What is the relationship between economic ideas and the interests of political actors or interest groups?

Full Terms & Conditions of access and use can be found at http://www.tandfonline.com/action/journalInformation?journalCode=rjpp20

Journal of European Public Policy

ISSN: 1350-1763 (Print) 1466-4429 (Online) Journal homepage: http://www.tandfonline.com/loi/rjpp20

The power of economic ideas – through, over and in – political time: the construction, conversion and crisis of the neoliberal order in the US and UK

Wesley Widmaier

To cite this article: Wesley Widmaier (2016) The power of economic ideas – through, over and in – political time: the construction, conversion and crisis of the neoliberal order in the US and UK, Journal of European Public Policy, 23:3, 338-356, DOI: 10.1080/13501763.2015.1115890

To link to this article: https://doi.org/10.1080/13501763.2015.1115890

Published online: 23 Dec 2015.

Submit your article to this journal

Article views: 1299

View Crossmark data

Citing articles: 8 View citing articles

The power of economic ideas – through, over and in – political time: the construction, conversion and crisis of the neoliberal order in the US and UK Wesley Widmaier

ABSTRACT In recent years, scholarly concern for ‘great transformations’ has yielded to a stress on ‘gradual transitions’. In thiscontribution, I offer a discursive institutionalist model of the shifts in ideational power which drive order construc- tion, consolidation and crisis. First, I argue that leaders exercise rhetorical power through ideas, employing communicative appeals to shape principled beliefs. Second, I argue that élites employ epistemic power over ideas to consolidate intellec- tual consensus. Finally, I posit that as structural power in ideas assumes a life of its own, this breeds overconfidence and crisis. Empirically, I then track the development of the neoliberal order over Reagan’s and Thatcher’s use of power through ideas in constructing principled restraints on the market power of labour, Clinton- and Blair- era efforts to concentrate power over ideas in central banks, and the structural power of New Keynesian ideas that obscured concentrations of financial power, culminat- ing in the global financial crisis.

KEY WORDS Crises; discursive institutionalism; Keynesianism; macroeconomic policy.

INTRODUCTION

In recent years, scholarly debate over the development of economic policy orders – or sets of ideas and interests, embedded in institutions – has seen a focus on punctuated change yield to a greater stress on incremental shifts across ‘political time’.

1 To be sure, International Political Economy (IPE) scho-

lars have kept a ‘first cut’ stress on the transformative role of crises like the Great Depression and Great Stagflation, as these provided the foundations for the Keynesian and neoliberal orders (Blyth 2002). Yet, they have also placed an increasing emphasis on ‘gradual transitions’ – as the Keynesian principled order evolved into a 1960s neoclassical synthesis premised on causal models that were used to guide fiscal fine tuning, and as a later neoliberal principled order was refined in the New Keynesian causal models of the 1990s, which

# 2015 Taylor & Francis

Journal of European Public Policy, 2016

Vol. 23, No. 3, 338 – 356, http://dx.doi.org/10.1080/13501763.2015.1115890

guided similar efforts at monetary fine tuning. Reinforcing this interest in slow- moving change, the incomplete and halting nature of the global financial crisis has spurred scholars to seek to identify the conditions under which gradual change either strengthens or subverts prevailing orders. From one vantage point, highlighting stabilizing possibilities, historical institutionalists like James Mahoney and Kathleen Thelen (2010) have stressed the adaptive, self- reinforcing practices which sustain policy orders. Yet, while offering important insights, such approaches obscure the tensions which can subvert orders and cause renewed crises. To redress such oversights, discursive institutionalists like Martin Carstensen and Vivien Schmidt (2016) have directed attention to tensions between types of ideas and forms of power that fuel order-subverting practices – providing new insights into endogenous sources of crisis and change.

In this contribution, building on the recent work of scholars juxtaposing ana- lyses of punctuated and incremental change (Baker 2013; Blyth 2013; Carsten- sen 2011; Cox and Béland 2013; Gallagher 2015; Grabel 2015; Helleiner 2010; Henriksen 2013; Moschella and Tsingou 2013; Tsingou 2014), I integrate these historical and discursive institutionalist perspectives, offering a theory of idea- tional power in political time and an account of the rise and demise of the neo- liberal order in the United States (US) and United Kingdom (UK). In the first section, I engage key theoretical debates, arguing that while historical institu- tionalists like Mahoney and Thelen emphasize mechanisms of institutional change, discursive institutionalists like Carstensen and Schmidt provide key insights into the tensions that can destabilize them. In the second section, I inte- grate these insights in a tripartite model of the construction, conversion and crises of economic policy orders: initially, in order construction, leaders employ rhetorical power to shape principled beliefs and justify regulatory or legal restraints on market power. However, in subsequent stages of order conver- sion, ensuing stability provides institutional and intellectual agents with scope to refine their epistemic power over ideas, as models like the neoclassical Phillips curve (Samuelson and Solow 1960) or New Keynesian Taylor rule (Taylor 1993) guide macroeconomic fine tuning, displacing regulatory or legal mechan- isms. Finally, overconfidence in such models can acquire a structural power that obscures new sources of market power, engendering crisis. From this theoretical foundation, I then offer a historical analysis of the neoliberal order. In the con- struction stage, the Reagan and Thatcher era use of rhetorical power supported the construction of neoliberal principled ideas, which justified efforts to break the market power of labour and liberalize financial markets. In the Blair- and Clinton-era conversion stage, neoliberal principles received more refined expression as economists and central bankers acquired epistemic power over ‘New Keynesian’ causal ideas, which obscured the macroeconomic benefits of regulation and fuelled overconfidence in monetary policy. In the crisis stage, the structural power of New Keynesian ideas – which took on lives of their own – led Bernanke- and King-era central bankers to overrate the likelihood of wage-price inflation and accommodate the market power driving the sub- prime bubble. In the conclusion, I address theoretical and policy implications

W. Widmaier: The power of economic ideas – through, over and in – political time 339

– emphasizing the social psychological aspects of this argument, which go beyond a stress on ideational contestation to highlight the shared precognitive biases shaped by the different forms of ideational power across time.

VARIETIES OF INSTITUTIONALISM: FROM POLITICAL TIME TO POLICY TENSIONS

In tracing the interplay of order, crisis and change, paradigmatic and insti- tutional ‘turns’ in recent years have provided important insight into the con- struction of policy orders. However, they have also led IPE scholars to overrate the scope for self-reinforcing change. Consider that paradigmatic per- spectives – in spite of differences over the material or intersubjective nature of structures – share views of order development as shaped by institutional, coali- tional or norm entrepreneurs who enable self-reinforcing change, obscuring ten- sions that can renew instability.

