Macroprudential Ideas and Contested Social Purpose: A Response to Terrence Casey

Andrew Baker, Wesley Widmaier

Research output: Contribution to journalArticle

2 Citations (Scopus)
326 Downloads (Pure)

Abstract

In response to Terrence Casey's argument that the emergence of macroprudential regulation since the financial crash can and should save neoliberalism we raise five objections. 1). The Debt-Driven Growth Hypothesis (DDG) and the Financial Instability Hypothesis (FIH), as Casey terms them, are just as likely to be complementary as they are oppositional and they are by no means incompatible. 2) Casey's empirics are too thin and static, drawn from the 1980s and 1990s, while Anglo Liberal Financialised Capitalism (ALFC) is a complex adaptive system that has continued to evolve throughout the 2000s. 3) Casey overlooks the dynamic relationship between potentially excessive financialisation and the performance of the wider economy, which is becoming a growing concern for many policy makers using the macroprudential frame. 4) Macroprudential as a series of ideas about the economy are often incompatible with neoliberal premises and their ontological foundations. 5) Many of the policy makers who have acted as the biggest champions of macroprudential regulation have also been highly critical of ALFC and view the macroprudential turn as making a contribution to a much needed deeper financial reformation that would over time transform some of the constituent economic and social relations of the existing political economy. We conclude that what we call the social purpose of macroprudential regulation (the question of whether it is intended to patch up or transform the existing system) is contested, and that macroprudential regulation has much potential beyond saving ‘neoliberalism’.
Original languageEnglish
Pages (from-to)371-380
Number of pages10
JournalBritish Journal of Politics and International Relations
Volume17
Issue number2
Early online date22 Jul 2014
DOIs
Publication statusPublished - May 2015

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