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David Karas, Pinar E. Donmez: Crises of Authoritarian Financialization: Monetary Policy in Hungary and Türkiye in the Polycrisis

In their chapter in Central Banking in a Post-Pandemic World our Post-doctoral Fellow David Karas and Pinar E. Donmez explain “the consolidation of inflationary and disinflationary monetary policies with differences in debt profiles, social blocs, and external financing conditions.”

They identify “the contradictory objectives of monetary policy under an authoritarian mode of financialization (AF) in Emerging Market Economies (EMEs) where the executive branch intervenes directly in monetary policy, banking supervision and retail banking.”

They interpret AF “as a statist-authoritarian attempt to manage the vulnerabilities of growth strategies under subordinate financialization.” Following Marxist theories of the state, the authors argue that “instead of providing political-economic stabilization, statist authoritarianism merely internalizes class conflicts within the state apparatus spurring accumulation and legitimation dilemmas for the state.”

They illustrate two divergent crisis trajectories of AF in Hungary and Turkey in the 2020–22 period “by showing how executive centralization fails to solve the increasingly contradictory objectives of stabilizing sovereign and private debt markets.” Instead, they observe “enhanced incoherence in monetary policy and a diminishing capacity of AF regimes to shore up rentier social contracts.”

The book addresses the urgent need to examine central bank policies in response to the global supply and demand shock brought on by the Covid-19 pandemic, asking whether central banks are doing enough to address inequalities and concerns around climate change and emerging technologies.

Learn more about the book here.

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