B&B: Thomas Piketty on Tony Atkinson // Cultural birth of Austrian Economics // Slavery made capitalism // Cold War fueled Free Market // Gendering of money // Topology of finance

This time, especially worth reading  and sharing articles:

> Thomas Piketty reflects on Tony Atkinson’s remarkable intellectual journey, his path-breaking works, and his last book Inequality: What Can Be Done?

How 1920-30s Viennese politics and culture shaped Austrian Economics and its key thinkers — by Erwin Dekker

> Slavery was not a hidebound institution that capitalism destroyed, but an integral one that made capitalism possible — Eric Herschthal on the global history of cotton, slavery and the state 

> Cold War philosophy tied Rational Choice Theory to scientific method and embedded “free-market” mindset in US society — by John McCumber

The Gendering of Finance: the surprising tale of why money in England has long had a female face — by Claudine van Hensbergen

> A big reason credit markets froze-up in 2008 was confusion about who was exposed to whom. So, can regulation applying Network Science prevent a financial crisis and decrease systemic risk? — by Bob Henderson

Car drifting in Saudi Arabia is embedded in the country’s economic inequality, urbanization and social violence — an interview with Pascal Menoret on his book Joyriding in Riyadh: Oil, Urbanism, and Revolt

credit default swap market

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Commercialization and the Far Right: Consuming and Constituting Extremism

by Cynthia Miller-Idriss*

Advertisers and marketers have long known that brands and commercial products are deeply intertwined with individuals’ identities. But with few exceptions, mainstream social scientists have been slow to acknowledge that economic objects can have constitutive power for identities. The connection between material culture and extremist identity is even less explored. In The Extreme Gone Mainstream (Princeton University Press, 2018), I examine how far right ideology has been commercialized in Germany through the creation of high-end brands which sell clothing and products laced with far right iconography and messages. This commercialization is part of a radical transformation that has taken place in the style and aesthetics of German far right subculture—and indeed, among far right youth globally, including in the U.S. In this book, I argue that style and aesthetic representation serve as one gateway into extremist scenes and subcultures by helping to strengthen racist and nationalist identification and by acting as conduits of resistance to mainstream society.
Extreme Gone Mainstream Commercialization and Far Right Youth CultureThe book draws on a multi-phase research project studying these brands, their messages, and how youth in and around far right scenes understand them. In the first phase, I analyzed thousands of images gathered from the archives of professional photographers who track the far right in German public settings like protest marches, music festivals, and demonstrations, along with hundreds of screenshots and additional images and photographs of symbols, logos and brands I gathered from historical and museum archives in the U.S. and Germany and in everyday places. Following the image analysis, I launched a second phase of field research to conduct 62 interviews with young people and their teachers in two German vocational schools with histories of far right extremist youth presence. The interview data aimed to explore whether and how youth in and around far right scenes understand the symbols, what they think they mean, and what the messages in the clothing can teach us about the appeal of far right extremism more generally.
The new branding phenomenon emerged shortly after the turn of the 21st century, when the brand Thor Steinar launched a slick mail-order catalog selling high-quality, well-made clothing coded with historical, colonial, and mythological references related to the far right. Other brands quickly entered the fray, sharing a reliance on mainstream-style, expensive clothing and the use of coded symbols that evoke, connote, or directly reference far right ideological viewpoints or mythic ideals appealing to the subculture. Over a dozen brands in Germany alone now sell mainstream-style, expensive clothing with embedded far right symbols and messages.
My interviewees clearly explained that clothing choices are centrally important to peer groups, identity, and self-understanding. In this sense, it’s important to understand the ways that the commercialized, coded references and symbols can desensitize and socialize consumers. The products often use humor or aggressive coded references to historical atrocities against Jews, Muslims and others deemed not to belong, denigrating victims and celebrating violence. In this way, the clothing can help strengthen racist and nationalist identification. But the clothing also matters because it can act as a gateway to broader activities in the far right. In Germany, far right clothing brands help youth signal membership and ideological views to other insiders, and facilitate connections in new settings, such as underground concerts.
It’s important to note that the brands’ popularity mirrored the rise of populist and far right rhetoric and party success across Europe and in the U.S. Some of the appeal of the brands’ messages, in other words, reflect broader social and political contexts that help drive the appeal of far right messaging in the brands and clothing. For example, one t-shirt references the refugee and migration crisis with iconography of an anchor and the words “Raise the borders, batten down the hatches” (Grenzen Hoch und Schotten Dicht). Nothing else on the shirt indicates what exactly that message might mean, but text on the website next to the t-shirt for sale directly references the recent influx of refugees.
For most sociologists, economic goods are seen primarily for their role in the production and reproduction of inequality. While consumer goods are an essential part of this process, they are usually described merely as the end product in a larger exploitative set of labor and production processes. Even the increasing scholarship on consumption focuses heavily on how consumer goods play a role in status systems and hierarchies of social inequality. Bourdieu’s Distinction and a generation of studies that followed, for example, examined how consumption patterns and the purchase and display of particular kinds of objects and goods work to build and convey cultural and social capital.
What I suggest is that our focus on the role that economic objects play in the production and reproduction of inequality has distracted many social scientists from the potential for these objects to hold symbolic meaning and play a significant role in other aspects of social life. My contention, on the contrary—following scholars of visual culture, like Jeff Alexander and his co-editors of a book on iconic and material culture—is that commodities and economic objects are also cultural objects that carry emotion, convey meaning, and constitute identities.
My analysis of commercial, coded symbols conveying extremist ideology shows they play a key role as conduits of youth’s emotional desires to belong and rebel, acting as gateways to the broader far right scene while simultaneously helping to mainstream extremist ideas. This means that the production and consumption of economic objects are not only exploitative acts but also constitutive ones. Consumer goods and products not only add meaning to individuals’ and groups’ lives but also can inform consumers’ life choices, actions, behaviors, beliefs, and identities.
Mainstream sociologists ought to take economic objects more seriously not only for their exploitative power, but also for their constitutive possibilities. Style and aesthetic representation act as a ‘gateway’ into extremist scenes and subcultures, as young people’s consumption of “lifestyle” elements like tattoos, clothing, styles, or music may gradually lead to further involvement with extremist ideologies. In the German case, the commercialized, coded references and symbols desensitize and socialize consumers and their peers and dehumanize victims. In this way, economic objects have the potential to constitute identity and shape engagement in social movements or extremist groups in ways that deserve our close attention.
* Cynthia Miller-Idriss is Associate Professor of Education and Sociology at American University in Washington, D.C. Her book, The Extreme Gone Mainstream: Commercialization and Far Right Youth Culture in Germany, was published in February 2018 by Princeton University Press. (Open access to the introduction)

