The Great Crashes: Lessons from Global Meltdowns and How to Prevent Them. Linda Yueh. Penguin. 2024.

Patterns linking great crashes

In The Great Crashes: Lessons from Global Meltdowns and How to Prevent Them, I examine how major economic crises often emerge during periods of profound structural change. Although each crash appears unique in real time, recurring dynamics frequently underpin them: optimism turning into overconfidence, vulnerabilities hidden during periods of growth and policymakers reacting too slowly to shifting economic realities. Those historical lessons offer an important lens through which to view today’s green transition.

The green transition was once widely viewed as a cooperative global project. Increasingly, governments are approaching climate policy through the lens of economic security, industrial resilience and geopolitical competition.

Decarbonisation is often framed primarily as a technological and environmental challenge. Yet, history suggests that large-scale economic transformations are rarely smooth. They reshape patterns of investment, alter geopolitical relationships and expose vulnerabilities often only fully understood in hindsight. What distinguishes the current transition is the growing importance of geoeconomics.

From climate policy to strategic competition

The green transition was once widely viewed as a cooperative global project. Increasingly, however, governments are approaching climate policy through the lens of economic security, industrial resilience and geopolitical competition.

Several recent shocks have accelerated this shift. Russia’s invasion of Ukraine ignited debates around energy dependence and strategic vulnerability. The COVID-19 pandemic exposed the fragility of global supply chains. Rising tensions between the US and China have intensified concerns over technological leadership and economic dependency. In response, governments have returned to industrial policy on a scale not seen for decades. The US Inflation Reduction Act is perhaps the clearest example. Although presented as climate legislation, it also represents a major industrial and strategic intervention designed to strengthen domestic manufacturing and reduce reliance on foreign supply chains. Europe, meanwhile, has increasingly emphasised “strategic autonomy” in sectors linked to clean energy and advanced technology.

China continues to dominate significant parts of the clean technology supply chain, including solar manufacturing, battery production and the processing of critical minerals. According to the International Energy Agency, the concentration of clean energy supply chains in a small number of countries has become a growing concern for policymakers seeking greater resilience. The green transition is therefore unfolding within a more fragmented global economy than many anticipated only a decade ago.

New vulnerabilities of the green transition

This fragmentation matters because decarbonisation depends heavily on globally integrated systems of production and trade. Electric vehicles, semiconductors, batteries and renewable energy infrastructure all rely on complex international supply chains. For many years, policymakers assumed that globalisation would continue to deepen, lowering costs and accelerating technological diffusion. Instead, governments are increasingly attempting to “de-risk” supply chains, reduce strategic dependencies and build domestic industrial capacity in sectors deemed essential to national security.

One of the recurring lessons from past crises is that vulnerabilities often emerge during periods of transition, when institutions and policies lag behind the economic reality. The green transition contains several such risks.

There are understandable reasons for this shift. Yet economic history suggests that fragmentation carries costs as well as benefits. One of the recurring lessons from past crises is that vulnerabilities often emerge during periods of transition, when institutions and policies lag behind the economic reality. The green transition contains several such risks. One concerns the concentration of critical minerals and industrial capacity. Lithium, cobalt, nickel and rare earths are all essential to clean energy technologies, yet processing remains geographically concentrated in countries such as China. Disruption in one part of the world can quickly reverberate across global markets.

Industrial policy and fragmenting economies

The intersection of climate policy and geoeconomics has revived debates about the role of the state in shaping markets. The return of industrial policy carries risks of inefficiency, protectionism and political distortion. These tensions raise difficult policy questions. How should governments balance resilience against efficiency? Should countries prioritise domestic production even if it increases costs? Can industrial policy support decarbonisation without fuelling retaliatory trade measures? And will geoeconomic competition ultimately accelerate or slow the transition to net zero? These debates are already reshaping investment decisions, corporate strategy and international diplomacy.

The UK faces important choices within this changing environment. Britain has ambitious climate goals and is one of the world’s leading financial centres. The City of London could play a significant role in financing the green transition, particularly in infrastructure finance, insurance and climate risk. Whether the UK can establish a durable comparative advantage in these areas, however, will depend on policy credibility, regulatory stability and international competitiveness. More broadly, Britain must navigate a world in which access to technology, capital and energy is increasingly shaped by geopolitical considerations rather than purely market forces.

Lessons from past crashes

One of the central arguments of The Great Crashes is that crises are rarely inevitable. Policy choices matter. Institutions matter. Credibility matters. Economic resilience is often built long before vulnerabilities become fully visible. That lesson applies equally to the green transition.

Periods of profound economic transformation are rarely linear. They create instability as well as opportunity.

There are reasons for optimism. Competition can spur innovation. Industrial policy may help scale emerging technologies. The dramatic decline in the cost of renewable energy demonstrates how quickly markets can evolve when incentives align. But history also suggests that periods of profound economic transformation are rarely linear. They create instability as well as opportunity.

The next major economic shock may not resemble previous crises. It could emerge from climate-related financial risks, supply chain disruption, energy markets or geopolitical fragmentation. Yet the recurring underlying dynamics explored in The Great Crashes – overconfidence, hidden vulnerabilities, delayed adjustment and institutional weakness – remain strikingly relevant.

The green transition is essential. Ensuring that it succeeds will require more than technological innovation: it demands successfully navigating a world where economics, geopolitics, climate policy and national security are becoming increasingly intertwined. That challenge may become one of the defining economic questions of our time.

Note: This essay gives the views of the author and not the position of the LSE Review of Books blog, nor of the London School of Economics and Political Science.

Linda Yueh will speak at an LSE Festival event on Monday 15 June, How geoeconomics will affect the green transition.

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Capitalism at the Limit: A Political Ecology of a World in Crisis. Ulrich Brand and Markus Wissen. Polity. 2025.

ZÖ: To begin, I would like to ask about the motivation behind your recent book. It was first published in 2024 and recently translated into English. Why did you feel the need to write this book, Capitalism at the Limit, at this particular moment?

UB: Before Capitalism at the Limit, together with Markus Wissen, I published The Imperial Mode of Living, which came out in German in 2017 and was later translated into many languages, including English, Turkish, Arabic, Spanish, and Portuguese. Around 2020, in the context of COVID-19 and the beginning of the war in Ukraine, we felt the need to write a book that would diagnose the present conjuncture, building on our earlier work on the imperial mode of living, which focused on its conceptual foundations and ecological modernisation, largely in the Global North.

To reproduce our lives in the Global North and increasingly also in the Global South, people rely on cheap labour and cheap nature ‘elsewhere’

So, we start the new book with a description of the climate crisis and how it is deepening. What we see now is that the project of ecological modernisation, which was very much at the core of the first book, is increasingly under pressure from right-wing, anti-ecological projects.

ZÖ: Since your new book builds on the concept of the “imperial mode of living”, could you briefly explain what you mean by it?

UB: The main argument is that all political and economic dynamics at the global, national, and regional levels are inscribed in everyday life. To reproduce our lives in the Global North and increasingly also in the Global South, people rely – via the market and commodities like cell phones, clothes, industrialised food, or cars – on cheap labour and cheap nature “elsewhere”. And elsewhere can mean the Global South, but it can also mean places closer to home.

But the argument is more complex than that. The imperial mode of living also operates through discourses that justify why it is acceptable that people possess and use, for instance, a cell phone or why they “need” to have a car. These discourses tend to obscure the living and working conditions behind production, as well as the way nature is accessed and often destroyed, for example when lithium, copper, or fossil fuels are extracted.

It is a very Gramscian question: the question of hegemony. Hegemony means that there must be a material form of consent. People participate in and reproduce the imperial mode of living rooted in a specific mode of production and patterns of consumption, both of which depend on exploitative labour relations and ecological destruction.

ZÖ: How do you see your approach contributing to existing Gramscian understandings of hegemony?

UB: We argue that a Gramscian approach needs to take into account the biophysical basis. Gramsci already has an understanding of materiality in the sense of structures. Historical materialism (the Marxist theory that holds that ideas and social institutions develop only as the superstructure of a material economic base) offers a very strong understanding of the historical development of power-shaped and domination-shaped structures, which today shape the conditions of action. And these structures have to do with exploitation of humans and nature. Our contribution with the book, and with the concept of the imperial mode of living, is to really link political ecology to Gramscian thinking.

