“Political economy should be a human science.” (Karl Polanyi, The Great Transformation, 2001, p. 117)
The definition of Political Economy — as a modern scholarly discipline, a research topic, a sphere of society, or the realm of polity — has gone through many incarnations over the years, since the phrase ‘political economy’ appeared in Antoine de Montchrétien’s Traicté de l’oeconomie politique in 1615. Four centuries later, the understanding what political economy is about still varies among academics accommodating different university departments: sociology, economics, history, political science, and international studies. The point is that these variations and shifts in grasping political economy are not merely technically semantic; in their essence — consciously or unconsciously, implicitly or explicitly — they rather reflect distinct ontological premises and epistemic presumptions about human life and the mutual embeddedness of State-Economy-Society. Therefore they largely determine and shape the research questions, empirical phenomena, methodology, theoretical frameworks, presented findings, and their analytical explanation.
“Changing Perspectives in Political Economy” is an interesting, instructive and worth reading paper by a noted German sociologist Renate Mayntz. (See its open-access copy below). In this new work, Mayntz proficiently addresses the disputed aspects, changing facets and some conventions of political economy, and then shows how they are expressed in academic publications. The paper’s abstract reads as follows:
“The history of a research field called political economy dates back to the eighteenth century, giving rise to a variety of disciplinary approaches, and experienced a renaissance as a multidisciplinary field after the Second World War, combining economic, political science, and sociological approaches. The divergence between economic globalization and the nationally restricted scope of economic policy directs interest to the relationship between politics and the economy. A quantitative analysis of the articles published in two dedicated political economy journals shows major trends of the developing research field. The relationship between politics and economy is interpreted rather widely, and research is largely focused on Western capitalist nations. In conclusion, two avenues for further research in the field are briefly discussed”
Already for eight years, this blog plows the ground, disseminates the seeds (of knowledge) and reaps the harvest in these fields of Economic Sociology and Political Economy. As the new academic year begins, I would like to use this opportunity to thank you — each and everyone of (around) 60,000 followers and members of our community from 160 countries. We all together do this work in different plots. So invite your colleagues, students and friends to join our common cause. Spread the word and commit to change. Thank you. — Oleg Komlik
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Mayntz, Renate. 2019. “Changing Perspectives in Political Economy.” MPIfG Discussion Paper 19/6. Max Planck Institute for the Study of Societies, Cologne
See also recent Mayntz’s book: Crisis and Control: Institutional Change in Financial Market Regulation (2012).
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Dear ES/PE community member, see below an abundant list of great academic opportunities: 
23 calls for papers for conferences and workshops (some are partially or fully funded), 16 job openings, 4 post-doc and temporary positions, 2 research grants, 2 training workshops, a PhD fellowship, a short visiting post — in various areas of economic sociology, political economy, and related fields, with September 9 – October 7 deadlines. Share this post with your colleagues and students. Good luck!
Calls for Papers:
PhD Fellowship:
Training workshop:
Short Visiting Position:
> “Transtemporal Capitalism”, a funded 3-month Visiting Fellowships at the Institute for European Global Studies, University of Basel (Switzerland). DL: September 29
Postdoctoral and Temporary Positions:
Research Grants:
Job openings:
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A towering intellectual, pathbreaking thinker, and preeminent sociologist Immanuel Wallerstein passed away. He lived a deep commitment to scholarship, justice and change.
Wallerstein has written dozens of remarkable and outstanding books, and hundreds of influential papers and shrewd commentaries. He was a field scholar, who tirelessly traveled around the world for research and lecturing. Concurrently, he has been dedicated to academic community, and served in a multitude of roles in higher education initiatives, editorial boards, and learned societies, including being elected as President of the International Sociological Association (1994-8). Due to his multifaceted contribution, Professor Wallerstein has earned numerous honorary degree, awards and prestigious fellowships from institutions all over the world.
He was first noticed in the mid-1950’s thanks to his M.A. thesis on McCarthyism as a phenomenon of U.S. political culture. But then he decided to divert his focus away from U.S. and make Africa the venue of his intellectual concerns — which would become the first stage of his lifelong scientific and political journey. In his PhD dissertation he compared the Gold Coast (Ghana) and the Ivory Coast in terms of the role voluntary associations played in the rise of the nationalist movements. Thereafter he has actually became an Africa scholar, analyzing political developments and social issues during the processes of decolonization (see Africa, The Politics of Independence and Unity– 1961, 1967 / 2005).
