The Growth of Shadow Banking and State-Finance Relations

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.
The Growth of Shadow Banking A Comparative Institutional AnalysisInstead 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.
* 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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B&B: Sins of economics // Appropriating the planet // Living in precarity // You are financier // Historians and economists // Labor and serendipity // Neoliberalism uses imperialism

This time, especially worth reading and sharing articles:

> The Seven Sins of Economics: 1) Alice in the wonderland of assumptions, 2) Abuse of modelling, 3) Intellectual capture, 4) The science obsession, 5) The textbook and Econ 101, 6) Ignoring society, 7) Ignoring history — by Pramit Bhattacharya

> “Capitalism works, not because it does terrible things to nature (it does), but because it has been successful at mobilising and appropriating manifold natures for free or low cost.” – by Jason W. Moore 

> Living in precarity and precariousness. Neoliberalism portrays them as a result of individual failures, masking the power relations and structural violence embedded in the political economies. Five great short pieces on this topic published in Cultural Anthropology

> 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

> Historians and economists have to overcome their reciprocal ignorance in order to encourage each discipline to question its own methods, habits, and aims, with a view to avoiding any blind ‘colonising’ of one discipline by the other. Guillaume Calafat and Éric Monnet hope for new links between the two disciplines

> Digital Taylorism: Labour between passion and serendipity: “There is a rather telling sign of capital’s lack of motivational pull with regard to labour that over the last two decades has developed into a management obsession: the theory and practice of ‘Employee Engagement’.” — by Sebastian Olma

> The ongoing strikes in the countries of the Global South are a result of the way in which neoliberalism uses the pre-existing channels of imperialism

dead pledges Debt, Crisis, and Twenty-First-Century Culture

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The Making of Homo Financius and Neoliberal Morality

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 SentimentsNot 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

Financial literacy

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Great academic opportunities: 18 calls for papers, 8 jobs, 5 postdocs, 3 PhD fellowships, 2 grants, a summer school

Dear ES/PE community member, see below a fresh list of great academic opportunities: call for papers18 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 deadlinesShare this post with your colleagues and students. Good luck!

Calls for Papers:

> CfP: “Challenging the Work Society“, an interdisciplinary conference on the future of work, Birkbeck, University of London (UK), 27-28 September 2019. The keynoter: Kathi Weeks. No fee. DL: August 9

> The 13th Southern California Comparative Political Institutions conference, Division of Politics and Economics at Claremont Graduate University (California. USA), September 13, 2019. No registration fee. DL: August 10 

> CfP: “Financialization and Development in the Global South” conference, Centro Cultural de la Cooperación, Buenos Aires (Argentina), 26-28 November 2019. The keynoters: Raquel Rolnik, Cédric Durand, Daniela Gabor, Martín Abeles. No fee for participants from the Global South. DL: August 16

> CfP: “The Political Economy of Contested Territories in Latin America” workshop, the Department of Politics at the University of York (England, UK), 26-27 September 2019. No fees; meals will be provided. DL: August 16

> CfP: “1989’s Loose Ends“, the UCL School of Slavonic and East European Studies conference, University College London, 7-8 November, 2019. Orginizer are looking for works on neoliberalism and globalisation after 1989, across Asia, Africa and Latin America. No fee. There are several travel bursaries available. DL: August 20.

> CfP: “Democratising Infrastructures: Exploring the Relation between Materiality and Democracy” workshop, Durham University (England, UK), 23-24 January, 2020. Travel costs for UK / overseas participants will be reimburse (up to £100/£250); food and accommodation will be covered. DL: August 30

> CfP: “Properties in Transformation: Broadening the Research Agenda“, the 2nd International Symposium, Brazilian Center for Analysis and Planning (Sao Paolo, Brazil), 16-17 December 2019. No fee. DL: August 30

> CfP: The 2nd International Conference on Heterodox Economics: 100th Birthday of Hyman Minsky and Robert Heilbroner, Universidad Nacional de Colombia (Bogota, Colombia), 13-15 November 2019. The keynoters: Jan Kregel and Yeva Nersisyan. DL: August 30

> CfP:  “No Middle Ground: From Flickers of Hope to Flames of Resistance“, the 8th annual Historical Materialism conference, Melbourne (Australia), 6-7 December, 2019. DL: August 31