2 Likewise, even as sociological, rational choice

and historical institutionalists differ over the roles of normative constraints, material incentives or bureaucratic structures, each casts such arrangements as self-reinforcing, obscuring potential pathologies that may hasten order decline.

3 To offset such biases toward stability, scholars in recent years have

directed attention to the means by which agents not only stabilize but also subvert prevailing orders. Perhaps most prominently, historical institutionalists interested in gradual change have posited that shifts in the coalitional distri- bution of power can spur incremental adjustments to prevailing orders. Yet, while offering a partial advance, these analyses remain limited where they obscure both the prior role of ideas in shaping coalitional interests and the idea- tional tensions which can exert order-subverting effects. To redress these over- sights, discursive institutionalist analyses have emerged in recent years to stress not only the role of ideas in shaping coalitional and institutional interests, but also the ideational tensions that can disrupt the social balance between them. Over this section, I juxtapose these perspectives in ways that highlight the importance of ideational tensions across political time.

Historical institutionalism: political time absent intersubjective tensions

In recent debates, institutionalist debates over stability and change have been domi- nated by what Capoccia and Keleman (2007: 344) term ‘dualist’ models of order development, which contrast shifts from critical junctures marked by ‘rapid change’ to ‘longer phases of relative stability’. Perhaps most prominently, Paul Pierson (2000: 251 – 4) casts such junctures as marked by the emergence of ‘adap- tive’ expectations which assume a self-reinforcing force as they give rise to arrange- ments that ‘can be virtually impossible to reverse’ as they yield increasing returns over time. Pierson elaborates that such choices are marked by strategic – albeit not absolute – efficiencies where agents’ expectations imbue their choices with a ‘self-fulfilling character’ as they ‘adapt their actions in ways that help make those expectations come true’. Yet, even as such dualist models have offered real insights,

340 Journal of European Public Policy

their emphases on self-reinforcing adjustment remain limiting where they obscure later developments that can exacerbate tensions and fuel order decline.

Partly to redress this overemphasis on the potential for early, self-fulfilling dynamics, historical institutionalist scholars like Mahoney and Thelen (2010) have countered that dualist analyses risk overrating the importance of critical junc- tures relative to later adjustments, stressing shifts in the coalitional balance of power that can combine with institutional ambiguity to enhance opportunities for incremental stabilization.

4 Characterizing the means to such gradual adjust-

ments, Mahoney and Thelen (2010: 16 – 18) identify a range of mechanisms like the conversion of ideas as ‘interpreted and enacted in new ways’ or the displa- cement of outmoded institutions as new ones in turn take their place. Such theor- etical refinements have highlighted a wider array of opportunities for agency and change, beyond the dichotomy of exogenous shocks and self-reinforcing stability.

However, even as Mahoney and Thelen have advanced debate, they have also taken two steps back where their ‘power distributional’ view that overrates the coa- litional bases of institutional interests and obscures the ideational tensions that can endogenously undermine orders, if not cause crises themselves. First, Mahoney and Thelen (2010: 7 – 9; emphasis original) offer a power-distributional view of institutions ‘as distributive instruments laden with power implications’. From this perspective, institutional stability ‘rests not just on the accumulation but also on the ongoing mobilization of resources’, leaving ‘source[s] of change’ to reside in ‘shifts in the [coalitional] balance of power’. Yet, such assumptions obscure the need for agents to interpret material incentives before they react to them. More broadly, they downplay the ways in which interests reflect not merely where institutional agents ‘sit’ but also how they ‘think.’ From this per- spective, neither coalitional nor institutional agents can ‘know’ their interests outside a social context – as capital may define in interests in higher wages to raise demand or lower wages to reduce labour costs as a means to profits. Likewise, market power itself may be employed with an eye to varied public or private inter- ests – as across the contrasting Keynesian and neoclassical eras. Second, to the extent that Mahoney and Thelen treat institutional agents as restoring efficiencies through adaptive, order-sustaining mechanisms, this obscures scope for maladap- tive, order-eroding adjustment. For example, they obscure the ways in which ambiguity enables not only élite rationalization of cognitively defined rules and procedures, but also ‘irrationalization’ as élites grow insulated from public debates in ways that exacerbate tensions between causal frameworks and prin- cipled beliefs. Put differently, to the extent that mechanisms like conversion can reshape ideas in ways that fuel hubris and overconfidence, it is necessary to focus on the ideational tensions which can sustain or subvert a prevailing order.

Discursive institutionalism: intersubjective tensions and mechanisms in time

To redress this neglect of tensions and pathologies, discursive institutionalist insights – most importantly found in the work of Vivien Schmidt (2008,

W. Widmaier: The power of economic ideas – through, over and in – political time 341

2010) – have emerged in recent years to stress both the structural variation in types of ideas which shape interests and the rhetorical forms and practices that stabilize or disrupt them. In this way, such approaches speak to the ‘structure – agent’ relationship, acknowledging the weight of enduring types of ideas that shape policy interests – but also ways in which agents can employ rhetorical practices to sustain or reshape structures. Beginning with a structural perspec- tive, Schmidt (2008: 306 – 8) contrasts two types of broader ideas – in prin- cipled beliefs regarding ‘what’s right’ and causal beliefs regarding ‘what works’. In a foundational sense, principled ideas identify ‘what one ought to do’ as they ‘attach values to political action and serve to legitimate the policies in a program through reference to their appropriateness’. In policy settings, they identify how ‘policies meet the aspirations and ideals of the general public’ and ‘resonate with a deeper core of . . . principles and norms of public life’. In con- trast, cognitive or causal ideas ‘provide the recipes, guidelines and maps for pol- itical action and serve to justify policies and programs by speaking to their interest-based logic and necessity,’ defining ‘what is and what to do’.

In turn, such syntheses must also be sustained or transformed via different types of rhetorical practices, as Schmidt (2008: 310) contrasts two types of ‘communicative’ and ‘coordinative’ discourses: while communicative discourses involve ‘the presentation, deliberation, and legitimation of political ideas to the general public’ in ways that are marked more by efforts to inspire and transform than to educate or inform, co-ordinative forms are more narrowly comprised of agents ‘at the center of policy construction who are involved in the creation, elaboration, and justification of policy and programmatic ideas’. In terms of the agent – structure relationship across these realms, the balance between types of ideas is always sustained by communicative and co-ordinative practices, until excesses in either direction fuel potential instability. Yet, even as discursive institutionalists direct crucial attention to sources of ideational tensions, they abstract to some degree away from a sense of political time and the sequential dynamics which can exacerbate or ease ideational conflicts.

