Time: 4 May 2023, from 14:15 to 17:00, followed by a reception
Venue: Unioninkatu 35, Auditorium 116 (first-floor lecture hall)
Behind the China–United States trade war and other similar trade disputes lie a simple contradiction. Trade deficits and surpluses cancel each other out. Countries with trade surpluses tend to have savings surpluses, whereas countries with trade deficits tend to accumulate debt. The compositional fallacy occurs when it is assumed that what is possible for a single given actor at a given time is possible for all of them simultaneously. For the deficit countries, a possible individual response is to resort to unilateral measures. The problem is that this can lead to a spiral of tit-for-tat retaliations, aggravating the situation further. To avoid suboptimal and contradictory outcomes, which can have far-reaching political consequences it is possible to create more adequate common institutions. J.M. Keynes’s early 1940s ICU plans involved an impartial system for the management of currencies, and a kind of world central bank governing a common currency, the bancor. Obligations would be made systemic and financial positions defined against the rest of the world. Subsequent modifications and recontextualisations of the proposal have either tried to make this proposal more feasible under the late 20th or early 21st century circumstances, have introduced novel ethical and political principles, or redefined the role of the world central bank.
This public seminar discusses the ICU idea in the context of the 2020s global political economy. What is the position of the dollar in the future? Is a common currency needed? What do the different ICU proposals assume from the perspectives of economic theory, ethics, and politics?
Seminar programme:
14:15 “A short introduction: ICU and the future of global political economy” Heikki Patomäki
14:25 “Global instability and the decline of the dollar" Lauri Holappa
Comment: Johan Wahlsten
15:05 “Beyond dollar hegemony? Revisiting Keynes’s plan for an international clearing union” Niina Kari
Comment: Matti Ylönen
15:45 Coffee break
16:00 “Towards an International Clearing Union (at last)? Normative underpinnings and elements of institutional design” Konsta Kotilainen
Comment: Heikki Patomäki
16:40 General discussion
17:00 Reception: drinks and snacks