Additionally, there is a current of Gramscian thinking which is very cultural, which interprets hegemony mainly in terms of ideas, discourse, and contestations within civil society understood as a separate sphere, and in a way moves away from Gramsci as a Marxist. And this is why we insist that the imperial mode of living is not just a form of consciousness; it is rather a material and lived practice.

ZÖ: In the book you suggest that social crises can no longer be adequately managed within capitalism. Could you elaborate on that?

UB: We do not argue that capitalism will collapse in five, ten, or fifteen years. Historically, imperial capitalism had relatively easy access to global and often cheap resources. We call this externalisation, one of the mechanisms through which the imperial mode of living is reproduced. A limit is the ecological and particularly the climate crisis itself. For many years in the Global North, people assumed that the climate crisis mainly affected the Global South. But now it increasingly interferes with everyday life, the economy, and society in the Global North.

The rise of authoritarianism is closely connected to the failure of liberal and social-democratic politics to address social insecurity, migration, and economic restructuring

In the past, capitalism has repeatedly managed to overcome crises. Think of the crisis of liberal capitalism after 1929, or the crisis of Fordism in the 1970s, when neoliberalism emerged. The neoliberal project ultimately prevailed and re-stabilised capitalism with a new international division of labour and the rise of countries like China. We argue that since around 2010 this formation has also entered a deep crisis. We do not see the emergence of a new dynamic accumulation regime or a new stable mode of regulation.

ZÖ: In the book, you describe the current socio-ecological condition as a “monstrous normality”. How does this normalisation relate to the rise of authoritarian political responses?

UB: One often, rightly made argument is that the rise of authoritarianism is closely connected to the failure of liberal and social-democratic politics to address social insecurity, migration, and economic restructuring. The far right has been able to take advantage of this situation.

Many people feel excluded after decades of neoliberal restructuring, which was often supported by social-democratic parties themselves. There is a powerful image described by Arlie Hochschild: the metaphor of the waiting line. Workers feel that they have been waiting patiently in line to reach a better life. But suddenly they perceive that migrants or other groups move ahead of them in the queue, supported by the welfare state. The feeling then becomes: “they are overtaking me”. These perceptions are linked to broader experiences of inequality. For example, workers in relatively well-paid sectors, such as automobile workers at companies like Volkswagen may still be considered part of a labour aristocracy. Yet many of them fear that their production model is no longer sustainable. So, we also need to acknowledge that racism exists within society itself. It does not only come from above; it also exists at the level of everyday attitudes.

Additionally, and this is often overlooked in critical debates, we argue that the failure of a green capitalist project is also an aspect of the rise of the far right. The green capitalist project was often socially very unjust and triggered fear: What will happen to my car with a combustion engine? What will happen to my heating system? What will happen to my job in traditional industries? The far right exploits this situation by claiming that the established parties represent and stabilise “the system” which goes wrong, and do not challenge economic elites. In reality, far-right parties rarely confront economic power. But rhetorically they present themselves as the voice of “ordinary people.”

ZÖ: In the last chapter of the book, you propose socialisation as an alternative. How does this challenge dominant market- and growth-oriented approaches?

UB: One important point is that we want to avoid the common individualistic argument that “if people simply behaved properly, we would save the world”. From a political ecology perspective, the key question is how we organise provisioning systems. This also raises questions about norms, orientations, and capitalist accumulation imperatives and power relations. Our argument is that the investment function in the key sectors, including energy, housing, mobility, and infrastructure, needs to be socialised. In these sectors, the main problem is the private control over investment decisions and the concentration of economic power, which is closely linked to the imperative of growth and capitalist accumulation. What we propose implies something like an eco-socialist strategy, because it really questions the power of capital. This could involve taxation, forms of devaluation of capital, and different forms of socialisation.

Note: This interview gives the views of the participants and not the position of the LSE Review of Books blog, nor of the London School of Economics and Political Science.

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Crisis Cycle: Challenges, Evolution, and Future of the Euro. John H. Cochrane, Luis Garicano and Klaus Masuch. Princeton University Press. 2025.

Few monetary experiments in modern history have been as ambitious – or as consequential – as the euro. Launched in 1999 on the premise that a common currency could anchor European integration, promote growth, and bind the continent’s democracies in a durable peace, it has since endured the global financial meltdown of 2007-2010, the sovereign debt crisis of 2010–2012, the COVID-19 pandemic, and the economic shockwaves of Russia’s invasion of Ukraine. That the euro survives is itself remarkable. But as Crisis Cycle: Challenges, Evolution, and Future of the Euro contends, each survival has come at the cost of deeper institutional distortion.

The book’s authors represent an unusual and formidable combination of expertise. John H. Cochrane, Senior Fellow at the Hoover Institution at Stanford University and author of the influential Fiscal Theory of the Price Level, provides the theoretical scaffolding. Luis Garicano, Professor of Public Policy at the London School of Economics and a former member of the European Parliament, contributes the political economy perspective. Klaus Masuch, who spent his entire career at the European Central Bank (ECB) – including as a member of the “troika” that negotiated the Greek adjustment programme – supplies intimate institutional knowledge. Their complementary vantage points give the book a depth that few single-authored treatments of the eurozone could match.

Founding design vs crisis-driven revision

Crisis Cycle opens by reconstructing the intellectual and institutional logic of the euro’s original architecture. The ECB was endowed with a narrow and clear mandate: pursue price stability through interest-rate policy, and refrain from purchasing sovereign debt. Member states were bound by debt and deficit ceilings under the Stability and Growth Pact (SGP). A “no-bailout” clause formally prohibited fiscal transfers between member states. The founders, as the authors explain, understood the central danger of a monetary union without fiscal union. Member governments might be tempted to borrow beyond their means and then rely on the central bank to monetise their debts.

Yet the founding framework contained crucial lacunae: no mechanism existed for the orderly default or restructuring of sovereign debt. Banks were permitted – indeed encouraged by regulation – to treat government bonds as risk-free assets, concentrating sovereign exposure in the very institutions most likely to be imperilled by a sovereign crisis. And no emergency fiscal facility existed to provide short-term liquidity to member states facing market pressure. These were not oversights born of negligence, the authors argue, but of the political and intellectual constraints of the 1990s. No one in that era anticipated advanced-economy sovereign debt crises, and a founding document is not the appropriate place to negotiate every contingency.

Member states were bound by debt and deficit ceilings under the Stability and Growth Pact (SGP). […] When France and Germany breached deficit limits in the early 2000s without meaningful consequence, the SGP’s credibility was permanently damaged.

The book’s most analytically powerful section charts how each successive crisis reshaped the euro’s institutional architecture in ways that gradually undermined its founding logic. When France and Germany breached deficit limits in the early 2000s without meaningful consequence, the SGP’s credibility was permanently damaged. During the 2007-2009 financial crisis, the ECB began lending more freely to banks against increasingly risky collateral, much of it sovereign debt – inadvertently financing government deficits through the back door.

The 2010 sovereign debt crisis was the decisive rupture, according to the authors. Confronted with market panic and the absence of any dedicated fiscal backstop, the ECB felt compelled to act as the de facto lender of last resort to sovereigns. Mario Draghi’s celebrated pledge to do “whatever it takes” stabilised markets, but at a profound institutional cost. It confirmed that the ECB would rescue over-indebted governments, eliminating the disciplinary pressure that market borrowing costs had previously exercised.

The authors identify a cruel irony at the heart of the eurozone’s crisis management: each intervention that saved the euro in the short run made it more fragile in the long run.

The subsequent rounds of quantitative easing (QE) – a monetary policy tool whereby a central bank purchases government and other securities on financial markets to inject liquidity into the economy and compress borrowing costs – were extended dramatically during the pandemic, embedding sovereign bond purchases as a routine instrument of ECB policy rather than an exceptional emergency measure. The authors identify a cruel irony at the heart of the eurozone’s crisis management: each intervention that saved the euro in the short run made it more fragile in the long run. It did so by weakening the incentives for fiscal discipline and structural reform that might have prevented the next crisis.

Moral hazards and the reform agenda

This is where the book’s central concept – the “crisis cycle” – acquires its analytical force. A moral hazard, in economics, refers to the tendency for insurance to reduce the incentives that would otherwise discourage the behaviour being insured against.

