Between state and market: Hegemony and institutions of collective action under conditions of international capital mobility

Abstract

This article rejects the atomistic conception of international capital mobility as individual, uncoordinated decision-making. It argues that non-state institutions exist in the global political economy which condition the thoughts and actions that comprise the investment process. Because these structure investment, such institutions can be understood as private makers of global public policy. Credit rating agencies are used as an example of these mechanisms. The article examines transformations in the organization of capital markets which underpin the greater influence of these agencies. Functional accounts of rating institutions are evaluated, and their scope for transcending a strict agency role with regard to investors is assessed, based on their possession of specialized forms of knowledge from which they derive control. Some description of the agencies, their international growth and the ratings process is provided. Three arguments about the pressures on the economic and financial structures identified by Zysman (1983) generated by rating agencies are considered. Rating institutions create pressures for fundamental analyss of investment, for a particular view of appropriate management forms and policy lines along new constitutionalist lines, and contribute to a more abstract investment process which is likely to have the effect of transforming social relationships within the dominant alliances of social forces. The article concludes with some consideration of the implications of these hybrid forms of authority and policy for world order.