The financial market turmoil in 2007 and 2008 has led to the most severe financial crisis since the Great Depression and threatens to have large repercussions on the real economy The bursting of the housing bubble forced banks to write down several hundred billion dollars in bad loans caused by mortgage delinquencies At the same time, the stock market capitalization of the major banks declined by more than twice as much While the overall mortgage losses are large on an absolute scale, they are still relatively modest compared to the $8 trillion of US stock market wealth lost between October 2007, when the stock market reached an all-time high, and October 2008 This paper attempts to explain the economic mechanisms that caused losses in the mortgage market to amplify into such large dislocations and turmoil in the financial markets, and describes common economic threads that explain the plethora of market declines, liquidity dry-ups, defaults, and bailouts that occurred after the crisis broke in summer 2007 To understand these threads, it is useful to recall some key factors leading up to the housing bubble The US economy was experiencing a low interest rate environment, both because of large capital inflows from abroad, especially from Asian countries, and because the Federal Reserve had adopted a lax interest rate policy Asian countries bought US securities both to peg the exchange rates at an export-friendly level and to hedge against a depreciation of their own currencies against the dollar, a lesson learned from the Southeast Asian crisis of the late 1990s The Federal Reserve Bank feared a deflationary period after the bursting of the Internet bubble and thus did not counteract the buildup of the housing bubble At the same time, the banking system underwent an important transformation The

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Deciphering the Liquidity and Credit Crunch 2007-2008

The newest “new institutionalism,” discursive institutionalism, lends insight into the role of ideas and discourse in politics while providing a more dynamic approach to institutional change than the older three new institutionalisms. Ideas are the substantive content of discourse. They exist at three levels—policies, programs, and philosophies—and can be categorized into two types, cognitive and normative. Discourse is the interactive process of conveying ideas. It comes in two forms: the coordinative discourse among policy actors and the communicative discourse between political actors and the public. These forms differ in two formal institutional contexts; simple polities have a stronger communicative discourse and compound polities a stronger coordinative discourse. The institutions of discursive institutionalism, moreover, are not external-rule-following structures but rather are simultaneously structures and constructs internal to agents whose “background ideational abilities” within a given “meanin...

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Discursive Institutionalism: The Explanatory Power of Ideas and Discourse

The third way: the renewal of social democracy

Across the broad field of heterodox political economy, ‘neoliberalism’ appears to have become a rascal concept – promiscuously pervasive, yet inconsistently defined, empirically imprecise and frequently contested. Controversies regarding its precise meaning are more than merely semantic. They generally flow from underlying disagreements regarding the sources, expressions and implications of contemporary regulatory transformations. In this article, we consider the handling of ‘neoliberalism’ within three influential strands of heterodox political economy – the varieties of capitalism approach; historical materialist international political economy; and governmentality approaches. While each of these research traditions sheds light on contemporary processes of market-oriented regulatory restructuring, we argue that each also underplays and/or misreads the systemically uneven, or ‘variegated’, character of these processes. Enabled by a critical interrogation of how each approach interprets the geographies, modalities and pathways of neoliberalization processes, we argue that the problematic of variegation must be central to any adequate account of marketized forms of regulatory restructuring and their alternatives under post-1970s capitalism. Our approach emphasizes the cumulative impacts of successive ‘waves’ of neoliberalization upon uneven institutional landscapes, in particular: (a) their establishment of interconnected, mutually recursive policy relays within an increasingly transnational field of market-oriented regulatory transfer; and (b) their infiltration and reworking of the geoinstitutional frameworks, or ‘rule regimes’, within which regulatory experimentation unfolds. This mode of analysis has significant implications for interpreting the current global economic crisis.

Variegated neoliberalization: geographies, modalities, pathways

The concept of power is central to international relations. Yet disciplin- ary discussions tend to privilege only one, albeit important, form: an actor control- ling another to do what that other would not otherwise do. By showing conceptual favoritism, the discipline not only overlooks the different forms of power in inter- national politics, but also fails to develop sophisticated understandings of how global outcomes are produced and how actors are differentially enabled and constrained to determine their fates. We argue that scholars of international relations should employ multiple conceptions of power and develop a conceptual framework that encourages rigorous attention to power in its different forms. We first begin by producing a tax- onomy of power. Power is the production, in and through social relations, of effects that shape the capacities of actors to determine their circumstances and fate. This general concept entails two crucial, analytical dimensions: the kinds of social rela- tions through which power works (in relations of interaction or in social relations of constitution); and the specificity of social relations through which effects are pro- duced (specific/direct or diffuse/indirect). These distinctions generate our taxonomy and four concepts of power: compulsory, institutional, structural, and productive. We then illustrate how attention to the multiple forms of power matters for the analysis of global governance and American empire. We conclude by urging scholars to beware of the idea that the multiple concepts are competing, and instead to see connections between them in order to generate more robust understandings of how power works in international politics.

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Power in international politics

(2004). Ideas, interests and institutions in the comparative political economy of great transformations. Review of International Political Economy: Vol. 11, No. 1, pp. 204-226.

Ideas, interests and institutions in the comparative political economy of great transformations

The State: Theories and Issues

In this framing paper for the special issue as a whole, the authors review existing attempts to diagnose and respond to the condition of political disaffection and disengagement afflicting our democratic polities. They caution against an overemphasis on measures to address declining turnout – which they see as a symptom of a more general condition. That condition, they suggest, is the development and inadvertent nurturing of a profoundly anti‐political culture. Such a diagnosis suggests: (i) the need for political elites to acknowledge how implicated they are in the crisis of democratic politics; (ii) that constitutional reform does not hold the key to a solution; (iii) that a revitalised politics must deal more adequately with the multi‐level character of modern politics; and (iv) that any strategy for revitalising our politics must build from a genuine understanding of how citizens understand and orient themselves to politics.

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Revitalising politics: have we lost the plot?

T IS now over twenty years since Stanley Cohen concluded his pioneering account of the discursive construction of folk devils and the mobilization of the moral panic surrounding the Mods and Rockers ’phenomenon’ with these hauntingly prophetic comments. Since then his words have become something of a sociological truism. Indeed, in a somewhat ironic confirmation of Cohen’s thesis, we are currently witnessing the first reflexive moral panic in which the British media itself has co-opted Cohen’s terminology to describe its

Colin Hay

Papers

Ideas, interests and institutions in the comparative political economy of great transformations

The State: Theories and Issues

Revitalising politics: have we lost the plot?

Mobilization Through Interpellation : James Bulger, Juvenile Crime and the Construction of a Moral Panic

The Political Economy of New Labour