You are here:   Columns >  Marketplace > Against 'Acronymia'
Kenneth Minogue (1930-2013), who was Professor of Political Science at the London School of Economics (LSE Library)

Last year’s two big shocks — Brexit and the Trump presidency — were separate and different events. Brexit may lead to the UK becoming a champion for free trade, while the US slides — at least temporarily — into an unattractive protectionism. But Brexit and  the Trump-quake did share one very important feature: they were protests from national democracies against international bureaucracy. Many US and UK voters resented the extent to which the power of their own government had been transferred to international institutions and arrangements, directed by people over whom their own leaders had no immediate control.

In the UK the resentment was focused on the European Commission. In the US it was diffuse, with Nafta and the Paris climate change accord only the most salient of several targets. Much of the trouble arose from the anonymous and unaccountable character of the foreign organisations, usually known by an acronym (EU, WTO, IMF).

The political philosopher Kenneth Minogue invented the collective noun “acronymia” for them. He did not mean it kindly. John O’Sullivan, speechwriter to Margaret Thatcher and now editor of the Australian conservative journal Quadrant, has said that “acronymia” exists in “a kind of penumbra”. The organisations may have been vital to the postwar global order and done an immense amount of good since 1945, but they lack the legitimacy that comes from democratic endorsement at a local level.

From 1945 to June 23, 2016, the power of acronymia had been growing at the expense of national governments. Whatever one may feel about Donald Trump (and I am not a fan), he is the commander-in-chief of the democracies’ counter-attack against the international bureaucracies. Suddenly and unexpectedly, the top people in the IMF, the WTO, the EU and so on realise that they have to justify themselves. In one area in particular, banking regulation, the Trump counter-attack could have major economic effects.

A few weeks after the intensification of the financial crisis in September 2008, the leaders of the G20 countries met in Washington to organise a response. Their expert advisers told them that banks were to blame for what had gone wrong and ought to be more tightly regulated. The job of enforcing the tighter regulatory regime was given to the BIS (Bank for International Settlements), a sort of international financial civil service located in Basel, Switzerland. Since then the Basel rules (Basel II, Basel III, Basel IV, etc) have been applied to the banking systems of a few dozen countries, including the US and the UK, with the explicit intention of making banks less risky.

View Full Article
March 4th, 2017
9:03 AM
"The BIS’s insistence that banks become less risky has also infuriated their shareholders, and indeed the managements, who must answer to shareholders." I'm sure that is true. However, the 'creation of money for 'any purpose' is too important to the wider macroeconomy to be left to 'unelected' bankers? Prof. R. A. Werner believes that the 'man-made problem' was the issuing of the 'wrong' type of credit. There is 'productive' and 'unproductive' credit. “Importantly for our disaggregated quantity equation, credit creation can be disaggregated, as we can obtain and analyse information about who obtains loans and what use they are put to. Sectoral loan data provide us with information about the direction of purchasing power - something deposit aggregates cannot tell us. By institutional analysis and the use of such disaggregated credit data it can be determined, at least approximately, what share of purchasing power is primarily spent on ‘real’ transactions that are part of GDP and which part is primarily used for financial transactions. Further, transactions contributing to GDP can be divided into ‘productive’ ones that have a lower risk, as they generate income streams to service them (they can thus be referred to as sustainable or productive), and those that do not increase productivity or the stock of goods and services. Data availability is dependent on central bank publication of such data. The identification of transactions that are part of GDP and those that are not is more straight-forward, simply following the NIA rules.”

Post your comment

This question is for testing whether you are a human visitor and to prevent automated spam submissions.