> CfP: “Productive Transformation, Regional Asymmetries, and Social Exclusion in Ibero-America“, the 4th Ibero-American meeting on Socioeconomics – the SASE Regional Conference, Universidad Nacional, Costa Rica 20-22 November 2019. DL: August 31

> CfP: “Complementary currencies and societal challenges: Crossing academic and practitioners knowledge/perspectives” international conference, Brussels (Belgium), 21-22 November, 2019. DL: September 1

> CfP: “DATUM: what are the root causes of the social problems that animate the ways you work, learn, build, or resist?“, The inaugural Race, Space, Place unConference, Virginia Commonwealth University (Richmond, Virginia, USA), November 15-17, 2019. DL: September 1 

> CfP: “Social Mobility” workshop by The Banque de France and the Centre for Economic Policy Research, the Banque de France (Paris), 14-15 November, 2019. The keynoters: Wojciech Kopczuk and Jean-Marc Robin. Travel and accommodation expenses will be covered. DL: September 1

>  CfP: The 4th Conference on the “Political Economy of Democracy and Dictatorship”, University of Münster (Germany), February 27-29, 2020. The keynoters: Roger Congleton and Marta Reynal-Querol. Meals will be provided. DL: September 2

> CfP: “Transforming Capitalism through Real Utopias. Featuring Erik Olin Wright’s legacy” international conference, University of Coimbra (Portugal), 23-24 January 2020. The keynoters: Fred Block, Gay Seidman, Boaventura de Sousa Santos. DL: September 2

> CfP: The 2020 Economic History Society Annual Conference, St Catherine’s College, University of Oxford (UK), 17-19 April, 2020. DL: September 2 

> CfP: “Policy, Politics and Pluralism: Pluralistic economics for the post-Trump era”, the International Confederation of Associations for Pluralism in Economics Conference, University of San Diego (San Diego, California, USA), January 5-6, 2020. Scholarships are available for graduate students. DL: September 4

> CfP: “EU Law in the Era of the Fourth Industrial Revolution”, the first YEL Annual EU Law and Policy Conference, Paris, January 2020. DL: September 8

PhD Fellowships:

> PhD scholarship within the field of global economic governance at the Department of Organization, Copenhagen Business School (Denmark). DL: August 15 

> PhD Scholarships at the Department of International Economics, Government and Business, Copenhagen Business School (Denmark). DL: August 15

> PhD scholarship in Industrial Foundation Governance at the Center for Corporate Governance, Copenhagen Business (Denmark). DL: September 1

Postdoctoral and Temporal Positions: 

> Postdoctoral Scholar in Poverty and Social Policy, the Center on Poverty and Social Policy at the Columbia University School of Social Work (2-year position). DL: August 15

> Visiting Professor of Social Stratification and Quantitative Methods, Oct 2019 – Feb 2021, the University of Vienna (Austria). DL: August 15

> Postdoc Position as a part of “An Intellectual History of Global Inequality, 1960-2015” project at Aarhus University (Denmark). The successful applicant will run the sub-project on India and study the intellectual history of international and global economic inequality in India. (2-year position). DL: August 16 

> Post-doc position for “Who is leading the change? Innovation and influence in the epistemic community for macroprudential regulation between central banks, IMF and academia” (one-year), Center for European Studies and Comparative Politics, Sciences Po (Paris). DL: August 28

> Research Fellow  to work on a 2-year project ‘Central banking for Sustainability’, Institute for Innovation and Public Purpose, University College London. DL: August 29

Research Grants: 

> Facebook invites research proposal on how (and whether) the digital economy and online platforms create opportunity and encourage social mobility, as well as identify and address inequalities in opportunity in the United States. DL: August 19

> The Hogeg Blockchain Research Institute invites researchers from all academic disciplines to submit research proposals on Blockchain technology. DL: August 30

Summer School:

> CfA: The First Nagwain School on Marxism, Society for Technology and Development, Nagwain, (Himachal Pradesh, India), September 20 to October 4, 2019. No participation fee; food and accommodation will be provided. DLAugust 15

Job openings:

> Research Fellow in Labour Market and Workforce Data Analysis, Centre for Employment Relations, Leeds University (UK). Applicants’ background could be in employment relations, sociology of work and employment, human resource management, labour economics. DL: August 9 

> Lecturer/Senior Lecturer specializing in changing nature of employment/ organisational studies/ entrepreneurship at the Faculty of Business and Law, The Open University (Milton Keynes, UK). DL: August 29

