Financial and Economic Crisis: Theoretical Explanations of the Global Sunset

Abstract

The authors identify and examine the most promising political science theories for explaining the financial and economic crisis that started in 2007. Surveying the literature on lobbying, elite integration, ideological hegemony, structural state dependence and varieties of capitalism, they review the potential contributions of these different theoretical perspectives to our understanding of the causes of the current crisis specifically, and of the factors driving policymaking and macroeconomic management decisions more generally. They conclude by arguing that these different theories are not mutually exclusive while highlighting the utility of approaches focusing on elite integration, lobbying and structural dominance for making sense of the crisis in Ireland and elsewhere.

Keywords:

• financial crisis
• economic crisis
• lobbying
• policy networks
• ideology
• structural dependence
• varieties of capitalism

Acknowledgements

This paper was previously presented at the University of Glasgow's Department of Politics Seminar on 15 March 2010 and the 60th Political Studies Association Annual Conference, 29 March–1 April 2010, Edinburgh, UK. The authors thank the participants at these events as well as Richard Rose and Benigno Valdés for inspiring conversations on ideas for this paper.

Notes

See, for example, the contributions to a recent symposium in Political Studies Review, 8(1).

Readers are referred to the thorough accounts of the financial and economic crisis by Cable (2009), Gamble (2009) and Peston (2008). Bibliographies on the crisis have been compiled by the Review of International Political Economy, 16(5), 743–745, and the European University Institute (Bibliography of the Global Financial/Economic Crisis and its Aftermath, available at: http://www.eui.eu/Documents/Research/Library/ResearchGuides/Economics/PDFs/GlobalCrisisBibliographyWebed.pdf).

A similar argument is developed by Hall (1993).

Lukes is aware of this problem and admits that different conceptions of interests are based on different moral and political positions (Lukes, 2005: 37). Far from solving the problem of objective interests, however, this illustrates the ‘epistemological relativism’ of the concept of third-dimensional power (Hyland, 1995: 203).

Analogously, we expect that, exceptions notwithstanding, advertisers and marketers generally believe that the products they try to sell are worth buying.