the West has a counterpart in rising PE activity in Global South countries. While the pandemic put a global halt to PE investments, there is reinvigorated interest in subsiding investments through development finance matched by an increased demand for climate and renewable energy deals.

Figure 2 Value of funds raised by largest private equity firms worldwide between 2017 and 2023 (in billion U.S. dollars)

Source: Statista 2025

Private Equity Debt: Leveraging Vulnerability and Deepening Commodification

PE inverts the capital structure of public companies by placing debt in command of equity, through a process of financial engineering. By design, PE redefines the traditional model of acquisition, transforming it into a financial instrument within a broader portfolio of investments. The ultimate goal is to derive returns from ownership for the PE fund. Debt, or indebtedness, plays a central role in this model, directly affecting the stability of acquisitions. The structural inclination of General Partners (GPs) towards leveraging significant amounts of debt inherently increases the risk of distress for acquired companies. While financial distress may represent an extreme outcome, it is nevertheless an anticipated possibility within the PE framework. Indebtedness constrains operational flexibility and heightens the exposure of acquisitions to adverse external factors.

In Global South countries, PE investments face additional challenges due to the compounded effects of structural underdevelopment, limited currency reserves, restricted access to international finance, and different operational and governance systems. These factors amplify the vulnerability of acquisitions to indebtedness. However, these challenges have not deterred PE investors. As  highlight, the failures of PE are not the result of errors in identifying struggling companies or making misguided investments. Instead, PE intentionally targets companies with inherent vulnerabilities, making them susceptible to acquisition and subsequent indebtedness. The monopolistic tendencies of PE operations, such as in the , further exacerbate these extractive dynamics. In an anthropological , David Souleles describes the role of financialisation in PE as 鈥榯he abstraction of productive enterprises into the register and language of finance鈥�.

The capacity of PE to exploit vulnerabilities extends beyond commercial companies seeking quick access to liquidity. In Global South countries, the privatization of public goods has been a gradual and ongoing process. Contrary to the notion of widespread privatization following the wave of liberalization in the early to mid-2000s, this period instead witnessed a combination of partial privatizations and intermittent re-nationalizations during periods of crisis. Sectors such as healthcare, education, and financial services鈥攐ften driven by the World Bank鈥檚 emphasis on financial inclusion鈥攔emain primary targets for PE investments in these regions.

In this context, the vulnerabilities leveraged by PE extend to capturing provision of essential public needs. By targeting critical services necessary for citizens鈥� well-being, PE investments exploit the structural weaknesses of public systems in these sectors, turning basic necessities into sources of profit and deepening the dependence of these services on private capital.

Weakening Public Markets

The expansion of private investment, including in the Global North, depends heavily on the institutional infrastructure of public markets. Private equity (PE) relies on public markets for exit, often using tradable stocks as acquisition currency. This practice undermines the original purpose of public markets鈥攖o generate new capital for domestic investment. The issue is magnified in Global South countries, where underdeveloped financial markets exacerbate the challenges. Limited financing for productive capital creation within the domestic private sector constrains long-term reinvestment opportunities and stifles the potential for effective industrial policy. As a result, the increasing monetization of gains by private investors through public markets reinforces the privatized reorientation of these markets.

Moreover, PE investors often benefit at the expense of public investors and domestic private sector participants. Valuation differences between public and private companies frequently favour the latter, enabling private investors to dominate IPO markets. This trend has become even more pronounced in the post-COVID-19 era, which has been marked by weak IPO performance across several regions.

In Asia, however, PE investors have navigated IPO challenges by creating 鈥�,鈥� which serve as alternatives to traditional IPOs. These funds allow investors to sell investments directly to a fund, sidestepping conventional public market mechanisms. The legal, governance and regulatory implications of selling funds raised by investors themselves and determining pricing in such transactions remain largely unexplored. This practice underscores the capacity of PE firms to engineer profitable exits while avoiding losses and bypassing the need to demonstrate tangible public returns. Notably,  stands out as an exception, where stringent government regulations on IPOs have prevented such PE-driven trajectories.

Development Finance to the rescue? Who Pays?

Since the 2008 financial crisis, finance-based integration between developed and developing countries has intensified, driving North-based institutional investors, Multilateral Development Banks (MDBs), and International Financial Institutions (IFIs) to pursue PE investments in developing nations. Multilateral and bilateral Development Finance has increasingly been routed through private equity funds for development-oriented investments. Prominent Development Finance Institutions (DFIs) investing directly in companies include the CDC Group, International Finance Corporation (IFC), Proparco, Swedfund, DEG, FMO, and Norfund. These efforts are characterized by a growing focus on climate-focused funds, renewable energy infrastructure, Environmental, Social, and Governance (ESG) ratings, and an emphasis on supporting Small and Medium Enterprises (SMEs) and domestic businesses, which are shaping the contours of PE activity in major Global South countries.

However, the case for a potentially reformed and 鈥渟tringently regulated鈥� PE model for Global South countries through the framework of development finance has no basis, given the widely reported extractive practices. A notable example is the former prominence of the Asian and Middle Eastern private equity fund , which spearheaded the marketisation of healthcare through its . This fund aimed to raise $1 billion for investments in health-related companies, receiving backing from major institutions such as the IFC, Overseas Private Investment Corporation (OPIC), Proparco, CDC, African Development Bank, and the Bill and Melinda Gates Foundation.

The eventual , often cited as a glaring case of corruption and illegal extraction, is frequently portrayed as an outlier. However, its practices are not fundamentally distinct from those of other Western PE funds. The protracted legal proceedings that led to Abraaj鈥檚 downfall have not been similarly applied to other funds engaging in comparable activities. Beyond the specific case of Abraaj, the broader role of PE in development finance, often misconstrued as 鈥減atient capital,鈥� fails to exhibit either patience or demonstrable value creation. Furthermore, it has yet to show any significant contribution to the structural transformation of Global South economies.

Why replicate failed models in the Global South?

PE, as a manifestation of private markets in Global South countries, operates as a mechanism that facilitates and normalises the pursuit of short-term yields. Extensive research from the Global North has underscored PE鈥檚 role in fragmenting and segmenting labour markets, exacerbating precarity within outsourced production networks, and hollowing out markets. These dynamics suggest that the role of PE in Global South economies must be critically examined through a financialised lens. PE鈥檚 impact on Global South economies with a predominance of the informal sector, a combination of diverse  listed and unlisted companies as well as a diversity of Global South conglomerates and rapidly changing financial markets demands attention to the dynamics of subjugation to monopoly capital in the Global North.

This is because PE does more than simply substitute the traditional role of finance as a service鈥攊t exploits the limited access to finance faced by firms in Global South markets. This structural vulnerability allows PE to entrench itself as a dominant financial force, often at the expense of long-term economic stability and development. While China provides an illustrative example of how rigorous state intervention can regulate and control PE activity, this approach addresses only the symptoms rather than the root issues. Even under stringent regulation, PE鈥檚 capacity to deliver meaningful value addition remains unproven. Furthermore, the inherent contradictions of PE, such as its reliance on indebtedness, extraction of value rather than its creation, and prioritization of investor returns over structural transformation, highlight the limitations of reformist approaches. A deeper reassessment of the structural objectives of PE entails examining its long-term socio-economic impacts, its contribution鈥攐r lack thereof鈥攖o domestic capital formation, and its influence on labour and public goods.

Farwa Sial聽is a Research Associate at the Department of Economics, School of Oriental and African Studies (SOAS).