> Full-time permanent faculty members at various levels to establish  a research centre on Digital Futures at Work, University of Sussex (UK). Applicants from Science and Technology Studies, Organisation Studies, Sociology or Economics, and Human Resources Management are encouraged to apply. DL: August 30

> Associate Professor in Economic History at the Department of Economic History and International Relations, Stockholm University (Sweden). DL: August 30

> Assistant Professor in Global Political Economy, the Department of Social Science and Business, Roskilde University (Denmark). The position is for 3 years. DL: September 1

> Associate Senior Lecturer/Assistant Professor in Political Science with specialization Development studies, Stockholm University (Sweden). DL: September 2 

> Tenure-track Assistant Professor in Business History, the Department of Management, Politics and Philosophy, Copenhagen Business School (Denmark). DL: September 3

> Assistant Professor (tenure track) of Sociology, California State University, Northridge (Los Angeles, California, USA).  Priority will be given to those who expertise in one or more of these areas: social welfare, inequality and diversity, social movements and political sociology. DL: September 9

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Probably the best “Acknowledgments” ever (5)

How Europe underdeveloped Africa

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
 hereherehere and here the previous scholars’ witty “Acknowledgements” 🙂

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Finance, Class, and the Birth of Neoclassical Economics: The Marginalist Revolution Revisited

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 utilitywas 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 amultiple 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.
jevons menger walrasThis 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.
* 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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The 2019 Zelizer Award for Best Book in Economic Sociology goes to ‘Starving the Beast’ by Monica Prasad

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!
Prasad starving the beastSince 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

2017: Marc Steinberg, England’s Great Transformation: Law, Labor, and the Industrial Revolution. University of Chicago Press. 2016

2016Gabriel Abend, The Moral Background: An Inquiry into the History of Business Ethics. Princeton University Press. 2014

2016: Debbie Becher, Private Property and Public Power for Eminent Domain in Philadelphia. Oxford University Press. 2014

2015: Martin Reuf, Between Slavery and Capitalism: The Legacy of Emancipation in the American South. Princeton University Press. 2014

2014: Ofer Sharone, Flawed System, Flawed Self: Job Searching and Unemployment Experiences. University of Chicago Press. 2013

2013: Lyn Spillman, Solidarity in Strategy: Making Business Meaningful in American Trade Associations. University of Chicago Press. 2012

2013: Monica Prasad, The Land of Too Much: American Abundance and the Paradox of Poverty. Harvard University Press. 2012

2012: Greta R. Krippner, Capitalizing on Crisis: The Political Origins of the Rise of Finance. Harvard University Press. 2012

2010: Terence G. Halliday and Bruce G. Carruthers, Bankrupt: Global Lawmaking and Systemic Financial Crisis. Stanford University Press. 2009

2008: Donald MacKenzie, An Engine, Not a Camera: How Financial Models Shape Markets. MIT Press. 2006

2006: Olav Velthuis, Talking Prizes: Symbolic Meaning of Prices on the Market for Contemporary Art. Princeton University Press. 2005

2006: James R. Lincoln and Michael L. Gerlach, Japan’s Network Economy: Structure, Presistence and Change. Cambridge University Press. 2004

2004: Harrison White, Markets from Networks Networks: Socioeconomic Models of Production. Princeton University Press. 2002

2004: Sarah Babb, Managing Mexico: Economists from Nationalism to Neoliberalism. Princeton University Press. 2001

2003: Neil Fligstein, The Architecture of Markets: An Economic Sociology of Twenty-First-Century Capitalist Societies. Princeton University Press. 2002

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Syntactic Structures: Noam Chomsky’s First Power Point Presentation

Alternative headlines for this historic event:
Understanding Power [Point] or Power [Point] Systems or Chomsky on Mis-Education
noam chomsky power

— courtesy of Open Culture 

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Neither Market Nor State?

The Science of Passionate Interests“And what if the choice had never been between Market and State organizations, between liberals and socialists, but instead between those who believe in the miracles of a pre-established harmony and those who refuse to ‘believe in miracles’? Could we not re-read, retrospectively, everything that has happened to us in the past two hundred years and that we have far too hastily summarized under the name of ‘capitalism’?” (Latour and Lépinay 2009: 5)

Latour, Bruno and Vincent Antonin Lépinay. 2009. The Science of Passionate Interests: An Introduction to Gabriel Tarde’s Economic Anthropology. Chicago: Prickly Paradigm Press.