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Great academic opportunities: 19 calls for papers, 5 jobs, 5 PhD fellowships, 5 postdoc positions, 3 summer schools, and a visiting post

Dear ES/PE community member, see below an abundant list of great call for papersacademic opportunities: 19 calls for papers for conferences and workshops (some are fully or partially funded), 5 job openings, 5 doctoral fellowships, 5 postdoctoral positions, 3 summer schools (fully or partly funded), and a visiting post — in various areas of economic sociology, political economy, and related fields, with April 6 — 30 deadlinesShare this post with your colleagues and students. Good luck!

Calls for papers:

> CfP: “Integrating Corporate Reporting” interdisciplinary workshop, Hebrew University of Jerusalem, June 6, 2018. Funding is available to partially cover participants’ travel costs.  DL: April 10

> CfP: “Globalizing the student rebellion in the long ’68”  symposium, University of Valencia (Spain), October 3-5, 2018. DL: April 10

> CfP: “Labour and Leisure in Global History“, am international summer academy organized by Humboldt University Berlin and University of Nairobi, 9 – 16 September 2018, Mombasa (Kenya). Travel and accommodation costs will be covered. DL: April 15

> CfP: “(Mis)trust, money and debt in interdisciplinary perspective” workshop, London School of Economics, July 15, 2018. Speaker: Nigel Dodd. DL: April 15

> CfP: The 50th Conference of the Union for Radical Political Economics, University of Massachusetts Amherst (USA), September 27-30, 2018. DL: April 15

> CfP: “Post-Transition and Emerging Economies ten years after the Financial Crisis: Policies, Response, Performance and Challenges“, the 15th European Association for Comparative Economic Studies Conference, Warsaw School of Economics (Poland), 6-8 September, 2018. DL: April 15 