To the extent that the theoretical challenge is to integrate historical and dis- cursive concerns for ‘tensions in time’, I suggest that Carstensen and Schmidt (2016) have offered an important foundation for a more sequential approach, as their formulations of ideational power can be used to track stages of political development. In a foundational sense, Carstensen and Schmidt argue that ‘idea- tional power occurs when actors have a capacity to persuade other actors of the cognitive validity and/or normative value of their world view through the use of ideational elements’. Given this basis, where agents employ power to reshape normative or cognitive beliefs in different ways over political time – or fail to recognize the scope for such practices – this can provide a basis for distinguish- ing stages in the construction, conversion and crises of political orders. Put in abstract terms: first, Carstensen and Schmidt stress rhetorical power that inter- pretive leaders wield through communicative appeals that characterize order construction, when principled foundations prefigure cognitive beliefs; second, they highlight the epistemic power employed as ‘stability causes instability’

342 Journal of European Public Policy

(Minsky 1986) and a loss of public attention sees interpretive leaders cede power to institutional and intellectual agents who reduce principled foundations to cognitive frameworks. Finally, they address the structural power in ideas which obscure the need for change and lead to crisis. Of course, none of this amounts to an issue-specific theory, and so it remains necessary to distinguish these types of power and their effects in an issue-specific analysis of economic policy orders.

IDEATIONAL POWER ACROSS TIME: CONSTRUCTION, CONVERSION, CRISIS

In this section, given a recognition of different forms of ideational power, I the- orize that one can identify corresponding stages in political time – as well as issue-specific implications for economic policy orders. First, the initial construc- tion of an economic policy order sees interpretive leaders employ rhetorical power in the construction of regulatory or legal restraints on market power. Second, to the extent that such restraints obscure the existence of market power, they provide opportunities for agents employing epistemic power to advance the intellectual conversion of ideas, refining models of macroeconomic trade-offs to enable efforts at fine tuning. Finally, as such ideas acquire a self-sus- taining structural power, they obscure new concentrations of market power that can lead to renewed crisis. In sum, the principled economic ideas that initially reduce uncertainty (Blyth 2002) can fuel a misplaced certainty, overconfidence and renewed crisis.

Stage 1: rhetorical power through ideas: interpretive leaders and market power

First, I posit that the construction of orders, or sets of ideas and interests, occurs as interpretive leaders employ rhetorical power through appeals that legitimate new principled beliefs, which in turn shape the causal ideas that more directly constitute state and societal interests. Speaking to this hierarchy, Carstensen and Schmidt (2016:) argue that ‘[t]here are many different ways in which power through ideas can manifest itself, with persuasion resulting from different processes or mechanisms’ that shape broader principled beliefs. In terms of the social distribution of knowledge, such principled appeals prefigure cognitive views in two ways. First, in communicating directly with the wider public and norm entrepreneurs, interpretive leaders ‘ratchet together’ popular values and cognitive beliefs, and so ground an intellectual consensus in principled foundations. Second, where leaders employ communicative appeals to infuse emotion into constructions of events, this can provide a reflexive basis for popular support, and so increase the available stock of ‘social capital’ that leads coalitional agents to co-operate or comply without expending resources.

In economic policy terms, such rhetorical appeals matter most, as they support regulatory or legal efforts to limit abuses of market power across a

W. Widmaier: The power of economic ideas – through, over and in – political time 343

range of sectoral contexts, in commodity, labour or financial markets. Prin- cipled foundations for efforts to contain monopolistic or oligopolistic abuses matter first because of the need for popular legitimacy – as principled beliefs predispose agents in an affective sense toward more refined causal models. They matter secondly because the spread of such beliefs will enable market agents to reflexively exercise the ‘spontaneous’ restraint necessary to maintain regulatory restraints absent a sense of shared restraint. In terms of the wider policy mix, the construction of such principled foundations can have specific implications for the efficacy of macroeconomic policy, as regulat- ory restraints on market power ease ostensible policy trade-offs as in Phillips curve relationship between inflation and unemployment (Samuelson and Solow: 1960) or notions of a Taylor curve between the volatility of inflation and output (Taylor: 1993). While such trade-offs justify policy efforts to ‘lean against the wind’ of inflation or unemployment, restraints on market power can limit the intensity of underlying wage- or asset-price pressures. However, to the extent that no regulatory order can exist absent principled bases of sentimental and reflexive support, this highlights a key source of instability, as the passage of time may obscure the need for ongoing, prin- cipled leadership. Indeed, as intellectual or institutional agents attribute stab- ility to their own macroeconomic expertise, they may overrate the scope for fine tuning and underrate the potential for revived market power. In such contexts, stability of beliefs can paradoxically presage increased economic instability.

Stage 2: epistemic power over ideas: intellectual conversion and macroeconomic policy

Over time, as the principled foundations of orders enhance policy consensus and effectiveness, interpretive leaders may cede their authority to institutional agents possessing specialized knowledge and resources. In such contexts, as the scope for debate is reduced, this can lead to the intellectual conversion of prin- cipled understandings into causal models. This conversion can in turn lead to the displacement of institutional arrangements, as bureaucratic agents limit regulatory appeals in favour of ostensibly more apolitical fine tuning. Over time, such tendencies may fuel an overreliance on co-ordinative discourses and prompt ‘flights into reason’ as agents overrate the scope for policy control, justifying their broader insulation from leaders and publics alike. In effect, this can be seen as a variety of Minsky’s (1986) insight that stability can cause instability, as prolonged stability prompts the public and leaders to discount potential abuses of market power, expanding the scope for macroeco- nomic risk management. Characterizing this ability of agents in positions of epistemic authority to limit the scope for debate, Carstensen and Schmidt (2016:) suggest that ‘power over ideas shows itself is in the ability of actors – nor- mally quite powerful also in terms of institutional position and authority – not to listen, i.e., a capacity to resist alternative ideas’.