Looking at his own trajectory of thinking Wallerstein wrote once: “I had the gut feeling in the 1950s that the most important thing that was happening in the twentieth‑century world was the struggle to overcome the control by the Western world of the rest of the world. Today we call this a concern with North‑South relations, or with core‑periphery relations, or with Eurocentrism. It has to be said that, in the 1950s and indeed for a long time thereafter, my assessment of what was most important was not shared by most people, for whom what some called the Cold War between democracy and totalitarianism and others called the struggle between the bourgeoisie and the proletariat (both of these terms being rather narrowly defined) was (and indeed for many, remains) the central defining issue of our time. My quest was therefore not only an upward battle against a wide consensus in the political and scholarly world but against the internalized concepts deriving from this dominant view within my own mind.” (2000: xvii).
In the light of these contemplations, in the 1970s Wallerstein embarked on the second phase of his intellectual journey and moved the locus of his work to a perspective he called “World‑systems Analysis“, based on two epistemic and methodological cornerstones. The first is that the determination of “a unit of analysis” is crucial. The modern social science presumed that the state boundaries constitute the boundaries of “societies.” Wallerstein asserted that this was a very misleading assumption that ignored dependencies and interdependencies in the world. Instead, he argued, the only plausible unit of analysis is a “world‑system”, whole interpolity system rather than single national society or delimited politie that implies closure. Secondly, all analyses have to be simultaneously historic and systemic, if they aspire to grapple seriously with the explanation of the reality and social changes. Neither premise was greeted with enthusiasm, when Wallerstein presented them. Especially, though unsurprisingly, such an analytical break was largely misunderstood in the US academia. In retrospect, they became his scholarly trademark and have had the greatest impact.
Wallerstein’s eye-opening and powerful World‑systems Analysis has transformed the way we understand history, capitalism, colonialism, liberalism, social sciences, and also the present turbulent times. It culminated in his four-volume masterpiece The Modern World-System (1974, 1980, 1989 and 2011) and three-volume collection of essays (The Capitalist World-Economy– 1979, The Politics of World-Economy– 1984, Geopolitics and Geoculture– 1991) in which Wallerstein generated a unique body of original and illuminating knowledge linking nations, political economies, ideologies, markets, classes, firms, households, labor, and identity groups. While at the beginning he had difficulties finding a publisher for the first The Modern World-System and his interdisciplinary approach has been denunciated, Wallerstein has become one of those rare academics whose research has been paradigm shifting and inspiring generations of scientists, political activists and social movements.
“World-systems analysis“, he once stated, “is not a theory but a protest against neglected issues and deceptive epistemologies… It is an intellectual task that is and has to be a political task as well, because — I insist –the search for the true and the search for the good is but a single quest. If we are to move forward to a world that is substantively rational, in Max Weber’s usage of this term, we can neglect neither the intellectual nor the political challenges. And neither can we separate these from each other. We can only struggle uneasily with both challenges simultaneously, and push forward as best we can.” (2000: xxii)
Immanuel Wallerstein’s life and work certainly symbolize an imprinting journey of a genuine and committed Global Public Intellectual.
On July 1st Professor Wallerstein deliberately wrote his ultimate commentary “This is the end; this is the beginning“, concluding it and leaving us with his final reflection:
“The world might go down further by-paths. Or it may not. I have indicated in the past that I thought the crucial struggle was a class struggle, using class in a very broadly defined sense. What those who will be alive in the future can do is to struggle with themselves so this change may be a real one. I still think that and therefore I think there is a 50-50 chance that we’ll make it to transformatory change, but only 50-50.”
Immanuel Wallerstein’s tremendous erudition, breadth of vision and depth of insight have been constantly enlightening our minds; and his legacy will have been accompanying us in (intellectual) struggles towards that transformatory change.
Recommended reading:
— Wallerstein, I. 2000. The Essential Wallerstein. The New Press (!!)
— Wallerstein, I. 2004. World-systems Analysis: An Introduction. Duke University
— Wallerstein, I. 1983/2011. Historical Capitalism with Capitalist Civilization. Verso
— Wallerstein, I. 2006. European Universalism: The Rhetoric of Power. The New Press
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This time, especially worth reading and sharing articles:
> Mark Blyth chooses and discusses the best 5 books on how Political Economy works >> The Passions and the Interests by Albert Hirschman, Social Origins of Dictatorship and Democracy by Barrington Moore, The Great Transformation by Karl Polanyi, The Rhetoric of Reaction by Albert Hirschman, The General Theory of Employment, Interest and Money by John Maynard Keynes
> Is philanthropy repugnant to the idea of democracy? Aaron Horvath & Walter Powell: “’Disruptive philanthropy‘ seeks to shape civic values in the image of funders’ interests… to change public opinion and demand.” — A review of David Callahan’s The Givers: Money, Power, and Philanthropy in a New Gilded Age
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On the brink of 1975, New York Magazine devoted an issue to a look at the year 1949. A canonical playwright Arthur Miller contributed to this issue an essay on “the state of New York mind in that year” through his own reflections. This shrewd quote tackles the big, national and global, events of that period. Well, times and protagonists have changed since then, but you remember what Hegel said about what we learn from history.
