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Susan Strange

Chapter 3 Political underpinnings: the US–Japan axis The political foundations for international financial cooperation are weaker today than they were in the 1970s and 1980s. If we have worries about the stability of the international financial system, it is important to understand in what way these foundations are weaker and how this has come about. For, while the pace of technological innovation in finance (as in manufacturing) has accelerated, and while the size and salience of finance in the world economy have greatly increased, the political capability to

in Mad Money
Abstract only
With an introduction by Benjamin J. Cohen
Author: Susan Strange

This book begins with a recapitulation of the main themes of Strange's earlier Casino Capitalism, stressing the major policy decisions and non-decisions that, in her opinion, had first allowed financial markets seemingly to outgrow governmental control. It adds a number of newer systemic developments that had emerged in the years after Casino Capitalism was published. Following this opening tour d'horizon, the book evaluates many of these developments in greater detail, covering the revolution in information technology interstate politics, contagion risks, global debt, money laundering and the roles of both national governments and multilateral agencies such as the International Monetary Fund and Bank for International Settlements. Great emphasis is placed on the relationship between the United States and Japan, the 'US-Japan axis', which is considered crucial to the effective management of financial crises. All the strings of Strange's discussion are pulled together where she turns her eyes to the future. Most financial research at the time seemed biased toward midlevel theory building, focusing primarily on key relationships within a broader structure whose characteristics were assumed, normally, to be given and stable. The book discusses hypotheses about the most important changes that have affected the global financial system and the international political economy. Key decisions, or non-decisions in the case of failures to act when positive action would have been possible, are also discussed.