After the Great Complacence: Financial Crisis and the Politics of Reform: Amazon.co.uk: Ewald Engelen, Ismail Ert�rk, Julie Froud, Sukhdev Johal, Adam Leaver, Mick Moran, Adriana Nilsson, Karel Williams: Books

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Publication Date: 29 Sep 2011 | ISBN-10: 0199589089 | ISBN-13: 978-0199589081

What is the relationship between the financial system and politics? In a democratic system, what kind of control should elected governments have over the financial markets? What policies should be implemented to regulate them? What is the role played by different elites - financial, technocratic, and political - in the operation and regulation of the financial system? And what role should citizens, investors, and savers play?

These are some of the questions addressed in this challenging analysis of the particular features of the contemporary capitalist economy in Britain, the USA, and Western Europe. The authors argue that the causes of the financial crisis lay in the bricolage and innovation in financial markets, resulting in long chains and circuits of transactions and instruments that enabled bankers to earn fees, but which did not sufficiently take into account system risk, uncertainty, and unintended consequences.

In the wake of the crisis, the authors argue that social scientists, governments, and citizens need to re-engage with the political dimensions of financial markets. This book offers a controversial and accessible exploration of the disorders of our financial capitalism and its justifications. With an innovative emphasis on the economically 'undisclosed' and the political 'mystifying', it combines technical understanding of finance, cultural analysis, and al political account of interests and institutions.

#outer_postBodyPS { display: none; } #psGradient { display: none; } #psPlaceHolder { display: none; } #psExpand { display: none; } What is the relationship between the financial system and politics? In a democratic system, what kind of control should elected governments have over the financial markets? What policies should be implemented to regulate them? What is the role played by different elites - financial, technocratic, and political - in the operation and regulation of the financial system? And what role should citizens, investors, and savers play?

These are some of the questions addressed in this challenging analysis of the particular features of the contemporary capitalist economy in Britain, the USA, and Western Europe. The authors argue that the causes of the financial crisis lay in the bricolage and innovation in financial markets, resulting in long chains and circuits of transactions and instruments that enabled bankers to earn fees, but which did not sufficiently take into account system risk, uncertainty, and unintended consequences.

In the wake of the crisis, the authors argue that social scientists, governments, and citizens need to re-engage with the political dimensions of financial markets. This book offers a controversial and accessible exploration of the disorders of our financial capitalism and its justifications. With an innovative emphasis on the economically 'undisclosed' and the political 'mystifying', it combines technical understanding of finance, cultural analysis, and al political account of interests and institutions.

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Hardcover: 304 pages
Publisher: OUP Oxford (29 Sep 2011)
Language: English
ISBN-10: 0199589089
ISBN-13: 978-0199589081
Product Dimensions: 15.2 x 2.2 x 23.6 cm

Average Customer Review: 4.0 out of 5 stars See all reviews (4 customer reviews)

Amazon Bestsellers Rank: 368,986 in Books (See Top 100 in Books)

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[A]n interesting and thought-provoking read for academics, practitioners and interested lay readers alike. (Liam Stanley, Political Studies Review )

Masterly ... should be read by every policy-maker currently engaged in the rhetoric of "rebalancing". (Paul Mason, The Guardian )

A very important book ... an indispensible tool to counter the propaganda of the City and its friends in politics and the media. (Ian Sinclair, Tribune )

It's excellent and important. Absolutely essential reading for anyone wanting to understand how Britain's financial sector got out of control ... a landmark in this field. (Nick Shaxson, author of the Treasure Island )

There have been many books about the financial crisis but very few as original and incisive as this one. This is a book which really ought to be read not only by academics but also by industry representatives and policy makers in order to make sure that the kind of hubris displayed in the early 2000s, born out of a curious mixture of elite miscalculation and misbegotten premises, never again becomes an article of faith. (Nigel Thrift, Vice-Chancellor, University of Warwick )

With the post-crisis financial reform process at an impasse the book looks at the historical causes of the crisis. Its focus on elite power control of central banking and regulation is a refreshing alternative to macro-economic narratives. This is essential and disturbing reading for anybody concerned about the relationship between financial power and democracy. (Paul Mason, Economics Editor, BBC Newsnight )

By taking a sideways swipe at the idea of the period before the financial crisis being the "great moderation" this book provides a convincing narrative for this being the "great complacence" instead. It suggests that this was a period of unprecedented hubris on the part of the political and economic elites, and that the resulting crisis was not an accident, not a disaster, not a catastrophe, nor a fiasco, but a genuine political debacle. The book argues that elites failed to appreciate the financial system as a bricolage of excess, disconnects, anomalies, and contradictions, with the result that this ramshackle assemblage collapsed around them and us with devastating consequences. Angry and compelling, this book demands to be read as a clear-headed alternative account of the run up to this critical period and its aftermath. (Grahame F. Thompson, Copenhagen Business School )

