This chapter expands on the two explanations for bank culture. Firstly, it explores the idea that... more This chapter expands on the two explanations for bank culture. Firstly, it explores the idea that culture is determined by financial and non-financial incentives, and values. Secondly, the chapter explores the financialization of Anglo-America. It argues that financialization stemmed from a crisis of accumulation in the post-war economy, but came to reshape a full range of financial and non-financial corporate activities. It explains though that financialization breeds instability and inequality, and that Anglo-American banks exploit and exacerbate these conditions. This is the argument that will be developed more fully in coming chapters, in order to understand the more significant determinants of ‘bad’ bank culture.
Following the global financial crisis and repeated scandals, US and UK state managers made substa... more Following the global financial crisis and repeated scandals, US and UK state managers made substantial efforts to reform the culture of their banking sectors. This book argues though that they focused on an extremely narrow definition of bank culture. They did so for two reasons: firstly, because the structural pressures of financialization—which are a far more important driver of the problematic features of bank culture in Anglo-America—are harder to remedy; but secondly, state managers also used their bank culture response to tackle a legitimacy crisis facing their institutions of government. In so doing they abdicated responsibility for the real problems—of inequality and instability—associated with their respective financial systems. Drawing on interviews with over 150 bankers this book explains the strategies employed by state managers before then examining what has and has not changed in the culture of banking in the US and UK.
The reluctance of nation states to concede authority to supranational institutions runs to the ve... more The reluctance of nation states to concede authority to supranational institutions runs to the very heart and history of European integration. The global financial crisis and the ensuing Eurozone sovereign debt—banking crisis shed new light on this debate however. The aim of this workshop is to explore two overarching questions. (1) Why do nation-states transfer regulatory and supervisory authority over banks to supranational institutions? (2) What are the distributional consequences of such a transfer? The questions are particularly timely given that, on the one hand, the financial and debt crises have heightened the need for more coordinated and supranational regulatory supervision. On the other hand though, the social, political, and economic fallout of the crises have increased the incentives for political authorities to pursue a more active and involved management of their domestic banking systems. This presents a seemingly uncomfortable dilemma for nation states that we seek t...
Despite much commentary in the media and the popular assumption that the banking industry exerts ... more Despite much commentary in the media and the popular assumption that the banking industry exerts undue influence on government policy-making, the academic literature on the role of the banks since the 2008 financial crisis remains theoretically and empirically under-specified. In particular, we argue that different forms of financial power are often conflated, while favorable policy outcomes are too-readily assumed to be evidence of regulatory capture. In short, we still know relatively little about how bank influence varies over time and in different national contexts, the extent to which banking interests are unified or divided, and the conditions under which banks are capable of producing meaningful variation in policy outcomes. This article has three objectives: 1) to explain why the debate on bank influence matters; 2) to examine the evidence of bank influence since the international financial crisis; and 3) to set out a range of conceptual tools for thinking about bank power.
Bank ring-fencing is the attempt to separate 'higher risk' banking activities from those activiti... more Bank ring-fencing is the attempt to separate 'higher risk' banking activities from those activities seen to be more socially useful to the real economy. It is also an important post-crisis regulatory response to the moral hazard dilemma surrounding Too Big To Fail banks. Since national governments bore the worst of the costs of rescuing the largest banks it is therefore reasonable to assume that the authorities would have the greatest incentive to promote tough ring-fence reform. In confrontation with the EU's Liikanen Group and the EU Commission however, France and Germany established a weaker set of national reforms. Our article asks why these national governments pursued a set of laws that were more accommodating to their largest banks than the EU proposals? We argue that France and Germany were defending market-based banking in their largest universal banks. What is most significant though is that they were therefore defending the ability of their largest banks to hold large volumes of trading assets which, in the view of the EU Commission and others, was a major cause of the financial crisis. Our conclusions have important implications for the Varieties of Capitalism literature and suggest that the direction of change in these countries will continue to be towards further marketbased banking, despite the associated costs revealed by the crisis.