> CfP: “Researching administrative power” workshop, University of Essex, (Colchester, UK) on 20th-21st September, 2018. The event is free of charge. DL: April 15

> CfP: The 12th History of Recent Economics Conference,  University of Cergy-Pontoise (Paris), 12-13 October, 2018. Travel and accommodation costs will be partially covered for junior scholars and PhD students. DL: April 15

> CfP: “Labor and History in the 21st Century“, the 40th Annual North American Labor History Conference, Wayne State University (Detroit, Michigan, USA), October 18-20, 2018. DL: April 15 

CfP: “Remittances as Social Practice” conference, University of Innsbruck (Austria), 27-28 September 2018. Travel expenses can be partly refunded, accommodation will be organised and paid. DL: April 15

> CFP: The 50th Annual UK History of Economic Thought Conference, Balliol College, University of Oxford, (UK), 29-31 August, 2018. Grants may be provided to students presenting original work. DL: April 18.

CfP: “What Kind of Work for the Future? Disruption, Experimentation and Re-/Regulation“, the Interuniversity Research Centre on Globalization and Work’s conference, HEC Montréal (Canada), October 25 – 27, 2018. DL: April 20

CfP: “Overcoming Inequalities in a Fractured World: Between Elite Power and Social Mobilization“, the United Nations Research Institute for Social Development conference, United Nations headquarters, Geneva (Switzerland), November 8-9, 2018.  Travel and accommodation costs will be covered, prioritizing presenters from developing countries. DL: April 20

CfP: “Justice at Work: Challenges and Possibilities“, The 4th Fairness at Work conference, University of Manchester (UK), September 10-11, 2018. DL: April 20

CfP: “Corporate Behaviour and Institutional Constraints – Multidisciplinary Perspectives on Institutional Dysfunctions and Firm Behaviour”  workshop, King’s College London, 4th of July 2018. No fee; meals will be offered; a small budget is available to cover costs for some of the participants. DL: April 22

CfP: “YSI Europe Convening“, The Institute for New Economic Thinking Young Scholars Initiative regional conference, Trento (Italy), May 31 – June 3, 2018. Selected young scholars will receive accommodation. DL: April 22

CfP: “YSI Latin America Convening“, The Institute for New Economic Thinking Young Scholars Initiative regional conference,  Buenos Aires (Argentina), July 19-21, 2018. Partial or full travel support will be available for selected participants. DL: April 27

> CfP: “Karl Marx and Rosa Luxemburg: Thought Legacy and Contemporary Value“, the 13th Forum of the World Association for Political Economy, Berlin School of Economics and Law (Germany), July 16-18, 2018. DL: April 30

CfP: “50 Years of Socialist Feminism“, Historical Materialism Symposium, Toronto, Canada, 26-29 September, 2018. DL: April 30 

Job openings:

Junior Professor for Philosophy of Economics (fixed 3-year term; may be extended), University of Bayreuth (Germany). DL: April 12

Associate Professorship in Business and Politics, with a focus on sociology of networks (permanent position) , Copenhagen Business School. DL: April 15

Associate Professorship in Business and Politics, with a focus on quantitative methods (permanent), Copenhagen Business School. DL: April 15

Associate Professorship in International Political Economy  (permanent position), Copenhagen Business School. DL: April 15

> Lecturer in Political Economy (any area, full-time, permanent), Department of Social Sciences, Oxford Brookes University (Oxford, UK). DL: April 18

Postdoctoral positions:

Postdoc position within ERC project “The Making of a Lopsided Union: Economic Integration in the European Economic Community, 1957-1992″, University of Glasgow (Scotland, UK). DL: April 9

> Two Post-Doc positions in Industrial Foundation Governance, Copenhagen Business School. DL: April 15

> Three Postdoctoral positions on Great Social Challenges, Lund University (Sweden). DL: April 22

Research Associate for the project “Work on Demand: Contracting for Work in a Changing Economy” (fixed 2-year term), University of Glasgow (UK). DL: April 23

> Postdoctoral position on “Regulatory Governance and Organisational Reputation” in the ERC funded project “Reputation Matters in the Regulatory State”, University of Leiden (the Netherlands). DL: April 29 

PhD scholarships:

