Timothy J. Sinclair

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

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.

Reinventing Authority: Embedded Knowledge Networks and the New Global Finance:

The author challenges common assumptions about the nature of the emerging global economy. Rather than being the product of disembedded market forces, this new global political economy is organized by specialized forms of intelligence gathering and judgment determination inside the new global finance (NGF). These embedded knowledge networks (EKNs) include the major bond-rating agencies, such as Moodys Investors Service, and Standard and Poors (both based in New York, but increasingly operating internationally). The author analyzes central features of EKNs, including their relationship to social interests, epistemic authority (the consequences that follow from EKN reputational assets), market coordination (the policy implications of EKN transformation of uncertainty into risk), and the complexities that characterize the interaction between EKNs and governments. The author argues that rather than disappearing with the increasing freedom of global market forces in the NGF, authority has been reinvented—characteristically in the form of EKNs—altering the postwar balance of public and private influence on policy formation.

Approaches to world order: Beyond international relations theory: Robert W. Cox and approaches to world order

Robert W. Coxs work stands outside the usual parameters of international relations theory. Strongly historical in perspective, Coxs method of understanding global change represents a challenge to conventional ontological assumptions about international relations. These assumptions, the central of which is that states are the major actors whose interaction is to be explained, are qualified by Cox based on his observation that the major driving forces of world order change, albeit slowly, over time. Rather than discuss “the state,” Coxs focus has been on forms of state and how these change under pressure from forces from above (world order) and from below (civil society). Cox considers states to be focal terrains of conflict and institutional means of action internationally and nationally. In Coxs worldview the future represents an opportunity to break with the structures of the past and thus the potential to escape the strictures that bind human potential. This essay is intended to provide the reader with an introduction to Robert W. Coxs approach to the study of international relations. It has four sections in which this is pursued. In the first part, the importance of Coxs work is established by reference to the changing nature of world order and the critical stance of his work. Unlike other approaches, it is argued, Coxs intellectual stance makes change a central feature of the understanding of international relations. This gives it an advantage over status quo perspectives in a world order characterized by transformation.

Round Up the Usual Suspects: Blame and the Subprime Crisis

One of the remarkable things about financial crises is that they often give rise to a political process with uncanny similarities to the hunt for a dangerous felon, or the showdown with the bad guy in an old-time Hollywood movie. In the Asian crisis of the late 1990s the culprit was ‘crony capitalism’, and rich country politicians pursued this target zealously, deflecting any blame they might have taken for the financial catastrophe that afflicted that region. The failure of Enron Corporation in 2001 caused the spotlight to shift to various institutions, including the American wholesale credit rating agencies, Moodys Investors Service and Standard & Poors. With the return of dramatic financial volatility in the summer of 2007, the American agencies seemed to become public enemy number one. This article suggests that moral panic serves key political objectives in fragile times, in this instance disciplining some of the most extreme forms of financial innovation, but also undermining counter-hegemonic claims about the inherent problems of global finance.

How you stand depends on how we see: International capital mobility as social fact

ABSTRACT A rich literature has emerged on the causes and consequences of international capital mobility (ICM). Yet much of this literature typically depicts ICM as a brute fact – one which possesses an unproblematic logic to which actors respond automatically across time and space. We challenge this depiction and argue that in large part, how you stand on ICM depends on how it is collectively seen as a consequence of empirically and contextually variable intersubjectively shared beliefs, or social facts. We therefore argue that researchers that fail to take social facts seriously run the risk of making unwarranted causal inferences and less effective policy recommendations. We advance the literature by specifying how the ontological novelty of a social facts perspective generates unique insights into key political economy questions concerning the causes and consequences of ICM. We develop an agent-centered perspective that stresses ideational contestation as a key area of analysis for those that take social facts seriously. We push forward this agent-centered perspective by outlining a set of features that winning ideas are likely to display. We then conclude by specifying an agenda for future research and opportunities for bridge-building among various perspectives on ICM.

Deficit Discourse: The Social Construction of Fiscal Rectitude

Budget deficits are bad, very bad indeed. Creating them was indulgent; tolerating their continued existence, insufferable; reigning them in, imperative. Or so we are led to believe. The 1990s has been a decade of budget-cutting austerity and restructuring in most advanced industrialized countries. Great attention is directed to competitiveness as the liberalization of trade rules is extended further, and as governments seek to attract scarce financial capital (Gill and Law, 1989; Sinclair, 1992; Cerny, 1993; Krugman, 1994b). In many countries, government budget deficits have been identified by neo-liberal policy intellectuals as one of the leading causes of relatively lower growth rates and persistent unemployment (Williamson, 1994: 26). Deficit reduction has become a major priority for governments, and strategically important elements within many civil societies seem to support this objective.

