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Abstract:
Most accounts of the interventionist turn that has taken place in advanced capitalist economies frame that shift as a reaction either to the 2008 financial crisis, or to China’s rapid advancement in hi tech in the 2010s and its recent dominance in multiple supply chains.
This paper, however, describes a ‘long interventionist turn’ that began significantly earlier. It was triggered by China’s World Trade Organization accession in 2001 and it has been driven primarily by China’s distinctive integration into the global economy. This process has been constituted by three successive waves of crisis and state intervention in advanced capitalist economies.
After WTO accession, Chinese oil demand sent global energy prices rocketing for much of the 2000s, and states responded with interventions in the energy sector, including policies that constituted the foundations of the energy transition. Chinese savings and petrodollars swollen by Chinese demand inflated the financial bubble, and after it burst states responded with bailouts, regulation and extraordinary monetary policy interventions that have still been only partially reversed. China increasingly dominated strategically sensitive supply chains, and since the late 2010s the same advanced capitalist economies have responded with interventions in industrial policy.
The existing scholarship acknowledges the contribution of China’s rise both to the conditions that produced the 2008 financial crisis and, especially, to the recent shift to industrial policy. However, these dynamics have not been identified as expressions of a single process that included an earlier wave of crisis and intervention in the energy sector.
This alternative account challenges a number of prevailing claims: that the 2008 financial crisis was the originating event of the contemporary interventionist turn, that China’s rise has affected that interventionist turn only relatively recently, and that the energy transition has been linked to this interventionist turn only relatively recently.
This paper draws on the literature examining the political economy of energy governance, and on more widely read bodies of scholarship that have developed largely in isolation from that literature: scholarship on global imbalances, the comparative political economy of the post-2008 interventionist shift, and recent work on the industrial policy and economic statecraft of advanced capitalist economies. By synthesising these literatures, this article shows that three apparently disparate waves of crisis and intervention share the common driver of China’s distinctive integration into the global economy. Financialisation, the US’s inability to project its power at key junctures, and the rise of other emerging markets are identified as important secondary factors.
Bio:
Richard Power-Sayeed is a PhD candidate in the Department of Political Economy at King’s College London. He previously worked for the Labour Party and as an environmental campaigner. His history of British politics and culture in the 1990s, The Future That Never Happened, was published in 2017. He is a regular political commentator on radio, on television and in print.