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B&B: Neoliberalism as creative destruction // Surveillance business // History of capitalism and counter-genealogy of race // Workplace is the hub of political power // GDP is irrelevant

This time, especially worth reading  and sharing articles:

> Neoliberal capitalism is a “form of creative destruction. For everyone whose life was being regenerated or rejuvenated… there was someone, as well, whose life was being destroyed”, asserts Akash Kapur in his book India Becoming, reviewed by Manu Goswami (New York University)

> Facebook and Google are the surveillance businesses; You are its product; and their customers are the advertisers. John Lanchester insightfully reflects on the power and philosophies of these new colonisers, through reading The Attention Merchants by Tim Wu, Chaos Monkeys by Antonio García Martínez, and Move Fast and Break Things by Jonathan Taplin

> “The only place where Negroes did not revolt is in the pages of capitalist historians”, wrote in 1937 C.L.R. James, a writer and activist considered today to be one of the principal forerunners of a theory of the relations between race and class. Matthieu Renault discusses his contribution in the much-needed light of a counter-genealogy of race

> “The hub of political power is not academia; it is not the internet; it is not the media, or comedy,.. or friendship, or art, or theory. It’s the Workplace.” — by Amber A’Lee Frost 

> Imagine if public health research were funded by the tobacco industry. Now think about that: Fossil Fuel (oil, gas, coal) companies have colonized nearly every nook and cranny of energy and climate policy research — by Benjamin Franta and Geoffrey Supran

> Measured GDP and productivity growth become irrelevant to improvement in human and social welfare — by Adair Turner

> Congratulations to Modern Corporation Project, led by Jeroen Veldman & Hugh Willmott from Cass Business School , and  Purpose of the Corporation Project, led by a public interest law firm Frank Bold, on winning the 2019 Academy of Management International Impactful Collaboration Award. This partnership promotes in the various fields the essential linkage between corporate governance theory, practice and institutions

Move Fast and Break Chaos Monkeys The Attention Merchants Akash Kapur India Becoming

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Are Entrepreneurs Dangerous to the Market Economy more than Marxists?

Yes — asserts regarding the odd question in the title one of the founders of Ordoliberalism Professor Franz Böhm:

The entrepreneurs […] in contrast with their emphatic declarations in favour of the market economy, are more inclined, at least, to contribute to its general abuse and destruction. In fact, the most radical and comprehensive socialist attacks on the market economy, such as that of Marx, do not undermine the market’s authority as seriously as the unscrupulous and ignorant cynicism from inside the camp of those who are supposed to be supporting the market. (Böhm 1979: 446)

Franz BöhmBöhm (1895–1977) – a German noted economist, lawyer, and politician – was one of the protagonist of the Ordoliberal doctrine that shaped the post-World War II German economic policies. Ordoliberalism manifests a firm commitment to competitive and robust markets operating within a strong social, political, and moral framework, backed by state agencies  via a concrete set of rules directing socio-economic activity. While some perceive Ordoliberalism as a German (camouflaged) variant of Neoliberalism, other see it as a practical path to moderate welfare state. (In this respect, Foucault’s bright insight springs to mind). The editor of Journal of Institutional and Theoretical Economics that published in 1978 the article from which the above quote was taken, described Böhm  “As one of the most prominent representatives of neoliberalism [that] advocated ardently the establishment of an effective legal framework for the newly established social market economy of this country.” The article itself “Left-Wing and Right-Wing Approaches to the Market Economy” (open-access below) depicts conceptual debate in post-World War II Germany regarding economic models and reflects aspects of Ordoliberal ideas.

Böhm, Franz. 1979. “Left-Wing and Right-Wing Approaches to the Market Economy.Zeitschrift Für Die Gesamte Staatswissenschaft / Journal of Institutional and Theoretical Economics 135(3): 442-448.
More on Böhm and Ordoliberalism: Grosseketller, Heinz. 2005. “Franz Böhm (1895 – 1977).” Pp. 489-97 in The Elgar Companion to Law and Economics, edited by Jürgen Backhaus. Cheltenham: Elgar. 

