In When Things Don’t Fall Apart, Ilene Grabel makes a simple but controversial claim, based on the work of the eminent social scientist Albert O. Hirschman. Grabel argues that as concerns global financial governance and development finance we are now in a period that she calls productive incoherence.
Unlike the Keynesian period of the middle 20th century and the neoliberal period that followed, the current conjuncture lacks an overarching theoretical framework to guide financial governance. In its absence, Grabel maps the proliferation of institutional innovation at the national, regional, and transregional levels. These experiments are grounded in a spirit of Hirschmanian pragmatism rather than Keynesian or neoclassical dogmatism. They are ad hoc, often limited in scope, and even inconsistent with each other. They are in that sense incoherent.
The book’s novel normative claim is that this incoherence is productive. It is allowing for new institutional and policy innovations that are contributing to a pluripolar financial governance architecture that is more robust and offers greater opportunities for problem solving and experimentation than the coherent architecture it is displacing.
Grabel substantiates these claims with empirically-rich case studies that explore the effects of recent crises on established and new networks of financial governance (such as the G-20); transformations within the IMF; institutional innovations in liquidity support and project finance from the national to the transregional levels; and the “rebranding” of capital controls. Grabel acknowledges, however, that the incoherent transformations underway also pose grave risks. She considers these risks in the concluding chapter of the book.
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