344 Journal of European Public Policy

Under such conditions, where policy-makers abstract away from the prin- cipled bases of regulatory orders, this can undermine regulatory consent and the stability of posited macroeconomic relations. First, where economic policy ideas are converted from principled to cognitive forms, this can under- mine not only communicative efforts to sustain the legitimacy of principled restraints on market power, but also reflexive or self-reinforcing market restraint. Put more simply, to the extent that no rule can be enforced strictly through the provision of coercion or incentives, the displacement of principled beliefs can undermine the above-mentioned sentimental legitimacy and reflexive effectiveness of regulatory or legal restraints. Second, the displacement of regu- latory institutions can have a self-reinforcing effect in rendering macroeconomic trade-offs more volatile. While such volatility can be managed for a time, even the most skilled macroeconomic helmsman will eventually be overwhelmed by wage-price or asset-price pressures. In such circumstances, ever-greater macroe- conomic activism becomes necessary to maintain past wage-price or asset-price trends, as ongoing accommodation foreshadows renewed crisis.

Stage 3: structural power in ideas: institutional pathology and re- emergent market power

Over time, cognitive frameworks may acquire a structural power that further limits adjustment that ironically constrains macroeconomic policy-makers themselves. When ideas acquire this structural weight, as Carstensen and Schmidt (2016:) argue, they work ‘at a deeper level than [mere] policy ideas . . . and are often left unarticulated as background knowledge’. Past a certain point, they constrain the options of élite agents themselves, acquiring the force of self-imposed blinders, limiting the ‘policy options they themselves believe to be normatively acceptable’. In such settings, ideational power resides neither in the hands of rhetorical leaders or norm entrepreneurs, but rather comes to assume a self-reinforcing structural life of its own – at least until crisis hits.

This is particularly the case where intellectual conversion sees increasing reliance on models like the Phillips curve or Taylor rule enable misplaced policy and market confidence in macroeconomic fine tuning. For example, given the identification of a policy rule for stabilizing inflation – i.e., in Taylor rule fashion that increased inflation requires a greater increase in real interest rates – policy-makers may view the publication of such rules as stabiliz- ing market expectations. Yet, as Jacqueline Best (2005) has noted, such unani- mity may just as easily reduce variation in market expectations in ways that prove destabilizing, offsetting benefits of diversification. More formally, as Charles Goodhart (1975) noted, the public definition of rules drawn from past correlations can give rise to new expectations that undo those past corre- lations. Such excesses have been most famously described where the use of the Phillips curve to guide fiscal policy gave rise to 1970s wage-price behaviour that undermined the descriptive merit of the curve itself. The longer the

W. Widmaier: The power of economic ideas – through, over and in – political time 345

interplay of accommodation and concentration goes on, the harder it is reverse – as crises may grow increasingly serious over time, with order reconstruction occurring over bouts of instability.

METHODS AND CASE SELECTION

Over the following sections, I apply this historical – discursive synthesis to make sense of the rise and demise of the neoliberal order in the US and UK. In struc- tured, focused fashion, I show how interpretive leaders initially employed rhe- torical power to construct the neoliberal order, institutional and intellectual élites acquired epistemic power in seeking to refine New Keynesian causal ideas, until the structural power in New Keynesian ideas obscured the rise of the subprime bubble. The US and UK comprise ‘least likely’ cases on grounds that their liberal characters render them less likely than other states to accommodate market power. Similarly, the economic issue-area comprises a ‘least likely’ arena, as near-perfect information should enable agents to identify and contain asset-price bubbles.

THE CONSTRUCTION AND CRISIS OF NEOLIBERALISM: POWER THROUGH, OVER AND IN IDEAS

In addressing the construction and ongoing crisis of the neoliberal economic policy order in the US and UK, I first highlight the importance of interpretive leadership in employing rhetorical power through ideas to legitimate the neolib- eral order. In particular, Reagan’s and Thatcher’s libertarian justifications for breaking labour power worked to limit wage pressures, but also undermined key sources of demand. Second, as the neoliberal order would be stabilized, I argue that Clinton and Blair recognized the importance of new financial sources of demand and growth, and so acquiesced to the epistemic power over ideas of central bankers and professional economists as a means to sustain asset-price appreciation. Finally, this set the stage for intellectual and insti- tutional overconfidence as the structural power in ideas – particularly as the Taylor rule-inspired stress on the need to contain wage-price pressures obscured the asset-price instability that drove the subprime boom presaged the global financial crisis.

Stage 1: rhetorical power through ideas: constructing the neoliberal order

Over the 1970s, the post-war Keynesian order would come under increasing pressure as constructions of the ‘Great Stagflation’ cast fiscal fine tuning as insuf- ficient to contain the market power of labour behind recurring wage-price spirals. Indeed, such fiscal policy was constructed as itself enabling the accelera- tion of wage-price pressures. Employing rhetorical power to make the case for this view, Ronald Reagan would assert in his first inaugural address that ‘in

346 Journal of European Public Policy

this present crisis, government is not the solution to our problem; government is the problem’ (Reagan 1981a). Reagan would go on to reinforce this claim by espousing an anti-government populism as he denounced ‘government by an elite group’

5 Likewise, Prime Minister Margaret Thatcher would later employ

a critique of egalitarian values in asserting that ‘we have gone through a period when too many children and people have been given to understand “I have a problem, it is the Government’s job to cope with it!”’ countering that ‘there is no such thing as society’. In each case, these leaders offered principled assertions that broke with a post-war egalitarianism and prefigured cognitive arguments against the Keynesian accommodation of wage-price spirals. In this light, the key difference between the Keynesian and neoliberal orders would be not any ostensible commitment to efficient markets, but rather a shift in the locus of market power – away from the use of labour power to drive wages and toward the use of financial power to reinforce asset values.

Subsequently, this value-laden appeal would support macroeconomic and antitrust policy shifts that broke the market power of labour. In a basic sense, macroeconomic restraint would play a key role in ensuring wage-price quies- cence over the early 1980s. However, monetary policy on its own would have only repressed wages for a few years had it not been joined to institutional and normative shifts in labour – management relations. Of more lasting impor- tance was Reagan’s mid-1981 dismissal of illegally striking Professional Air Traffic Controllers Organization (PATCO) workers – later cast by Volcker (2000) as having had ‘a profound effect on the aggressiveness of labour’. More- over, PATCO represented a particularly appealing target as its stand was not popular with either labour allies at the American Federation of Labor and Con- gress of Industrial Organizations (AFL-CIO) or the wider public. In this setting, Reagan (1981b) was able to infuse the strike with an emotional power, con- demning the strikers for a stoppage that was ‘in violation of the law’. Over this period, labour’s ability to carry off large-scale strikes would accordingly dwindle: From 1960 to 1980, the number of major work stoppages involving at least 1,000 workers had averaged more than 286 annually. By the 2000s, it would fall to 20 (McCartin 2011: 348 – 51).