Our intention in bringing together this collection of scholars has been to begin a process of ref... more Our intention in bringing together this collection of scholars has been to begin a process of reflection on why volumes such as these are particularly timely in the current period, for both the discipline of IPE and the study of the international political economy. Although the debates on the ‘British’ and ‘American’ schools were an important catalyst for such reflections, they also built upon earlier marginalizations and silencings which were, in our view, unwarranted. Recall, for example, Robert Keohane’s more explicit invitation in the late 1980s to ‘reflectivist’ scholars to produce systematic research agendas and falsifiable claims as a means of engaging with the ‘rationalism’ dominant in IR — in other words, a demand for ‘post-positivist’ research to abandon its raison d’etre and engage in narrow specifics which take for granted wider questions about the world in which we live. More recently, the explosion of contributions on ‘globalization’ tended to produce a neat conjuring trick, whereby a globalized world was (magically and tautologically) both the outcome — what needed to be explained — and the explanation of this outcome. In the process, alternative narratives were pushed to the sidelines (Rosenberg, 2000).
The US financial crisis that started in 2007 ultimately had global reach, but those countries mos... more The US financial crisis that started in 2007 ultimately had global reach, but those countries most severely affected were the advanced industrialized states. In the United States and Europe, banks, many of which had regional or global profiles, were the source of nearly unprecedented economic instability. This special issue therefore examines the politics behind the re-regulation of banks after the crisis, focusing on the Transatlantic community. The volume finds competing impulses for enhanced international regulatory coordination on the one hand versus national retrenchment on the other. From these two dueling agendas flow three notable developments. First, despite evident functional pressures for a coordinated and global approach to bank regulation following the crisis, regional arrangements have dominated instead. Second, reduced international capital flows and bank activity were as much the result of national and regional regulatory measures as they were a function of market conditions. Third and finally, where national retrenchment has prevailed at the expense of international regulatory harmonization, we see risks for further international financial instability.
Millennium: Journal of International Studies, 2015
This short piece responds to Matthias Kranke’s extended review of our 2011 book Critical Internat... more This short piece responds to Matthias Kranke’s extended review of our 2011 book Critical International Political Economy: Dialogue, Debate, Dissensus. We reiterate the book’s commitment to challenging disciplinary orthodoxies and immanent critique. The response also observes how the review elides a number of crucial definitions to abrogate our commitment to an expansive disciplinary engagement.
"There is no abstract, but this is a representative paragraph (from the introduction... more "There is no abstract, but this is a representative paragraph (from the introduction): 'Our intention in bringing together this collection of scholars has been to begin a process of reflection on why volumes such as these are particularly timely in the current period, for both the discipline of IPE and the study of the international political economy. Although the debates on the ‘British’ and ‘American’ schools were an important catalyst for such reflections, they also built upon earlier marginalizations and silencings which were, in our view, unwarranted. Recall, for example, Robert Keohane’s more explicit invitation in the late 1980s to ‘reflectivist’ scholars to produce systematic research agendas and falsifiable claims as a means of engaging with the ‘rationalism’ dominant in IR – in other words, a demand for ‘post-positivist’ research to abandon its raison d'être and engage in narrow specifics which take for granted wider questions about the world in which we live. More recently, the explosion of contributions on ‘globalization’ tended to produce a neat conjuring trick, whereby a globalized world was (magically and tautologically) both the outcome – what needed to be explained – and the explanation of this outcome. In the process, alternative narratives were pushed to the sidelines (Rosenberg, 2000).' "
ABSTRACT As a response to the crisis in the British banking system and reduced lending, the Briti... more ABSTRACT As a response to the crisis in the British banking system and reduced lending, the British government established Project Merlin, a series of lending targets aimed at boosting lending to the British economy, and small and medium-sized enterprises (SMEs) in particular. Given the economic importance of the targets, however, this paper questions why the Merlin agreements were so ineffective. Three explanations are given: first, in light of the challenges in accessing wholesale funding for the largest UK-owned banks, there was a lack of capacity and incentive to lend more; second, the lack of decisive intervention by the British state to compel banks to lend was also a determinant; third, though, I argue that boosting actual lending figures was not the primary aim of Project Merlin. Instead, the targets were performative, rather than substantive. I argue that these three explanations have important implications for the varieties of capitalism (VoC) debate and the economic and political economic literature on foreign versus domestic bank ownership. To the first literature, the article explains the degree to which politics underpins the structure of even the UK's purportedly liberal market economy (LME), whilst to the second, it explores the limitations to political control over even domestically-owned banks.