“An era can be said to end when its basic illusions are exhausted… A retreat began from the old confidence in reason itself; nothing any longer could be what it seemed… A sort of political surrealism came dancing through the ruins of what had nearly been a beautifully moral and rational world… The whole place was becoming inhuman, not only because an unaccustomed fear was spreading so fast, but more because nobody would admit to being afraid.” (Miller 1974: 30, 32, 36)
Miller, Arthur. 1974. “The Year it Came Apart.” New York Magazine, 30 December 1974 – 6 January 1975, 8 (1): 30-44.
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by Erwin Dekker*
Neoliberalism is often associated with an excessive focus on the market at the expense of both the state and society. A new book Wilhelm Röpke (1899–1966): A Liberal Political Economist and Conservative Social Philosopher, edited by Patricia Commun and Stefan Kolev (Springer, 2018), which is the outcome of a conference in Geneva held to commemorate the fiftieth anniversary of Röpke’s passing, demonstrates that precisely this imbalance was one of the main worries of many ordoliberals, and in particular of Wilhelm Röpke. Röpke who was born in 1899, started out as many economists of his day, as a theorist of the business cycle. But more than some of his liberal friends he was convinced that a crisis as severe as the Great Depression required the state to support the natural correction process, as three chapters in the volume demonstrate, in particular the one by Lachezar Grudev.
Soon after this work on the Great Depression Röpke’s work broadened considerably. While in exile in Istanbul, on the run from the Nazi regime of which he was an early critic, he and his friend Alexander Rüstow started to theorize the far deeper crisis in society and Western culture of the 1930’s. The problem was not economic, it was far deeper, and it touched the organization of the state, the fabric of society and ultimately liberal and humanist culture.
It is here that Röpke’s great relevance lies for today, and to which most of the book is dedicated. It is clear that many of the current discontents of our day are not simply economic, but extend to social issues (immigration and free speech) as well as the state (the future of the EU and the rise of populism on the left and right). The problem is not merely the stability of our financial system or the global economy more broadly, but what in this illuminating book is called “the metastability” of our society and culture. Röpke’s work from the 1940’s onwards is an attempt to provide a unified analysis of the crisis of his times, among other things by figuring out the way in which culture, society, market and state relate to one another. It is a task too big for any one man, including Röpke, as the volume implicitly illustrates. But the strength of his work is precisely to be found in this integrative approach. It seems that none of the nineteen contributors to this book agrees wholeheartedly with his analysis or suggested cures, but it is the questions he raises, and the challenges he presents that make him relevant.
This is best illustrated in the chapter by Nils Goldschmidt and Julian Dörr who make very clear that they disagree at quite fundamental points with Röpke, but they also make clear why this disagreement can be so fruitful. More than other economists Röpke was willing to engage fully with the cultural dimension (and the religious dimension about which this book is curiously silent) of liberalism and markets. He was skeptical that liberal institutions had much of a chance in the absence of bourgeois and Christian culture, or a social order that fostered personal responsibility and autonomy. It was an unpopular argument in a secularizing society looking to free itself from many traditional institutions and norms, and one that does not sit easily with a liberal universalism. After all Christian and bourgeois culture are not global phenomena, and the regionalism favored by Röpke implies significant variation in local customs and freedoms. But it is also a point that is hard to ignore after failed Western attempts to spread democracy and markets both in post-Communist countries and other parts of the world.
This primacy of the social and cultural is also evident in Röpke’s view of the market. What he liked most about the market economy was, surprisingly, not its material effects but instead the bourgeois ethic that was intimately tied up with it, as Alan Kahan shows in his wonderful chapter on Jacob Burckhardt and Röpke. It is the ethic of personal responsibility, of thrift and prudence, of self-discipline supported by the small business family capitalism. This, however, was not the capitalism of the twentieth century with its major hierarchical firms, the technological advancement and its culture of consumerism. This modern form did not allow for the continuum between private and public virtues which Röpke sought. Instead, as his close associate Hayek later would theorize, modern man lives very much in two different worlds: the small world of the family and the open society of the market and politics.