Similarly, in the UK, the most important measures to repress wages were not simply found in macroeconomic restraint, but in regulatory and legal measures. The Thatcher government would push through a series of acts which limited the autonomy of unions – across the 1982 Employment Act, which increased the legal rights of employers to sue and potential liabilities to be faced by unions; the 1984 Trade Union Act, which limited the autonomy of union leader- ship vis-à-vis the rank and file; and the 1988 Employment Act, which enhanced regulatory oversight of union finances. These measures would prompt reductions in the number of industrial stoppages and the magnitude of union membership itself, paralleling the above-noted declines in the US. In terms of work stoppages, the number of days lost to strikes fell from its peak in the critical – and eventually broken – 1984 – 5 National Union of Mineworkers’ strike, with more than 27 million days lost in 1984, to a post-war low of 157,000 days lost in 2005.

W. Widmaier: The power of economic ideas – through, over and in – political time 347

Likewise, union membership would fall from a peak of 12.2 million in 1982 to 6.5 million by 2005 (Barlow 2009: 272 – 3).

To the extent that inflation is not simply a monetary phenomenon, the weak- ening of labour would remove a key institutional source of wage-price pressures, in a way that persisted into the twenty-first century. Ironically, however, the weakening of wage-driven demand would provide a further spur to monetary policy activism in the construction of the neoliberal order, as central bankers would employ a New Keynesian approach to ‘fine tuning’ – shifting between monetary tightening to limit wage-price pressures and monetary easing to enable ‘soft landings’ of the business cycle – as well as lender-of-last activism following recurring financial crises. Claims for efficient markets notwithstand- ing, this policy activism would enjoy increasing support over the 1990s amid a rising trend toward central bank autonomy.

Stage II: epistemic power over ideas: consolidating the new Keynesian neoliberal order

Over the mid-1980s, Reagan- and Thatcher-styled communicative rhetoric would be refined in a more technocratic exercise of epistemic power over ideas, to enable a New Keynesian discretionary monetary policy. The essence of the New Keynesian approach was to manage short-run tensions between growth and price stability, while also accommodating the recurring asset-price bubbles that had grown more important as a source of demand. Speaking to the intellectual climate of the day, economist Gregory Mankiw (1992: 446 – 9; emphasis original) would cast New Keynesians as ‘keepers of the faith that policymakers face a short-run tradeoff between inflation and unemployment’ – with monetary policy being the primary lever of control. Moreover, given the importance of private credit provision to growth in the US and UK alike, Reagan’s and Thatcher’s successors in Clinton and Blair would come to realize that they had limited the scope for reviving a wage-driven order, and so would refrain from challenging the core role of central banks.

From the US vantage, while Clinton had initially aspired to the status of a Roosevelt in arguing that he would close an ‘investment deficit’ and launch an array of new programmes, he would soon find early projections of rising def- icits foreclosing his options. With key advisers arguing for deficit reduction, Clinton objected forcefully at one point to arguments that ‘the success of the program and my reelection hinges on the Federal Reserve and a bunch of fucking bond traders’ (Woodward 1994: 84). Yet, Clinton would ultimately retreat, offering concessions to the neoliberal agenda in a February 1993 address unveiling his economic plan, arguing that his budget would enable shifts ‘from consumption to investment’ (Clinton 1993). Moreover, the admin- istration would court and receive public support from Federal Reserve Chair- man Alan Greenspan in congressional testimony, who would argue that Clinton was ‘to be commended for placing on the table’ a plan that was ‘serious’ and ‘plausible’ (Woodward 1994: 143 – 4) that would engender

348 Journal of European Public Policy

financial confidence and lower long-term interest rates, enabling sustained investment-led growth. Moving forward, given the epistemic power of the Federal Reserve to ignore public appeals, the Clinton administration would seek to influence monetary policy by placing sympathetic New Keynesian econ- omists on the Federal Reserve Board. This led off in mid-1994 with the nomi- nations of Princeton’s Alan Blinder and Berkeley’s Janet Yellen, who would push Greenspan slowly in an easing direction, and the Federal Reserve would propose its first outright rate cut of the Clinton era in July 1995 – leading to the 1995 – 6 ‘soft landing’ of the economy. Looking back, Greenspan (2007: 165 – 6) would term this ‘one of the Fed’s proudest accomplishments’ as he grew increasingly confident in a ‘risk management’ approach. Such a stress on monetary fine tuning – to accommodate the demands of financial markets – would be sustained across the remainder of the Clinton administration. In macroeconomic terms, this was reflected in administration fealty to the pursuit of a balanced budget – finally achieved in its later years. In legislative terms, the Clinton administration’s most important final acts were to support laws repealed Glass – Steagall-era restrictions on banking activities in the Finan- cial Services Modernization Act of 1999 and to prohibit the regulation of derivatives in the Commodity Futures Modernization Act of 2000. Speaking to the market impact of such measures – and central bank accommodation – the Clinton years would see the Dow Jones Industrial Average triple in value, from 3,300 in January 1993 to nearly 11,000 in January 2001 – a rate which even the later Bush years could not match, as the Dow would peak at 14,165 in October 2007. More importantly, however, through this period wages would broadly continue decline, as growth derived from asset-price increased.

In the UK ‘New Labour’ under Blair would parallel Clinton in seeking to appease finance – given the absence of wage-driven demand – and refrain from any challenges to the Bank of England. Indeed, to the extent that Blair could go further than Clinton, he would immediately establish the policy inde- pendence of the Bank of England. This served to recognize the epistemic power of monetary policy élites and the need to cultivate credibility on these ensuing terms by according the central bank greater autonomy. As Watson and Hay (2003: 298) would later note, the Blair government had sought to maximize its policy credibility by constructing an institutional guarantee, ‘placing the key instrument of contemporary monetary policy beyond the direct control of the Treasury’ as ‘Labour effectively externalised responsibility for counter- inflationary credibility’ in a ‘deliberate attempt to depoliticise domestic monet- ary policy relations’, reflecting the assumption, as the Daily Telegraph put it, ‘that “the City . . . believes that the Bank will be a lot less tolerant about inflation than any government could be”’. Affirming the merit of a more intellectualized debate – as intellectual conversion enhanced the epistemic power of expertise – Watson and Hay (2003 297) further note Blair’s technocratic call in November 1997 for ‘a politics no longer scarred by the irrelevant ideological battles of much of the twentieth century. . . . [M]ost of the left/right tags today are nothing but obstacles to good thinking.’

