Taming the City? Ideas,Structural Power and the Evolution of British Banking Policy Amidst the Great Financial Meltdown

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.     

The Grameen Bank as Progressive Institutional Adjustment

Over the past 25 years, a variety of Neoliberal reforms were introduced. Instead of growth, stability, and the narrowing of income gaps, however, we have seen stagnation, volatility, and increased inequality. The paper examines the theory that justified these policies, describes an alternative approach, and takes a brief look at a small group of Latin American countries in the aftermath of the Mexican Crisis. It is shown that not only does the alternative view raise serious doubts about the efficacy of Neoliberalism, but that those countries that refused to follow suit were better protected against contagion after the December Mistake.     

Financialization and Vested Interests: Self-Regulation vs. Financial Stability as a Public Good

I propose an institutionalist analysis of financialization through the lens of Thorstein Veblen, built on some peculiar characteristics of money and related financial instruments in a market-based capitalist economy. Following the case of the overcapitalization of farmlands, studied by Veblen (1919), I argue that modern capitalism is a financialized society dominated by vested interests that rely on financial liberalization-led speculative overcapitalization, often leading to a perverse accumulation process and resulting in systemic catastrophes. Consequently, one of the major constituent institutions of liberal finance, market-dependent selfregulation, proves unable to deal with society-level issues like financial stability. This latter issue must be handled at a systemic level, as a public good. Therefore, specific public regulation and action mechanisms must be designed to maintain society (and dominant vested-interests) within some viability limits to ensure a smooth functioning of the economy.     

新制度经济学的新发展与政治学新制度主义:比较与启示

新制度经济学和政治学新制度主义在发展中都因为缺乏现实性、历史性和社会性而受到批评.面对相似的问题,经济学领域兴起了以青木和格雷夫为代表的比较制度分析,政治学领域兴起了历史制度主义和社会学制度主义.本文从制度观、制度对行为的影响、制度的变迁、过去的制度对现在制度的影响、文化观念和意识形态在制度形成和发展中的作用等方面,对比较制度分析和历史制度主义、社会学制度主义进行了比较,就未来制度研究的发展趋势提出了看法.     

What made Economists so Politically Influential? Governance-related Ideas and Institutional Entrepreneurship in the Economic Liberalisation of Israel and beyond

Liberal economists are known to be one of the driving forces behind economic liberalisation in various countries, but how did they become so politically influential? Constructivists generally suggest that during economic crises liberal economists persuaded decision-makers to adopt pro-market policy ideas as solutions for economic turbulence. While this answer is true, it is also only partial because it disregards the role played by governance-related ideas and institutional entrepreneurship in the political actions of liberal economists. I argue that ideas regarding decision-making mechanisms provided liberal economists with the basis for creatively exploiting pre-liberalisation institutions, such as central banks and central budget offices, through which these economists enhanced their long-term political influence. An in-depth examination of a paradigmatic case of economic liberalisation driven by liberal economists – Israel's Stabilisation Plan – exemplifies that argument. The existence of like-minded economists and similar pre-liberalisation policy-making institutions in many other countries hints that the Israeli experience is not unique.     

Backwater Economics: A Life Story

Abstract:

Economics is sometimes portrayed as a contest between saltwater and freshwater, between the coastal pseudo-Keynesians and the Great Lakes neo-Walrasians, between the flaws-and-friction model-builders and the free-market hard-liners. As evolutionists know, both habitats are fairly sterile. Evolution occurs in the backwaters, in the mudflats, bogs, lagoons, cypress swamps, and wetlands, in the shadows of perpetually endangered habitat. This essay sketches a personal journey through the backwaters. Intellectually they are my home, as they have been for every other recipient of the Veblen-Commons prize, with just one exception …     

The 2017 Veblen-Commons Award Recipient: John F. Henry: “Brutus Is an Honorable Man”

The question I pose in this article is just why, from its egalitarian foundations, inequality first arose. There is good information regarding how inequality has been defended over the millennia, but no answer as to why, from an egalitarian ideological foundation, some began to assert a superior position, while others — the vast majority, in fact — accepted this. In this historic process that leads to the current period, it appears that those asserting a superior position are of an “honorable” nature. That is, they tend to be mass murderers, fundamentally dishonest, hypocrites, and generally anti-social. Just why is this? Why are these “honorable men” of the Brutus type at the top of the social hierarchy? While Thorstein Veblen and Karl Marx have developed cogent analyses of inequality itself, neither has explained the origins of inequality in its break and separation from the original state of equality. I propose that this is a task for institutionalists, basing their argument on Veblen’s understanding of “institutions.”     

Toward a Humanist Reconstruction of Economic Science

This paper examines whether governance matters for the economic growth of developing countries, empirically captured within the institutional economics theoretical framework using the panel data estimation procedure. In doing so, it tests the effect of several dimensions of governance on the growth of 84 low and middle-income economies using regression specifications common in the growth literature. The empirical results show that political stability and government effectiveness is significantly positively correlated with growth. Voice and accountability and corruption are statistically significantly negatively correlated with growth. The regulatory quality and rule of law dimensions of governance are negatively but statistically insignificantly correlated with growth. The findings of this study imply that the dynamics of the current modern economy makes it necessary for developing countries to act now and within their own country, improve the dimensions of governance and establish good governance practices that are domestically relevant and internationally comparable and consistent.