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Great academic opportunities: 18 calls for papers, 4 postdocs, 4 jobs, 3 doctoral fellowships, a research grant

After a several-month intermission, I am glad to let you know that the ES/PE community blog is resuming its activity. Your wondering inquiries and kind emails I’ve been receiving reminded me of Jacques Lacan’s argument that anticipation creates a symbolic social link which binds humans together in the anticipatory relationship. This anticipatory relationship between a writer and reader, interpreted Mikhail Bakhtin, is what enables a greater understanding of their intellectual encounter.
Thank you.
Let’s get back to business! More work ahead…
Oleg 🙂
Dear ES/PE community member, see below a abundant list of great call for papersacademic opportunities: 18 calls for papers for conferences and workshops (some are partially or fully funded), 4 post-doc positions, 4 job openings, 3 doctoral fellowships and a research grant — in various areas of economic sociology, political economy, and related fields, with July 7 – August 10 deadlinesShare this post with your colleagues and students. Good luck!

Calls for Papers:

> Call for essays on “The Corporation” for The Transnational Institute’s 2020 State of Power Report. TNI has a small number of grants of 250-500 euros – to be prioritized for activists with low-incomes and those working in the Global South. DL: July 10

> CfP: “Constitutions of Value” workshop as part of the research project “Democratization of Money and Credit”, University of Würzburg (Germany), 12-13 December 2019. DL: July 12

> CfP: “Automating Communication in the Networked Society​: Contexts, Consequences, Critique” conference, Berlin (Germany), November 6-8, 2019. The keynoter: Shoshana Zuboff. DL: July 15

> CfP: “Navigating Complexity: Understanding Interactions Between International Institutions”, The 6th Barcelona Workshop on Global Governance, Barcelona (Spain), January 23-24, 2020. The confirmed speakers: Mette Eilstrup-Sangiovanni, Jessica Green, Randall Henning, Liesbet Hooghe, Kal Raustiala, and Javier Solana. The organizers expect to be able to cover accommodation expenses, and to contribute to transport costs. DL: July 15

> CfP: “Digital / Communicative Socialism“, a Special Issue of Communication, Capitalism & Critique (Triple C). DL: July 15  

> CfP: “Promoting History of Economic Thought in Latin America: richness, limits and challenges”, the Latin American Society for the History of Economics conference, Federal University of Paraná (Curitiba, Brazil), November 20-22, 2019. The keynoters: Jeremy Adelman, Mauro Boianovsky and Marianne Johnson. DL: July 15

> CfP: Graduate Colloquium on Digital Labour by The International Network on Digital Labour, University of Toronto (Canada), October 3, 2019.  No registration fee. DL: July 19

> CfP: “Visions of Labour and Class in Ireland and Europe” conference by the Irish Labour History Society and the Irish Congress of Trade Unions, Liberty Hall, Dublin, (Ireland), 24-27 September 2020. There will be a number of travel and accommodation bursaries available. DL: July 21

CfP: “Wage, labour market and globalisation: from Cold War to European Union – focus on Central and Eastern Europe“, the Wage Analysis in a Globalising Environment network conference, West University of Timisoara (Romania), 10 – 11 October 2019. There are no registration fees. DL: July 25

> Call foe essays on “Strike! Labor Conflict in Higher Education”, The Activist History Review special issue. DL: July 26

> CfP: “Institutions and Survival: Social order for the 21st Century” conference by Forum for Institutional Thought and World Interdisciplinary Network for Institutional Research (WINIR), Pedagogical University of Cracow (Krakow, Poland), 20-21st February, 2020. The keynoters: Laszlo Csaba, Geoffrey Hodgson, Claus Thomasberger. DL: July 30

> CfP: “The Challenge of Market Socialism – Challenges to Market Socialism” workshop, Goethe University Frankfurt (Germany), February 20-21, 2020. The confirmed speakers: Tamara Jugov, Hannes Kuch, Helen McCabe, Christian Neuhäuser, Martin O’Neill, Nicholas Vrousalis, Lea Ypi. Travel costs will be covered up to 450€. DL: July 31

> CfP: “Institutions and Change“, the 5th The Role of State in Varieties of Capitalism conference, Central European University (Budapest, Hungary), 28-29 November 2019. DL: July 31

> CfP: “150 Years Rosa Luxemburg: New Perspectives on Her Life, Work, and Impact” conference by the Rosa-Luxemburg-Stiftung (Berlin, Germany), 5-6 March 2020. Limited funds for travel are available for special cases. DL: July 31

> CfP: “Research on global financial stability: the use of BIS international banking and financial statistics” workshop by the Bank for International Settlements, Basel (Switzerland), 12 December 2019. Travel and accommodation expenses for academic speakers will be reimbursed. DL: July 31

