Capital Control and the Liberal Discourse

Introduction
The implications of international capital mobility for sustaining growth and stability stands
among the most contentious and least understood contemporary issues in the field of
international political economies. The bursting of the housing bubble and the bankruptcies
that came along in North-America grew the forthcoming credit crisis into a global financial
crisis. As central banks in Europe and other regions in the world warn states that they risk
unleashing unsustainable debt spirals if they fail to follow through on their pledges to cut
budget deficits, unequal weight is given to another associated worrisome development: the
blind eye turned toward the global financial crisis’ unequal societal disturbing effects on the
less-wealthier states on the globe. Next to the more wealthier nation concerns such as falls in
capital flows and remittances, falls in exports, rising unemployment and the increasing
poverty, developing countries in addition face more alarming concerns such as starvation,
poor health, desperation, the danger of easier recruitment of extremists etc.
At the heart of the global financial crisis which showed up across the capitalist
landscape, it is claimed by financial institutions, lays the very persistent propensity to save
and withhold, rather than to spend and invest(source). Similarly, the international media
seems heavenly engaged with the projection of everyday politics of financialization. This
excessive market-orientation is the result of deregulation policies from the 1970s onward
wherein both ends of the transatlantic, reformed throughout a liberal agenda. These for both
Western Europe and Northern America, originally instigated to encourage business, minimize
governmental oversight and stimulate entrepreneurship for corporations, banks and other
evolving financial institutions(source). Unfortunately, throughout the globe, companies and
(nationalized) banks are sitting on more cash than ever before, as they persistently hold back
from hiring and spending despite their improving economies and surging profits(source). The
cash and bank reservoirs spilling up in corporately sealed coffers, it is held by neo-liberals,
has the powerful potential to help the world economy grow more vigorously and bring
unemployment rates lower. In the wake of the worst economic downturn since the Great
Depression, however, companies and banks seem reluctant to make that shift.
The basic problem associated with the liberal wish to make money the servant rather
than the master of economic stability and growth, is that it touches upon fundamental liberal
ownership rights. The liberal right to storage and accumulate daunting amounts of capital by
individual persons, groups, companies or governments, when it comes to desiring more
accommodation of voluminous international financial flow, cannot be reconciled with liberal
principles serving the adage ''pacta sunt servanta'' or that ''agreements must be kept'. To be
more precise, the idea of liberal ownership rights comes under severe pressure when the basic
economic freedoms to accumulate, withhold and utilize economic wealth and capital are being
perceived as the same necessary constituencies which constrain the maintenance and
extension of the international liberal zone. In sum, the call for enacting anti-liberal
mechanisms such as regulation and fiscal monitoring is fundamentally opposed to the basic
liberal freedom to either spend or to save money.
If the fundamental purpose of liberalism is to inform us about the universal
applicability of free trade and open markets, whilst safeguarding basic economic freedoms
such as ownership-rights, then it stands on its own that liberal norms should be internally
consistent. This research design elaborates on this intrinsic tension by asking whether the
recent global financial crisis, in the wake of increasing capital-flow related regulation
tendencies, marks a reversal from embedded liberalism toward the rise of state capitalism.
Why is it worthwhile to address this particular issue?
 First, the current re-regulation calls for the market economy and the desire to control
financial flows, poses a fundamental challenge to the universal applicability and practicability
of liberal norms. Governments which once have been encouraged to promote marketization
and deregulation by traditional powerful liberal institutions such as the IMF, are now
increasingly backpedalling from their liberal course. As such, the effectiveness of the general
reliance on the universal applicability of liberal policies and arguments which have been designed to
minimise the role of the state vis-à-vis the market, remains to be seen.
Second, states, and especially the more vulnerable developing states, should bear
awareness about the global course or discourse of liberalism in order to make sound policy
choices. The hard demands from international liberalism oriented institutions on weak states,
aimed at strengthening international and transnational (economic) cooperation, can generate
counterproductive outcomes: if states with strong capitalistic traditions unilaterally thrive on
more protectionist courses, whilst at the same time demand from less experienced states to
open and liberalize domestic markets. The significant skewness in global welfare share
between the rich and the poor could increase if weak states, especially in the midst of their
vulnerable transition toward sustainable economic growth, are (un)intended misinformed
about the current statue of capitalist states' liberalization practices.
Third, in terms of its outcome, the global financial recession, doesn’t reflect the true
variation and density of the economic downturn for the more vulnerable nation states. When
the current recession hit in late 2007, and the financial crisis erupted in 2008, the relatively
strong balance-sheets of the wealthier nation states helped them to weather the storm. At the
same time, however, the economic and social impact of the recession hit developing or less-
wealthier nation-states more severely. Whereas wealthier states, due to more or less
successful experiences they had in the past, in the midst of a crisis, could fall back into the
rise of state capitalism, developing countries could only fall back in the claws of
authoritarianism.
Fourth, the right to be rightfully informed on the question whether and why the more
wealthier states, whilst promoting the openness of other's markets and borders, do make a
sharp reversal from the market induced liberalization project. Second, the right to eventually
decide on (temporally) following an alternative course of action, if the liberalism-induced
caveats, risk, limitations and dangers are too demanding.