About the Author

This book is written by an interdisciplinary team based at the ESRC funded Centre for Research on Socio Cultural change at the University of Manchester. The authors are collectively best known for their pioneering work on financialization including team written books such as J. Froud et al, Financialization and Strategy (2006), I Erturk et al, Financialization at Work (2008) and M. Savage and K. Williams, Elites Remembered (2008). Several of the authors also publish individually within their disciplines with books such as M. Moran, The British Regulatory State (2007) and Business, Politics, and Society (2009).
Ewald Engelen is Professor of Financial Geography at the University of Amsterdam.
Ismail Erturk is Senior Lecturer in Innovation, Management, and Policy at the Manchester Business School
Julie Froud is Professor of Financial Innovation at Manchester Business School
Sukhdev Johal is Reader in Strategy and Business Analysis, Royal Holloway
Adam Leaver is Lecturer in Business Analysis, Manchester Business School
Michael Moran is WJM MacKenzie Professor, the University of Manchester
Adriana Nilsson, Post Doctoral Fellow, Manchester Business School
Karel Williams, Professor of Accounting and Political Economy, Manchester Business School

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15 of 16 people found the following review helpful

2.0 out of 5 stars Some interesting insights, but superficially developed; too concerned with political correctness to impress 15 Jan 2012

By 0spinBoson

Format:Hardcover

The aim of this book is to convince its readers (elites? politicians? The Public?) that the finance sector must be brought under "democratic control" -- an idea the implications of which however are left somewhat vague, though their main point seems to be that banking should be simplified, and "financial innovation" curbed. The book's premise is that the 'global financial crisis' should be understood as an "elite debacle". This is at the same time quite right, and very wrong. (More on that anon.) They proceed by analyzing the mental conceptions or narratives that made the deregulation that made the crisis possible palatable -- think here of notions like the 'Great Moderation' and the 'Washington Consensus', the social value of finance and the 'democratization' of finance, as well as of the increasing analytic centrality of notions like market efficiency and actor rationality. Specifically, they argue that this happened via a process of 'mystification' of finance (it seems to me more or less correctly, although it is unclear to me why they ignore the question of whether the academics contributing to this mystifying process were acting in good or bad faith).

Such 'narrative analysis' can be fairly illuminating (if the narratives are understood and described correctly), and the book fairly convincingly explains why (and provides an out for) so (the) many actors (who) were apparently helping create this 'new', and increasingly unstable, system. Moreover, they also give a correct high-level explanation for why entrenched elites were capable of stymieing all attempts at systemic reform: because the few who wanted it at all, lacked a proper narrative to convince the others with....

The premise of the book seems right to the extent that it is true that many politicians and bankers are likely not so callous as they would have to have been for them to knowingly change the rules so as to allow this crisis to occur (though note that the emphasis is on the occurrence and undesirability of crisis, and not on the looting made possible in the run up to the crisis). (As an aside I would point out, however, that, as any psychologist will tell you, people almost always find ways to rationalize their actions, making it unlikely that they would've understood their own actions this way even if that had been their intent.) The authors feel it is important for an explanation of the crisis to acknowledge and emphasize this fact, which is why they start by rejecting a few elite corruption-based accounts of crisis, to note that they feel that the majority of the steps that led to the crisis were "small, and in themselves relatively harmless decisions made by individual traders or bankers and banks". And the majority of these actors wasn't malevolent because "no banking insider from one node had an overview of the changing latticework of circuits" (9). (Complexity fetishism? This presupposes that knowing all aspects of the crisis is a necessary condition for "calling" it or understanding what you're working towards; though they both nuance and contradict this point in chapter four when pointing out that someone like Steve Keen predicted the bubbles while being unaware of the size of the shadow banking system.) In this way, they hope to be able to give their readers a way to understand that most bankers did not set out to destroy the world, but that they were rather out to make a profit, while "complacently" not wondering even for a moment about the possible consequences of their actions.

Frustratingly, however, this framework is actively hostile to the idea that fraud could have played an important role in creating the crisis. They sort-of justify this view that criminal behavior is not an important explanatory factor by first lumping together all actors who played a part in creating the crisis, and then arguing that, since it is "not proven" that all actors were 'callously corrupt' (and here they refer to GS's Fabrice Tourré), we may not assume that a significant portion of them were. Yet this in no way follows, because it seems quite conceivable to me to imagine that while for instance central bankers were mostly dim-witted hacks and dupes who got those posts because they were too stupid to recognize the idiocy of the models they took to describe reality -- the neoliberal self-regulation propaganda sold by the Thatcherites and Reaganites, the crap about (self-)equilibrating markets, rational actors, etc. -- (investment) bankers, on the other hand, were rather more aware of the illegality of their actions. As such, I am not sure why it seems so inconceivable to these authors to allow for the possibility that this played a role, except that they simply do not want to believe it. (They similarly simply assume that politicians, being 'representatives', are automatically interested in acting in the interests of their constituents, which is equally naive.) This is the main reason why I think this book's thesis quite wrong: because it furthers the myth that fraud did not play a significant role in creating this crisis, and that there wasn't at least an influential subset of bankers and politicians who did know what they were doing, whilst being quite happy to keep at it (for this, see Hare's work on corporate psychopaths, as well as the work of e.g. Bill Black on what's called 'control fraud'). This is underscored by the fact that the word 'fraud' is used exactly once in the book, to describe Madoff, while events like the S&L Crisis and the Abacus deals are described as a '(regulatory?) fiasco/scandal' rather than the fraudulent schemes that they were -- the message being 'look away, there's nothing more troubling to be seen here'.

