Money and Financial Systems

Chapter 6 elaborates on the role of money and financial systems in the capitalist economic cycle. It counters notions of money as a neutral “lubricant” with a political understanding of financial and monetary relations. Along different dimensions and functions of money, three organizational problems surrounding money in the world economic order are emphasized: (1) capital needs; (2) instability; and (3) currency competition. The chapter highlights the fragmentation of the global financial system, as different organizational patterns and actor constellations prevail at national and regional levels. However, there are also clear hierarchical relationships, including the continued dominance of the US dollar in the international monetary system and the associated dominance of liberal capitalism in global financial markets. These characteristics also shape coordination and conflict in the international regulation of the monetary economy, the dynamics of which are assessed differently by theories of IPE.