> CfF: “Intersections of Finance and Society“, the 4th annual Finance and Society Network conference, City, University of London (UK), 12-13 December, 2019. The keynoters: Katharina Pistor and Peter Osborne. DL: August 1

> CfP: “Power – Conflicts and Contradictions” conference by the Danish Society for Marxist Studies, Danish School of Education (Copenhagen), 4–5 October 2019. DL: August 1

> CfP: “Consuming Gender: Intersections in Identity and Consumption in the Global South” symposium, Wits University (Johannesburg, South Africa), 30 October 2019. DL: August 3

Postdoctoral Positions: 

> LSE Fellow (a fixed term, 12 months) , Department of Sociology, London School of Economics. The successful candidate should have a very good knowledge of one or more of the following areas: economic sociology, cultural economy, sociology of risk and risk governance, sociology of regulation. DL:  July 7

> Post-Doctoral Research Associate to work (30 months, full time) on a project  ‘Between protection and exclusion: Separated child migrants’ care relationships and caring practices” at The Open University (Milton Keynes, UK). An applicant should be with a PhD in political economy of care or cultural political economy, feminist political economy, economic inequality or economic sociology. DL: July 10

> Research associate (Post-doctoral) position in Sociology (Fixed-term contract 24 months), the Institute for Research on Socio-Economic Inequality, University of Luxembourg. DL: July 28

Authoritarian Capitalism, Reactionary Populism & Counter-Strategies: Global Perspectives from the South” — The Rosa-Luxemburg-Stiftung will fund up to 10 post-doc-scholarships worldwide in the Global South to realize individual research projects at institutions in the South and to participate in our International Research Group on Authoritarianism & Counter-Strategies. DL: August 4

Doctoral Fellowships:

PhD Studentship in Understanding and Reducing Global Health Inequalities, Newcastle University (UK). DL: July 10

> PhD scholarship in Sustainable Finance in Central Banking, Department of Organization at Copenhagen Business School (Denmark).  Applications within the fields of political economy, organisational sociology, and public administration are encouraged. DL: August 1

>  PhD Scholarship in Social Justice at the School of Social Policy, University College Dublin (Ireland). DL: August 10

Research Grants: 

>  The William T. Grant Foundation’s Research Grants on Reducing Inequality in youth outcomes, especially on the basis of race, ethnicity, economic standing, language minority status, or immigrant origins. DL: August 1

Job Openings:

Professor/Associate Professor/Senior Lecturer in political economy / industrial policy / innovation / industrial organisation, 5 year fixed-term contract at the University of Johannesburg (South Africa). DL: July 26

> 3 Tenure-Track or Tenured (open rank) positions in Social Sciences, Yale-NUS College, Singapore. Applicants require a PhD in disciplines such as politics, economics, sociology, development studies to teach in Philosophy, Politics, and Economics and / or Global Affairs majors. DL: August 1

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German New Economic Sociology and the Max Planck Institute for the Study of Societies

The new much-anticipated discussion paper by John Wilkinson (Federal Rural University of Rio de Janeiro) provides a thoughtful and comprehensive survey of German new German New Economic Sociology and the Max Planck Institute for the Study of Societieseconomic sociology with a special focus on the contributions of the Max Planck Institute for the Study of Societies in Cologne (MPIfG). This Institute undoubtedly fulfills a leading scholarly role in the field of economic sociology and political economy, impacting researchers (including me) throughout the world. Therefore its institutional history, embedded in the broad context of intellectual developments in German new economic sociology, is a very informative and interesting read. Here is the paper’s abstract and its full (open-access) text is below:

“New economic sociology (NES) in Germany has many similarities with economic sociology in the United States in its conscious efforts to institutionalize its presence within the broader sociology community, its promotion of a canon via handbooks, and its focus on the sociology of markets. At the same time, it differs in its stronger connections to the German classics, the greater vitality of a macrosociological tradition in Germany, the prior existence of a “bridging” generation of economic sociologists, and its later consolidation in a period of neo-liberal globalization, all of which have given NES in the German-speaking world a distinctive character. In addition, it has been influenced by successive waves of French economic sociology – Bourdieu, convention, and actor-network theory – and its bilingual academic tradition has ensured its integration into English-speaking NES. In its contribution to the sociology of markets, the fact that NES emerged later in Germany than in the US led to a greater concern with quality markets rather than commodity markets, and a concomitantly greater attention to issues of value and price. These latter themes, in their turn, establish a continuity with German economic sociology’s enduring concern with understanding the role of money. Not surprisingly, therefore, German NES is now making key contributions to discussions on the sociology of money and is increasingly situating its analysis within the broader dynamic of capitalism and current processes of financialization.”

