Political Governance of Capitalism

Political Governance of Capitalism

A Reassessment Beyond the Global Crisis

Helmut Willke and Gerhard Willke

This path-breaking book highlights that systemic risks emerge from a globally operating financial industry that is not only disconnected from the real economy but also allowed to hide in ‘shadow banking’ practices. Governance based on national regimes fails to cover ‘finance-led’ global capitalism. The authors argue that the risk of systemic meltdown will reappear unless intelligent governance regimes are installed, combining legally binding rules and civil society pressures to restore the balance between risk-taking and accountability. They illustrate the goal is ‘resilient’ capitalism in which the rules of the game are set by politics and knowledge-based discourse.

Chapter 4: On Governance of Capitalism as Global Political Economy

Helmut Willke and Gerhard Willke

Subjects: economics and finance, political economy, politics and public policy, political economy, public policy, regulation and governance


Many approaches, theories, concepts and ideas compete to explain the logic and the meaning of globalization. Nobel laureate Joseph Stiglitz even endeavors to ‘make globalization work’ (Stiglitz 2007) and John Dunning veritably sets out to ‘make globalization good’ (Dunning 2003) as if this was a project of choir boys. More modest authors try to single out the salient dynamics and main driving forces characterizing the present phase of globalization. In a brief exposition we shall look at the dynamics of globalization in order to gain ground for the more specific questions of governance. The main controversy of the debate about globalization has been a dispute between ‘globalists’ and ‘statists’, pitching the proponents of a market-driven primacy of the economy against the defenders of the primacy of the nation-states (Gilpin 2001; Krasner 2001). The ongoing global financial crisis and its proposed remedies have even intensified this controversy. Globalists believe in the self-organizing power of a global free market, as expressed in the principles of capitalism, distrusting the narrow and self-interested problem-solving capacities of the nation-states. Conversely, statists believe in the power of public authority and the principles of self-governance of territorially organized states protected by the overriding norm of national sovereignty. This state-centric view has come under severe attack with the ascendance of the ‘free market ideology’ of the Reagan-Thatcher years, the ‘Washington consensus’ (that is, the common marketliberal position of the main Washington institutions like the World Bank, IMF, Federal Reserve and, of course, the Bush administration in general). On...

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