Many of Röpke’s neoliberal friends, when given the choice, gave prominence to the ethics of the open society: tolerance, competition and rationalism. Röpke, on the other hand, sought to protect the ethics of the small closed world. This makes him an interesting critic of his times with a sharp eye for the corrupting influence of mass movements and for the importance of civil society. He had sympathies for both (European) political integration and a high degree of federalism. It makes him an original critic of monopolies: they are bad not only because they harm consumers, but also because they represent an unhealthy degree of concentration in the economy, with harmful social and cultural effects. He favored the small firm, exemplified by the independent farmer and artisan. It was an economic structure which he found in Switzerland, where he lived the latter half of his life, from 1937 to his passing in 1966.
It is not uncommon to treat Röpke and Rüstow, who spent a number of years together in exile in Turkey, as the left-wing of the attendants at the Colloque Walter Lippmann, and the later Mont Pèlerin Society. After all they were far more willing to accept interventions for social purposes, to combat unemployment for example. But this volume demonstrates the extent to which that interpretation relies on a single analytical axis that ranges from radical non-interventionism to centralized control. It is the purely economic lens through which to analyze the state. When analyzing Röpke’s work it is clear how misguided such a single axis is. His social program does not follow primarily from economic arguments, but instead from social ones. Such social reasons could be progressive, i. e. fighting unequal outcomes, but they could equally be conservative, i. e. maintaining existing social structures. Some of the early neoliberals were more progressive and therefore more willing to allow for states to step in to secure individual autonomy, others were more conservative and therefore more willing to allow for states to step in to maintain existing social structures. Röpke certainly belonged to the latter category. For both conservatives and progressives in favor of social policies the idea that some efficiency has to be sacrificed for other goals is a given, not a counter-argument to state intervention. To understand his work therefore, we have to understand what other values were important enough to sacrifice some economic efficiency and possibly economic freedoms.
These are issues that the book grapples with, although occasionally one would have wished they were addressed more directly. Röpke’s ideal image of the economy clearly seeks to protect independent farmers and artisans, because it gives rise to a social structure that is likely to support a liberal culture. Just like in his arguments against monopolies we encountered above, it is the social and cultural that take precedent not the economic. His evaluation of the 1930’s had much in common with that of José Ortega y Gasset who also lamented mass society. And hence Röpke’s resistance to fascism should be sought primarily in that direction, and only after that in the political or economic program of fascism. It was fascism’s embrace of mass society that was its gravest danger for him.
Stefan Kolev in his contribution suggests that Ludwig von Mises was wrong in associating Röpke’s program with the social program of Bismarck. This is true to the extent that Röpke despised the centralist tendencies of the nineteenth-century German statesman, but Röpke’s social vision of order had much in common with that of Bismarck. Both men sought to prevent the advent of socialism, through the revision of the role of the state in society. And, more importantly, both believed that social order required state policies that supported this social order. It opens up the possibility of an extensive role of the state in society, and Röpke never found a clear limit of this role. One might fault him for it, but I think it makes him into a deeper thinker than some of his neoliberal contemporaries. While they were content with outlining an economic program, from which other virtues were supposed to follow, Röpke wondered whether such an economic program would be sufficient for a cultural liberalism.
In the various chapters on Röpke’s relations to other conservative thinkers the fundamental question of the social order which best supports liberalism is brought out. What is the social order that fosters individual responsibility, as well as a strong civil society able to resist centralizing tendencies in the state? If we regard this question as the most fundamental, then we should ask of economic policies to what extent they sustain and foster this particular social order. For Röpke this included not merely issues of culture, but for example also of economic geography. Where the post-war Western world favored an urban home-owning structure, Röpke favored the decentralized economy of independent farmers.
Although the book contains little explicit engagement with contemporary issues, it is not hard to realize that this challenge too is still with us: local, regional and national identities and variations in economic structures have proven incredibly resistant to the homogenizing forces of markets, and often a powerful opponent of them. Current anti-globalist and anti-EU sentiments stem to a considerable extent from the fact that global markets are believed to endanger these identities and structures. This book demonstrates that Röpke’s work is full of attempts to work out these tensions, without making a simple choice in favor of one of them. Both the local identities and markets are “cooperative practices” as Henrique Schneider’s contribution points out. How to best combine these partly rival cooperative practices is a question that breathes life into Röpke’s work, just like this volume breathes life back into his oeuvre. Not because the book manages to resolve the tensions, but because it takes them seriously.
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This review essay was originally published in ORDO – Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft:
Dekker, Erwin. 2019. “The Virtues of the Market: Wilhelm Röpke as a Cultural Economist.” ORDO 69: 496-499.