Europe is facing both a political crisis of democracy and legitimacy and an economic crisis of de... more Europe is facing both a political crisis of democracy and legitimacy and an economic crisis of debt and competitiveness. These two seem to point in opposing directions, growing social unrest over the Europeanised mechanisms of economic adjustment, and increasing efforts at strengthening those same institutions that regulate the adjustment process. Recent analyses have suggested that this failure of democracy will prove decisive; legitimacy for crisis management efforts requires a re-democratisation of the European polity. Instead, drawing on an analysis of ordo-and neo-liberal traditions the paper explains how European integration was itself a response to the perceived threat of democratic demands at the domestic level. The body of the paper then traces the crisis through three phases, arguing that efforts by state managers reflect a deliberate attempt to depoliticize policymaking processes. Yet the selective intervention-to restore accumulation whilst withdrawing social spending-has only fuelled the politicisation of segments of European society. This threatens to test the limits of depoliticisation as a governing strategy.
One resounding absence in much current critical IPE theorising is the absence of spatial consider... more One resounding absence in much current critical IPE theorising is the absence of spatial considerations. There is an incipient, though unacknowledged, nation-state centrism in much contemporary critical IPE focused on the immutability of the nation-state and inter-state ...
This chapter expands on the two explanations for bank culture. Firstly, it explores the idea that... more This chapter expands on the two explanations for bank culture. Firstly, it explores the idea that culture is determined by financial and non-financial incentives, and values. Secondly, the chapter explores the financialization of Anglo-America. It argues that financialization stemmed from a crisis of accumulation in the post-war economy, but came to reshape a full range of financial and non-financial corporate activities. It explains though that financialization breeds instability and inequality, and that Anglo-American banks exploit and exacerbate these conditions. This is the argument that will be developed more fully in coming chapters, in order to understand the more significant determinants of ‘bad’ bank culture.
Following the global financial crisis and repeated scandals, US and UK state managers made substa... more Following the global financial crisis and repeated scandals, US and UK state managers made substantial efforts to reform the culture of their banking sectors. This book argues though that they focused on an extremely narrow definition of bank culture. They did so for two reasons: firstly, because the structural pressures of financialization—which are a far more important driver of the problematic features of bank culture in Anglo-America—are harder to remedy; but secondly, state managers also used their bank culture response to tackle a legitimacy crisis facing their institutions of government. In so doing they abdicated responsibility for the real problems—of inequality and instability—associated with their respective financial systems. Drawing on interviews with over 150 bankers this book explains the strategies employed by state managers before then examining what has and has not changed in the culture of banking in the US and UK.
The reluctance of nation states to concede authority to supranational institutions runs to the ve... more The reluctance of nation states to concede authority to supranational institutions runs to the very heart and history of European integration. The global financial crisis and the ensuing Eurozone sovereign debt—banking crisis shed new light on this debate however. The aim of this workshop is to explore two overarching questions. (1) Why do nation-states transfer regulatory and supervisory authority over banks to supranational institutions? (2) What are the distributional consequences of such a transfer? The questions are particularly timely given that, on the one hand, the financial and debt crises have heightened the need for more coordinated and supranational regulatory supervision. On the other hand though, the social, political, and economic fallout of the crises have increased the incentives for political authorities to pursue a more active and involved management of their domestic banking systems. This presents a seemingly uncomfortable dilemma for nation states that we seek t...
Despite much commentary in the media and the popular assumption that the banking industry exerts ... more Despite much commentary in the media and the popular assumption that the banking industry exerts undue influence on government policy-making, the academic literature on the role of the banks since the 2008 financial crisis remains theoretically and empirically under-specified. In particular, we argue that different forms of financial power are often conflated, while favorable policy outcomes are too-readily assumed to be evidence of regulatory capture. In short, we still know relatively little about how bank influence varies over time and in different national contexts, the extent to which banking interests are unified or divided, and the conditions under which banks are capable of producing meaningful variation in policy outcomes. This article has three objectives: 1) to explain why the debate on bank influence matters; 2) to examine the evidence of bank influence since the international financial crisis; and 3) to set out a range of conceptual tools for thinking about bank power.
Bank ring-fencing is the attempt to separate 'higher risk' banking activities from those activiti... more Bank ring-fencing is the attempt to separate 'higher risk' banking activities from those activities seen to be more socially useful to the real economy. It is also an important post-crisis regulatory response to the moral hazard dilemma surrounding Too Big To Fail banks. Since national governments bore the worst of the costs of rescuing the largest banks it is therefore reasonable to assume that the authorities would have the greatest incentive to promote tough ring-fence reform. In confrontation with the EU's Liikanen Group and the EU Commission however, France and Germany established a weaker set of national reforms. Our article asks why these national governments pursued a set of laws that were more accommodating to their largest banks than the EU proposals? We argue that France and Germany were defending market-based banking in their largest universal banks. What is most significant though is that they were therefore defending the ability of their largest banks to hold large volumes of trading assets which, in the view of the EU Commission and others, was a major cause of the financial crisis. Our conclusions have important implications for the Varieties of Capitalism literature and suggest that the direction of change in these countries will continue to be towards further marketbased banking, despite the associated costs revealed by the crisis.