W. Widmaier: The power of economic ideas – through, over and in – political time 349

On each side of the Atlantic, such technocratic overconfidence would inten- sify over the next decade. Yet, the success of New Keynesian ideas would also imbue them with a mounting structural power, which found expression in increasingly rigid policy macroeconomic frameworks. To the extent that these macroeconomic models – most notably, the Taylor rule – can be seen as tying interest rate settings to a balanced ‘nominal’ concern for inflation and a ‘real’ concern for gross domestic product (GDP) growth, they embodied an increasingly unbalanced concern for wage-price over asset-price pressures. Over time, to the extent that such fears of revived inflation were structurally embedded in the macroeconomic frameworks of a new generation of intellectual and institutional leaders, they would persistently overrate the danger of inflation and underrate the danger of financial instability – a structural source of instabil- ity that would prevail through to the Global Financial Crisis itself.

Stage III: structural power in ideas: neoliberal pathology and crisis

Overconfidence in the cognitive merit of New Keynesian ideas would assume a self-reinforcing force over the next decade, as monetary policy-makers fell into the trap of ‘fighting the last war’ and focusing more on containing wage-price pressures than financial instability. Speaking to the structural con- centration of intellectual power in the social distribution of knowledge, the Massachusetts Institute of Technology (MIT) Economics Department – which had housed key early-1960s supporters of the Phillips curve in Paul Samuelson and Robert Solow – would be populated in parallel fashion by intellectual New Keynesians in the 1980s. Subsequent Federal Reserve Chair- man Ben Bernanke and Bank of England head Mervyn King even worked in adjoining offices at MIT – and Solow himself would serve as a reader on Bernanke’s dissertation committee. Paralleling the Samuelson and Solow neo- classical analysis of the Phillips curve trade-off, which obscured the role of market power in driving the wage-price spiral, Bernanke and King came to favour a similar Taylor rule approach which similarly overlooked the financial sources of asset-price bubbles. For example, speaking at Jackson Hole, King (1999: 23) would endorse a view of monetary policy-making as guided by a ‘back-of-the-envelope calculation, based on the assumption that the central bank follows a “Taylor rule” under which interest rates are raised or lowered according to whether output is above or below trend and inflation is above or below its target level.’ King would even cite Bernanke in charac- terizing this inflation targeting approach as benefiting from a ‘constrained dis- cretion’ (Bernanke and Mishkin, and King quoted in King 1999: 23) of central banks. Characterizing support for the Taylor rule, Asso et al. (2007: 6) would later stress its merits in moving beyond the often ideological nature of new classical scholarship of the 1970s, instead offering a pragmatic heuristic ‘in a language devoid of rhetorical passion’. Indeed, these ideas had such a broad acceptance among the epistemic community of leading econom- ists that Taylor-styled arguments would likely have influenced academic

350 Journal of European Public Policy

debate across the 1990s – -2000s – even if Bernanke and King had each refrained from policy engagement.

Yet, while the Taylor framework has merit as a heuristic, its structural dom- inance would fuel two broad types of oversights: these pertained to a lack of concern for asset-price stability – reflecting a failure to recognize monetary policy’s own role in accommodating asset-price bubbles – and an excess of concern for wage-price pressures – reflecting a failure to recognize the legal limits on labour power. Speaking first to the former lack of concern for bubbles, as late as March 2007, Bernanke testified that ‘the problems in the sub- prime market were likely to be contained’ (Financial Crisis Inquiry Commission 2011: 16 – 17). Indeed, even as financial instability threatened, monetary policy would stress the need to limit wage-price pressures and the Federal Reserve refrained from any reduction until a half-point cut in September 2007. In June 2008, Bernanke (2008, emphases added) warned of the potential for a wage-price spiral, arguing that ‘the possibility that commodity prices will con- tinue to rise [is] . . . an important risk to the inflation forecast’. Elaborating, he warned that if the ‘currently high level of inflation’ were sustained, that ‘might lead the public to revise up its expectations for longer-term inflation’ in ways that could become ‘embedded in the domestic wage- and price-setting process’. Such concerns speak to the importance of structural power in assuming a life of its own, fuelling pathological fears of wage-price pressures – when the collapse of Lehman Brothers would come within three months.

From the UK perspective, similar structural predispositions to fear labour’s market power were evident at the Bank of England, where debate concerned the relative importance of inflation or unemployment, with King’s concern for inflationary restraint being opposed on the rate-setting Policy Committee by Dartmouth professor David Blanchflower, who feared a larger slump. Even in the aftermath of the collapse of Bear Stearns, through mid-2008, King had resisted Blanchflower’s pressure for rate cuts, keeping the policy rate at 5 per cent into early September to ward off a wage-price spiral. On 11 September 2008, Blanchflower and King together addressed the House of Commons’ Treasury Committee, where Blanchflower admitted to a ‘more doom-laden view’, warning that ‘I think we are going to see a deeper decline than others think.’ In contrast, King testified, ‘I do not think we really know what will happen to unemployment . . . At least, the Almighty has not vouch- safed to me the path of unemployment data over the next year. He may have done to Danny, but he has not done to me.’ Blanchflower later recalled think- ing, ‘Well, I just read the data,’ and considerable annoyance with his colleague (Irwin 2013: 137 – 9). Only a few days later, Lehman Brothers would collapse – revealing the irrelevance of wage-price spirals in an era of asset-price bubbles. Taken together, Bernanke and King had so internalized models premised on the need to contain wage-price spirals that they ignored the asset-price bubble accelerating in their midst – and so the inability to overcome the structural power of New Keynesian ideas provided a key endogenous source of the global financial crisis.

W. Widmaier: The power of economic ideas – through, over and in – political time 351

CONCLUSIONS: THEORETICAL AND POLICY IMPLICATIONS – IDEAS AND POWER IN POLITICAL TIME

In this contribution, I have integrated insights from historical and discursive institutionalism to offer a staged theory of the construction, conversion and crisis of economic policy orders. More formally, I have argued that orders evolve across stages marked by the use of rhetorical, epistemic and structural forms of ideational power. These manifest themselves as interpretive leaders establish principled restraints on market power, institutional agents refine causal ideas regarding macroeconomic fine tuning, and the structural power in such causal ideas eventually obscures the emergent concentrations of market power that fuel renewed crisis. The result is not simply a straightforward analysis of ideational contestation, but a more social psychological analysis of the ways in which different forms of ideational power exacerbate shared biases that impede informational inefficiency over time. Empirically, I then applied this approach to trace the rise and decline of the neoliberal order, as early-principled justifications for efforts to break labour yielded to the insti- tutional shift toward central bank autonomy, and in turn to structural overcon- fidence in fine tuning, which obscured mounting instability.