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* Erwin Dekker is a post-doctoral researcher at the Erasmus School of Economics where he is working on the intellectual biography of Nobel laureate and Dutch economist Jan Tinbergen. He is also assistant professor in cultural economics at the Erasmus School of History, Culture and Communication. He published The Viennese Students of Civilization: The Meaning and Context of Austrian Economics Reconsidered (Cambridge University Press, 2016) and his research focuses on the intersection of art, culture and economics.
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“If a hospital in a crowded city stopped charging [for parking], it would mean more frail, elderly people staggering into the accident and emergency ward on their own as their sons and daughters search for a space, more parents panicking as a child who has hit her head lolls in the back seat, and more labouring women leaning against railings.”
— “A lesson in parkonomics, for Jeremy Corbyn; Abolishing charges in hospitals is a terrible idea.” (The Economist, May 8, 2017)
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by Matthias Thiemann*
How can we understand the growth of a system of credit provisioning outside of the realm of bank regulation since the 1970s which linked non-banks and banks in a convoluted system of market-based banking, securitization and wholesale finance which burst into the public consciousness with the 2007-9 crisis as the shadow banking system? While we can observe this general trend, why do we see differences in this trend fractured according to different national legal and supervisory traditions?
My recent book The Growth of Shadow Banking: A Comparative Institutional Analysis (Cambridge University Press, 2018) aims to provide answers to these questions by exploiting the variance in the exposure of banking systems around the world with respect to shadow banking, using in-depth process tracing and focusing on the US, the country where modern shadow banking originated, Germany and the Netherlands as countries with high exposure, and France as a country with low exposure, despite common EU regulation. The book is based on more than 80 expert interviews with banking regulators, bankers, auditors and accounting scholars in these 4 countries. The book seeks to explain these divergent trends without falling into the traps of a literature that explains these issues by regulatory or cognitive capture. Not because these issues did not play a role, but because these theories employ a view of the agency of regulators which is too simplistic at best.
Instead of treating regulators as either bought or dopes, I seek to place the decisions of banking regulators to not regulate these off-balance sheet activities of banks, on the one hand, into their structural context, both on the national and the transnational level and, on the other hand, to their embeddedness in the regulatory networks that determine the compliance with national banking regulation. Studying the processes of the regulatory dialectics between rule evasion and re-regulation in these countries, I show that the rise of shadow banking and its continued growth were not the outcome of regulators being persistently duped by the “smartest guys in the room” or all bought by the lucrative prospects of future employment. Instead, I link its growth to the particular structural situation in which banking regulators found themselves, where regulatory competition with non-banks domestically and banks from other jurisdictions globally structured their behavior, as they formed a dialectical unity with the regulated, sharing common interests at the same time.
The book first traces the growth of shadow banking to the rising competition between banks and capital market activities since the 1950s in the United States, which threatened the disintermediation of banks and the impossibility of the Fed to prudentially intervene in the behavior of non-bank actors. Being thus constrained, they instead sought to facilitate the capital market activities of their banks from the 1970s onwards. Focusing on the Asset-Backed Commercial Paper market, I show however that this support was not unconditional and that it was subject to persistent reviews over what was and what was not allowed. This critical stance of the Fed, which in turn provoked industry innovations, came to a halt with the shift from Paul Volcker as the chair of the Fed, who had become increasingly critical of these activities, to Alan Greenspan, who was largely hands-off. Evidence drawn from interviews with the Fed officials shows how the Fed itself was internally riven between those who wanted to clamp down on these activities and force them back into the balance sheets of banks and those favouring a hands-off approach. Interestingly, this conflict would come to the fore again with Enron scandal in 2001 and would be resolved through the anticipated introduction of rules envisioned in Basel II in the US.
And here is the second element I point out in the book: the attempt to pry open the global banking market, in full swing since the 1980s leads to a difficult position for national banking regulators. Since the first Basel Accord in 1988, banking regulators as an epistemic community have sought to level the playing field by introducing transnational rules which could and should be implemented nationally. These “global” rules for banking activities were to both permit fair competition and ensure financial stability. And yet, here is the paradox: as global rules establish a level playing field, they put a disadvantage on the national re-regulation of activities that are designed by legal engineers to circumvent these global rules. The normal delays between innovation and re-regulation are expanded on the global level (from Basel I to Basel II it took 15 years to agreement and implementation) and national re-regulation in the meantime is disadvantaged due to the competitive disadvantages that national banks face in a global market for banking activities when their rules are stricter than those of their competitors. I show that both these arguments were advanced by bankers and demonstrate how they structured the agency of banking regulators. Aggravating this dynamic is the fact that global rules are placed upon national accounting rules, which by chance provide competitive advantages to banks from certain countries, as certain shadow banking activities are excluded from the purview of banking regulation by accounting definition. This in turn exerts pressure on other countries to adjust their rules to allow the expansion of these activities domestically.
