Power Elites and Everyday Politics in International Financial Reform

Abstract

No singular account of the crisis really gets at what went on or how we got here. What we do know is that the market reacts to signals (see Hall and Sinclair, this forum) and that there are permeable boundaries of exclusion in who gets to hold the talking stick. Professional groups thrive on a combination of exclusion and co-option of others’ ideas and skills that can heighten their prestige (Abbott 1988). They also rise and fall according to their capacity to persuade society of their importance or to receive everyday impulses for policy changes that afford them legitimacy. Such was the case with the rising prominence of regulation via risk management as a form of financial governance among a “power elite” of expert policymakers, academics, and market practitioners in the international financial community (Mills 1956; Tsingou 2009). The prominence of risk management was justified, in part, on its capacity to integrate financial techniques (see Best, this forum), such as securitization, that increased the overall level of credit within economies. In countries where securitization is tied to homeownership there were clear political incentives to favour this view of financial regulation rather than dealing with more difficult welfare questions (Schwartz and Seabrooke 2009). In this way, power elites and everyday politics are intimately bound.