Crash Course Economics is joining FiscalMatters' week of debate is the high-level moment on European fiscal policy in 2021.

Big Tech companies have spearheaded the digitization of economy and society, with their seemingly inescapable digital interfaces - from Google Maps to Facebook's WhatsApp to Zoom - increasingly overlaying the ‘real‘ world.

But the tide seems to be turning for these powerful corporations. Increasingly, Big Tech is being recognized as a powerful enemy to democracy and part of the rising post-truth society which is fueling xenophobic and illiberal ideologies. Big Tech has gained the reputation of an unchecked corporate power.

In the past year the seven largest Big Tech firms had financial assets (surplus profits) of US $631 billion. In October 2020, Apple, Microsoft, Amazon and Alphabet each single one represented a value over US $1 trillion. The financial firepower of Big Tech firms is unrivaled, and new or independent platforms often do not stand a chance against these monopolists.

These seven Big Techs increasingly dominate the tech universe, with thousands of smaller platforms orbiting around them. Millions of applications are built on top of them -- all relying on its core infrastructure, and paying rent for doing so. With each firm having cornered its own monopoly, Big Tech as a whole has effectively come to colonize key forms and means of social exchange, broadly defined, overlaying the ways in which people interact via digital interfaces.

This Crash Course series investigates the main threats and challenges that Big Tech monopolies confront us with and invites you to contribute to progressive answers to rogue techno-scientific capitalism.

The indebtedness of developing countries had reached alarming levels before the Covid-19 crisis. A wall of money, managed by investment funds seeking profits across the planet, had an endless appetite for investments in debt from the Global South. Once the panic hit capital markets in March 2020, financial flows to the Global South suddenly stopped. The drop in financial flows to developing countries was faster and larger than at any crisis seen before. Since May, money has started to flow back, leaving the Global South with even less means for coping with the consequences of the Covid-19 crisis.

This disproportionate mood swing of capital markets is a perfect illustration of the difficult position developing countries find themselves in when it comes to today’s financialised global economy. In this Crash Course series, we take a look at the different aspects that determine the subordinate economic and financial position of the Global South and why this matters. We will discuss the different mechanisms that produce unequal economic relations, and also the possible solutions for tackling the root causes of these inequalities.

In the 1980s we saw debt crises in many parts of the Global South. This was followed by ‘Structural Adjustment Programmes’ set by the World Bank and the International Monetary Fund (IMF): indebted countries had to pursue austerity policies, privatise state enterprises and liberalise their economies.

In the 1990s, global financial markets were further liberalised, creating opportunities for speculative funds to take advantage. This resulted in new debt crises in regions like East Asia. More recently we have also seen the controversial handling of the Greek debt crisis and the severe adjustment package imposed upon Greece, with the consequences that followed from it.

The Quantitative Easing (QE) programmes of central banks in the Global North injected trillions of dollars into the financial system after the global financial crisis of 2007, paving the way for another round of potential debt crises today. The surplus of capital and low interest rates in developed economies led to a rise in capital flows to developing countries. Then Covid-19 came along. Again we saw an unprecedented increase in money being injected into the financial system by central banks in the Global North. This rising tide of capital flows has the potential to result in a new period of ‘lost decades’, provoked by debt crises.

In this Crash Course series, we discuss the field of debt crises in the ‘developing world’. Has anything changed since the 1980s debt crises when a global movement called for a debt jubilee? What are the prospects for change? And how can these kinds of debt crises be prevented in future?

The financial crisis of 2007/2008 caused a huge shock throughout the global north. The finance-driven economic model was rescued by extreme measures taken by central banks in developed economies, which embarked on ‘unconventional monetary policy’. One of these policies was the massive purchase of assets by central banks, primarily government bonds, with instantly created money. This asset purchasing programme was branded ‘Quantitative Easing (QE)’.

QE policies were controversial right from the start. While the community of central bankers had always displayed a unified front, QE policies led to a visible split on several issues. The Bank for International Settlements, for example, refuted  the claims made by the European Central Bank (ECB) that QE money was reaching the real economy.

The Dutch and German central banks criticised the ECB’s QE policies on the grounds that they would reduce the disciplining effects of markets on corporations. In their opinion, this would result in zombie companies. Ben Bernanke, the former Chair of the US Federal Reserve, responded to the lack of monetary theory: “The problem with QE is that it works in practice, but it doesn’t work in theory.”

In the years that followed, the effects of QE became apparent. It was one of the most spectacular engines for wealth inequality. The QE money that was injected into the financial system remained circulating in the financial system instead of reaching the real economy. QE blew bubbles in real estate markets and stock markets. The asset-owning class – the rich – became even richer. Everyone else was confronted by austerity policies – after all, someone had to pay the bill.

There was also a global component. Investors searched for a return on investment as interest rates were low in the global north. One of the outlets of this massive wall of money looking for activities was a huge increase in the amount of debt in in the global south. In particular, non-financial corporations and government debt in the global south swelled through bonds issued in dollars and euros. This debt will play an important role in how the Covid-19 crash will impact on economies throughout Africa, Latin America and Asia.

The 2020 Covid-19 crash

Fast forward to the Covid-19 crash. Centrals banks intervened enormously as the global financial system appeared to go into the second meltdown in just 13 years. This time around everything is even bigger and moving even faster. But a community of engaged and critical researchers stands ready to comment on the ongoing monetary policy changes and help with formulating progressive policy proposals, drawing lessons from the previous global financial crisis.

If we are able to pump tens of trillions of dollars into the financial system to save the global economy, why not use this to finance the necessary steps to move to green societies? How can we use the Covid-19 crisis to become stronger than before? What is the role of central banks and monetary policies in this process? How can monetary policy be useful to avert a new decade of austerity and debt crisis in the global south, and to finance a global green deal instead?

These are the issues we are planning to discuss in our first Crash Course series on transformative monetary politics in a series of four webinars.