Europe is the looking glass for these trends. Since 1988, with the first European banking directive, the competitive struggle to open national banking markets has been on the agenda. Due to the impossibility to agree to common banking rules and to install a common banking supervisor, European bureaucrats and politicians adopted the compromise of implementing Basel I on a binding European level and of enforcing it through national regulators. This institutional set up enshrined the contradictions mentioned before and amplified them by binding the fate of national regulators and the fate of national banking champions together. I show this best via the Dutch case, where rule evasion by banks was spotted in 2004, but was not corrected due to “competitiveness concerns” for its national champions, waiting for Basel II to come into force European wide in 2008. In Germany, which possibly is closest to a case of regulatory capture, the banking regulator is subordinated to the ministry of finance, which follows a conscious strategy to encourage shadow banking, seeking to wean Germany off its dependence on bank credit. Lastly, the case of France presents a case of successful pre-crisis regulation of parts of the shadow banking sector. This happened, on the one hand, due to the discretionary powers of the banking regulators to enforce its own interpretation of rules, its strong interactions with the compliance officers in the banking and auditing community which allowed for awareness of rule evasion as well as sanctioning power with respect to these agents. Hence, it was proximity to the regulated, not distance, which allowed the French to regulate shadow banking. At the same time, the structural context of a profitable oligopoly in France, with low foreign banking presence was helpful in weakening banks’ demands for rule relaxation.
After the 2007-8 crisis, several regulations regarding the interaction between banks and crucial capital market actors have been strengthened in Europe, the US as well as globally and some of the shadow banking activities seen pre-crisis have disappeared. And yet, the structural conditions, which facilitated its growth still exist. Regulatory competition and economic patriotism still exist; diversity of accounting systems still exist; competition between banks and non-banks providing credit still exists, which in turn leads banking regulators to go soft on their banks due to an impossibility to impose “prudential market regulation”. In that sense, the book does not expect the phenomenon of growing shadow banking activities to shrink (see for instance the recent developments in the leveraged loan market in the US). And yet, it offers several insights how the regulation of shadow banking activities could function better, by encouraging more, not less contact between regulators and financial institutions and by relying on expertise of compliance officers and other intermediaries to overcome information asymmetries. In this respect, the book opposes simple accounts of capture theory and shows that the current focus on transparency and arms-length relationships cuts regulators off from industry knowledge.
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* Matthias Thiemann is Assistant Professor of European Public Policy at Sciences Po. He holds a PhD in Sociology from Columbia University and has published widely on financial regulation pre- and post-crisis as well as the role of European public development banks in these newly reconfigurated financial markets.
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This time, especially worth reading and sharing articles:
> Betting on other peoples lives: “You don’t need to be an investor yourself to be involved in finance. You are already incorporated in financial calculations others perform“. Daniel Fridman discusses Ivan Ascher’s Portfolio Society, Alex Preda’s Noise: Living and Trading in Electronic Finance, and Annie McClanahan’s Dead Pledges: Debt, Crisis, and Twenty-First-Century Culture
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“There is [a] set of qualities ascribed to the actions and conduct of mankind, distinct from their propriety or impropriety, their decency or ungracefulness, and which are the objects of a distinct species of approbation and disapprobation. These are Merit and Demerit, the qualities of deserving reward, and of deserving punishment.“
These Adam Smith’s words from The Theory Of Moral Sentiments (2010: 30) imply the constitution of a system of worth relations reflected in the rewards and punishments of everyday life. In line with this argument, Smith depicts in this book the character of a virtuous person. Such a person, he suggests, would embody the qualities of prudence and self-command. Prudence moderates the individual’s excesses and self-command moderates his passions and reins in his destructive actions. Morality, according to Smith, is created by nature.
Daniel Maman and Zeev Rosenhek have recently published in The British Journal of Sociology an interesting paper “Responsibility, Planning and Risk Management: Moralizing Everyday Finance through Financial Education“, which derived from their research project “The Making of “Homo Financius”: The Emergence and Development of Financial Literacy in Israel”. This revealing paper revolves around the question on how the state programmes of financial education define the individuals’ basic qualities that purportedly underpin proper financial conduct, formulating a model of the desired financially literate subject in the age of neoliberalism. The abstract reads as follows:
“The individualization, privatization and marketization of risk management represent a fundamental dimension of the financialization of everyday life. As individuals are required to engage with financial products and services as the main way of protecting themselves from risks and uncertainties, their economic welfare and security are construed as depending largely on their own financial decisions. Within this setting, the concept of financial literacy and accompanying practices of financial education have emerged as a prominent institutional field handling the formulation and communication of the attributes and dispositions that arguably constitute the proper financial actor. This article analyzes financial education programmes currently conducted by state agencies in Israel, examining the notions and principles they articulate when defining and explaining proper financial conduct. The study indicates that moral themes and categories occupy a salient place in the formulation of the character traits that constitute the desired literate financial actor. Notions of individual responsibility, planning ahead and rational risk management are presented not merely as instrumental resources, but as moral imperatives. Through these notions, the programmes moralize a broad array of everyday practices of personal finance such as saving, investing, borrowing and budget management, thereby connecting the sphere of financial matters to the domain of moral virtues. Offering a representation of particular modes of financial conduct as constitutive components of morally virtuous personhood, these practices imbue the financial field as a whole, especially its current generalized logic of individualized and marketized risk management, with moral meanings, hence contributing to the normalization and depoliticization of the financialization of everyday life.”