PhD Position in Politics of Wage Regulation and Low-Wage Employment, Dept. of Comparative Politics, University of Bergen (Norway). DL: April 9

> PhD fellowship in a project “Urban sustainable development and social / spatial inequalities“, Norwegian University of Life Sciences (Ås, Norway). DL: April 9

> 3 Doctoral Fellowships within the ERC Project “Labour Politics and the EU’s New Economic Governance Regime“, University College Dublin (Ireland). DL: April 10

PhD Fellowships on Comparative Labour Market Research, Bremen International Graduate School of Social Sciences (Germany). DL: April 15

> Fully funded PhD Scholarship within ERC project “The Making of a Lopsided Union: Economic Integration in the European Economic Community, 1957-1992″, University of Glasgow (Scotland, UK). DL: April 30

Summer schools / PhD workshops:

> CfP: ”Studying economic actors: debates and approaches“, a summer school for junior scholars and PhD students, Universidad Internacional Menéndez Pelayo (Sevilla, Spain), June 11-15, 2018. DL: April 6 

> CfP: “Poverty, Development, and Globalization“, the Initiative for Policy Dialogue Advanced Graduate Workshop, Azim Premji University (Bangalore, India), July 8-21, 2018. Room and board will be covered for all participants. For students outside India airfares tickets will be paid, as well as tickets for students from India. DL: April 15 

CfP: The 16th SCANCOR PhD Workshop on Institutional Analysis, Copenhagen Business School, September 3-7, 2018. DL: April 30. Recommended!

Visiting opportunity:

Visiting Fellows at the Max Planck Sciences Po Center on Coping with Instability in Market Societies (senior academics for 2–4-month stay), Paris. MaxPo offers an office, a round-trip ticket, a stipend to cover expenses. DL: April 30

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What is Economics? Read Keynes’ definition

In July 1938, an English economist Roy Harrod sent John Maynard Keynes his lecture keynes“Scope and Method of Economics” which he intended to deliver as a Presidential Address at one of the sections of the British Association. In his reply, after Keynes complimented Harrod (“it is much the best Presidential Address for many years”) and expressed his concern about its length, he softly scolded him for not sufficiently repelling contemporaries’ increasing attempts “to turn [economics] into a pseudo-natural-science”. Elaborating this point, Keynes wrote: 

Economics is a science of thinking in terms of models joined to the art of choosing models which are relevant to the contemporary world. It is compelled to be this, because, unlike the typical natural science, the material to which it is applied is, in too many respects, not homogeneous through time. The object of a model is to segregate the semi-permanent or relatively constant factors from those which are transitory or fluctuating so as to develop a logical way of thinking about the latter, and of understanding the time sequences to which they give rise in particular cases
Good economists are scarce because the gift for using “vigilant observation” to choose good models, although it does not require a highly specialised intellectual technique, appears to be a very rare one.
In the second place, […] economics is essentially a moral science and not a natural science. That is to say, it employs introspection and judgments of value.” (4 July)

Later in their correspondence, Keynes continued:

I also want to emphasise strongly the point about economics being a moral science. I mentioned before that it deals with introspection and with values. I might have added that it deals with motives, expectations, psychological uncertainties. One has to be constantly on guard against treating the material as constant and homogeneous in the same way that the material of the other sciences, in spite of its complexity, is constant and homogeneous.” (10 July, 1938)

Reading this Keynes’ definition of economics not only urges mulling over the transformations this discipline has gone through during the last 50 years of the Neoliberal turn, but particularly this reflects how far it has moved away from the ontological essence and methodological wisdom of social science.

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Socially Liberal but Fiscally Conservative

socially liberal but fiscally conservative


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Market Forecasting: A Sensitive Practice at the Heart of Neoliberal Capitalism