Wilkinson, John. 2019. “An Overview of German New Economic Sociology and the Contribution of the Max Planck Institute for the Study of Societies.” MPIfG Discussion Paper 19/3.

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Erik Olin Wright has contributed to making utopias real

Gramsci once described the struggle for social justice as requiring ‘pessimism of the intellect, optimism of the will.’ I believe in the world today we need an optimism of the intellect as well: an optimism grounded in our understanding of the real potentials for emancipatory alternatives which can inform our practical strategies for social transformation.” (Erik Olin Wright)

Erik Olin WrightErik Olin Wright, an eminent sociologist and one of the great public intellectuals of our time, has died at 71 from myeloid leukemia. Wright, a brilliant scholar and Marxist thinker, has not just taught us so much about class, exploitation, and power, but he has also envisioned way to democratic and egalitarian alternatives to the capitalist system. Erik Olin Wright was passionately and equally earnest about intellectual rigour and political relevance.
In a deeply moving and sincere blog post “Clarifying my final weeks”, he wrote:

Sometime in my late teens to early twenties, I decided… not to live a life of self-indulgence but to create meaning for myself and others by trying to make the world a better place. The particular way in which I did this of course is historically bounded by the intellectual currents and turmoil of the late 60s and early 70s. I don’t think that means it should be thought of as merely an effect of that historical moment. I think my dogged attempt to revitalize the Marxist tradition and make it more deeply relevant to social justice and social transformation today is grounded in a scientifically valid understanding of how the world actually works. But without being embedded in a social milieu where those ideas were debated and linked in both sensible and misguided ways to social movements, I would never have been able to pursue this particular set of ideas. But I was enabled, and it’s made for an incredibly meaningful and intellectually exciting personal life. So no complaints. I will die in a few weeks, fulfilled. Not happy that I’m dying, but deeply happy with the life I’ve lived, and the life I’ve been able to share with all of you. (

published more than a hundred research papers, and wrote and edited about 20 books. Many of them are free to download from his personal website.
Wright’s quote at the beginning of this post is from the overview of the tremendous Real Utopias Project, which culminated in his

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Top 10 Most-read Economic Sociology and Political Economy Posts of 2018

As 2018 (already) comes to an end, I rounded up the top 10 most-read posts of the year on the Economic Sociology and Political Economy community blog. Six of these interesting, enlightening and thought-provoking posts were published in 2018 and the rest in previous years. You are welcome to (re)read and share them. 
I would like to use this opportunity and genuinely thank everyone for being here and for making this community what it really is! Thank you for every ‘like’, ‘share’ and comment! Thanks for spreading the word and recommending the ES/PE your colleagues, students and friends. Thanks for posting online, referring and sending me links and reads. About 10,000 new members joined us this year, and the ES/PE community proudly counts almost 60,000 members, followers, and readers from about 140 countries — researchers, students, practitioners, journalists, policy makers, and activists who constantly generate more than 150,000 monthly page views on our sites and social media (FacebookTwitterLinkedInInstagramTelegram, Reddit, and Tumblr)Achieving the main goal of our community — that is to disseminate the insights of socio-political research on the economy — would be impossible without your support, participation and enthusiasm. Together we maintain this intellectual and public campfire — and I am grateful to you all!
As we all conclude this (turbulent) year and look forward (with hope) to the next one, what can be said with certainty is that economic sociology and political economy perspectives and insights will be essentially needed to keep on mulling over, debunking, realizing and, of course, changing. More work ahead…

> Michel Foucault: Neoliberalism is not laissez-faire, but permanent vigilance, activity, and intervention

> Ulrich Beck has died. His powerful concept of ‘Risk Society’ is relevant as never before

> Nobel winner Paul Romer on the backwardness of economics and economists’ misleading use of math

> Karl Marx on Free Time – Time for the Full Development of the Individual

> Albert Einstein on the Power of Ideas and Imagination in Science

> Karl Polanyi on the Rise of Fascism and Market Economy

> The Sociology of Quantification: Seeing like Numbers

top10> What is Economics? Read Keynes’ definition

> Robert Solow’s sarcastic economics

> R.I.P. James March — “Success”

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