Isabella M. Weber
Isabella M. Weber is a political economist working on monetary theory, China, global trade and the history of economic thought. She is an Assistant Professor of Economics at the University of Massachusetts Amherst and the Research Leader for China at the Political Economy Research Institute .
Her first book How China Escaped Shock Therapy: The Market Reform Debate is the winner of the Joan Robinson Prize 2021 and the International Studies Association Best Interdisciplinary Book Award and has been recommended on best book of 2021 lists by the Financial Times, Foreign Policy, Project Syndicate, ProMarket and Folha de S.Paulo among others. For her work on the rise of economics in China’s recent history she has won the International Convention of Asia Scholars’ Ground-breaking Subject Matter Accolade and the Warren Samuels Prize for Interdisciplinary Research in History of Economic Thought and Methodology. Previously she was a Lecturer (Assistant Professor) at Goldsmiths, University of London, and has been the principal investigator of the ESRC-funded Rebuilding Macroeconomics project What Drives Specialization? A Century of Global Export Patterns. Isabella holds a Ph.D. in Economics from the New School for Social Research, New York, and a Ph.D. in Development Studies from the University of Cambridge and was a visiting researcher at Tsinghua University. German born, she studied at the Free University of Berlin and Peking University for her B.A.
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Isabella M. Weber is a political economist working on monetary theory, China, global trade and the history of economic thought. She is an Assistant Professor of Economics at the University of Massachusetts Amherst and the Research Leader for China at the Political Economy Research Institute .
Her first book How China Escaped Shock Therapy: The Market Reform Debate is the winner of the Joan Robinson Prize 2021 and the International Studies Association Best Interdisciplinary Book Award and has been recommended on best book of 2021 lists by the Financial Times, Foreign Policy, Project Syndicate, ProMarket and Folha de S.Paulo among others. For her work on the rise of economics in China’s recent history she has won the International Convention of Asia Scholars’ Ground-breaking Subject Matter Accolade and the Warren Samuels Prize for Interdisciplinary Research in History of Economic Thought and Methodology. Previously she was a Lecturer (Assistant Professor) at Goldsmiths, University of London, and has been the principal investigator of the ESRC-funded Rebuilding Macroeconomics project What Drives Specialization? A Century of Global Export Patterns. Isabella holds a Ph.D. in Economics from the New School for Social Research, New York, and a Ph.D. in Development Studies from the University of Cambridge and was a visiting researcher at Tsinghua University. German born, she studied at the Free University of Berlin and Peking University for her B.A.
In their own words…
IEA: Can you tell us what made you pursue a career in economics?
Isabella: I entered university in the context of the 2008 global financial meltdown. It was clear to me that to understand the world, I needed to study the economy. I have been passionate about economics ever since.
IEA: You have written a very interesting book on China’s economic reforms, called “How China Escaped Shock Therapy.” Can you summarize for us two or three lessons other developing countries can learn from China’s experience?
Isabella: One of the big lessons is that there is no one size fits all, there is no magic bullet of development, no singular model that can always facilitate economic catch up. In economics, we often aim for universal explanations. In practical development, a lot depends on taking advantage of specific, local constellations. This does not mean that economics is useless for development. But rather, that economics can be one among other tools to assess historical experiences and local conditions to come up with tailored strategies. Another big lesson is, that development requires a creative rethinking of state-market relations. Rather than simply assuming that more market or more state is always better, China’s experience suggests that markets can be created and steered by the state in pursuit of developmental goals. Stabilizing essential sectors through state-market participation can help avoid inflation in the course of fast structural change. Finally, China’s experience shows how difficult economic development is. The Chinese growth trajectory is often described as unprecedented in terms of pace and scale. Yet, China’s GDP per capita at market exchange rates was still less than one sixth of the U.S. in 2019, while environmental costs and inequality are high.
IEA: You’ve weighed in recently on the inflation debate in the U.S., arguing that price controls sometime can play a role in controlling inflation. When are such administrative measures superior, in your view, to the conventional macro policies (such as monetary tightening)?
Isabella: This intervention was inspired by the arguments in the aftermath of World War II of some of the most prominent American economists of the 20th century across a wide range of schools of thought. I have written on this history in my book since it came up in China’s market reform debate. After the war, there was a somewhat similar inflationary pressure as after the COVID-19 shutdowns – as for instance the White House Council of Economic Advisors has argued. In both cases, there have been widespread bottlenecks and a relatively strong demand for goods. For certain goods demand outstrips supply and the prices shoot up. The problem is that these price increases do not bring about the kind of quantity adjustment that we would expect in normal times. If the goods are stuck at a congested port, they will not get to the store faster because the price has increased. The war in Ukraine also does not follow the laws of supply and demand and affects the supply of a wide range of essential commodities. Meanwhile, if supply chain disruptions are sufficiently widespread and severe, competition is undermined. There are strong barriers to entry at a time when even companies that have established production networks don’t manage to increase supply. Firms also know that all competitors are facing supply chain issues, which means they can raise prices without the normal risk of losing customers. The result is a sort of temporary monopoly while major interruptions to supply last.
These kind of product-specific price increases are hard to control with a macro response. In some sense, a stern macro response that affects the whole economy and risks a hard landing is a more intense intervention in this unusual constellation. Product specific measures would aim to prevent firms that gain temporarily unusual pricing power from reaping windfall profits to the detriment of consumers – low-income households with limited capacity to absorb price increases in particular.
IEA: You have spent much of your academic career at institutions that are considered “heterodox” in the U.S. – the New School and UMass Amherst. Do you think mainstream academia is becoming more (or less) open to diverse disciplinary voices?
Isabella: I have been overwhelmed by the enormous amount of interest in my book How China Escaped Shock Therapy across academic disciplines and across dividing lines like heterodox and mainstream economics. This has been a very encouraging experience. I have been fortunate to have found an intellectual home at economics departments that value the kind of work I do. We are living through a period in which numerous global emergencies coincide, the pandemic, climate change and a major geopolitical crisis. In such moments, the urgency of the tremendous economic challenges tends to eventually give way to pragmatism. The economic policy discourse is shifting quickly as we speak. It remains to be seen what this will mean for the discipline of economics.