by Stefan Leins*

capitalism neoliberalism financeSince the emergence of modern financial markets, financial analysts have played a critical role in producing visions of “the economy” and its future development. As experts, they analyze market developments and predict future scenarios that enable other financial market participants to speculate on the rise or fall of stock prices, the success or failure of particular investment products, and the growth or decline of entire national economies. The substance of the analysts’ valuation and forecasting practices is, however, heavily disputed among economists. In neoclassical economic theory, the assumption that markets are informationally efficient has challenged the legitimacy of the work of financial analysts since the establishment of the efficient market hypothesis as a central paradigm in the mid 1960s. Alternative schools of thoughts – such as new institutional or behavioral economics – have criticized this paradigm. However, they have also argued that the degree of uncertainty, which is inherent to financial markets, makes prediction impossible.
Empirically, this critique has been around even longer. In 1933, economist Alfred Cowles published an
article that tested the attempt to forecast stock market prices. After having analyzed thousands of stock market predictions from 16 financial service agencies, Cowles came to the conclusion that “[s]tatistical tests of the best individual records failed to demonstrate that they exhibited skill, and indicated that they more probably were results of chance.” Such results have been confirmed repeatedly. In the UK in 2012, for example, Orlando, a ginger cat that tapped over the pages of the Financial Times to select stocks, outperformed a group of financial professionals.
The lack of justification of the forecasting practices financial analysts deploy brings up an important question: Why do financial analysts exist at all? How do they manage to maintain their role as experts in the market? And how they cope with the uncertainty and lack of theoretical and empirical foundations of their practices?
I spend two years in the financial analysis department of an internationally operating bank, where I was given research permission to follow the financial analysts’ work practices on a daily basis. In my book
Stories of Capitalism: Inside the Role of Financial Analysts (University of Chicago Press, 2018), I illustrate how, in the absence of theoretical and empirical justifications, analysts base their work on what they refer to as “market feeling – a technique that builds of affect, tacit knowledge, and experience – to make sense of market developments.
In the first weeks of my fieldwork, a financial analyst who coached me, told me how I could learn to do financial analysis. He advised me to take some time getting a “feeling” for how markets work. “This takes a lot of time,” he explained, “but basically, you just have to observe the market and read financial newspapers and the reports of other analysts.” The analyst then stared off into space, groping for words. After a while, he said, “You know, it’s not just about observing and reading, it’s about…” He did not finish his sentence since he could not put into words how one should develop that feeling for the market he was talking about. “You know, it’s about…,” he made a gesture as if he was touching a very smooth fabric to check whether it was made of silk. “That feeling,” he continued, “is what differentiates a good analyst from a bad one.”
Weeks later, another analyst allowed me to sit next to him when he valuated a company’s stock in order to come up with a forecast. To come up with a company’s “target price,” that is an estimated future price of a stock, this analyst first looked at the facts and figures presented in the company’s quarterly financial statements. After looking at the numbers depicted on the statement, he entered them into the bank’s internal computer program. He was, however, not happy with the target prices proposed to him by the models he used. He looked at them and then told me that the numbers support his overall feeling. Looking at the numbers a second time, he sighed, turned to me, and said, “You know what, I’ll take the most bullish target price and adjust the projections on the overall market development a little. After that, I’ll have a target price that truly reflects my feeling about the future development of this particularly promising stock.”
Combining such market feeling with calculative practices allows financial analysts to create persuasive narratives of the future of the market. These narratives become visible in the way analysts explain future market developments. Moreover, they are inscribed into the aesthetics of charts, tables, and figures analysts produce to visualize past, current and potential future market developments. Once these narratives are created, they are circulated among the banks’ stakeholders and clients. Sometimes, the narratives also become part of broader public discourse – often through the help of newspapers and TV stations that give financial analysts a platform to share their opinions on economic developments.
The establishment of such narratives is critical to modern financial markets, as they construct a sense of meaning in an environment that is governed by coincidence and characterized by a lack of regularity. Financial analysts thus produce images of the market as an institution that is not speculative and randomly developing, but accessible and understandable though the analysts’ expertise.
What does this tell us about the nature of capitalism in general? In
Millennial Capitalism: First Thoughts on a Second Coming,” Jean and John Comaroff argue that the production of visions of the future – which are sometimes reminiscent of techniques of divination as observed by anthropologists – are a characteristic feature of how capitalism in its neoliberal form materializes in everyday ethics and practices. Speculating on possible future developments, they state, is a new form of enchantment: It feeds on imaginaries of the future and on the notion that through the anticipation of the future, wealth can be created without effort. With this in mind, the forecasting practices deployed by analysts can be understood as a particular form of enchantment fostered by neoliberal capitalism. Rather than representing a disputable practice, the work of financial analysts is thus at the heart of today’s financial market economy and a characterizing feature of capitalism in its neoliberal form.
* Stefan Leins is a senior lecturer of social anthropology and cultural studies at the University of Zurich and a member of the research program Anthropology of the Economy at the London School of Economics and Political Science. His book Stories of Capitalism was published by the University of Chicago Press in 2018.