Now, let us return to Adam Smith. The depoliticizing impetus features most of his economic writings, but it contrasts with other parts The Theory Of Moral Sentiments. Not only prudence and self-command, as I mentioned above, he considers as virtues in this book, but also justice and beneficence. Justice limits the harm we do to others and it is essential for the continuation of social life; beneficence improves social life by prompting us to promote the happiness of others. Well, where is THIS Adam Smith when we need him?…
In their paper Maman and Rosenhek made an insightful contribution in shedding light on how the state agencies, institutional actors and mechanisms concoct the neoliberal morality and conduct the moralization of the economic field within particular macro-institutional context. This important research direction should be amplified more in our field. One thing is certain: in (neoliberal) capitalism moral sentiments play a key role in the extraction of economic value.
Maman, Daniel and Zeev Rosenhek. 2019. “Responsibility, Planning and Risk Management: Moralizing Everyday Finance through Financial Education.” The British Journal of Sociology https://doi.org/10.1111/1468-4446.12698
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Dear ES/PE community member, see below a fresh list of great academic opportunities: 
18 calls for papers for conferences and workshops (some are partially or fully funded), 8 job openings, 5 post-doc / visiting positions, 3 doctoral fellowships, 2 research grants, a summer school — in various areas of economic sociology, political economy, and related fields, with August 9 – September 9 deadlines. Share this post with your colleagues and students. Good luck!
Calls for Papers:
> CfP: “Complementary currencies and societal challenges: Crossing academic and practitioners knowledge/perspectives” international conference, Brussels (Belgium), 21-22 November, 2019. DL: September 1
PhD Fellowships:
Postdoctoral and Temporal Positions:
Research Grants:
Summer School:
Job openings:
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“Contrary to the fashion in most prefaces, I will not add that “all mistakes and shortcomings are entirely my responsibility.” That is sheer bourgeois subjectivism. Responsibility in matters of these sorts is always collective, especially with regard to the remedying of shortcomings.” (Rodney 1972: 2)
From: How Europe Underdeveloped Africa (1972), a groundbreaking and controversial book by Walter Rodney, a influential historian and public intellectual who was assassinated in 1980.
See also here, here, here and here the previous scholars’ witty “Acknowledgements” 🙂
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by Yair Kaldor*
In economic textbooks, the concept of “value” is regarded as nothing more than the prevailing market price. This definition might seem self-evident, but it stands in sharp contrast to the classical theories of Adam Smith and David Ricardo, who used the notion of “value” to probe beneath the surface of the market and discover objective factors that regulate economic exchanges. It was only in the late nineteenth century, when the idea of “marginal utility” was first introduced into the field, that “value” came to be viewed as a subjective measure that is reflected in prices. This transformation also meant a change in the category of “market”, which came to be understood as an abstract “resource allocation” mechanism, as opposed to a physical marketplace or a specific geographic area in classical economics. This sea-change in economic thought, often labeled as “the marginalist revolution”, gave rise to what later became “neoclassical economics”, a term coined at the turn of the century by Thorstein Veblen.
Besides its importance for the history of economic thought, the marginalist revolution also includes an interesting puzzle in the form of a “multiple discovery”. Its beginning is usually dated to the early 1870s, with the close publications of three economists working in remote locations – William Stanley Jevons (England), Carl Menger (Austria), and Leon Walras (France). Although they knew nothing of each other’s work, all three argued that the utility (satisfaction, benefit) someone derives from any good diminishes as its quantity increases. The utility derived from the last unit of the good, later labeled “marginal utility”, determines its price, which is a measure of its value.
This was a clear break from classical economists, who argued that value is determined by the amount of labor used in production, or the total cost of production (including labor, land, and capital). Jevons, Menger and Walras used marginal utility to turn the classical theory of value on its head. Instead of labor, land and capital determining value, they insisted that it is the value of a good – now equated with its price – that determines the value of labor, land and capital.