When governments know that the ECB will purchase their bonds should yields rise to dangerous levels, the incentive to maintain sustainable fiscal trajectories is blunted. When banks know that sovereign debt will effectively be supported by monetary intervention, they have little reason to reduce their concentrated holdings. When investors know that no sovereign default will be permitted, they have limited incentive to discipline profligate borrowers through higher interest rates. The result is a system in which each crisis generates institutional innovations that protect against immediate collapse but increase the underlying fragility – until the next, potentially larger, crisis arrives. Italy’s public debt, exceeding 135 per cent of GDP, and France’s deteriorating fiscal position loom large in the background of these pages.

The book’s final section is its most directly normative, outlining a package of reforms that the authors regard as necessary conditions for the euro’s long-term survival. Three pillars stand out.

First, the creation of a genuinely capable European fiscal institution that can provide temporary liquidity support to member states experiencing market pressure. If rendered subject to strict conditionality, this could relieve the ECB of the need to perform this quasi-fiscal function. Second, the development of a credible sovereign debt restructuring mechanism, so that default, however painful, remains a possibility that disciplines borrower and creditor behaviour alike. Third, a thoroughgoing reform of prudential regulation to break the “doom loop” between sovereign debt and bank balance sheets, requiring institutions to hold diversified sovereign portfolios and treat government bonds as the risky assets they demonstrably are.

Reform is easiest in calm times and most necessary in crises; yet it is precisely in crises that the short-term pressures for improvisation tend to crowd out long-term institutional design.

The authors are careful to distinguish their preferred path from two more radical alternatives they reject: full fiscal union, involving large-scale budgetary transfers to the European Commission, and unconditional debt mutualisation through Eurobonds. Their proposed middle course – disciplined national fiscal sovereignty, backstopped by a lean European fiscal facility and a credible default mechanism – is intended to restore the spirit of the original framework without requiring the constitutional revolution that fiscal union would entail.

The book addresses whether this programme is politically achievable with admirable candour. The authors acknowledge that reform is easiest in calm times and most necessary in crises; yet it is precisely in crises that the short-term pressures for improvisation tend to crowd out long-term institutional design.

An uncertain future for the euro

Crisis Cycle is a genuinely important contribution whose prose is uncommonly clear for a work touching on monetary economics, fiscal theory and European institutional law. The historical narrative is meticulous, situating the ECB’s successive innovations within the broader political contexts that shaped them, and the theoretical framework is applied with disciplined consistency rather than mechanical rigidity.

One might question whether the book’s reform proposals adequately reckon with the political economy of their implementation. The institutional actors – national governments, the ECB, the European Commission – whose co-operation is indispensable to reform are themselves among the principal beneficiaries of the current arrangements. The authors’ faith that the next crisis will galvanise rather than paralyse reform impulses is perhaps optimistic. The book also focuses principally on the monetary-fiscal nexus, with relatively less attention to the growth and productivity dimensions of Europe’s structural challenge – a gap that limits the comprehensiveness of the reform agenda.

These are, however, objections from within the book’s own framework rather than challenges to its fundamental contribution. Crisis Cycle provides economists, policymakers and engaged citizens with the most rigorous and readable account of the euro’s structural predicament to date. It is indispensable for scholars of European political economy, monetary theory and institutional design, and highly relevant to anyone seeking to understand why the future of the single currency remains, a quarter-century after its creation, genuinely uncertain.

Note: This review gives the views of the author and not the position of the LSE Review of Books blog, nor of the London School of Economics and Political Science.

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If You Can Just Print Money, Why Do I Pay Taxes? Modern Monetary Theory Distilled and Debunked in Plain English. Emmanuel Maggiori. Wiley. 2026.

Modern monetary theory (MMT) is a seductive economic theory making the rounds among politicians, bloggers, and the general public. The theory says that, in countries that manage their own currencies, the government has more opportunities to increase prosperity than we usually acknowledge. These opportunities are currently missed due to an unjustified obsession with budgets and debt. But under scrutiny, MMT’s bold claims don’t add up to the recipe for prosperity it claims to be, as I explore in my new book.

The government cannot run out of money

MMT argues that the central government is not financially constrained, thanks to its power to create money. One of its advocates Randall Wray says, “Government cannot run out of money; it can always financially afford to take care of our own.” This observation has been described as one of the main contributions of MMT.

Modern Monetary Theory derives a number of surprising conclusions, including that taxes and bonds aren’t needed to fund the government, and that the national debt can be wiped out at no cost.

From this, MMT derives a number of surprising conclusions, including that taxes and bonds aren’t needed to fund the government, and that the national debt can be wiped out at no cost. MMT imagines a world in which the government is allowed to create money to fund its day-to-day spending, such as roadworks and pensions, contrary to current procedures. We can rephrase MMT’s assertion as, “If the government can create money, then it cannot run out of money.” But this isn’t a significant contribution; it’s a truism.

MMT critic Thomas Palley makes the point that, “The critical question is not whether government can finance spending without taxes. Everybody knows it can [by creating money]. Instead, the question is what are the macroeconomic consequences of doing so and should the government do so?”

We can still give MMT the benefit of the doubt and study its conclusions. Unfortunately, these are still deeply unsatisfactory. For example, MMT pioneer Stephanie Kelton argues that “the entire national debt could be paid off tomorrow [by creating money], and none of us would have to chip in a dime.” But this ignores that a sudden and permanent replacement of bonds with newly created money is likely to cause at least some surprise inflation. As a result, the recipients of debt repayments won’t be able to afford as much as they thought with that money. This is an economic default on debt even if is technically repaid.

There is no central bank independence

In the real world, the government is rarely allowed to create money to fund its day-to-day expenses. Instead, its treasury department must top up its bank accounts either by collecting taxes or selling bonds. Moreover, the central bank is made politically independent of the ruling government, to prevent it from succumbing to the temptation of creating money to help fund politicians’ budgets. The Bank of England explains, “Independence means that we can promote the good of the people of the UK by maintaining monetary and financial stability, free from political influence.”

MMT argues that central bank independence is a myth. Kelton explains, “Modern governments actually finance all of their spending through the direct creation of high-powered money.” Unfortunately, MMT’s substantiation of this point suffers from numerous problems. For example, when studying the US, MMT fails to count balances in bank accounts owned by treasury. This gives the wrong impression that money “disappears” when it’s moved into those accounts and “created” when it moves out.

MMT relies on an outdated theory of inflation; it gives no role to expectations about the future.

After being proven wrong, MMT advocates have tried to resuscitate this argument in a number of ways, including the comical idea that the US Treasury could mint a platinum trillion-dollar coin and force the central bank to accept it as a deposit. (This has been debunked.) Clearly, MMT hasn’t succeeded in proving that central bank independence is fictitious, though this doesn’t mean we should dismiss this. Central bank independence is just one possible institutional arrangement and, if we want to preserve it, we must defend it. Economist George Selgin argues that: “The question that concerns us here isn’t whether the Fed [the US central bank] is presently bound to fund the federal government’s expenses, as some Modern Monetary Theorists suggest. The question is whether the Fed, perhaps owing in part to MMT’s influence, might be compelled to do so in the future, through explicit legislation or otherwise.”

The government should focus on resources, not money

According to MMT, our economies have an enormous number of idle resources, or “slack.” MMT proponents Yeva Nersisyan and Wray claim that European economies are “probably operating 25 per cent or more below full capacity. Even the US today has substantial excess capacity.” MMT says the government should increase its spending – funded by money creation – to mobilise those idle resources., such as by offering a job to anyone who needs one. In addition, every government initiative must be evaluated based on its resource requirements instead of budgets. For example, are there enough resources for energy transition? If not, how can we repurpose existing resources for it?

MMT says this mode of operation won’t cause inflation because the government doesn’t compete with the private sector for the same resources. Nersisyan and Wray explain that “Below full employment, government spending creates “free lunches” as it utilises resources that would otherwise be left idle.” Inflation only becomes a risk, so their argument goes, if there is a surge in demand for products and services, but there aren’t enough idle resources to supply them. This could happen, for example, if private companies became optimistic and start investing too much. If this were to happen, MMT claims the government must increase taxes to suppress private spending.

