Researching the Financial Crisis

Workaround: In current version of Panels 3.8, it seems this body field needs to be populated in order for title above to appear. This note is hidden by custom CSS style. Jack Latimer.

  • After the Great Complacence is an account of the first phase of the financial crisis. Nominated by in the Guardian by Paul Mason as one of his five economics books of 2011, Mason writes:

    • "With much of southern Europe in the process of being handed over to "technocrats", as democracy fails to balance the books, a study from Manchester-based research centre CRESC has proved timely. In After the Great Complacence: Financial Crisis and the Politics of Reform (OUP, £25), Ewald Engelen et al argue the global financial crisis was neither an accident born of complexity, nor a fiasco attributable to misregulation, but what they call an "elite debacle". The book is as much about knowledge as it is about economics and concludes that the entire anti-crisis strategy of the global elite has been marked by "technocratic hubris", and has therefore failed. In this context their short, masterly hatchet job on the "30-year experiment" in credit-fuelled growth in Britain should be read by every policy-maker currently engaged in the rhetoric of "rebalancing". It shows how difficult rebalancing will be, in particular because the same financial and political elite that created the debacle remains substantively in charge"

    The book uniquely combines sophisticated technical analysis of financial innovation with political analysis of regulatory failure as it argues the crisis was not an accident or a conspiracy but an elite political debacle. Pre 2008 finance combined bricolage and shareholder value business models which put finance technically beyond control at huge social cost to the taxpayer and citizen. At the same time regulatory constraints were  politically undermined before 2008 and reform has subsequently been frustrated. In three different worlds of lobbying ( UK, USA and EU) the distributive coalition around finance has so far escaped re-regulation and the policy intelligentsia are ineffectual because their technical fixes do not connect with democratic politics. 

    The book’s political analysis is updated in the team’s most recent working paper Groundhog Day which addresses the issue of how all three main stream political parties in the UK  welcomed the half hearted and inadequate Independent Banking Commission reform proposals for ring fencing around retail banking. The UK is stuck in a ‘Groundhog Day’ time loop where radical banking reform is unthinkable because our political elites have not broken with their financial backers and changed their pre 2008 principles about the priority of shareholder value and minimal public control of financial markets and banking structures, The working paper highlights a series of democratic disconnects because the radical technocratic critics of finance have not had much impact on the many critics of finance in civil society and the Labour opposition (so far) is an obstacle to mobilisation partly because its own roots in civil society are almost non-existent.

    The second euro zone phase of the financial crisis in and after 2011 fits easily into the CRESC frame because this crisis is driven by improvised financial interconnections which are beyond political control. The question now is whether and how further crisis will shift the political limits on financial reform.

    For  short versions of the argument see our press release and our new downloadable CRESC Working Paper.

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Date of news item

Sunday, November 27, 2011