Building on these claims, this analysis has important theoretical, historical and policy implications. In theoretical terms, it provides an endogenous theory of change, countering a limitation of the paradigmatic and institutional ‘turns’ of recent decades where they rely on exogenous crises to explain self-rein- forcing change. To be sure, paradigmatic and institutional efforts have provided insight into the effects of exogenous crises on the reconstruction of orders – in the norm cascades that drive policy ‘tipping points’ (Finnemore and Sikkink 1998) or the social learning that fuels paradigm shifts (Hall 1993). However, in the process, such paradigmatic and institutional analyses have overlooked the inefficiencies that can themselves cause crises – and impede post-crisis readjustment. In contrast, this analysis highlights the ways in which agents may collectively overrate one type of (cognitive) information and underrate another type of (principled) beliefs, generating intersubjective inefficiencies that provide endogenous sources of ostensibly exogenous shocks.

In terms of historical implications, this analysis directs attention to the ways in which economic policy orders always rest on some degree of ‘embedded’ intervention. More specifically, it counters historical accounts which cast the shift from Keynesian to neoliberal orders as marked by shifts from interventionist to non-interventionist orders. Such views underrate the ways in which each order was based on efforts to reshape the balance of market power – as the Keynesian order was marked by initial efforts to restrain capital and the neoliberal order was marked by parallel efforts to place restrictions on labour. In turn, parallel patterns of gradual change also marked the development of each order, as the neoclassical synthesis and New Keynesian frameworks each provided justifications for attempts at fine tuning that would produce diminishing returns over time.

6 From this

352 Journal of European Public Policy

perspective, economic orders are distinguished less by the extent of state intervention than by its purposes.

In terms of policy debates, this analysis finally highlights the extent to which the main constraints on policy are less to be seen as residing in enduring trade- offs than as functions of evolving ideational and institutional shifts. More specifically, it suggests that ostensible trade-offs between nominal and real vari- ables – e.g., inflation and unemployment – are exacerbated by ideational shifts across political time: in the early stages of the establishment of an economic order, principled appeals can enable policy-makers to ease macroeconomic trade-offs as regulatory or legal instruments blunt the effects of market power on wage-price or asset-price dynamics. Yet, paradoxically, the passage of politi- cal time can see the very success of regulatory or legal efforts obscure their neces- sity. To paraphrase Minsky (1986) – as noted above – policy stability can breed instability where policy-makers attribute success to the more visible mechanisms of fiscal or monetary policies. From this vantage point, the displacement of prin- cipled beliefs can ironically themselves bring macroeconomic trade-offs into being – as the single tool of macroeconomic demand management is charged with ‘hitting’ two targets. In this light, key policy constraints can be found not in enduring trade-offs between growth and monetary stability, but rather in ideas which obscure the use of market power and the scope for reforms to prevent the abuse of such power.

Biographical note: Wesley Widmaier is a senior lecturer in the Griffith Univer- sity Centre for Governance and Public Policy.

Address for correspondence: Wesley Widmaier, Centre for Governance and Public Policy Glyn Davis Building (N72) Griffith University 170 Kessels Road Nathan Qld 4111, Australia. email: [email protected]

ACKNOWLEDGEMENTS

For comments, I owe debts of gratitude to Daniel Béland, Martin Carstensen, Zim Nwokora, Susan Park, Craig Parsons, Leonard Seabrooke, Vivien Schmidt, Eleni Tsingou, and participants at the 2014 Copenhagen Business School Conference on ideas and power. I also gratefully acknowledge the support of an Australian Research Council Future Fellowship (FT100100833) and Discovery Grant (DP130104088).

NOTES

1 On punctuated and incremental change, see Mahoney and Thelen (2010); Moschella and Tsingou (2013); on political orders and political time – defined with respect to stages of order development – see Skowronek (1993). The key advantage of a stress on political time is in moving beyond a paradigmatic focus on discrete rational choices in favour of a stress on sequential inefficiencies that can cause mounting instabilities.

W. Widmaier: The power of economic ideas – through, over and in – political time 353

2 On paradigmatic debates, see Jackson and Nexon (2013). 3 For an overview of institutionalisms, see Hall and Taylor (1993); in an International

Relations setting, see Fioretos (2011). 4 While Mahoney and Thelen (2010) view institutional rules as ambiguous, they do

not view the underlying distribution of power in this light – and so theirs is a con- strained view of ambiguity’s scope. On ambiguity, see Best (2005).

5 Margaret Thatcher, interview for Woman’s Own (‘No such thing as society’), 23 Sep- tember 1987, available at http://www.margaretthatcher.org/document/106689 (accessed 2 December 2015).

6 To be sure, the early neoliberal order was marked by the use of efficient markets rhetoric to justify legal moves to fragment labour’s power. However, just as Paul Volcker’s embrace of monetarism served an instrumental purpose in enabling the Federal Reserve to raise interest rates – as Volcker abandoned monetarism in 1982 – efficient markets rhetoric would be qualified to recognize the role for mon- etary policy in stabilizing market expectations. Mankiw (2008) concedes as much in noting that ‘At the broadest level, new Keynesian economics suggests – in contrast to some new classical theories – that recessions are departures from the normal efficient functioning of markets.’

REFERENCES

Asso, P.F., Kahn, G. and Leeson, R. (2007) ‘The Taylor rule and the transformation of monetary policy’, Federal Reserve Bank of Kansas City Working Paper 07-11, available at https://www.kansascityfed.org/publicat/reswkpap/pdf/rwp07-11.pdf (accessed 2 December 2015).

Baker, A. (2013) ‘The new political economy of the macroprudential ideational shift’, New Political Economy 18(1): 112 – 39.

Barlow, K. (2009) The Labour Movement in Britain from Thatcher to Blair, Frankfurt: Peter Lang.

Bernanke, B. (2008) Semiannual monetary policy report to the Congress Before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate (July 15, 2008), available at http://www.federalreserve.gov/newsevents/testimony/bernanke20080715 a.htm (accessed 2 December 2015).

Best, J. (2005) The Limits of Transparency: Ambiguity and the History of International Finance, Ithaca, NY: Cornell University Press.

Blyth, M. (2002) Great Transformations: Economic Ideas and Institutional Change in the Twentieth Century, Cambridge: Cambridge University Press.

