The Battle of Economic Ideas: A Critical Analysis of Financial Crisis Management Discourse in the UK, 2007-8

This thesis contributes to our understanding of the financial crisis as it played itself out in the UK. The onset of the crisis provoked multiple diagnoses and interpretations of the crisis. Pre-dominant economic understandings of the crisis minimised its significance, suggesting that the natural operation of market mechanisms would enable the economic system to self-correct spontaneously and rapidly. As the economic situation worsened, however, other interpretations gained ground. From this perspective, the crisis was an event that exposed the limits of the highly financialised status of our economy, presenting policy makers with the opportunity to roll back the financialisation. The eventual non-realisation of this financial ‘roll-back’ is the starting point of many studies, and my thesis can be said to contribute to this literature in a modest way. Its main focus is the battle of economic ideas in elite policy-making circles in the UK. What is often missing from critical narratives of the crisis period is a detailed account of the dynamic interplay of competing interpretations of the crisis at crucial conjunctural moments by key agencies and figures animating the crisis drama in the UK context. These battles are ‘battles of ideas’ in the sense that they refer to competing characterisations of the unfolding events, as well as competing policy and regulatory proposals designed to manage the crisis, rooted in competing economic doctrines, espoused by different actors occupying hegemonic positions of the UK elite finance and media establishment. Although these battles were often fought with great intensity and urgency, there was an internal complexity to the dynamic of these battles that often gets glossed over in accounts of this period. I suggest that ‘reactivating’ this period in detail and with nuance is helpful in showing not only the manner in which ‘neoliberal finance’ has managed to survive the crisis largely intact despite the general expectation of its end but also in pointing to the challenges faced by those who wish its end. Three key conjunctural moments are chosen as the focus of my empirical analysis: the Great Crunch in the Summer of 2007, the Run on the Rock in the Autumn of 2007, and the Lehman Shock in the Autumn of 2008. I articulate a novel theoretical approach and research strategy, drawing on poststructuralist discourse theories. I deploy this approach in a close and systematic analysis of UK elite narratives on economic management, my corpus comprising the discourse produced by official political and economic institutions and agents, including professional economists, as well as narratives found in the broadsheet press more generally. Qualitative interpretative techniques are used to probe the justifications informing a range of bailout and regulatory policy proposals, in order to characterize in a unique and original manner the discursive battles at each one of the conjunctures. My empirical investigation reveals how the battle of economic ideas played itself out politically and ideologically in such a way as to leave neoliberal finance largely unperturbed. While anti-interventionist and interventionist proposals were frequently thematised and debated, these exchanges did not end up challenging the neoliberal finance character of our economy. Moreover, while my findings reveal a clear shift of emphasis in the centre of gravity of elite policy debates when moving from the Great Crunch to the Rock Run (the focus shifting from bailouts to regulation), the legal reforms announced following the Lehman Shock were understood to be largely temporary measures designed to calm and stabilise the markets rather than challenge neoliberal finance. More radical proposals were not taken seriously in the mainstream policy making community, and I argue that this is in part due to the hegemonic sway of neoliberal finance within this context. In order to contribute to the broader question of why neoliberal finance survived the crisis, it is essential to have a clear picture of how the detail and dynamics of the battle of ideas in the early period of the crisis unfolded, including a clear picture of the main actors, the discursive coalitions within which they operated, and the economic doctrines they appealed to when debating the scale of the crisis and the state management of the crisis. It is at this level that my thesis contributes to an overall account of the ‘non-death’ of neoliberal finance.