Unfortunately, MMT’s proposed policies are not supported by theory. MMT relies on an outdated theory of inflation; it gives no role to expectations about the future. But standard economic theory says that money creation done in a discretionary way – ie, not following strict rules – makes the public expect future inflation and increases prices pre-emptively. This is often said to explain the persistent stagflation of the 1980s. In addition, MMT assumes it is possible to completely eliminate unemployment without causing inflation, which goes against how unemployment is understood in modern economics.

MMT asks us to trust ‘wise’ politicians to use money creation judiciously. But most economists don’t think this is a good idea.

MMT’s theory of slack is equally unsatisfactory. It assumes severe slack is a permanent feature of an economy, however, according to contemporary theories, slack (known as the “output gap”) is a temporary phenomenon caused by rigidities.

The political challenge of MMT

But MMT’s biggest challenge is arguably not theoretical; it is political. MMT asks us to trust “wise” politicians to use money creation judiciously. But most economists don’t think this is a good idea. Many argue politicians will use money creation unwisely to accommodate shocks to their budgets, and that governments will find it politically difficult to increase taxes to fight inflation.

MMT asks us to trust politicians to perform accurate calculations of resource availability and requirements, while disregarding budgets. But they may be tempted to do this in an overly optimistic way. For example, Nersisyan and Wray analyse the Green New Deal in terms of resources, but their calculations are too rough. They determine that free college and other initiatives all “pay for themselves,” as the productivity gains exactly offset their required resources. They don’t provide any detailed calculations to justify this.

All in all, MMT claims to offer a novel form of policymaking, capable of increasing prosperity in an unprecedented way. But under scrutiny, the free lunch it promises isn’t really free – we’ll have to pay for it, one way or another.

Note: This review gives the views of the author and not the position of the LSE Review of Books blog, nor of the London School of Economics and Political Science.

Emmanuel Maggiori spoke at an LSE event, If you can just print money, why pay taxes? on Tuesday 12 May. Find details.

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Why Immigration Policy Is Hard: And How to Make It Better. Alan Manning. Polity. 2026.

Advocates and opponents of immigration often cite statistics. Some note that half of all Nobel Prizes in the US were earned by migrants, or that migrants have low rates of integration. These statistics can be misleading, as expertly demonstrated in Alan Manning’s Why Immigration Policy is Hard. Drawing upon government data and natural and survey experiments, Manning follows others (such as Alexander Kustov and Hein de Haas) in noting the dysfunctional relationship between policy, immigration, and public perception. In particular, he argues that there is an “infernal cycle,” where governments attempt to control immigration, would-be migrants attempt to avoid such control, citizens perceive a loss of control, governments attempt to better control immigration, and so forth. This results in poor policy and polarised debates with misleading claims (6).

Misleading claims about immigration

Before presenting these claims, Manning provides data on immigration globally, noting that – largely due to inequality – 16 per cent of the world wished to migrate in 2023, and 80 per cent of that group to higher-income countries (45). He then focuses on immigration’s effect on receiving countries, picking apart common talking points. For example, while many Nobel laureates are migrants, the odds of any given migrant winning a Nobel Prize are around one in 20 million. If so, these winners aren’t evidence supporting migration in general, Manning argues; they are reason to admit certain types of migrants, like scientists (112). Manning also presents statistics made by those opposing immigration, such as the claim – made by those against Muslim immigrants – that Muslims on average in the UK live in areas that are 32 per cent Muslim, and so are overly segregated. This overlooks the fact that Christians on average live in areas that are 52 per cent Christian (179).  

Determining immigration’s effects requires looking at data on the ground. It also requires examining how other policies impact the effects of immigration.

Claims about labour can also be misleading: some think migrants fill labour shortages, doing jobs locals won’t do like picking strawberries, but there are not a fixed number of jobs to be filled. New job openings can crop up when migrants arrive, as they create demand for food and other necessities, which can lead to new labour shortages as a result (123). Rather than attempting to generalise, determining immigration’s effects requires looking at data on the ground. It also requires examining how other policies impact the effects of immigration. For example, building more housing impacts whether migrants increase housing prices (141) and generous welfare impacts whether migrants are net fiscal contributors (159).

Issues with immigration policies

Manning then addresses potential new policies. While he supports making borders more open (201), he rejects completely open borders in today’s unequal world, arguing that too many migrants would move to wealthy countries, leading to the policy collapsing from various harms (197). One potential harm arises when low-wage local citizens are paid lower salaries due to employers hiring migrants (198-199). Even if such employers could compensate citizens made worse off, Manning thinks there is no way of ensuring they do (199). Importantly, if migrants were eligible for welfare benefits, at least once they become citizens, eventually migrants’ contributions may no longer outweigh their costs, and the economic benefits of open borders would be less clear-cut (201).

Manning notes that international students on post-study work visas often end up with jobs not requiring BAs, such as social care. He proposes offering them work visas instead.

Even current migration policies, far short of open borders, have some downsides. Manning notes that international students on post-study work visas often end up with jobs not requiring BAs, such as social care (243). If many students are essentially paying for degrees to work in jobs not requiring them, he proposes offering them work visas instead. Then such migrants needn’t first study, and the visa fees would go directly to the government, accruing revenue for the general taxpayer and not just universities (243).    

Problematic immigration enforcement

Of course, even when there are good reasons to limit migration, it isn’t always justified. Sometimes trying to reduce immigration means immigration officers falsely accuse migrants of violating immigration laws (249). Governments must always account for risks of false accusations, which can be difficult. One reason it is difficult, Manning claims, is that immigration enforcement is under-resourced, and so it is hard to discern who is or is not in the country legally (319 and 326).

The book pays significant attention to refugees. Some refugee advocates claim border enforcement does not actually deter border-crossings, because refugees have little other choice. Manning presents evidence debunking this claim: it turns out, not surprisingly, that if a state erects an armed border, then fewer cross (271). Whether this is viewed as a positive outcome, of course, is another matter. Manning supports rights for refugees, but claims that preventing irregular migration can save lives, because fewer try to make unsafe border crossings (274-275). Here he overlooks how stopping migrants from crossing borders could lead to them dying in unsafe transit and home countries. Indeed, Manning himself earlier notes that migrants taking life-threatening journeys are increasing their life expectancy if staying in their home countries means having shorter lives (3). He does not raise this when discussing enforcement deterring migrants from unsafe journeys, where he only considers deaths during travel.

This oversight might be explained by Manning’s focus on immigration’s effects on the “size and mix” of the population of receiving countries (330 and 334). This focus feeds into his conclusion that higher-income countries should have an upper limit of one per cent per annum net migration (334). It is not clear to what extent he thinks countries should also focus on immigration policy’s effects on the size, mix, and indeed survival rates of those unable to migrate.

Absent morality and selective data

Relatedly, the book rarely mentions morality. While Manning notes that immigration enforcement involves violence (204-205), he does not explain how moral concerns over this violence should be weighed against other considerations. Given that even citizens opposing more migration often oppose harmful detention and deportation, it would have been helpful to understand how such considerations ought to be integrated into policy.

The book has another limitation: while Manning rightly criticises others for cherry-picking facts to fit narratives, he sometimes cherry-picks himself. For example, in defending more resources for immigration enforcement, he cites checks of UK delivery drivers who were 42 per cent unauthorised (325), and US agricultural workers who are 44 per cent unauthorised (326). These industries are atypical: immigration enforcement is much higher in other industries and countries. Manning might even be cherry-picking data when claiming others cherry-pick data: he cites a working paper finding that scholars analysing the impact of welfare programs on support for immigration are biased, picking methods which reach their desired conclusions (83). Yet this paper cites another – never appearing in the book – which found that bias was “barely predictive” and “explained little” of the diverging conclusions.

While the book primarily focuses on economic values, that may be Manning’s intention: as he notes throughout, he is open to broader discussions. Such openness is desperately needed

Other times citations are missing, as when claiming most refugees wish to eventually return home (262 and 267), which might not be true, and claiming governments should publish data on migrant crime because otherwise people “will think there’s something to hide” (190), without presenting evidence. He later suggests that two-year post-work visas for international students are “more generous than necessary” for finding jobs, a claim many graduates will question. He additionally makes unsubstantiated claims about others’ claims, as when stating that some advocating “for more generous refugee policies” think refugees’ economic benefits will be “automatic” (297).

