Chapter 3 looks at how contemporary studies of public banks have tended to bypass the historical dynamism of public banks, preferring to see the diverse legacies of public banks through narrow concepts like ‘market failure’ or ‘additionality’. This can impoverish rather than enrich how we think of contemporary public banks and constrain how we imagine their future. This chapter argues that the histories of public banks are more diverse than typically recognised within mainstream economics. Nevertheless, the transition to neoliberalism has tended to narrow the reproductive options for public banks towards more corporatised and marketised logics.

This chapter provides the conceptual foundations for discussing the process and impact of co-creation as a mode of governance as developed in subsequent chapters. To do this, the chapter traces the genealogy of the notion of co-creation, discussing how it has become increasingly central to social science research, and defining the concept in ways that distinguish it from similar and related concepts such as corporatism and collaborative governance. Building on this genealogical approach, the chapter also discusses how recently developed theories may contribute to our understanding of the concept of co-creation and support its practical application. Finally, yet critically, the chapter will justify our attempt to elevate the concept from its original narrow focus on service production to a concept that aspires to become a new governance paradigm supplementing and partially supplanting Classical Public Administration and New Public Management.

Transforming the way that public governance is produced and delivered is difficult given the combination of bureaucratic politics and institutional path-dependence. To imagine whether it is still possible, this chapter looks at how public leaders can transform public institutions through intentional reform and what kind of change they must bring about in order to advance and support co-creation. First, it discusses how different forms of strategic management can help to spur the transition to co-creation. Next, it presents four crucial conditions for enabling the future expansion of co-creation into a predominant mode of governance: 1) the creation of new institutional designs; 2) the cultivation of new forms of leadership and management; 3) the transformation of the role perceptions of key social and political actors; and 4) the development of new ways of measuring effects. The conclusion critically examines competing scenarios for the development of co-creation into a mode of governance and presents a five-step model for the transition to co-creation.

We provide an overview of the monetary policy failures that resulted in the 2007–2008 financial crisis and ensuing Great Recession, focusing on the United States. Before the crisis, monetary policy was too loose, which fueled the bubble. After the bubble burst, monetary policy became too tight, hindering the recovery. These failures are fundamentally due to the Federal Reserve’s discretionary monetary policy. Furthermore, the popular approach of “constrained discretion” is really just discretion. Hence, it is sensitive to all the usual problems with discretionary monetary policy. Only firm monetary rules, ones that actually bind, can maintain macroeconomic stability and prevent crises.

In Latin America, goods substitution dynamics are evident in states that have recently opposed US hegemony, such as Venezuela and Ecuador. However, the case of Colombia – one of the USA’s closest allies in the region – shows how asset substitution dynamics come to operate under conditions of hierarchy. Colombia does not seek to challenge the USA directly. Rather, Colombia is consistently seeking to diversify its ties with the USA, thereby increasing its leverage and autonomy and hedging its bets from within a hierarchical arrangement. Colombia is a “least likely” case for the theory of goods substitution, and there is limited evidence of actual Chinese goods substitution in Colombia. Yet, China’s increasingly central role in a global goods ecology is a new context in which Colombian hedging strategies are used to threaten with goods substitution. This chapter shows that the mere threat of exiting or hedging strategies has the potential to effect policy change, particularly when combined with domestic political context – a diversification of ties interacts with domestic and international politics, with one area having possible unintended effects on the other.

Orthodox monetary policy scholarship assumes that central bankers act to maximize the public welfare. If imperfect incentives enter the model, it is on the part of the public. We challenge this assumption. Monetary policymakers are just as prone to incentive problems, which cause them to act according to their own self-interest. Furthermore, the self-interest of policymakers is not always the same thing as the public welfare. The two diverge frequently, in fact. We survey the history of the Federal Reserve and show the numerous ways discretionary central bankers have been compromised. These incentive problems are an inherent feature of discretion. They can only be eliminated by embracing true monetary rules.