2
State of the Art

It is worthwhile to state that the complete exposition of theoretical works on this issue cannot
be undertaken faultlessly. Basically, the debate on the question whether to impose capital controls is
conducted between two camps: those who believe that the state should in principle refrain from any interference
with the market, and those contenting that capital controls remain one of the very few instruments which
governments have at their disposal to regulate international capital movements.
Liberal policy-minded opponents of capital controls argue that achieving greater capital mobility and
moving towards full and open financial market integration are crucial steps to world economic development.
This should provide the best prospects for transforming the small pool of world savings into the required stock of
investment capital

Research Question
At issue here Is not so much the sincerity of liberal policy makers , but rather the business
realties affecting developing countries’ ability to adapt to such politics. It is imperative

What could this indicate to? Could this trend perhaps demarcate a substantial shift in
the internationally institutionalized liberal values? The ambitious liberal project was to
encourage states to mutually gain from free trade, which also provides the free flows of
speculative capital. This raises an important question on the direction the international
political course or discourse is heading to: is the era of embedded liberalism really over or are
we now in the midst of a period reminiscent of stronger governmental intervention like in the
1950s and 1960s? As a consequence, does the liberal shift, for all, indicate that we are in the
midst of a shifting Power Transition or that we are just dealing with a temporal revival of
State Capitalism? This research design addresses similar questions.

Contribution to the knowledge of the field

For governance purposes…..

More efficiency,
Forms and functions
Accountability and legitimacy
Evaluation criteria
Case study
Conclusion

1.Corporate social responsibility: which info used in the literature

How to understand the concept/definition…referencing
2/3.Provide an answer tgo the question why this is a good and practical idea
Why is it a bad idea
4. What would it take to take transparent companies to behave responsibly?

Bealin article
Three tendencies in glob…deneationaliz/ destatization and internationalization..still dominant
trends?
What are the implication for democracy or the democratic quality of government processes
and decision-makings..

Membership and overall universe?

Lets look into a given issue-area…issue based discussion…delineate universe on issue

base…..difficulty=spill-over effect.
Sectoral approach
Goal=skill to thwe market…definitional problems….generalizable statements….2002 summit
for sustainable development im Johannesburg (Johannesburg partnerships/Type-2
partnerships…registered with the UN…
Hard binding agree,ents not attainable=t1…then lets work on an other…type2=working om
something which others already have been working on…new tool=PPP=implementing
partbnerships..nothing new…MDG’s for example..2 years earlier settet goals were yet to be
reached…discussions swifted modestly…acces to drinking water etc…vicing new
mecahnisams..fresh funds…new people…
Liberalism and Capital flow,
capital flow and neo-liberalism and
embedded liberalism.
The links between the resilience of the financial system and capital inflows could go in both
directions.

What needs to be asked is what the following.

Ecven a legitimacy problem without prove effectiveness…public regulation…why

omportant…

Issue: state liberalism…donot infer with the other constituencies…

Main thing is that they loose much money…20/30/40…un---only regisLabel for

partnershoips?,..creates transperancy…not organized….how to distillate this ide…appetizer
fir or the partnershops……
ter of partnerships…unclear whom are relly involved…..
Appropriate level of supervision…step up supervision through the UN
Provisio of information…having funds…small or big?

Internationally regulated…international law/….domestic approach…not necessary…still

some concerns…like the mitigation of funds…
Nobody..especially the controlling units within society….bringin nin
What is it compred with,…rationale of the actors…very fuzzt…perhaps impermeable..
Civil society gain…control…cheap way to be aligned to the persons in charge,,,how we
discuss information…
Local expertise…,deeply rooted in the special situation…bottom-up approach to influence
rather then the other way around….
Legitimacy debate:
1-why is someone governed without consent
2-if legitimate more effective (normative structure)…legitimacy as a prerequisitice for
effectiveness….
Theoretical delineation…if effective…truthfulness…
Why not a problem? Democracy os always suboptimal…evenyhough not convincing..others
could be involved as well…legitime…tow different thons ;… l

Cancune….assessment..criteria….finer grained scale…..