The above limitation, however, is partly down to the many variables relevant for immigration: defending every claim is difficult. This is especially true when presenting a broad overview, which Why Immigration Policy is Hard does successfully. In doing so, the book also demonstrates challenges in determining which policies to implement given competing values. And while the book primarily focuses on economic values, that may be Manning’s intention: as he notes throughout, he is open to broader discussions. Such openness is desperately needed in today’s debates to create better informed and more beneficial immigration.

Note: This review gives the views of the author and not the position of the LSE Review of Books blog, nor of the London School of Economics and Political Science.

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Eclipsing the West: China, India, and the Forging of a New World. Vince Cable. Manchester University Press. 2025.

India and China’s rise to “superstates”

In Eclipsing the West, Vince Cable has created a comprehensive, data-rich account of the rising prominence of China and India and the outsized role in global trade and geoeconomics they are set to play in the coming century. Bracketing more speculative premises found in the literature, about when – or indeed whether – the West will be surpassed by these superstates (or if it has already been), Cable amasses data point after data point, cumulatively demonstrating the inexorable momentum of these emerging Asian economies while outlining several possible future scenarios. The result is an economic portrait of a world in definite flux, but where the geoeconomic contours of the future are far from determined. “The old world is disappearing,” writes Cable, paraphrasing Gramsci, “but the shape of the new one remains unclear.” 

A decisive selection of terminology, which shape’s the book’s analysis, is Cable’s preference for “superstate” over superpower. The author claims, convincingly, that the former is more useful to describe forms of geoeconomic competition predicated on “expanse of territory, the number and diversity of people and… social and economic capacity” (3) which are likely to shape forms of competition in the coming decades. Whereas the comparative strengths of rival “‘superpowers” in the Cold War were occluded by an overemphasis on the destructive power of their weapons, advantage in the 21^st century is likely to be defined by decisive factors such as large, unified internal markets, the ability to make labour and fiscal transfers internally, and network effects derived from common infrastructure – all conditions which China and India, despite their challenges, are well placed to exploit in a new era of geostrategic competition.

Recent upheavals in world trade caused by the Iran war have highlighted the fragility of key global chokepoints while exposing the unwillingness of great powers to take on the sustained burden of securing them.

Cable devotes a significant portion of the book to a side-by-side analysis of the economic, political, regulatory, and social systems through which the parallel, but distinct stories of India and China’s growth are unfolding. A strength of the book is certainly the balance Cable strikes in drawing nuanced comparisons between these neighbours, both with reference to their divergent histories and internal dynamics as well as the outlook of their governing classes. Despite their many uncanny similarities (such as their near-identical population sizes, independence dating from roughly the same period, and their initial belief in socialist planning, rapid industrialisation and economic autarky), their differences – manifest in their growth trajectories, development models, and current challenges – are manifest. As Cable elucidates these differences, the oft-cited metaphor of the Chinese “galloping hare” contending with the Indian tortoise, is shown to contain elements of the truth, though by no means the whole story.

Structural constraints and 21^st-century traps

Having meticulously laid out the advantages and challenges faced by the Chinese and Indian superstates, Cable suggests that their trajectories will be shaped by how effectively each is able to resolve their contrasting structural constraints. Can China sustain growth as its investment-driven model runs into diminishing returns, mounting debt, and demographic headwinds? And can India translate its vast demographic potential into productive employment, overcoming its persistent failures in job creation and industrialisation? And how can each square the circle within an increasingly fragmented and uncertain international order?

From here, Cable builds out what, for the non-specialist reader, is likely the most engaging portion of the book: a forward-looking exploration of geopolitical scenarios, structured around the “traps” that may define the twenty-first century. These include the well-documented and widely debated risk of great-power conflict between a rising China and a defensive United States, and the parallel danger that no state is willing or able to sustain the global public goods on which stability depends.

Cable’s analysis of the second of these traps, the Kindleberger Trap, is particularly resonant in light of recent upheavals in world trade caused by the Iran war. These have highlighted the fragility of key global chokepoints while exposing the unwillingness of great powers to take on the sustained burden of securing them. Even more so, recent events show a scenario more troubling than those contained in Cable’s framework: not merely a vacuum of leadership, but a readiness on the part of a dominant power to test and disturb the norms that underpin global commerce without a corresponding willingness to assume unilateral responsibility for stabilising them.

A return to ideology or order?

Where, in Cable’s forward-looking scenarios, does that leave us? Cable suggests that China has, at least implicitly, recognised the risks of the Kindleberger Trap and may, under more cooperative scenarios, move to mitigate it – though it has shown no signs of interfering in Iran. Indeed, China’s stance is that it will engage selectively and on terms that reflect its own conception of global order rather than a wholesale assumption of the liberal system’s burdens.

Other economists, such as Jeffrey Sachs, have been more willing to advance definitive claims that China has already surpassed the West, in some sense, a decade or more ago. Cable resists this certainty.

But even this semi-activist role is uncertain. Indeed, in the least pleasant of the three scenarios, there is a fragmented, transactional order in which China, India, and middle powers pursue their interests entirely independently, and no hegemon emerges to uphold global public goods. In this scenario, large states benefit from self-sufficiency and scale, while global rules weaken and protectionism spreads.Cable thinks this scenario more likely than one in which the world coalesces around ideological camps once more, or alternately moves toward a reformed version of the “post-war international order.” Unpromisingly, Cable maintains that, as for the latter, optimistic scenario, only geopolitical or climatic disaster could usher us back to the collective management of global challenges.

Casting the West into shadow

Cable’s talent for developing clear scenarios, no doubt sharpened by his time as Chief Economist at Shell as well as his later career in government, lends his final section an admirable precision. It is notable, too, that he opts for scenario-building rather than prediction, a restraint that sits somewhat at odds with the temptations of the genre. Other economists, such as Jeffrey Sachs, have been more willing to advance definitive claims that China has already surpassed the West, in some sense, a decade or more ago. Cable resists this certainty. Instead, he presents a set of plausible, contingent trajectories. It is in this light that the title, Eclipsing the West, seems particularly well chosen. An eclipse does not replace what it obscures; it casts it into shadow. To speak of the West being “eclipsed” is therefore to describe not a clean succession of one order by another, but an ambiguous interlude in which power is redistributed even as the structures that once sustained it persist in altered form. Cable’s account suggests that China and India are indeed moving into the light, yet the question remains whether what they inherit is a coherent system to lead, or a fragmented one to navigate. In that sense, the eclipse may tell us as much about the dimming of the old order as it does about the clarity of the new.

Note: This review gives the views of the author and not the position of the LSE Review of Books blog, nor of the London School of Economics and Political Science.

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International Development Law: Rule of Law, Human Rights & Global Finance (Third Edition). Rumu Sarkar. Springer. 2025.

We are living through a time when international law, and development, are facing unprecedented challenges. These include unilateral decisions about trade, seemingly capricious tariffs, and military action without the imprimatur of the United Nations, especially in the Middle East. Rumu Sarkar’s revised edition of International Development Law: Rule of Law, Human Rights & Global Finance was motivated by emerging trends in globalisation, especially in the developing world. But by coincidence, more recent developments, including trade disputes and reductions in development assistance, make the subject even more compelling. The new version is therefore a timely offering, providing an innovative and comprehensive view of the legal aspects of international development.

Other authors can fall into the trap of pushing an ideological agenda, compromising their analysis; Sundhya Pahuja’s Decolonizing International Law: Development, Economic Growth and Universality is one such example of a more overtly political approach to the topic. Contrastingly, Sarkar seeks to examine objectively the strengths and weaknesses of economic development architecture. Further, with virtual slides and videos as teaching aids, the book brings 21^st century technology into legal instruction, helping students to navigate the complex principles that are crucial to understanding contemporary international development.

A shifting international order

The first part of the book covers a wide variety of relevant topics, including the core principles of international development (as they intersect with international law, impact global justice, the implementation of the rule of law in developing regions, and sustainable development law), the emergence of development’s legal principles, and human rights. The post-colonial era was characterised by competing ideologies revolving around the rights and responsibilities of both developed and developing states. The UN New International Economic Order (1974), for example, reflected the exuberance of nascent countries seeking an expeditious path to development. It featured preferential trade arrangements, debt relief and grants-based assistance for developing countries.