Here also lies a second puzzle: despite their criticism of classical political economy and their different analytical framework, Jevons, Menger, and Walras reached the very same practical conclusions. Like the classical economists who preceded them, Jevons, Menger, and Walras insisted that the principle of marginal utility proves that it is impossible for workers to increase their wages through unionization and strikes, and that free trade is the best way to ensure economic prosperity for all.
How can we explain the “multiple discovery” of marginal utility? Why did economists in the late nineteenth century understood the category of “value” as something completely different from the meaning it had earlier in the century?
In a recently published Socio-Economic Review article “The cultural foundations of economic categories: finance and class in the marginalist revolution“, I revisit to the marginalist revolution in search of answers to these questions. For this purpose, the article incorporates a cultural emphasis on meaning-making processes within a macro-level analysis of the historical conditions in which these processes take place. The empirical section traces the roots of the marginalist revolution to the rise of finance as a dominant economic sector, and the escalating class struggles across Europe during the period. This analysis not only shows the social foundation from which these economic ideas rose, but also explains the different outcomes of the marginal revolution in England, France, Austria, and Germany.
Economic categories, of course, are not simply theoretical tools constructed by economists. They are also part of the everyday concepts through which people perceive and make sense of social reality. It should not surprise us, therefore, that when this reality changes, the categories used to understand it are likely to change as well. More specifically, the article identifies three ways in which macro-level developments shape and transform the basic categories of economics: (a) by creating new problems that might require new tools of analysis; (b) by providing the necessary conditions that are presupposed in these categories (c) by making make certain economic sectors more visible and providing new models for economic theorizing.
However, the article also makes clear that the way such developments are viewed and understood “on-the-ground” depends on the specific social position of the people who seek to make sense of them. In this sense, economic categories reflect a specific social standpoint, a term used by critical feminist theorists to remind us that the way we represent social reality is always from a distinct location within this social reality.
The marginalist revolution and the birth of neoclassical economics is an important research topic in its own right. However, the contributions of the article go beyond the historiography of economic thought. A long-standing scholarship in political science and sociology has shown the power of economic ideas to shape public policies and promote institutional change. A more recent literature examines economic categories through cultural lenses to show how they contribute to a wide-range of social and economic processes. However, there is a lack of research on the historical development of such categories. The present article provides a theoretical framework to examine these questions, in which economic categories are at the same time an outcome as well as a contributing factor to processes of structural changes.
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* Yair Kaldor is a PhD candidate in the sociology department at the University of Wisconsin-Madison, and a member of Koah LaOvdim (“Power to the Workers”), an Israeli labor union. His fields of interest include class analysis, cultural and economic sociology, and the sociology of knowledge. His current research investigates the impact of financialization on income inequality, focusing on the use of corporate debt as a strategic tool in the context of class struggles.
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Northwestern University scholar Monica Prasad is the winner of the 2019 Zelizer Book Award given by the American Sociological Association’s Economic Sociology section for an outstanding book in the field. Prasad will receive the Award for her superb book Starving the Beast: Ronald Reagan and the Tax Cut Revolution (Russell Sage, 2018) which detects the origins of the GOP’s relentless focus on tax cuts. Congratulations!
Since the early 1980s, Republicans have consistently championed tax cuts for individuals and businesses, regardless of whether the economy is booming or shrinking or whether the budget is in surplus or deficit. In this original book Prasad traces the history of the famous 1981 “supply side” tax cut, and argues that the main impetus behind it was not business pressure, racial animus, or a belief that tax cuts would pay for themselves.
Rather, the tax cut emerged because in the United States, unlike in the rest of the advanced industrial world, progressive policies are not embedded within a larger political economy that is favorable to business. Since the end of World War II, many European nations have combined strong social protections with policies to stimulate economic growth such as lower taxes on capital and less regulation on businesses than in the US. Meanwhile, the US emerged from World War II with high taxes on capital and some of the strongest regulations on business in the industrial world. This adversarial political economy, argues Prasad, could not survive the economic crisis of the 1970s. She suggests that taking inspiration from the European progressive policies embedded in market-promoting political economy could serve to build an American economy that works better for the many not the few.
This will be Monica’s second Zelizer award — she also won it in 2013 for her great book The Land of Too Much. Cheers!!
The past Zelizer Best Book Award recipients:
2018: Yuen Yuen Ang, How China Escaped the Poverty Trap. Cornell University Press. 2016
2008: Donald MacKenzie, An Engine, Not a Camera: How Financial Models Shape Markets. MIT Press. 2006
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