In this chapter, Alexander Cooley details how Central Asian countries use the competing and overlapping infrastructure of external powers to consolidate their own domestic political standing. In the 2000s, after 9/11 and a string of “Color Revolutions,” Russia and China established themselves as alternative providers of public goods in a region hitherto seen as consisting in countries in “democratic transition” under US influence. Consequently, with alternative goods providers available, Central Asian countries themselves leveraged their relationship to the West to achieve political and economic aims and to push back against criticism about human rights abuses and authoritarian policies. Cooley’s example of how Russia deploys and supports alternative election observers to post-Soviet countries drives home the point that the rise of alternative providers and goods substitution has undermined US hegemony and eroded the policies, norms, and institutions of the US-led liberal international order. As the chapter demonstrates, these dynamics escalated very quickly in a region, originally categorized as “post-Communist,” at the outer boundary of the US-led Western sphere of influence.

We analyze the information problems inherent in discretionary monetary policy. Discretionary central bankers confront immense informational burdens. Some of these are technical problems only, and can in principle be overcome. But there is also a genuine knowledge problem involved in discretionary monetary policy: reacting in real time to changes in the demand for money. This problem is unsolvable. It renders discretionary central banking systematically unlikely to achieve macroeconomic stability. In contrast, rules-based policy does not confront a knowledge problem.

This introductory chapter first reviews the major categories of goods: private, public, common-pool, and club, and discusses the concept of good specificity – essentially, the number of possible suppliers – which matters to the politics of substitution. It then turns toward a discussion of how this volume defines and understands international order: An important feature of international order is its “goods ecology” – that is, patterns in the production, supply, quality, and nature of international goods. The next major section elaborates the logic of goods substitution, which serves as the common framework for the chapters in the book, before illustrating how many of the goods in international politics are cultural or symbolic in character and having performative dimensions. The chapter concludes by laying out the plan of the volume and the contents of each of the chapters.

Goods are not only tangible things, like military hardware or trade goods, but may also be normative in nature. In this chapter, Rumelili and Towns emphasize the centrality of international symbolic and normative goods in maintaining or challenging hegemony. International orders may be characterized by different systems of supply of normative goods and status. They analyze the role played by ranking organizations and the country performance indices they produce in transforming norms into a set of normative goods. Such country performance indices provide moral value in three ways: They supply public and comparative information, which constructs moral hierarchies; they define norms by assigning moral value to specific indicators; and they distribute moral status to states through the ranking systems they employ. States may acquire normative goods to challenge the dominant position of the United States, or they may challenge the existing set of normative goods to undermine the liberal normative order that undergirds US hegemony. Conceiving of norms as goods alerts us to a distinct terrain where hegemony is challenged in a bottom-up and gradual fashion, through putatively technical measures and standards.

We conclude by situating the theory and practice of monetary policy within liberal political economy more generally. As we have seen, there are significant tensions between existing monetary institutions (discretionary central banking) and liberal ideals. This has been made even clearer by the Federal Reserve’s response to COVID-19. In brief, the Fed is now engaging in not only monetary policy but fiscal policy as well. This represents an immense expansion in its mandate, one that poses serious challenges for general and predictable monetary policy. The way out of this mess is embracing a comparative institutions approach to monetary policy. We cannot be satisfied with technical refinements to existing models and data. We need to explore alternative monetary policy rules, ones that are effective at providing macroeconomic stability while also respecting the requirements of democracy.

At root, the problems with the Federal Reserve (and many other central banks) are institutional. The repeated recessions and crises in the era of the Fed show that we need a radical reimagination of the basic institutions of monetary policy. In this chapter, we survey the work of the three great classically liberal Nobel laureates of the twentieth century – James Buchanan, F. A. Hayek, and Milton Friedman – to show that each of them gave serious consideration to monetary-institutional fundamentals. Our focus is not on their particular conclusions, but on how they thought about the problems of monetary institutional design. This represents a very different style of scholarship than macroeconomists and monetary economists currently practice. Unless scholars engage the research projects of Buchanan, Hayek, and Friedman, research in monetary economics will not be of much help in achieving lasting macroeconomic stability.