Additionally, I would take issue with the suggestion to view the crisis as a "debacle," for two reasons. First, it in a strange way seems to efface the moral relevance of any and all actions taken during the Great Moderation, because of the way in which everything is cast as a "policy failure" on the part of the government only, rather than as something more morally disturbing, such as, say, a nasty mixture of looting, theft and class warfare. Moreover, it seems to be cast this way at least in part because the authors cannot shake the belief that economic policy, post-Washington Consensus, is 'beyond politics,' so that nobody could be bothered any longer to identify the growth in income inequality as events in a political project, rather than as a bland "consequence of globalization", and of "bad incentives."

Having said that, the book does offer a few points of interest, such as some empirical support for the point that New Labour did not take much convincing, and that it cared little for the macroeconomic consequences of their supporting the growth of finance. The authors here neatly undermine the idea that Britain profited from allowing unlimited financial sector growth. Second, it has a decent -- if too short -- discussion on the role and history and importance of the BIS, the Basel Committee, and the ECB as being entirely outside of the reach of democratic politics. In all, though, while the touch on a number of important issues, it seems to me that their analysis is far too shallow to really impress.

Weighing the good against the bad, however, I would have to say that I take what's right in this book is not interesting enough to balance out that what's wrong and omitted; it seems to correctly identify a number of important considerations, only to then deliver a far too superficial analysis of what went wrong and why. And the major reason for this is that the authors place far too much emphasis on their belief that most of the actors involved could not and did not know what the precise result of their actions would be; while paying too little attention to the fact that the actions that led up to this crisis were quite problematic in themselves, that is, even if they had not led to the current crisis. As such, I cannot recommend buying this book.

A final note: In the concluding chapter, the authors say that what they think is needed are "stories that can displace the ones currently circulating". It seems to me that there are no stories better suited for getting this process of story displacement rolling than those that tell us of the massive number of frauds and scams perpetrated by (mostly) financial sector employees attempting to enrich themselves at the cost of everyone else. The primary difference (relevant to this discussion) from the way the 1929 depression unfolded, then, is that back then, it only took three years for the Pecora committee to be installed; whereas this has yet to happen this time around. (And no, the various parliamentary hearings, which assigned blame to "the system", while leaving all of the primary actors alone -- of course only after 'extracting' a number of variations on "wir haben es nicht gewußt" -- do not count.) Read more ›

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3 of 4 people found the following review helpful

4.0 out of 5 stars Excellent study of Britain's economy 21 Feb 2012

By William Podmore

Format:Hardcover

Even before the crisis, Britain's private sector was unable to create enough jobs. There were 7 million manufacturing jobs in 1979, 4 million in 1997 and 2.8 million in 2008.

From 1996 to 2008 business investment was flat at 10 per cent of GDP; bank lending to productive business fell from 30 per cent to 10 per cent, while bank lending to other financial firms and to property developers soared.

The transfer of 750,000 jobs from the public to the private sector accounted for 71 per cent of the apparent increase in private sector jobs between 1979 and 1997. Under Labour, increased spending on health and education accounted for 37 per cent of job growth (61 per cent in the West Midlands, 43 per cent in Wales and 46 per cent in Scotland). Privatisation and outsourcing led to an expansion of state funding for private employers, as in nursery education and services for the elderly - 1.7 million jobs.

In 2007, the OECD's chief economist forecast `a strong and sustained recovery in Europe'.

The authors argue that the economic crisis was not an accident but a debacle, like the Iraqi and Afghan war disasters and the euro. As they note, "two debacles collided as the financial crisis crashed into European Monetary Union." They observe that neither the euro, nor the European Central Bank nor the EU was any use in the crisis. The euro no more reduced the risks on government debt than all the securitization and special financial vehicles reduced the risks of investment.

The bailout cost the British taxpayer �1,183 billion in loans and guarantees (not all used) - �46,700 per household. Public debt rose from 36.5 per cent of GDP in 2007 to 63.6 per cent in 2010, the public sector deficit from �634 billion to �890 billion.... Read more ›

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5.0 out of 5 stars Excellent read!! 9 Mar 2013

By Banker

Format:Hardcover|Amazon Verified Purchase

Top drawer academic read. Different perspective on the financial crisis asking thereafter to think on a socio political level for answers rather than the more orthodox argument on crisis of hubristic elite, complex product, technological disaster, financial engineering, and regulatory failure. We must look to develop standards of both international accounting and international and regulation governing on a global level that all countries buy into in our now globalised world, only this can provide a framework for the future.

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2 of 3 people found the following review helpful

5.0 out of 5 stars Understanding the Politics of Finance 15 Jan 2012

By Questor

Format:Hardcover

An extremely valuable contribution to the current concerns about global finance. The studies are rigorously sourced, the arguments presented with clarity and precision. Essential reading at the present time.

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