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Neoliberalism and global capital mobility: A necessary reconsideration of textbook trade theory

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  • Kunibert Raffer

Abstract

Textbook theory ignores capital flows: trade determines exchange rates and specialisation. Approaches taking the effects of capital movements adequately into account are needed, and a new theory of economic policy including measures to protect the real economy from external volatility. Equilibrating textbook mechanisms cannot work unless trade-caused surpluses and deficits set exchange rates. To allow orthodox trade theory to work one must hinder capital flows from destroying its very basis, which the IMF and wrong regulatory decisions have done, penalising production and trade. A new, real economy based theory is proposed, a Neoclassical agenda of controlling capital flows and speculation. JEL Classification: F11; F13; F32; F40; G15.

Suggested Citation

  • Kunibert Raffer, 2015. "Neoliberalism and global capital mobility: A necessary reconsideration of textbook trade theory," Brazilian Journal of Political Economy, Center of Political Economy, vol. 35(2), pages 267-284.
    • Handle: RePEc:ekm:repojs:v:35:y:2015:i:2:p:267-284:id:224
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    More about this item

    Keywords

    trade theory; specialisation; capital movements; neoliberalism; speculation;
    All these keywords.

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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