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B&B: Finance drains firms // The Adjunct Crisis // Sociology of cashless society // Risk officers increase risks // The myth of the empowered consumer // Credit, Neoliberalism, and post-Apartheid South Africa

This time, especially worth reading  and sharing articles:

“Finance is no longer a tool for getting money into productive businesses, but getting money out of them” — by J.W. Mason

Corporatization, marketization, and adjunctification of the university end up producing the corporatized student — by Yasmin Nair 

Sociology of money and India’s informal economy: Why a cashless society would hurt the poor — by Dana Kornberg

Chief Risk Officers led banks to take on even more risks hoping for “maximizing risk-adjusted returns” — by Kim Pernell, Jiwook Jung, and Frank Dobbin

> Is this the era of the empowered consumer? Or is this a system of grossly asymmetric power relationships? — by Jacob Silverman

Crime impacts differently the economic mobility of people from advantaged vs. disadvantaged communities — by Richard Florida

Credit reform in post-Apartheid South Africa: Neoliberalism coupled with the promise of freedom (to consume) — by Deborah James 

sociology of money

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Thatcherism’s greatest achievement

In 2002, twelve years after Margaret Thatcher left office, she was asked at a dinner what was  her  greatest  achievement.  Thatcher  replied:  “Tony  Blair  and  New  Labour.  We forced our opponents to change their minds.”  (Conor Burns, April 11, 2008)

Thatcher Tony Blair neoliberalism

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Stephen Hawking: Technology drives ever-increasing inequality

On 6 October 2015, a great theoretical physicist Stephen Hawking conducted a special Reddit “Ask Me Anything” session. Out of the thousands of submitted issues, Hawking selected those he wished to reply, mainly discussing aspects of artificial intelligence. In conclusion, Hawking picked a question about technological unemployment and ended with an insightful alarming observation on socio-economic and political trajectories:

Q: Have you thought about the possibility of technological unemployment, where we develop automated processes that ultimately cause large unemployment by performing jobs faster and/or cheaper than people can perform them? Some compare this thought to the thoughts of the Luddites, whose revolt was caused in part by perceived technological unemployment over 100 years ago. In particular, do you foresee a world where people work less because so much work is automated?
Stephen Hawking: “If machines produce everything we need, the outcome will depend on how things are distributed. Everyone can enjoy a life of luxurious leisure if the machine-produced wealth is shared, or most people can end up miserably poor if the machine-owners successfully lobby against wealth redistribution. So far, the trend seems to be toward the second option, with technology driving ever-increasing inequality.” (The original Reddit thread)

Apparently, every brief history of time is the history of class struggles…


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Marketcraft as the New Statecraft

