Économie politique

G12 - Crisis and Uncertainty: Banking, Finance, and Taxes

Date: May 31 | Heure: 02:00pm to 03:30pm | Location: Classroom - CL 420 Room ID:15724

Chair/Président/Présidente : John Peters (Laurentian University)

Discussant/Commentateur/Commentatrice : Mary Bartram (Carleton University)

Fixed Infrastructure, Shifting Finance: The International Political Economy of Pipelines: Kate Neville (University of Toronto), Sarah Martin (Memorial University of Newfoundland)
Abstract: The international political economy of finance in the energy sector is shaped by a constellation of material and ideational factors, from engineering plans and drilling rig hardware to commodity price speculation and commitment to certain forms of economic growth. Uncertainty is a key component of this political economy, with highly volatile commodity prices and markets, uneven social responses and resistance, corporate competition and collaboration, and varied resource availability and access. Although social, regulatory, geotechnical, and economic uncertainty poses challenges to energy extraction and transportation, they also present key sources of profitability in the financial sector, as speculation relies on risk for reward. In this paper, we ask how various domains of uncertainty—social, regulatory, geotechnical, and economic, among others—shape power and profit in energy governance. Through an examination of the changing financial dynamics of oil and gas pipelines, with case studies focused on the Canadian north from the 1970s-2010s, we track contested energy dynamics at global and local scales, and their consequences for local communities and ecosystems.

Financing Uncertainty: Disasters, Power, and the Rise of Alternative Reinsurance Capital: Korey Pasch (Queen's University)
Abstract: The CPSA’s 2018 Annual Convention theme: ‘Politics in Uncertain Times’ emphasizes the significance of global warming and the changes that are occurring in the global political economy between networks of rules, both formal and informal, and the exercise of power by actors. Many scholars within International Relations and Global Political Economy have commented on these changing relationships, perhaps most famously Susan Strange through her concept of structural power. One area where such exploration of the relationship between uncertainty, power and rules remains crucial is that of the policies which address the rising impacts of disasters. Indeed, uncertainty in this area of governance has been highlighted recently due to the numerous hurricanes and wildfires that have affected many states including Canada. Wildfire has been particluarly devastating in the Canadian context, with almost 5000 square kilometers burned in British Columbia in 2017 and Fort McMurray remaining in recent memory. This paper seeks to investigate the network of rules and power that influence the policies and choices that actors make regarding disasters. Specifically, the turn of insurers and reinsurers to new financial mechanisms and capital sources to address the costs of these events through insurance-linked securities and catastrophe bonds. The paper addresses the following questions: How should ‘power’, ‘rules’, and ‘disaster’ be understood within the current moment of uncertainty? What is the relationship between uncertainty, power, rules, and the financing of disasters? How is this relationship linked to transformation within the global political economy? How does Canada exert influence within this issue area?

Politics, Financial Safety Nets, and Banking Crises: Michael Gavin (University of Toronto)
Abstract: The literature on the causes of banking crises is extensive and political factors feature in most accounts (Bordo et al, 2001; Harvey, 2011; Reinhart and Rogoff, 2009). However, political economy explanations of banking crises are first and foremost centered on how politics contributes to the emergence of a weak banking system. As fruitful as these approaches are, current theories of banking crises cannot explain a key puzzle: if politics explains why a banking system is weak, why do some weak banking systems end up in crisis while others do not? This paper resolves this puzzle with a new political economy theory of banking crises that uses the lens of financial safety nets, which consist of public interventions that contain the spread of financial crises (Gelpern, 2009). Unlike existing accounts which argue that financial safety nets induce moral hazard and make banking crises more likely (Corsetti, Pesenti, and Roubini, 1999; Burnside, Eichenbaum, and Rebelo, 2004), I argue that banking crises are less likely when financial safety nets are strong and generous. In contrast to the moral hazard approach, I argue that banking crises are the product of: (1) a weak banking system; and (2) the unanticipated removal of a state-supplied financial safety net. Supporting case study evidence comes from the decision to let Lehman Brothers fail during the global financial crisis, the failure of the Soviet Union to assist Eastern European states during their debt crises in the early 1980s, and the emerging market crises of the 1990s.