Journal Article•
The power of Inaction: : Bank bailouts in comparison.
About: This article is published in Foreign Affairs.The article was published on 2015-01-01 and is currently open access. It has received 50 citations till now.
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TL;DR: In this paper, structural power can be exercised strategically, distinct from instrumental power based on lobbying, and that it explains consequential variations in bailout design in the United Kingdom, the United States, France, and Germany.
Abstract: The 2008 bailout is often taken as evidence of the domination of the US political system by large financial institutions. In fact, the bailout demonstrated the vulnerability of US banks to government pressure. Large banks in the United States could not defy regulators, because their future income depended on the US market. In Britain, by contrast, one bank succeeded in scuttling the preferred governmental solution of an industry-wide recapitalization, because most of its revenue came from outside the United Kingdom. This was an exercise of structural power, but one that most contemporary scholarship on business power ignores or misclassifies, since it limits structural power to the automatic adjustment of policy to the possibility of disinvestment. We show that structural power can be exercised strategically, that it is distinct from instrumental power based on lobbying, and that it explains consequential variations in bailout design in the United Kingdom, the United States, France, and Germany.
204 citations
TL;DR: In this article, a distinctive source of political influence of some technology firms, which is called platform power, is discussed. Platform power inheres in companies of economic scale that provide the t...
Abstract: This article articulates a distinctive source of political influence of some technology firms, which we call platform power. Platform power inheres in companies of economic scale that provide the t...
98 citations
TL;DR: In this paper, the authors argue that in strategic areas, such as macroeconomic policy or banking regulation, supranational institutions have seen their discretionary powers significantly enhanced and that they have played an instrumental role in bringing about such a change.
Abstract: While much of the literature on the Euro crisis has highlighted the intergovernmental features of the European Union response, it appears that in strategic areas, such as macroeconomic policy or banking regulation, supranational institutions have seen their discretionary powers significantly enhanced and that they have played an instrumental role in bringing about such a change. This is all the more remarkable considering the decline in support for integration among governments and the public. This article explains this paradox by the dramatic character of the crisis and the deep mistrust that existed between European states at the time. It also suggests that the process could be hard to reconcile with attempts at ‘politicizing’ EU public policy.
68 citations
Cites background from "The power of Inaction: : Bank bailo..."
...Given the crucial role played by banks in the economies of European countries (Woll 2014), banking regulation was regarded as part and parcel of national sovereignty by national governments, as demonstrated by the reactions in the first years of the crisis....
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TL;DR: In this paper, the authors employ network methodologies that have been recently extended for use with weighted and directed networks to shed light on how the most severe global financial crisis since the 1930s affected the organization of the world political economy.
Abstract: How did the most severe global financial crisis since the 1930s affect the organization of the world political economy? Was Anglo-American structural power in finance eroded? I employ network methodologies that have been recently extended for use with weighted and directed networks to shed light on these questions. I draw from complexity science and political economy to link these empirics to prior theories of structural power, which I refine in several ways. This approach provides unique explanations for developments in global banking since the crisis, including expected outcomes that did not occur: the continuation – and even expansion – of Anglo-American prominence, the decline of continental European prominence, and the lack of emergence of the BRICS economies into the core of the global banking system.
64 citations
TL;DR: This article pointed out that structural power, not lobbying resources, are key to explaining variativeness of the finance sector in the United States and pointed out the predominant position of finance in economic inequality.
Abstract: In recent debates about inequality, many have pointed to the predominant position of the finance. This article highlights that structural power, not lobbying resources, are key to explaining variat...
57 citations
References
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TL;DR: In this paper, structural power can be exercised strategically, distinct from instrumental power based on lobbying, and that it explains consequential variations in bailout design in the United Kingdom, the United States, France, and Germany.
Abstract: The 2008 bailout is often taken as evidence of the domination of the US political system by large financial institutions. In fact, the bailout demonstrated the vulnerability of US banks to government pressure. Large banks in the United States could not defy regulators, because their future income depended on the US market. In Britain, by contrast, one bank succeeded in scuttling the preferred governmental solution of an industry-wide recapitalization, because most of its revenue came from outside the United Kingdom. This was an exercise of structural power, but one that most contemporary scholarship on business power ignores or misclassifies, since it limits structural power to the automatic adjustment of policy to the possibility of disinvestment. We show that structural power can be exercised strategically, that it is distinct from instrumental power based on lobbying, and that it explains consequential variations in bailout design in the United Kingdom, the United States, France, and Germany.
204 citations
TL;DR: In this article, a distinctive source of political influence of some technology firms, which is called platform power, is discussed. Platform power inheres in companies of economic scale that provide the t...
Abstract: This article articulates a distinctive source of political influence of some technology firms, which we call platform power. Platform power inheres in companies of economic scale that provide the t...
98 citations
TL;DR: In this paper, the authors argue that in strategic areas, such as macroeconomic policy or banking regulation, supranational institutions have seen their discretionary powers significantly enhanced and that they have played an instrumental role in bringing about such a change.
Abstract: While much of the literature on the Euro crisis has highlighted the intergovernmental features of the European Union response, it appears that in strategic areas, such as macroeconomic policy or banking regulation, supranational institutions have seen their discretionary powers significantly enhanced and that they have played an instrumental role in bringing about such a change. This is all the more remarkable considering the decline in support for integration among governments and the public. This article explains this paradox by the dramatic character of the crisis and the deep mistrust that existed between European states at the time. It also suggests that the process could be hard to reconcile with attempts at ‘politicizing’ EU public policy.
68 citations
TL;DR: In this paper, the authors employ network methodologies that have been recently extended for use with weighted and directed networks to shed light on how the most severe global financial crisis since the 1930s affected the organization of the world political economy.
Abstract: How did the most severe global financial crisis since the 1930s affect the organization of the world political economy? Was Anglo-American structural power in finance eroded? I employ network methodologies that have been recently extended for use with weighted and directed networks to shed light on these questions. I draw from complexity science and political economy to link these empirics to prior theories of structural power, which I refine in several ways. This approach provides unique explanations for developments in global banking since the crisis, including expected outcomes that did not occur: the continuation – and even expansion – of Anglo-American prominence, the decline of continental European prominence, and the lack of emergence of the BRICS economies into the core of the global banking system.
64 citations
TL;DR: This article pointed out that structural power, not lobbying resources, are key to explaining variativeness of the finance sector in the United States and pointed out the predominant position of finance in economic inequality.
Abstract: In recent debates about inequality, many have pointed to the predominant position of the finance. This article highlights that structural power, not lobbying resources, are key to explaining variat...
57 citations