This ideological path to development was attractive at a time when the “Second World” of Socialism appeared to provide a quick pathway to prosperity. The reality was starkly different, however. The military prowess of the former Soviet Union could not conceal its inherent poverty and the unsustainability of its economic model. The eventual demise of the Soviet Union dampened the romance of the socialist economic model but did not necessarily lead to an embrace of Western-style capitalism.

No discussion of development law can be sufficient without an examination of human rights, as they form the basis for a moral argument for a right to development. Citing United Nations documents, including the UN Declaration of Human Rights, and post-war State practice, Sarkar argues convincingly that there are human rights underpinning the right to development. These include both individual rights, and economic rights, including social benefits like health and education. There is indeed an international consensus that, although some states may not formally recognise the right to development (the US has opposed it, in 1986 and 2024, for example), its pursuit benefits both developing and developed countries.

Without real commitment to build or strengthen domestic financial institutions, countries in debt distress will only continue the cycle of unsustainable debts and international bailouts.

Experience demonstrates that, for example, to attract the foreign investment necessary for prosperity, developing countries must adapt their economies to the needs of international commerce and finance. This requires the establishment of the rule of law and a business environment friendly towards the private sector and unfriendly to official corruption. Successful examples include Vietnam’s electronic manufacturing industry, Estonia’s digital infrastructure, and Brazil’s agricultural sector. This also means, however, that the West cannot impose mirror images of its institutions on developing world governments.

Development finance and debt injustice

Part Two of the book focuses on development finance, including debt and investment. Given the recent significant reduction in bilateral development assistance (OECD preliminary data shows a 23 per cent decline in Overseas Development Assistance in 2025, this topic is especially relevant. Developing countries often complain that they spend more on international debt payments than on health and education, with the implication being that the international lending system is unjust. Sarkar delves deeply into the international financial system to explain the legal and policy aspects of the current debt crisis, using past crises in Mexico and East Asia to show how such crises can be mitigated or otherwise avoided.

Sarkar proposes a new principle reconciling Western universalism and Western cultural relativism. Coined the “Janus Principle,” it requires a simultaneous view of a country’s past and future, along with a similar view of both its domestic needs and place in the broader world economy

Most significantly, she notes how the current “churning” of debt relief, particularly in Africa, fails to ultimately solve the debt problem. Without real commitment to build or strengthen domestic financial institutions, countries in debt distress will only continue the cycle of unsustainable debts and international bailouts. Tellingly, only about three of 34 rated African governments have “investment-grade debt”, wherein their debt is considered high-risk due to the absence of properly functioning governance institutions and the rule of law. Without the certainty that profits can be repatriated and contracts respected, foreign investors will continue to shy away from Africa.

How corruption robs citizens

The book refuses to shy away from one the most important obstacles to development: official corruption. Dwarfing the amount of overseas development assistance, billions are stolen or misappropriated annually by predatory governments and their allies. The result is underfunding of basic human needs, including health, education and housing. Skittish foreign investors avoid risky investments, except for resource extraction, which does not always promote economic development. 

While examining the limited role of the developing world in shaping the largely Western dominated paradigm of economic development, Sarkar proposes a new principle reconciling Western universalism and Western cultural relativism. Coined the “Janus Principle,” it requires a simultaneous view of a country’s past and future, along with a similar view of both its domestic needs and place in the broader world economy. Notably, the approach places emphasis on the need for developing economies to adjust to the needs of the current globalised economy. It also asks the Western World to adjust to the institutions and needs of the developing world.

An exceptional contribution to the discipline and a worthy textbook for any course in development

This new edition of International Development Law is an exceptional contribution to the discipline and a worthy textbook for any course in development. World events after the publication of this book, including military conflicts, trade disputes, and the diminution of development assistance, especially in Africa, make its principles ever more relevant.

Note: This review gives the views of the author and not the position of the LSE Review of Books blog, nor of the London School of Economics and Political Science.

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The Story of Capital. David Harvey. Verso. 2026.

A spotlight on finance

Marx needs David Harvey. First, because the great thinker’s language is often dense and impenetrable and requires Harvey’s illuminating “translation” to make sense to today’s readers. Second, much has changed since 1867 when the first volume of Das Kapital was published in Berlin. Third, Marx and Marxism need Harvey and this book because academic commentary tends to concentrate on Volume I of Capital and not on the crucial Volumes II and III published some twenty years after the first.

Much of today’s Marxist debate misses the role of monetary theory and policy and of interest-bearing capital in driving capitalism’s exponential spiral of accumulation, and in precipitating crises at home and internationally. As Michael Hudson has argued, Marxists often neglect finance capitalism’s failure to free economies from the rentier dynamics reminiscent of European feudalism and imperialism. “Academic Marxism has not focused on the FIRE sector – Finance, Insurance and Real Estate. It is as if interest and rent extraction are secondary problems to the dynamics of wage labor”, he writes. Harvey does not neglect finance. Chapter 15 of The Story of Capital is titled “The Return of the Rentier” and it argues that:

“It is now the turn of the industrial capitalist to be rendered subservient either to the monopsony power of the merchants (like Walmart or IKEA), or to the monopoly power of the financiers, while the landed interest (including command over the minerals under the land) is extracting its pound of flesh (or grams of lithium) wherever it can.” 

Mapping the story of capital

Harvey is a geographer, known for his contribution to a critical geography which explains how capitalism has survived and prospered by prioritising space. True to form, Harvey’s book opens with his “map” of the “story” of capital. The map depicts capital’s processes: the circularity of money capital producing effective demand leading to the production of commodities of value and then surplus value valorisation, culminating in the realisation of value in money form. Like all maps the process appears static. However, as Harvey explains elsewhere the capitalist process moves from the cyclical form depicted in the map to a more linear, spiral form in the real world: a spiral of endless accumulation of what Marx called a “monstrous mass”. As Harvey spells out in his fascinating Chapter Seven – “Masses in Motion” – the “ever-increasing mass of ‘everything’ threatens to exhaust possibilities for endlessly accumulating capital”. Echoing environmental scientific concerns, Harvey argues that “the rising mass seriously compromises the very existence of humanity’s already tenuous lifestyle, if not humanity itself, on Planet Earth.” 

Thanks to the ubiquity of today’s export-led economic model, the global economy suffers from a crisis of over- or excess-production

One of the prime “engines of such harms,” Harvey writes, surely lies with problems deriving from the rising mass of values and surplus values that have nowhere profitable to go. This rising mass cannot be reversed, given the way capital’s laws of motion of capital are structured. And thanks to the ubiquity of today’s export-led economic model, the global economy suffers from a crisis of over- or excess-production. Simultaneously, wage repression and other forms of austerity result in the under-consumption of all that is produced globally.

Spiralling accumulation

To emphasise the scale of such accumulation Harvey points to World Bank estimates of global GDP valued in 1950 at $9.25 trillion. By 2011 that had spiralled upwards to $94.9 trillion – a more than tenfold increase in global economic output since 1950. How can such a compounding rate of growth be sustained into the future, Harvey asks? Between 2011 and 2013 China consumed 6.6 gigatons of cement – a major source of greenhouse gases. (To set that figure in context, the US had taken 100 years to consume 4.5 gigatons.)

“During those two years, China led the world in economic growth, thus saving the world from economic recession partly by spreading cement everywhere in a massive infrastructure construction boom unparalleled in human history.” 

The spatial dimension of exponentially spiralling capital accumulation could not be clearer.

From industrial production to rent and interest

After the Great Financial Crisis of 2007-9, I and many others argued the crisis had been caused by the deregulation of international, as well as domestic financial systems, and by the repositioning of finance under the authority of private markets, rather than public, democratic, regulatory authority. Marxists countered these arguments with the contention – and I paraphrase here – that the crisis had instead been triggered by capitalism’s “falling rate of profit.” Harvey devotes a whole chapter to the topic and in it points to one notable Marxist blogger, Michael Roberts who considers it irrefutable that the law of falling profitability is the single underlying cause of the crisis tendencies of capitalism (86).

Marx was not alone in predicting a tendency for profit rates to fall, Harvey explains. Ricardo and (more tentatively) Smith also thought profits were doomed to fall, suggesting that industrial capitalism might not be a viable mode of production in the long run. Marx’s law, he argues is based on a rule that “a large capital with a lower rate of profit accumulates more quickly than a small capital with a higher rate of profit.” If the mass of value is already huge then that mass continues to expand with potentially monstrous consequences (environmental as well as social) even in the face of sharply falling profitability. Leveraged buyouts spring to mind as convenient ways whereby particular capitalists can gain control over a huge mass of capital on the basis of very little of their own capital input.

