Neoliberalism and the Regulatory Foundations of American Financialization

• In Event: 118 - Section on Economic Sociology Refereed Roundtable Session and Business Meeting
  In Refereed Roundtable 60min: Table 15. Political Economy of Regulation

Abstract

This paper explores the relationship between neoliberalism regulatory policy and financialization in the US. The goal here is not so much to explain why the rise of finance took place in the US, but to shed some light on the specific characteristics that it gained due to the neoliberal reorientation in American regulatory policy.
The existing scholarship tends to understand neoliberalism as disembedding of market forces, and focuses on a single dimension of the neoliberal turn in regulatory policy: deregulation. This is a rather narrow view, and leads to a flawed, or at best an incomplete understanding of the relationship between neoliberal policy reforms and the rise of finance. The neoliberal turn in American regulatory policy involved a profound political re-imagination of the nature of the government, of the market processes, and of the individual economic actor. Deregulation was a significant part of it but so were regulatory fragmentation, overreliance on disclosure regulations, and the shifting of the responsibility of consumer protection from the government to the individual. In this paper I discuss how these characteristics have together shaped American financialization. In doing so, I also attempt to offer a more nuanced understanding of the relationship between neoliberalism and the rise of finance.

Author

• Basak Kus, Wesleyan University