Kirshner: Currency and Coercion in the Twenty-First Century

KIRSHNER, J. 2005. Currency and Coercion in the Twenty-First Century.

Much of the work done on monetary issues and power has focused on the periods between WWI and 1989. This work has a different, much more current, focus. "In the early twenty-first century, however, two conditions, less salient during those seventy-five years, are of dramatically increased significance: globalization and uni-polarity...The goals of this chapter are to illustrate the continued role of monetary power and to assess the nature of this transformation" (from abstract).

"This paper argues that although the consequences of globalized finance are profound, those consequences recast rather than reduce the significance of monetary diplomacy in contemporary international relations. By shifting the analysis from an almost exclusive focus on state-to-state interactions to one that places much greater emphasis on the relationship between states and markets, it can be illustrated that even in an era of globalization international monetary relations remain an area of political competition. As long as there are states and money, states will attempt to manipulate monetary relations to advance their political objectives" (1).

The three independent variables that were explored in Kirshner's Currency and Coercion book are also explored: the effect of globalization on 1) currency manipulation; 2) monetary dependence; and 3) strategic disruption.

Currency manipulation: a very interesting story of manipulation of the Dinar is told. "As illustrated by the events described above, there is good reason to believe that currency manipulation will continue to be a feature of International Relations under globalization" (6).

Monetary Dependence: There is arguably even greater competition among states to become a central currency within the global order after unipolarity.

Strategic Disruption: This still exists. See the US' insistence that all states reduce capital controls. Once again, this does not take the same form as in the pre 1990 world of bipolarity.

"In sum, the contemporary international system is characterized by globalization and unipolarity. Financial globalization in particular recasts the nature of monetary power and the practice of monetary diplomacy. But it does not provide an escape from politics-even under globalization, international relations will continue to feature currency manipulation, monetary dependence, and strategic disruption. As long as there are states and currencies, the monetary system will remain an arena of political conflict" (17).