Blyth, M. (2013) ‘Paradigms and paradox: the politics of economic ideas in two moments of crisis’, Governance 26(2): 197 – 215.

Capoccia, G. and Kelemen, R.D. (2007) ‘The study of critical junctures: theory, narra- tive, and counterfactuals in historical institutionalism’, World Politics 59(3): 341 – 69.

Carstensen, M.B. (2011) ‘Ideas are not as stable as political scientists want them to be: a theory of incremental ideational change’, Political Studies 59(3): 596 – 615.

Carstensen, M.B. and Schmidt, V.A. (2016) ‘Power through, over and in ideas: concep- tualizing ideational power in discursive institutionalism’, Journal of European Public Policy.

Clinton, W.J. (1993) ‘Address Before a Joint Session of Congress on Administration Goals’, 17 February, available at http://www.presidency.ucsb.edu/ws/?pid=47232 (accessed 2 December 2015).

Cox, R.H. and Béland, D. (2013) ‘Valence, policy ideas, and the rise of sustainability’, Governance 26(2): 307 – 28.

354 Journal of European Public Policy

Financial Crisis Inquiry Commission (2011) ‘The Financial Crisis Inquiry Commission report, available at http://cybercemetery.unt.edu/archive/fcic/20110310173545/ http://c0182732.cdn1.cloudfiles.rackspacecloud.com/fcic_final_report_full.pdf (accessed 2 December 2015).

Finnemore, M. and Sikkink. K. (1998) ‘International norm dynamics and political change’, International Organization 52(4): 887 – 917.

Fioretos, O. (2011) ‘Historical institutionalism in International Relations’, Inter- national Organization 65(2): 367 – 99.

Gallagher, K. (2015) ‘Countervailing monetary power: re-regulating capital flows in Brazil and South Korea’, Review of International Political Economy 22(1): 77 – 102.

Goodhart, C. (1975) ‘Monetary relationships: a view from Threadneedle Street’, Papers in Monetary Economics, Vol. I, Sydney, Australia: Reserve Bank of Australia.

Grabel, I. (2015) ‘The rebranding of capital controls in an era of productive incoher- ence’, Review of International Political Economy 22(1): 7 – 43.

Greenspan, A. (2007) The Age of Turbulence, New York: Penguin. Hall, P. (1993) ‘Policy paradigms, social learning and the state: the case of economic

policy-making in Britain’, Comparative Politics 25(3): 275 – 96. Hall, P. Taylor, R. (1996) ‘Political science and the three new institutionalisms’, Politi-

cal Studies 44(5): 936 – 57. Irwin, N. (2013) The Alchemists, New York: Penguin. Jackson, P. and Nexon, D. (2013) ‘International theory in a post-paradigmatic era:

from substantive wagers to scientific ontologies’, European Journal of International Relations 19(3): 543 – 65.

Helleiner, E (2010) ‘A Bretton Woods moment? The 2007-2008 crisis and the future of global finance’, International Affairs 86(3): 619 – 36.

Henriksen, L.F. (2013) ‘Economic models as devices of policy change: policy paradigms, paradigm shift, and performativity’, Regulation and Governance 7(4): 481 – 95.

King, M. (1999) ‘Challenges for monetary policy’, in New Challenges for Monetary Policy, Federal Reserve Bank of Kansas: Kansas City, pp 11 – 58, available at https://kansascityfed.org/PUBLICAT/SYMPOS/1999/s99king.pdf (accessed 10 May 2015).

Mahoney, J. and Thelen. K. (2010) Explaining Institutional Change: Ambiguity, Agency and Power, Cambridge: Cambridge University Press.

Mankiw, N.G. (1992) ‘The reincarnation of Keynesian economics’, European Economic Review 36: 559 – 65.

Mankiw, N.G. (2008) ‘New Keynesian economics’, The Concise Encyclopedia of Econ- omics, available at http://econlib.org/library/Enc/NewKeynesianEconomics.html (accessed 10 May 2015).

McCartin, P. (2011) Collision Course, New York: Oxford University Press. Minsky, H. (1986) Stabilizing an Unstable Economy, New Haven, CT: Yale University Press. Moschella, M. and Tsingou, E. (2013) Great Expectations, Slow Transformations: Incre-

mental Change in Financial Governance, Colchester: ECPR Press. Pierson, P. (2000) ‘Increasing returns, path dependence, and the study of politics’,

American Political Science Review 94(2): 251 – 67. Reagan, R. (1981a) ‘Inaugural Address’, 20 January, available at http://www.

presidency.ucsb.edu/ws/?pid=43130 (accessed 2 December 2015). Reagan, R. (1981b) ‘Remarks and a question-and-answer session with reporters on the

air traffic controllers strike’, 3 August, available at http://www.presidency.ucsb.edu/ ws/?pid=44138 (accessed 2 December 2015).

Samuelson, P. and Solow, R. (1960) ‘Analytical aspects of anti-inflationary policy’, American Economic Review 50: 177 – 94.

Schmidt, V. (2008) ‘Discursive institutionalism: the explanatory power of ideas and dis- course’, Annual Review of Political Science 11: 303 – 26.

W. Widmaier: The power of economic ideas – through, over and in – political time 355

Schmidt, V. (2010) ‘Taking ideas and discourse seriously: explaining change through discursive institutionalism as the fourth “new institutionalism”’, European Political Science Review 2(1): 1 – 25.

Skowronek, S. (1993) The Politics Presidents Make, Cambridge, MA: Harvard Univer- sity Press

Taylor, J. (1993) ‘Discretion versus policy rules in practice’, Carnegie-Rochester Confer- ence Series on Public Policy 39: 195 – 214, available at http://www.stanford.edu/~ johntayl/Onlinepaperscombinedbyyear/1993/Discretion_versus_Policy_Rules_in_ Practice.pdf (accessed 2 December 2015).

Tsingou, E. (2014) ‘The club rules in global financial governance’, The Political Quar- terly 85(4): 417 – 19.

Volcker, P. (2000) ‘Interview’, The Commanding Heights, available at http://www.pbs. org/wgbh/commandingheights/shared/minitext/int_paulvolcker.html (accessed 24 September 2014).

Watson, M. and Hay, C. (2003) ‘The discourse of globalisation and the logic of no alternative: rendering the contingent necessary in the political economy of New Labour’, Policy and Politics 31(3): 289 – 305.

Woodward, B. (2000) Maestro: Greenspan’s Fed and the American Boom, New York: Simon and Schuster.

356 Journal of European Public Policy