The New Political Economy of the Macroprudential Ideational Shift

By A. Baker. 2013

286 citations recorded by the source corpus.

From late 2008 onwards, in the space of six months, international financial regulatory networks centred around the Swiss city of Basel presided over a startlingly rapid ideational shift, the significance and importance of which remains to be deciphered. From being relatively unpopular and very much on the sidelines, the idea of macroprudential regulation (MPR) moved to the centre of the policy agenda and came to represent a new Basel consensus, as the principal interpretative frame, for financial technocrats and regulators seeking to diagnose and understand the financial crisis and to advance institutional blueprints for regulatory reform. This article sets out to explain how and why that ideational shift occurred. It identifies four scoping conditions of presence, position, promotion, and plausibility, that account for the successful rise to prominence of macroprudential ideas through an insiders' coup d'état. The final section of the article argues that this macroprudential shift is an example of a ‘gestalt flip’ or third order change in Peter Hall's terms, but it is not yet a paradigm shift, because the development of first order policy settings and second order policy instruments is still ongoing, giving the macroprudential ideational shift a highly contested and contingent character.

Subfields: Finance, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/b32d5cace385d088c0709780b370d0e1d9a0f1a5

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Finance

1. Benjamin Braun
2. Daniela Gabor
3. M. Hübner
4. Leonard Seabrooke
5. E. Tsingou
6. Brett Christophers
7. M. Aalbers
8. Jathan Sadowski

In Strategy and Management

1. Leonard Seabrooke
2. Benjamin Braun
3. Brett Christophers
4. Daniela Gabor
5. E. Tsingou

Citations in the corpus

• Governing through financial markets: Towards a critical political economy of Capital Markets Union (2018, background): “…the resilience of finance in the post-crisis political environment, political economists have studied the role of ‘finance-friendly’ economic ideas (Baker, 2013; Braun, 2014; Engelen et al., 2011; Lockwood, 2015; Widmaier, 2016), as well as the financial sector’s instrumental, structural and…”
• Distinctions, affiliations, and professional knowledge in financial reform expert groups (2014, background): “Debates over macroprudential regulation represented a ‘gestalt flip’ in thinking, but one that occurred without a paradigm shift from an established policy setting (Baker 2013).”
• Climate Change and Financial Instability: Risk Disclosure and the Problematics of Neoliberal Governance (2017, background): “The crisis, however, convinced regulators that this approach was flawed: “diversification at an institutional level does not necessarily produce system wide diversity” and hence making all institutions (individually) safe “does not necessarily make the system as a whole safe” (Baker 2013, 115).”