The GOVERNANCE blog

Before the financial crisis, write Julie Froud, Adriana Nilsson, Michael Moran and Karel Williams, the governing agenda was shaped by “reassuring liturgies” about the defeat of inflationary pressures and the benefits of financial innovation.  But the crisis itself has led to a period of intensified conflict in which rival interests offer “competing stories” about the nature of the crisis and appropriate responses.  “So long as no story wins out,” the authors argue, “group identity, institutional affiliation, and crude calculations of interest become more important.”  Post-crisis politics, they argue, “is ‘turf wars’ writ large.”  Open access to the article:  Stories and Interests in Finance: Agendas of Governance Before and After the Financial Crisis.

Sir John Gieve speaks at Governance roundtable on financial crisis

In the current issue of Governance, John Gieve (formerly of the Bank of England) and Colin Provost (University College London) explain how a flawed intellectual model discouraged coordination by monetary and regulatory authorities that might have prevented the financial crisis.  “This common intellectual framework helps to explain why similar mistakes were made in countries with very different institutional arrangements,” Gieve and Provost argue.  Future reforms will put more emphasis on coordination between central banks and regulators, as well as checks against “policy groupthink.”  Open access to the article: Ideas and Coordination in Policymaking.

In the current issue of Governance, Martin Lodge of the London School of Economics and Christopher Hood of the University of Oxford examine the effect of the financial crisis on the attitude of OECD governments toward public services.  These countries will not follow “a single direction of travel” in response to the crisis, they argue, and not only because fiscal vulnerabilities differ.  Two other pressures — demographic and environmental change — may prove equally significant.  Some OECD countries are “triply vulnerable” and face a “formidable challenge” in coming years.  Open access to this article: Into an age of multiple austerities.  Photo: Martin Lodge speaks at Governance roundtable on financial crisis.

“The legacy of the Great Recession for fiscal policy is staggering,” Paul Posner of George Mason University and Jón Blöndal of the Organization for Economic Coordination and Development write in the current issue of Governance (25.1, January 2012).  Some OECD countries have already fallen into devastating “market-driven fiscal crises.”  Are the rest doomed to follow?  Not necessarily, Posner and Blöndal argue.  Skilled political leaders can achieve fiscal sacrifice in ways that promote electability.  The conventional wisdom — that democratic systems are incapable of exercising fiscal self-restraint — is overdrawn.  Open access to this article.  Photo: Paul Posner speaks at Governance roundtable on financial crisis.