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doi: 10.1080/13563467.2014.951432pmid: N/A
Not only did the global financial crisis transform the prevailing institutions, policies and practices of contemporary capitalism, it also had a profound impact upon the discipline of economics itself. From 2008 a different crisis, one of public legitimacy, engulfed academic economics as critics railed against its failure to predict the onset of unprecedented global economic turmoil. But despite the public focus upon the failings of mainstream economics, the rise of alternative disciplinary and epistemological perspectives has been muted. Scholars of international political economy (IPE), unconstrained by the debilitating equilibrium assumptions of neoclassical economics and keenly aware of the intimate connectivity between politics and economics, might justifiably have expected to make gains during the economics profession's darkest hour. That they have not managed, thus far, to substantially unsettle the intellectual and institutional predominance of economics should not, however, be a source of dismay. Political economy scholars possess the analytical tools to produce a much-needed counterpoint to prevailing academic economics. It is with demonstrating that capacity, and restating the holistic merits of political economy scholarship, that this Special Issue is concerned. Bringing together a number of diverse theoretical perspectives and employing a wide range of conceptual categories, this Special Issue showcases the rich variety of IPE scholarship and its collective capacity to generate much deeper and more holistic analyses of the global economic crisis than those provided by the reigning economics orthodoxy, and in doing so, to get what went wrong right.
doi: 10.1080/13563467.2014.951431pmid: N/A
One of the principal tasks facing post-crash academic political economy is to analyse patterns of ideational change and the conditions that produce such change. What has been missing from the existing literature on ideational change at times of crises however, is a sense of how processes of persuasive struggle, and how the success of those ‘norm entrepreneurs’ arguing for ideational change is shaped by two contextual variables: the most immediate material symptoms and problems that a crisis displays (the variety of crisis); and the institutional character of the policy subsystem that agents have to operate within to affect change. Introducing these two variables into our accounts of persuasive struggle and ideational change enables us to deepen our understanding of the dynamics of ideational change at times of crisis. The article identifies that a quite rapid and radical intellectual change has been evident in the field of financial regulation in the form of an embrace of a macroprudential frame. In contrast in the field of macroeconomic policy – both monetary and fiscal policy, many pre-crash beliefs remain prominent, there is evidence of ideational stickiness and inertia, and despite some policy experimentation, overarching policy frameworks and their rationales have not been overhauled. The article applies Peter Hall's framework of three orders of policy changes to help illuminate and explain the variation in patterns of change in the fields of financial regulation and macroeconomic policy since the financial crash of 2008. The different patterns of ideational change in macroeconomic policy and financial regulation in the post-crash period can be explained by timing and variety of crisis; sequencing of policy change; and institutional political differences between micro policy sub systems and macro policy systems.
doi: 10.1080/13563467.2014.951427pmid: N/A
Nearly a century ago, one of the leading forefathers of the school of evolutionary economics, John R. Commons, coined the term ‘futurity’ to describe an epochal change in the late nineteenth-century advanced economies. Futurity refers to the reorientation of economies towards the future, and specifically to the fledgling practice of treating businesses as ‘going concerns’ and measuring its value in terms of their anticipated future profits. Curiously, the implication of such epochal changes on the performance of the financial system had rarely been discussed, let alone addressed. This article presents a theoretical argument that suggests that futurity encourages pro-cyclical dynamics that are pulling the financial systems in ever more violent and disastrous swings.
Montgomerie, Johnna; Büdenbender, Mirjam
doi: 10.1080/13563467.2014.951429pmid: N/A
This article explores the contingencies of financialisation and housing. More specifically, how the spatial and temporal dynamics of the UK housing market ensure that homeownership does not (and arguably cannot) deliver welfare provision in the way envisioned by asset-based welfare initiatives. The first section demonstrates the fundamental problem of conceptualising households as asset-holders; in particular, with regard to housing-based welfare strategies and as part of financialised growth strategies in the UK, more generally. We show that continuing to assume residential housing is a static and unchanging asset-class depoliticises how asset-based welfare intensifies household indebtedness. The second section demonstrates the temporal, spatial and social limits of homeownership in the UK. We argue that the financialisation of housing in the UK is a unique set of political and economic circumstances that cannot be repeated; therefore, current gains from residential housing are a one-off wealth windfall to particular (lucky) groups within society. The temporal and spatial limits of gains from residential housing mean that the same conditions cannot be repeated (often enough) in the way required for residential housing to provide a generalisable welfare function. Finally, the article concludes by suggesting the potential of new research that incorporates temporal, spatial and social contingencies of housing to demonstrate how financialisation materialises in everyday life.
Bengtsson, Erik; Ryner, Magnus
doi: 10.1080/13563467.2014.951430pmid: N/A
This paper relates the financial and monetary dimensions of the contemporary economic crisis to working-class agency via a central concern of classical political economy: the distribution of surplus between the chief factors of production. The fall in the wage share of value added is now accepted as a stylised fact in the empirical economic literature. This paper argues that the punctuated pattern of the development validates the regulation theoretical narrative of an epochal shift from Fordism to finance-led accumulation. Furthermore, synthesising econometric studies supports a class-centred explanation. In the last instance, the falling wage share is due to successful transnational class rule in the form of a neoliberal hegemonic paradigm. Crucially, such class rule restructured the environment of trade unions, rendering increasingly ineffective its relational power resources. The paper concludes by considering the contradictory implications for organised labour of the current financial crisis. On the one hand, the financial crisis offers an opportunity to link its particular interests to the general interest of macroeconomic management since low wage share inhibits growth rates. But how might trade unions assert a higher wage share in the face of the structural power of (financial) capital?
doi: 10.1080/13563467.2014.951428pmid: N/A
This article focuses on the role the shadow banking system played in the financial crisis of 2007–9. Engaging with emergent theories of shadow banking, I inquire into its structural role in contemporary capitalism. My main premise here is that the crisis of 2007–9 is distinct in financial history because it did not centre on any organised market. Rather, it was crisis of the overcrowded financial channels bridging the present and the future, which have become congested because of the massive concentration of financial values generated, yet not sustained, through the shadow banking network. My analysis suggests that shadow banking has determined the nature of financial crisis of 2007–9 and continues to play a necessary role in financial capitalism based on futurity. Drawing on scholarship in financial Keynesianism, contemporary legal studies and early evolutionary political economy, I argue that shadow banking is best seen as the organic institutional infrastructure of financialised capitalism based on debt and geared towards futurity, a concept originally developed by John Commons.
Bell, Stephen; Hindmoor, Andrew
doi: 10.1080/13563467.2014.951426pmid: N/A
We are increasingly learning more about the contingencies and independent variables that shape the structural power of business and financial interests. This paper contributes to this research by analysing factors that led to weakening in the structural power of financial interests in the City of London in the aftermath of the 2007/2008 crisis. We focus on under-researched mediators of structural power dynamics, especially the context of action and the agency and ideas of state leaders. Prior to the crisis, closed regulatory policy and a prevailing discourse premised upon the notion of market efficiency, helped to reinforce the structural power of the UK banking and financial sector. After the crisis heightened politicisation, more assertive state leadership, and especially ideational revision, has increasingly challenged the power of the City. We illustrate this through an examination of the Independent Commission on Banking's proposals in relation to the ‘ring fencing’ of investment and retail banks.
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