Our intention in bringing together this collection of scholars has been to begin a process of ref... more Our intention in bringing together this collection of scholars has been to begin a process of reflection on why volumes such as these are particularly timely in the current period, for both the discipline of IPE and the study of the international political economy. Although the debates on the ‘British’ and ‘American’ schools were an important catalyst for such reflections, they also built upon earlier marginalizations and silencings which were, in our view, unwarranted. Recall, for example, Robert Keohane’s more explicit invitation in the late 1980s to ‘reflectivist’ scholars to produce systematic research agendas and falsifiable claims as a means of engaging with the ‘rationalism’ dominant in IR — in other words, a demand for ‘post-positivist’ research to abandon its raison d’etre and engage in narrow specifics which take for granted wider questions about the world in which we live. More recently, the explosion of contributions on ‘globalization’ tended to produce a neat conjuring trick, whereby a globalized world was (magically and tautologically) both the outcome — what needed to be explained — and the explanation of this outcome. In the process, alternative narratives were pushed to the sidelines (Rosenberg, 2000).
The US financial crisis that started in 2007 ultimately had global reach, but those countries mos... more The US financial crisis that started in 2007 ultimately had global reach, but those countries most severely affected were the advanced industrialized states. In the United States and Europe, banks, many of which had regional or global profiles, were the source of nearly unprecedented economic instability. This special issue therefore examines the politics behind the re-regulation of banks after the crisis, focusing on the Transatlantic community. The volume finds competing impulses for enhanced international regulatory coordination on the one hand versus national retrenchment on the other. From these two dueling agendas flow three notable developments. First, despite evident functional pressures for a coordinated and global approach to bank regulation following the crisis, regional arrangements have dominated instead. Second, reduced international capital flows and bank activity were as much the result of national and regional regulatory measures as they were a function of market conditions. Third and finally, where national retrenchment has prevailed at the expense of international regulatory harmonization, we see risks for further international financial instability.
Millennium: Journal of International Studies, 2015
This short piece responds to Matthias Kranke’s extended review of our 2011 book Critical Internat... more This short piece responds to Matthias Kranke’s extended review of our 2011 book Critical International Political Economy: Dialogue, Debate, Dissensus. We reiterate the book’s commitment to challenging disciplinary orthodoxies and immanent critique. The response also observes how the review elides a number of crucial definitions to abrogate our commitment to an expansive disciplinary engagement.
"There is no abstract, but this is a representative paragraph (from the introduction... more "There is no abstract, but this is a representative paragraph (from the introduction): 'Our intention in bringing together this collection of scholars has been to begin a process of reflection on why volumes such as these are particularly timely in the current period, for both the discipline of IPE and the study of the international political economy. Although the debates on the ‘British’ and ‘American’ schools were an important catalyst for such reflections, they also built upon earlier marginalizations and silencings which were, in our view, unwarranted. Recall, for example, Robert Keohane’s more explicit invitation in the late 1980s to ‘reflectivist’ scholars to produce systematic research agendas and falsifiable claims as a means of engaging with the ‘rationalism’ dominant in IR – in other words, a demand for ‘post-positivist’ research to abandon its raison d'être and engage in narrow specifics which take for granted wider questions about the world in which we live. More recently, the explosion of contributions on ‘globalization’ tended to produce a neat conjuring trick, whereby a globalized world was (magically and tautologically) both the outcome – what needed to be explained – and the explanation of this outcome. In the process, alternative narratives were pushed to the sidelines (Rosenberg, 2000).' "
ABSTRACT As a response to the crisis in the British banking system and reduced lending, the Briti... more ABSTRACT As a response to the crisis in the British banking system and reduced lending, the British government established Project Merlin, a series of lending targets aimed at boosting lending to the British economy, and small and medium-sized enterprises (SMEs) in particular. Given the economic importance of the targets, however, this paper questions why the Merlin agreements were so ineffective. Three explanations are given: first, in light of the challenges in accessing wholesale funding for the largest UK-owned banks, there was a lack of capacity and incentive to lend more; second, the lack of decisive intervention by the British state to compel banks to lend was also a determinant; third, though, I argue that boosting actual lending figures was not the primary aim of Project Merlin. Instead, the targets were performative, rather than substantive. I argue that these three explanations have important implications for the varieties of capitalism (VoC) debate and the economic and political economic literature on foreign versus domestic bank ownership. To the first literature, the article explains the degree to which politics underpins the structure of even the UK's purportedly liberal market economy (LME), whilst to the second, it explores the limitations to political control over even domestically-owned banks.
