Books

This book contends that governments in advanced capitalist democracies now face a hard trade-off: liberal democracy, economic growth, and effective climate action are increasingly incompatible. At most, only two can be pursued simultaneously. This book introduces a bold new framework—the trilemma—to explain why democratic governments are failing to address the climate crisis with the urgency it demands. It reveals how democratic institutions, growth-driven economies, and short-term electoral incentives structurally obstruct the scale of decarbonisation required to prevent ecological collapse. Through an analysis of state capacity, political backlash, and distributive conflicts, the book issues a stark warning: unless a broad working- and middle-class coalition for climate action can be built within the next decade, liberal democracies may face rising authoritarianism, ecological breakdown, and economic turmoil. This is the defining political crisis of our time.

With the sudden, dramatic rise in inflation after the pandemic and the Russian invasion of Ukraine, the three low-inflation decades were, at least temporarily interrupted. What appeared to many observers as a simple, yet significant, supply-side shock elicited a surprising response by central banks, who raised interest rates to constrain the demand for goods and services, following a recipe that emerged in the 1970s and 1980s throughput the OECD. In response to high inflation in these years, governments of all stripes adopted a ‘monetarist’ outlook on macroeconomic policy, pivoting away from the prevailing Keynesianism. In this book, we look back at that period and examine the shift to a low-inflation regime in the advanced capitalist economies between the 1970s and 1990s. Conventional views emphasize the rise of monetarism as a new economic paradigm that convinced policy makers to delegate monetary policy to conservative and independent central banks. Others point to the structural imposition of restrictive policies through monetary hierarchies with the US Dollar at its apex, or the growing structural weakness of organized labour in deregulated capitalism. Our analysis instead directs attention to the political and electoral dimensions of these processes of economic policy adjustment. Economic ideas and their institutional expressions have unnecessarily dominated the debate, while the politics of the process, in particular the electoral effects of slow changes in crucial aspects of the life chances of working-class households, were ignored.

This book claims that when job security increases and wages rose during the great post-war boom, the preference ordering of median (middle-class) voters on macro-economic policies shifted from a preoccupation with growth and employment to concerns revolving around inflation. These broad socio-economic shifts in their electorate then forced social-democratic parties, which held on longest to Keynesian policies, to adopt anti-inflation policies to remain electorally viable. Left parties played a pivotal role in the institutionalization of disinflationary regimes because their policies were ‘naturally’ anchored on the Keynesian pro-growth and pro-employment side of the debate: when they moved to the right on economic policy, the disinflationary monetary regime became the entrenched default policy paradigm. Systematic survey evidence on inflation preferences, descriptive aggregate material, and detailed case studies of the UK, France, and Germany, with shorter discussions of other countries including the USA and Sweden, underpin this argument. We close with an assessment of the politics of inflation in the post-Covid world in light of our argument.

Political economy debates have focused on the internationalisation of private capital, but foreign states increasingly enter domestic markets as financial investors. How do policy makers in recipient countries react? Do they treat purchases as a threat and impose restrictions or see them as beneficial and welcome them? What are the wider implications for debates about state capacities to govern domestic economies in the face of internationalisation of financial markets? In response, Foreign States in Domestic Markets have developed the concept of ‘internationalised statism’, where governments welcome the use of foreign state investments to govern their domestic economies. These foreign state investments are applied to the most prominent overseas state investors, Sovereign Wealth Funds (SWFs). Many SWFs are from Asia and the Middle East and their number and size have greatly expanded, reaching $9 trillion by 2020.

This book examines policies towards non-Western SWFs buying company shares in four countries: the US, UK, France, and Germany. Although the US has imposed significant legal restrictions, the others have pursued internationalised statism in ways that are surprising given both popular and political economy classifications. This book argues that the policy patterns found are related to domestic politics, notably the preferences and capacities of the political executive and legislature, rather than solely economic needs or national security risks. The phenomenon of internationalised statism underlines that overseas state investment provides policy makers in recipient states with new allies and resources. The study of SWFs shows that internationalisation and liberalisation of financial markets offer national policy makers opportunities to govern their domestic economies.

The theory chapter is available here. You can buy the book in Oxford University Press , Waterstones , Amazon , Oxford Scholarship Online.

Reviews of “Foreign States in Domestic Markets”

• “This book is a “must” for scholars of International Political Economy and Comparative Political Economy. It is impressive in terms of analytical rigor, breath of empirical coverage and importance of the findings and how they contribute to the existing literature.” Quaglia, L. (2022) Book review published in Regulation & Governance. https://doi.org/10.1111/rego.12489
• “The four case studies in this book offer basic data and succinct analysis of recent policies on this issue—which is sure to loom large as Western democracies ponder how to respond to the rising geoeconomic power of their global competitors.” Moravcsik, A. (2022) Book review published in Foreign Affairs, November/December 2022.
• “Taking forward the internationalized statism concept, Thatcher and Vlandas reiterate the significance of domestic politics and institutional setting in shaping international economic relations.”…”This book, in sum, has much to offer for a range of discussions in political science and beyond.” Dixon, A. (2022) Book review published in Perspectives on Politics, 20(4), 1509-1510.
• “Few studies examine how a state seeks to attract investment from other states, or how it directs foreign state investment within its domestic markets. To fill this gap, Mark Thatcher and Tim Vlandas develop the concept of ‘internationalized statism’ in Foreign states in domestic markets. They evaluate the degree to which France, Germany, the United Kingdom and the United States shape their domestic economic policies in response to potential investment from Middle Eastern and Asian sovereign wealth funds (SWFs).” Mott, C. (2023) Book review published in International Affairs, 99(3): 1334–1335.