Macroprudential Regimes and the Politics of Social Purpose

Following the financial crash of 2008, many scholars have highlighted flaws and inadequacies in emerging macroprudential regulatory regimes. A missing ingredient in the political economy of post-crisis financial reform is the neglect of questions of social purpose in both policy debate and IPE scholarship. Social purpose is defined as a vision of the desirable or good economic system, derived from combinations of economic analysis and ethical reasoning. It is of particular relevance and importance to macroprudential regime building, because the foundational macroprudential conceptual frameworks developed by the Bank for International Settlements (BIS) and the Geneva Group from 2000 onwards display the features of a macro-social ontology that draw on a Minsky-Keynes tradition. By focusing on systemic outcomes and collective social expectations such an ontology creates the basis for so-called macro-moralities that provide ethical justifications for public forms of systemic stabilization. However, a variety of epistemological, professional, institutional and political barriers have impeded relevant expert groups and political actors’ willingness and ability to actively translate macroprudential ontology into a systemic vision, or sense of social purpose that could be communicated to the public at large.