Innovation and the entrepreneurial state in Asia : mechanisms of bond market development

Abstract Bond markets have expanded rapidly in emerging East Asian economies in recent years. Asian policymakers have played a pivotal role in this development. This process presents an interesting challenge to the developmental state literature associated with bank-based financial systems. We argue that it is best to understand the role of the state as an entrepreneurial state in the construction of these markets, focusing on institutional innovation in three mechanisms of state-led market infrastructure: national or local credit rating agencies, mortgage corporations and bond pricing agencies. National credit rating agencies rate the creditworthiness of debt in local currency. Mortgage corporations create markets in securitised housing loans. Bond pricing agencies put a value on illiquid debt instruments to enable mark-to-market portfolio management. Together, these three mechanisms constitute the core determinants of the market (demand for creditworthy products, supply of tradeable assets, and the fixing of a price to those assets). In so doing they influence the nature of market operations, producing outcomes very different from the free market ideal type. We also consider cross-country commonalities and variations in this general pattern.

Approaches to world order: Global perestroika (1992)

Mikhail Gorbachevs perestroika was a revolution from above, a decision by political leadership to undertake a reform of the economic organization of “real socialism” which, once initiated, got out of control and spun into entropy. Underlying that decision was a vague idea that some kind of socialism could be rebuilt in the context of market forces. No one had a clear strategy based upon real social forces as to how this result could be achieved. The consequence has been a devastating destruction of the real economy, i.e., the productive capacity and the economic organization of real (albeit ailing) socialism, and a disarticulation of social forces. Soviet perestroika aggravated the decay of public services, created large-scale unemployment, polarized new wealth and new poverty, generated inflation, and made a former superpower dependent upon foreign relief. Those who gained from the “market” were preeminently well-placed members of the former nomenklatura , speculators, and gangsters. The market is the mafia. Perestroika in the now-defunct Soviet empire is perhaps the worst case of what has become a global phenomenon – worst not in an absolute sense but in the most dramatic descent from production to entropy. Global perestroika , more euphemistically called “globalization,” is not the consequence of a conscious decision of political leadership. It is a result of structural changes in capitalism, in the actions of many people, corporate bodies, and states, that cumulatively produce new relationships and patterns of behavior. The project of global perestroika is less the conscious will of an identifiable group than the latent consequence of these structural changes.

Robert W. Cox's Method of Historical Structures Redux

Abstract This article argues that Coxs Method of Historical Structures (MHS), although a highly useful tool for understanding the world, should be adapted to make it more effective as a framework for understanding world order in the twenty-first century. The advent of the method helped rejuvenate critical scholarship in international relations and international political economy during the 1980s. It offered a way out of the excessively structural approaches that had dominated critical thinking in the 1960s and 1970s. Coxs method enabled the unpacking of a structure, so that the components that made up any particular configuration could be considered analytically. Providing guidance on how to look at an historical order, and how to consider the component features of that structure, proved to be a revelation for many critical scholars of international relations. Surprisingly, given Coxs highlighting of the distinction between critical and problem-solving theory introduced in the same Millennium article, what really distinguishes Coxs approach, and why it has had the impact it has, is the pragmatism of the method. The MHS offers the possibility of a more closely reasoned analysis of world order than was previously available. It was the practical and somewhat systematic quality of the MHS that made it influential because it offered to facilitate empirical research by critical scholars. Thirty-five years on, the Method looks less satisfactory and this article offers some suggestions for its development.

Im Inneren der Weltfinanzkrise: Eine kritische Analyse zum Problem des Interessenkonflikts

Wer hatte noch vor kurzem gedacht, dass im Zuge der aktuellen Weltwirtschaftskrise das etwas geheimnisvolle Geschaft der Kreditratingagenturen innerhalb kurzester Zeit zum Gegenstand einer von Prasidenten und Premierministern kommentierten offentlichen Debatte werden konnte? Die MitarbeiterInnen von Rating-Agenturen mogen zwar inzwischen daran gewohnt sein, dass ihre Arbeit ausfuhrlich mit einer Mischung aus Ehrfurcht und Geringschatzung in der Finanzpresse debattiert wird. Ehrfurcht, weil Ratings einen grosen Einfluss auf die Refinanzierungskosten von Unternehmen und ganzen Volkswirtschaften haben und es sich schlieslich dabei um ein milliardenschweres Geschaft handelt. Geringschatzung, weil in der Wall Street eine allgemein verbreitete Ansicht vorherrscht, dass es sich die MitarbeiterInnen von Agenturen eigentlich nur um Finanzexperten zweiter Wahl handelt, die fur die einst so machtigen Investmentbanken und Hedge-Fonds einfach nicht gut genug sind. An diesen Mix aus Ehrfurcht und Geringschatzung sind die MitarbeiterInnen gewohnt. Jedoch derart im Zentrum des offentlichen Interesses zu stehen ist fur sie eine vollig neue Erfahrung.