Europe is facing both a political crisis of democracy and legitimacy and an economic crisis of de... more Europe is facing both a political crisis of democracy and legitimacy and an economic crisis of debt and competitiveness. These two seem to point in opposing directions, growing social unrest over the Europeanised mechanisms of economic adjustment, and increasing efforts at strengthening those same institutions that regulate the adjustment process. Recent analyses have suggested that this failure of democracy will prove decisive; legitimacy for crisis management efforts requires a re-democratisation of the European polity. Instead, drawing on an analysis of ordo-and neo-liberal traditions the paper explains how European integration was itself a response to the perceived threat of democratic demands at the domestic level. The body of the paper then traces the crisis through three phases, arguing that efforts by state managers reflect a deliberate attempt to depoliticize policymaking processes. Yet the selective intervention-to restore accumulation whilst withdrawing social spending-has only fuelled the politicisation of segments of European society. This threatens to test the limits of depoliticisation as a governing strategy.
One resounding absence in much current critical IPE theorising is the absence of spatial consider... more One resounding absence in much current critical IPE theorising is the absence of spatial considerations. There is an incipient, though unacknowledged, nation-state centrism in much contemporary critical IPE focused on the immutability of the nation-state and inter-state ...
This book examines how decisions made by the Conservative government during the COVID19 pandemic ... more This book examines how decisions made by the Conservative government during the COVID19 pandemic have increased economic inequality in the UK. Decades of austerity, asset-based welfare and financialization had already exacerbated social divisions in the UK prior to the pandemic. The political blueprint behind these measures combined Privatized Keynesianism and the Asset Economy. To explain, economists have highlighted that inequality derives from the fact that income from wealth increases at a faster rate than income from wages. The ensuing political assumption is that – in the face of pressures on public finances – promoting asset ownership is the best alternative to government-funded welfare schemes. What this meant, as the pandemic unfolded, was that when tough decisions about resource allocation needed to be made, the UK Treasury and the Bank of England found almost unlimited funds to rescue and protect asset-holders and middle-income homeowners, whilst reverting to a narrative of “misfortune” for the asset-less poor. This book assesses the political decisions taken by UK policymakers during 2020-21 and their consequences. In doing so, it challenges policymakers and the informed public to re-consider the morality of inequality, and to make alternative decisions to promote a more ecologically sustainable, caring, equal and prosperous society.
Amidst the continued debate surrounding the foundations of IPE and recent methodological and theo... more Amidst the continued debate surrounding the foundations of IPE and recent methodological and theoretical divides, the authors argue that an attempt should be made to re-visit the notion of the 'critical'. They assess the development of so-called critical IPE and interrogate whether the theoretical foundations it was built upon have reached their potential. This challenge is taken up in a number of different ways, but all share a common concern: to re-assess the purpose of critical approaches and to reflect on why certain social theorists have been favoured as a point of departure, yet others have largely been ignored. In light of recent debates on the notion of a 'trans-Atlantic divide' within IPE, this book demonstrates how the distinction between the 'critical' and the 'orthodox' (or 'empirical') is only significant if the 'critical' is geared towards a larger, more substantial body of critical social enquiry and engages with what it means to conduct such enquiry.
Thirty years ago best-selling author Michael Lewis penned a damning indictment of the culture of ... more Thirty years ago best-selling author Michael Lewis penned a damning indictment of the culture of Wall Street bond traders in the semi-autobiographical novel, Liar's Poker. Contempt for the rules and the ability to exploit weakness were the main characteristics of technologically-backward bond trading rooms, he argued. Further, an almost complete lack of transparency allowed traders free rein in setting prices and earning lucrative fees and commissions. In the decades since then, and despite massive technological advances in other areas of banking and finance, fixed income (corporate) bond trading remained alarmingly anachronistic and opaque. In the period since the global financial crisis however, the world that Lewis described has changed dramatically and the Wall Street cartel has been the biggest loser. The aim of this paper is to explain why.
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Papers by Huw Macartney