Capitalism’s relapse from industrial production to the more intangible rent-and-interest economy requires a rethinking of Marx’s Capital.

Harvey rejects presentations of Marx’s argument that suggests the profit rate is exclusively tied to the rate of exploitation of labour power in production. He cites the example of the US pharmaceutical industry where very little profit is gained from the exploitation of labour power. Instead, most is derived from extortionate monopoly pricing in connivance with medical insurance companies and captive federal regulators (93).Today, industrial capitalism constitutes a diminishing part of the globalised rent-and-interest economy – one that I characterise as a “Global Casino”in my latest book. Capitalism’s relapse from industrial production to the more intangible rent-and-interest economy requires a rethinking of Marx’s Capital. It requires today’s Marxists to move beyond theories based on labour power and industrial production alone. In this book David Harvey has done so in authoritative and accessible style.

Note: This review gives the views of the author and not the position of the LSE Review of Books blog, nor of the London School of Economics and Political Science.

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How Sanctions Work: Iran and the Impact of Economic Warfare. Narges Bajoghli, Vali Nasr, Djavad Salehi-Isfahani, and Ali Vaez. Stanford University Press. 2024.

The ongoing war between the United States, Israel, and Iran has brought several critical questions to the fore: What lies at the root of the grievances that triggered a protest movement in Iran earlier this year, exploited by the US and Israel? How widespread are the sentiments of resentment towards the regime among the Iranian population? How did Iranian society not collapse, and what prevented the sanctions from incapacitating the Iranian economy, thereby preserving Tehran’s ability to resist today?

How Sanctions Work: Iran and the Impact of Economic Warfare effectively answers these questions from different angles. It is written by Narges Bajoghli – an anthropologist with expertise in media, power, and military dynamics, Vali Nasr – a political scientist, specialising in international relations, Middle Eastern politics, and Islamic political movements, Djavad Salehi-Isfahani – an economist with interests in demographic and energy economics, with a focus on Iran and the Middle East, and Ali Vaez – a policy analyst that helped bridge gaps during Iran-P5+1 nuclear negotiations. What sets this book apart from other approaches is its balanced take on the subject, enabling readers to form their own opinions. Their multifaceted methodological approach, combining inputs from dozens of leading scholars, discourse analysis, interviews with Iranians, and quantitative analysis based on surveys and official economic data, lends further credence to their work.

Sanctions against Iran predate the expansion of Tehran’s nuclear program, initially imposed after the 1979 Islamic Revolution and the hostage crisis the same year. Over the decades, the sanctions regime became increasingly comprehensive.

Sanctions against Iran predate the expansion of Tehran’s nuclear program, initially imposed after the 1979 Islamic Revolution and the hostage crisis the same year. Over the decades, the sanctions regime became increasingly comprehensive: “no country in the world has been the target of this array of sanctions to the extent experienced by Iran over the past four decades (56).” Beyond the explicit restrictions on Iranian banks, oil revenues, and access to the global financial system also lies an unspoken component of the sanctions regime. The vagueness of the sanctions regulations, particularly in their language, coupled with Iran’s portrayal as a ‘pariah’ state, leads to their overinterpretation, effectively deterring the Western scientific, literary, and academic communities from interacting with their counterparts in Iran.

Impacts of sanctions on the public

On the impact of sanctions on the economy, the book offers compelling evidence.  Beginning in 2018, sanctions became increasingly harsh; between 2018 and 2021, healthcare costs in Iran rose by 125 per cent, and food prices increased by a staggering 186 per cent. The resultant hardships inevitably generated frustration among the public and, among some, resentment towards the regime. However, the expression of this resentment was not widespread enough to trigger regime change, one of the sanctions’ key goals. In fact, authors hold that sanctions weakened the middle class and strengthened the regime by increasing the population’s dependency on the state.

To highlight societal resilience, the authors include first-hand accounts of Iranians living through sanctions. Some respondents highlighted coping strategies that included detachment from the capitalist struggle for money and material desires, and finding refuge in nature, music, and art. For instance, Kaveh, an architect in his late thirties recounted, “I quit my job. I began to play music again. I hike and cook and document it all on my Instagram. I’ve found so many others my age who are doing the same thing… We’ve literally downsized our lives to two backpacks. We’ve given up the race of being ‘successful’ and instead have decided to connect with nature and music and art and each other” (26-27).

Businesses formed economic links with non-Western partners and learning from how sanctioned nations, such as Cuba, developed their domestic industries despite external embargoes.

The authors also show that, while the socioeconomic impacts were challenging, they did not become entirely dismal for most Iranians. Unemployment remained contained, as nearly half of all Iranian workers were self-employed, the country’s labour laws discouraged employers from laying off workers, and a large informal economy accommodated the unemployed. Meanwhile, the government’s decision to allow the currency to depreciate, along with the associated rise in the cost of imported goods, enabled domestic businesses to capture a larger market share and grow. Besides government cash transfers, mutual aid networks, run mostly by women, and formal impacts were charities helped the population in dealing with everyday hardships.

How sanctions drove innovation and complicated diplomacy

As with society, so did the economy adapt in meaningful ways, as sanctions forced Iran to innovate. In 2010, the then Iranian Supreme Leader, the martyred Ayatollah Ali Khamenei, formulated the notion of a “resistance economy’” (eghtesad-e moqavemat), calling on economists, scholars, and businessmen to propose and pursue policies to diversify markets and revenue sources. By providing testimonies from Iranian businesspeople, the authors show that businesses actively rallied behind these calls, forming economic links with non-Western partners and learning from how sanctioned nations, such as Cuba, developed their domestic industries despite external embargoes. More importantly, sanctions encouraged Tehran, alongside international actors such as China and Russia, to explore alternatives to the dollar-based cross-border payment system. These adaptations could not fully offset the impact of sanctions, given their scope and magnitude, but they kept Iran from collapsing under pressure.

But while the authors mention the role of “workarounds” in alleviating sanctions-related pressures, at times, readers are left seeking deeper explanations in some cases. For instance, What role did the Iranian shadow fleet of tankers play, and to what extent did it help mitigate the impact of sanctions on oil revenues? What role did barter trade play? Beyond this, an analysis of the role Iran’s high literacy rate, and the employment opportunities this affords, played in helping the country endure sanctions could have enriched the discussion.

The authors contend that sanctions complicated diplomacy, as they were easier to impose than to remove. Congress and domestic politics strongly supported Iranian sanctions, making it difficult for US leaders to lift them even when negotiations required it. However, neither could the sanctions trigger a regime change, nor did they lead Iran to abandon its nuclear program. Instead, while sanctions may have been effective in the short run in bringing Iran to the negotiating table, culminating in the Joint Comprehensive Plan of Action (JCPOA), in the long run, they led Iran to accelerate its nuclear program and pursue a more assertive regional policy.

A partial view of Iran’s nuclear program

One shortcoming of the book is that while the authors treat the acceleration of the Iranian nuclear program as a reactive response to the hardline approach by the West, they do not probe the veracity of dubious claims made about it. It is unknown which direction the Iranian nuclear program will take after the current war ends. At the time of the book’s writing, sufficient evidence suggested that assumptions surrounding the program may have been grossly exaggerated, even if Iran was expanding its uranium enrichment program. For instance, multiple Western intelligence assessments concluded that Iran halted its nuclear weapons program in 2003, while an International Atomic Energy Agency report found no conclusive evidence linking Iran’s undeclared nuclear activities, even prior to 2003, to a weapons program. (The report was published during the tenure of Mohamed ElBaradei, who was widely regarded for his impartiality.)

By incorporating local testimonies and vivid descriptions of Iranian streets and social spaces into the research, the book allows readers to picture everyday life in Iran under sanctions,

While the discussion briefly acknowledges Washington’s lack of sustained commitment to diplomacy in compelling Tehran to accelerate its nuclear program, it places an outsized emphasis on the role of sanctions, without adequately exploring other factors. For instance, in 2021, former Iranian President Hassan Rouhani linked Iran’s decision to produce 60 per cent enriched uranium to a suspected Israeli attack on a nuclear site. The limited consideration of other factors results in a somewhat reductionist conclusion.

