Not so global afterall?
Varieties of liberalism
& the 2008 financial crisis
Sue Konzelmann, Director LCCGE
International Research Network on VoL
Birkbeck Business Week
London, 29 June 2011
International
Research Network
on Varieties of Liberalism
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•
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London Centre for Corporate Governance & Ethics (Birkbeck)
Centre for Analysis of Risk & Regulation (LSE)
Centre for Regulation & Governance (Uni. College Dublin)
Centre for Banking & Finance (University of North Carolina)
College of Law & College of Business (University of Illinois)
Critical Laboratory in Law & Society (York University, Canada)
Centre for Law, Markets & Regulation (University of New
South Wales, Australia)
• College of Business (Massey University, New Zealand)
Market capitalization
& Cost of bank bail-outs
Change
($bn)
1999-2009
Bank bail-out
package as a %
GDP (March 2009)
Canada
97.5
0.0 %
Australia
85.6
0.1 %
UK
-244.3
19.8 %
USA
-676.1
6.8 %
Source: Financial Times, 23 March 2009, p.9. 1999 values are as of 31 May
1999; 2009 values are as of 17 March 2009; Stewart 2009.
Contemporary
economic liberalism
• The return to economic liberalism
• ‘Varieties of economic liberalism
– Neo-classical liberalism: Britain & America
– Pragmatic liberalism, akin to ‘Ordoliberalism’:
Canada & Australia
• Variety stems from interpretation of theory
and translation into policy
– Private sector and the state; financial sector and
the broader economy
The return to
liberal capitalism
• The return to economic liberalism in the AngloSaxon world during the 1970s
– US discontinues gold backing of the American dollar,
leading to the collapse of Bretton Woods;
– UK introduces policy of ‘Competition & Credit Control’ and
makes a ‘Dash for Growth’
• ‘Reaganomics’ and ‘Thatcherism’
– Shift in balance in favour of the private sector – finance in
particular – relative to the state
• Pragmatic liberalisation in Canada and Australia
– Liberalization accompanied by ‘market friendly’ regulation
Early effects &
responses to crises
•Australia’s ‘corporate cowboys’
•The American Savings & Loan crisis
•Canadian and British bank, insurance
trust & investment house failures
•Looking into the abyss …
Financial market
liberalization
• Financial Market liberalisation & regulation
– US & UK: ‘May day’ 1975 & ‘Big Bang’ 1986
– Canada & Australia: incremental & prudential
• Britain & America: ‘light touch’ regulation & return of
global finance
– London Euromarket
– Framework of regulation: UK integrated & US diffuse
• Canada & Australia: Incremental liberalization & reregulation
– National branch banking system
– Framework of regulation evolves into ‘twin peaks’
Conclusions
• The structuring role of theory and policy,
tempered by context
• Getting it right & getting it wrong?
• ‘Ordoliberalism’
• Varieties of liberalism & the crisis of
contemporary capitalism
International
Research Network
on Varieties of Liberalism
•
•
•
•
•
•
•
London Centre for Corporate Governance & Ethics (Birkbeck)
Centre for Analysis of Risk & Regulation (LSE)
Centre for Regulation & Governance (Uni. College Dublin)
Centre for Banking & Finance (University of North Carolina)
College of Law & College of Business (University of Illinois)
Critical Laboratory in Law & Society (York University, Canada)
Centre for Law, Markets & Regulation (University of New
South Wales, Australia)
• College of Business (Massey University, New Zealand)