by Steven K. Vogel*

What if we thought of marketcraft (market governance) as a core government function comparable to statecraft? And what if we sought to optimize market governance rather than to minimize government intervention? I submit that this simple reframing would generate analysis of market dynamics and prescriptions for government policy that deviate fundamentally from the conventional “free market” wisdom.
Consider market reform, for example. The pervasive language of liberalization, privatization, and deregulation implies that market reform is primarily a process of removing constraints. But liberalizing markets does not mean liberating them. In reality, empowering markets is a process of building institutions, not one of removing constraints. It requires more state capacity, not less. It means more regulation, not less.
Marketcraft How Governments Make Markets Work VogelLet’s begin with market reform in the post-Communist world.  We have now experienced several decades of debate over the nature of the transition from a planned economy to a market economy, often caricatured as a contest between shock therapy and gradualism. The crux of the debate hinged on whether market reform was primarily a matter of dismantling the old command system or one of building the institutions to sustain a market economy. The latter view has now prevailed, both in the realm of scholarly analysis and in that of real-world experience. But if we had viewed market transition as a matter of marketcraft, then shouldn’t this have been obvious from the outset? Couldn’t we have avoided a lot of fruitless debate and some devastating policy errors?
Or consider market reform in developing countries. Again, we have traversed several decades of debate over the fundamental nature of the problem and the appropriate solutions, sometimes depicted as a contest between the Washington Consensus and a more institutional perspective. And the latter view has now prevailed, after a protracted battle, countless flawed policies, and untold human suffering. But shouldn’t we have figured this out a bit sooner?
And what about market reform in the advanced industrial countries? While we have discovered that market reform requires building institutions in post-Communist and developing countries, we have been slow to recognize that the same logic applies to rich countries as well. Ironically, we are less attuned to the institutional character of market reforms in our own countries because they already have a fairly well developed institutional infrastructure. But market reform means enhancing this institutional infrastructure in the rich countries, just as it does elsewhere.
The term we most commonly use to describe market reform in rich countries – deregulation – nicely illustrates the confusion. The term is typically used to depict a decrease in government regulation and an increase in market competition, as if there were a natural association between the two. But enhancing competition most often requires more regulation, not less. In network sectors, for example, incumbents are not likely to voluntarily cede their market power. So the government has to fabricate competition via regulation. In telecommunications, for example, governments crafted competition via asymmetric (i.e. anti-incumbent) regulation, requiring incumbents to lease their lines to their competitors.
In the rich countries, as elsewhere, insufficient attention to the institutional nature of markets has fostered policy errors, with devastating results. The causes of the global financial crisis are complex, multidimensional, and intertwined, yet the essence of the story boils down to a massive failure of marketcraft. Federal Reserve Chairman Alan Greenspan made this case rather poignantly, if inadvertently, with his famous recantation in testimony to Congress in 2008. “Those of us who have looked to the self-interest of lending institutions to protect shareholder’s equity (myself especially),” he conceded, “are in a state of shocked disbelief.” Pressed by Committee Chairman Henry Waxman on whether his laissez-faire ideology contributed to decisions that he regrets, Greenspan replied, “What I am saying to you is, yes, I found a flaw. . .”
The U.S. authorities committed fundamental errors of marketcraft in the lead-up to the financial crisis. They gave financial institutions greater freedom to engage in risky behavior without strengthening regulation and oversight. They chose not to regulate derivatives in the late 1990s, partly because they viewed derivatives as instruments within an isolated market of sophisticated investors, and partly because they feared that regulation would destabilize financial markets. They put too much faith in the ability of market players to self-regulate. And they failed to appreciate the degree to which the U.S. mortgage-backed securities market had become plagued with misaligned incentives.
But marketcraft can do good as well as evil. After all, marketcraft produced the information revolution. The U.S. government funded the research that produced much of the relevant technology, and provided early-stage capital for many of the most successful high-tech firms. U.S. institutions, and the Silicon Valley ecosystem in particular, fostered the innovative start-ups that played a key role in commercializing the Internet, with innovations in devices, computing, transmission, and services. Antitrust policy played a less obvious but equally critical role by preventing vertically integrated firms like IBM and AT&T from dominating the emerging information technology sector. And this in turn enabled the open innovation characteristic of the digital economy. And regulatory reform brought lower communications costs, including flat-rate local service, which allowed startups to offer value-added services and household consumers to experiment with new applications at a reasonable cost.
These two examples – the financial crisis and the information revolution – illustrate the enormous stakes in the game of marketcraft. I am not suggesting that marketcraft is the same thing as statecraft. But I am contending that marketcraft has profound implications for economic performance, social welfare, and national power. So we should want to get it right.
Marketcraft will be even more critical going forward.  The marketcraft realm is growing as a share of what governments do, and as a core element in how governments enhance or undermine the welfare of their people. Some of the core items on the marketcraft agenda – financial regulation, intellectual property rights, and the governance of the digital economy – are among the most consequential policy issues today.
* Steven K. Vogel is the ll Han New Professor of Asian Studies and a Professor of Political Science at the University of California, Berkeley. This article is based on his new book, Marketcraft: How Governments Make Markets Work (Oxford, 2018). Vogel is also the author of Japan Remodeled: How Government and Industry Are Reforming Japanese Capitalism (Cornell, 2006), Freer Markets, More Rules: Regulatory Reform in Advanced Industrial Countries (Cornell, 1996), and co-editor (with Naazneen Barma) of The Political Economy Reader: Markets as Institutions (Routledge, 2008).

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