These limitations aside, the book is a comprehensive and insightful account of Iran’s survival and resilience under sanctions. By incorporating local testimonies and vivid descriptions of Iranian streets and social spaces into the research, the book allows readers to picture everyday life in Iran under sanctions, where hope and vibrancy still existed – characteristics that remain evident even amidst the new war. Despite being a compilation of contributions from four authors, the book maintains coherence and consistency in style throughout. It is a worthwhile read for current and future policymakers, effectively demonstrating why maximum pressure strategies fail to achieve their intended results.

Note: This review gives the views of the author and not the position of the LSE Review of Books blog, nor of the London School of Economics and Political Science.

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Capitalism in the Web of Life: Ecology and the Accumulation of Capital. Jason W. Moore. Verso. 2025.

A decade after its first publication in 2015, Capitalism in the Web of Life still offers one of the most powerful frameworks for rethinking the relation between capitalism, ecology, and history. It conducts a world-historical investigation of how bundles of human and extra-human natures shape subsequent phases of capitalist development.

From Cartesian dualism to a world ecology

One of the main claims in this 305-page book is that we need to abandon the usual division between “Society” and “Nature”, established at the dawn of modernity (especially with the work of René Descartes)thus structuring much of contemporary, mechanistic science. In Part I of the book, Moore writes that seeing Nature as external is a fundamental condition of capital accumulation. Without the objectification of nature (including women and slaves), and its reconceptualisation as a mere stock of work/energy, centuries-long ecocide would be unthinkable. Capitalism does not act on nature as if they were separate worlds that only collide. Capitalism unfolds through nature – the creative, generative, and multi-layered relation of species and environment. Human organisation becomes not only a producer but also a product of environmental change. This deep ontological rethinking resonated in the work of new critical thinkers, e.g. Jason Hickel or Kohei Saito (whose more accessible writing styles have enabled them to resonate with larger readerships).

This is the basis of Moore’s key concept of “world ecology” as a method to analyse nature’s relationality. This way he offers a post-Cartesian worldview of capitalism as a dialectical unity of capital accumulation, the pursuit of power, and the co-production of nature. “Capitalism is not an economic system; it is not a social system; it is a way of organizing nature” (2).

That shift in perspective is one of the book’s great strengths. Cartesian dualism, Moore writes, is driving our interpretations of historical change into a choice between social reductionism or environmental determinism. Mainstream environmentalism tends to treat nature as a stock of resources, and mainstream social theory still treats capitalism as if it were mainly about markets, classes, industry, or finance. Moore challenges both views, showing that the history of capitalism is inseparable from the remaking of forests, fields, bodies, frontiers, trade routes, energy systems, and global divisions of labour.

Capitalism and Cheap Nature

Moore’s central concept is “Cheap Nature”, which describes capitalism’s long dependence on appropriating undervalued or unpaid work/energy from humans and the rest of nature. Besides appropriation, capitalism has to capitalise (exploit) paid work/energy; but if it is to survive, the first process must unfold faster than the latter.

Capitalists do not like to pay for what they take, which is demonstrated in female unpaid housework, the oil as accumulated geological labour of Earth, and depeasantisation (pushing small-scale farmers into market labour).This preference requires them to drive the real costs of production (beyond paid proletarian work) as low as possible. Cheap Nature is the invention of a civilisation premised on dualism, comprising key inputs such as labour, raw materials, energy, and food (Moore and Patel later expanded this intuition).

To restore the flow of cheap inputs, capitalists, in conjunction with states, seek new configurations of human and extra-human natures. This is inherent to the history of capitalism

In Part II, Moore offers a historical periodisation of capitalism’s emergence, tracing how early capitalism took shape through frontier expansion, agrarian transformation, imperial power, and new forms of appropriating unpaid work/energy from the agricultural revolution of the Low Countries from the early 15th century onwards. This long historical arc gives the book much of its explanatory force. Capitalism is not an ahistorical economic process but a historically evolving configuration of human and extra-human natures.

That means nature is constitutive of capital accumulation. Capitalism’s recurring crises are tied to its dependence on new streams of cheap inputs. Once Cheap Nature becomes dear, problems emerge: the system is struggling to reproduce the conditions that made its own expansion possible. To restore the flow of cheap inputs, capitalists, in conjunction with states, seek new configurations of human and extra-human natures. This is inherent to the history of capitalism: from the enclosure of the commons in England and the enslavement of indigenous peoples in the “New World” (cheap labour), through plantation production in the colonies (cheap food) to the supply of oil from distant continents (cheap raw materials).

World-systems thinking

The book has a strong intellectual architecture. Besides Marx as clearly the central reference point, Moore is drawing on a wider tradition of historical and critical thought including world-systems analysis and the longue durée tradition associated with thinkers such as Immanuel Wallerstein, Giovanni Arrighi and Andre Gunder Frank. From them comes Moore’s insistence that capitalism must be grasped historically, globally, and relationally rather than substantially. Rejecting both conventional Green thought and poststructuralist theory as well as Latourian actor-network thinking, Moore’s work is underpinned with the same question: not how does capitalism act on nature, but how does it manage to put nature to work.

These observations explain why Moore has become one of the most prominent advocates of the term “Capitalocene” against the more dominant “Anthropocene.” His point is not merely semantic. As he writes in Part III of the book, the Anthropocene discourse attributes planetary crisis to humanity in general, while Capitalocene directs attention to capital as the world-ecological relation.

The crisis of falling ecological surplus

This relation brings us closer to the key message of the book: the crisis of capitalism is a crisis of “diminishing ecological surplus”. Ecological surplus is the foundation of the capitalist civilisational regime, and its core is Cheap Nature. It is how capital prevents the mass of capital from rising too fast in relation to the mass of appropriated nature (191).

The ecological surplus – the relative contribution of unpaid work to capital accumulation – can decline for several reasons: due to class struggle; the rise of environmental movements across the world; mechanised, monoculture agriculture with its increasingly toxic inputs; and, perhaps most obviously, the depletion of energy and mineral resources. Although with geographical variations, Moore writes that from 2003 onwards we witness the simultaneous rise in prices of all four inputs – labour, food, energy, and raw materials.

Moore’s concepts are striking and illuminating, but they sometimes operate at a level of abstraction that leaves the reader craving more empirical grounding.

Though brilliant, Capitalism in the Web of Life is intensely theoretical, arguably to a fault. Moore’s concepts are striking and illuminating, but they sometimes operate at a level of abstraction that leaves the reader craving more empirical grounding. But maybe Moore’s ambition is inseparable from his book’s central tension: its power lies in its attempt to build a unified account of capitalistic environment-making through history, but consequently some earlier critiques of Cartesian dualism tend to disappear from his retrospective.

Reconstruction of value is one of the book’s major achievements, especially where it connects Marxist-feminist insights on unpaid reproductive labour with the appropriation of unpaid work and energy from extra-human natures. But the scale of the theoretical claim occasionally comes at the expense of fuller engagement with nearby interlocutors and alternative vocabularies. In a 2025 essay Moore confirmed his commitment to this level of conceptual generalisation, which gives his work coherence and polemical force.

Changing the terms of the debate

“Man did not weave the web of life; he is merely a strand in it. Whatever he does to the web, he does to himself,” said Native American leader and activist Chief Seattle in the mid-19th century, illustrating the arrogance of modern science. In fact, as biologists suggest, we humans live only a few moments of evolutionary time; and we play games in which we and our mechanical toys are the main characters in an infantile fairy tale called the Anthropocene. But our civilisational model is exhausting, as global warming evidences.

Capitalism in the Web of Life has become a contemporary classic. Moore’s subsequent reflections show less a revision than a sharpening of this original wager.

In this sense, Capitalism in the Web of Life has become a contemporary classic. Moore’s subsequent reflections show less a revision than a sharpening of this original wager. But what’s demanding is rewarding: Moore offers us a powerful framework for understanding the deep roots of planetary breakdown, as well as for understanding why the future seems even bleaker. His work is (somewhat depressingly) even more relevant now, as it becomes ever clearer that capitalism’s expansion will always involve intolerable violence against the web of life we are part all part of.

This review gives the views of the author and not the position of the LSE Review of Books blog, nor of the London School of Economics and Political Science.

Main image: mustafa bilge satkın / Climate Visuals Countdown via climatevisuals.org.

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