It is probably well known that my interests straddle (global) political economy, the humanities and social sciences, and flirtations with photography. With global political economy (in my Business Day columns) I take on a fairly stable, yet heterodox position.
My Daily Maverick columns are more polemical, in the sense that I play in the traffic and roll out provocations, test ideas and confront injustice. I am especially interested in the way South Africa is slouching towards fascism, a term which it is probably wise not to throw about too recklessly to the extent that when the actual fascists show up the term has lost all its meaning. All of this is probably well known, but the reader of my columns and this blog. Just thought I should mention…
Sometimes I address issues which I think have fallen between cracks, at least in South Africa, but can’t completely ignore a teaching moment. I was, after all, a lecturer for a short while, though I could not quite cut it.
Anyway, in my Business Day column this week, I boldly, perhaps foolishly, suggested that 2023 might be “the year of the central bank”. I expect it would be the year when focus on the central banks may become sharper and, in the long run, they may well expand mandates towards more progressive ends
Conventionally central banks are expected to focus sharply on price stability and/or inflation targeting and making sure that payment systems run optimally. The world has, however, gone through a succession of crises over almost three decades, starting with the East Asian Crisis in 1997; the dotcom bubble burst; recurrent currency and banking crises; Washington’s ill-conceived war on terror; horrific conflicts in Afghanistan, Myanmar and Palestine; the 2008 global crisis; the Ebola and Covid crises of global communicable disease, and Russia’s war on the Ukrainian people. On the back of this, and bearing in mind the political economic and ideational (ideological) challenge that China presents to the liberal international economic order, underpinned as it is by liberal capitalism, Central Banks are being looked upon to support an expansive range of markets and activities, through mechanisms and instruments beyond interest rates and the functioning of open market.
In the least, if we have to address glaring inequalities, recurrent financial or currency crises (especially for their impact on the poor), we may need a more progressive monetary policy by first raising interest rates, and investing gains on reducing inequality. Given, also, the global climate crisis, there has to be a sharp focus on action to mitigate the worst of environmental disaster; my guess is that we have gone too far down the road to destruction, and the best we can hope for is create social safety nets while rolling back the worst of our impact(s) on the environment. With this, we may start to approach a type of “sustainable monetary tightening”. I am convinced, that these issues can be addressed while maintaining macroprudential policies that focus almost exclusively on the stability of the financial system, and on order to prevent substantial disruptions of important financial services that are necessary for stable economic growth. While these policies may be necessary, they are insufficient. Also, these policies should not be ends in themselves in a world of people, poverty inequality, hunger, homelessness, violence, persecution, mass migration and the threats to indigenous people, customs and ways of life. I would insist that not every one of six or seven billion people in the world is comfortable with a culture of consumer capitalism, nor can we expect complete acceptance that “the economy” or “the global financial system” are disembedded from society, and that they function without human interventions at the beginning, in the process and at the end.