IPE Talk: Mark Schwartz

• In-person event

The Institute of Political Economy’s Visiting Fulbright Scholar, H. Mark Schwartz will be hosting an online talk titled “Why is the US dollar still the world’s dominant currency?”

How does dollar centrality persist in the face of continuous US current account deficits and a steadily worsening net international investment position? Two mechanisms create a structural basis for dollar centrality, explaining how dollars enter global credit markets and why surplus countries continue to hold dollar-denominated assets. First, institutional structures deriving from late development suppress domestic demand in major current account surplus countries, making them reliant on external demand for growth. Local banks recycle those dollars into the global economy, creating huge dollar liabilities and assets on their balance sheets. This locks them into continued use of the dollar and reliance on the US Federal Reserve during crises. Second, US firms participating in the global unbundling of production have constructed commodity chains in which they capture disproportionate shares of global profits through their control over Intellectual property. These profits sustain valuations and thus the attractiveness of dollar-denominated assets. Together these sustain the dollar’s role as quasi-state money (outside money) in the global financial system. This talk builds on my 2019 RIPE article, adding material from on-going collaboration with Randall Germain. Papers related to this on-going project can be found at:  https://uva.theopenscholar.com/hermanschwartz/publications

H. Mark Schwartz  is a professor in the Politics department of the University of Virginia. He is best known for work on the evolution of the global economy and the geo-politics of the subprime mortgage crisis, and has over a million published words which even his mother hasn’t read. His current work looks at how changes in corporate strategy and structure towards seeking monopoly profit from intellectual property right deployed in vertically disaggregated production chains has contributed to slower global growth (i.e. ‘secular stagnation’). Like Rick, who came to Casablanca for the waters, Schwartz comes to Ottawa for the mild weather. Rather than opening a café he plans to work with Carleton Professor Randall Germain on why and how the US dollar persists as the dominant global currency, how it resembles (or not) the Pound sterling in the nineteenth century, and what this tells us about global growth and political power.

Zoom link will be emailed out to all registered attendees on March 24th. For assistance, please email peco@carleton.ca