Since the outbreak of the subprime crisis in 2007, and especially after its brutal aggravation the following year, there has been an immense flood of economic commentary. Even those who have spent the last decades celebrating financial deregulation have found it easy to be wise after the event. But while post-facto diagnoses have been plentiful, sustained analyses that anticipated the crisis were less common. Désordres dans le capitalisme mondial belongs firmly in this latter category, offering a comprehensive survey of the global economy and identifying the increasing tensions that have arisen within it in recent yearsfootnote1. These are the product of the completely inconsistent paths adopted by the main economic powers—the us, Japan, the Eurozone, China—and, according to the book’s authors, can only be addressed by greater coordination among the four. However, they also argue that the world economy in the twenty-first century is likely to be shaped increasingly by today’s emerging countries, holding out the possibility of a more multilateral global order to succeed the present system of imbalances.
Michel Aglietta, currently based at the University of Paris-X, is best known in the Anglophone world for his Theory of Capitalist Regulation, a seminal text of the French Régulation school, first published in 1976 (a new edition appeared in 2001). At the time, mainstream economic discussion was dominated by extremely abstract general equilibrium theories which were taken, in a very naive way, as a guide to policy decisions. Aglietta, by contrast, insisted—as he has done throughout his subsequent work—on the political structures and social institutions which make market exchange possible and establish its limits in specific historical contexts. A Theory of Capitalist Regulation combined analysis of the key economic institutions and control mechanisms of the postwar period—putting forward the concepts of ‘accumulation regime’ and ‘mode of regulation’—with an account of their cumulative loss of effectiveness and of the crisis tendencies thereby released. The book was generally better received by Europeans than Americans, who were more aware of some of the simplifications and abstractions in Aglietta’s picture of the us economy. But many heterodox economists welcomed it as pointing towards a systematic account of the dynamics of contemporary capitalist systems. Among neo-Marxist economists, previously influenced by Althusserian structuralism, Regulation Theory was widely perceived as a significant renewal of their own analytical traditions—though Aglietta’s insistence that ‘institutions lead economic trends’, rather than the economy playing the determining role, also indicated a distance from classical structuralist positions.
In the decades since, he has produced an immense range of economic and socio-economic studies, centred on monetary and financial questions, but also embracing social anthropology, economic sociology and economic history. Few of these writings have been translated from French—a regrettable Anglophone provincialism that means his work is not as well known to English-language readers as it should be. For no other economist today is producing such a rich and varied body of work. To take three examples from among the works he has published since the turn of the century, Dérives du capitalisme financier (with Antoine Rebérioux, 2004; translated as Corporate Governance Adrift) provides a critique of the doctrine of shareholder value and gives an account of the high-tech bubble and related corporate scandals; La Chine vers la superpuissance (co-written by Yves Landry, 2007) analyses the prc’s astonishing growth while stressing its political and social specificity, denying the notion of any simple convergence with Western norms; and in La Monnaie entre violence et confiance (2002), Aglietta and André Orléan revisit their audacious 1982 account of the origins and nature of money, and the theory of monetary crises that they developed from it.
That earlier work, La Violence de la monnaie, made what many thought to be extravagant use of René Girard’s speculative Christian anthropology, and may help to account for a certain distance that has arisen between Aglietta and other members of the Régulation school. But it is also apparent that régulationnisme has become less clearly defined over time, the sense of a unified approach fragmenting as its proponents’ interests have varied. Thus while Aglietta has continued to focus on the overall dynamics of capitalist development (as these find concentrated expression in the financial sphere), the other leading exponent of the school, Robert Boyer, has tended rather to emphasize comparative international studies. The third highly influential figure, Alain Lipietz, moved away from the School’s preoccupations, becoming a Green mep in 1999 and more recently voicing his support for the eu constitutional treaty. Other major figures—Benjamin Coriat who produced the key régulationniste texts on the labour process, Pascal Petit who has analysed ‘tertiarization’ and the service sector, Christine André and Robert Delorme who have studied the pattern of state intervention—have also taken somewhat divergent paths, related more to their specific interests than to any core doctrine. The output of the School’s second generation is similarly varied—Frédéric Lordon writes on economics and subjectivity and on pension funds, Bruno Aimable on the different forms of contemporary capitalism. Indeed, régulationnisme now seems to constitute at most a loose grouping, spanning a wide range of studies. The reasons for this dispersal are also partly conjunctural: in the 1970s, the Regulationists were seeking to overturn dominant social science paradigms, while offering an alternative to the orthodox Marxism of the pcf. By the 1990s many had shifted into the realm of policy advice to the centre-left: Aglietta, Boyer and Lipietz all wrote reports for Jospin’s Conseil d’analyse économique between 1997 and the ump’s assumption of power in 2002.
Désordres dans le capitalisme mondial stems from Aglietta’s current advisory role for Groupama Asset Management, a French fund manager linked to a large mutual insurance company, with a portfolio of €82bn at the end of 2008; Aglietta’s co-author, Laurent Berrebi, is Groupama am’s chief economist. The book does not deploy any of Aglietta’s earlier régulationniste terminology, but its attention to the different regimes of the four major economic zones discussed—institutional, social and political structures—indicates a certain continuity with the theoretical framework he had previously developed; in that sense the book’s conceptual orientation clearly derives from Aglietta, with Berrebi principally contributing to its empirical aspects.
Published in March 2007, the book could not respond to the subprime crisis which broke out that year, and which only revealed its unprecedented scope and scale in 2008. It centres, rather, on the massive, uncontrolled us current account deficit which certainly was one of the most important factors behind the crisis. The book falls into three main sections. The first covers the evolution of the system as a whole since the East Asian crisis, which the authors regard as a key turning point, marking the world’s entry into a ‘new growth regime’. After 1998, the countries most affected by the financial turmoil turned away from a reliance on Western capital which had led first to currency collapse and then to the inept and dogmatic interventions of the imf. They now made a decisive choice for export-led growth, generating structural payments surpluses and directing capital flows back to the industrialized countries. These flows, together with those from China and Japan, took the form of cheap imports into the eu and especially the us, and became one factor in the shift to a generally deflationary economic climate. The other such factor was the triumph in the us and to a lesser extent the eu of the movement for shareholder value, which set very high profitability thresholds for new investment and thus restricted the demand for labour. In the postwar decades the corporations supplying consumer goods had often possessed strong and stable market power, but wage-earning households were able to obtain pay increases which cut into the monopoly rents this market power implied. Now, most workers could no longer apply such pressure, and could only increase their purchasing power by taking advantage of price competition in output markets.
Aglietta and Berrebi view this shift from generally inflationary to deflationary conditions as structural. They correctly argue that big increases in the prices of oil, cereals and other commodities did not trigger inflationary spirals in the industrialized countries because labour was too weak to obtain compensating pay rises, and therefore had simply to absorb the loss of purchasing power. However, waning inflationary pressures by no means signified stability. On the contrary: the pattern of the cycle merely altered, with monetary factors such as changes in interest rates becoming less important in determining investment expenditures; but, just for that reason, there was an increased likelihood of financial disturbances. Excess liquidity was no longer expressed by general inflationary pressure, but rather by asset-price bubbles. The inflow of capital from emerging industrial economies helped to feed one of the most acute of these, the dot-com bubble at the turn of the century. In effect, then, this first section of Désordres puts forward a periodization: after 1998, the global economy entered a new era, firstly because a significant group of countries broke away from the policies proposed for them by the us, bringing to an end a brief phase of uncontested us domination in economic strategy; and secondly because of the radical change in macroeconomic conditions brought about by this same move.