Debt, power, and crisis: Social stratification and the inequitable governance of financial markets

American Quarterly

Volumn 64, Issue 3, 2012, Pages 387-409

  Heintz, James ^a   Balakrishnan, Radhika ^a  

^a NONE

Author keywords

[No Author keywords available]

Indexed keywords

EID: 84867379702     PISSN: 00030678     EISSN: 10806490     Source Type: Journal    
DOI: 10.1353/aq.2012.0035     Document Type: Article

References (52)

1. David Harvey, The Enigma of Capital (Oxford: Oxford University Press, 2010);
2. John Belemy Foster, "The Financialization of Accumulation," Monthly Review 62.5 (2010): 1-17;
3. Greta Krippner, "The Financialization of the American Economy," Socio-Economic Review 3 (2005): 173-208;
4. Giovanni Arrighi, The Long Twentieth Century: Money, Power and the Origins of Our Times (New York: Verso, 1994).
5. Krippner, "Financialization of the American Economy."
6. William Lazonick, "How Shareholder Value Ideology Is Destroying the U.S. Economy," in The Oxford Handbook on the Political Economy of Financial Crises, ed. Gerald Epstein and Martin Wolfson (Oxford: Oxford University Press, forthcoming);
7. James Crotty, "The Neoliberal Paradox: The Impact of Destructive Product Market Competition and 'Modern' Financial Markets on Nonfinancial Corporation Performance in the Neoliberal Era," in Financialization and the World Economy, ed. Gerald Epstein (Northampton, Mass.: Elgar, 2005), 77-110.
8. Arthur B. Kennickell, "Ponds and Streams: Wealth and Income in the U.S., 1989 to 2007," Finance and Economic Discussion Paper 2009-13 (Washington, D.C.: Federal Reserve Board, 2009).
9. Robert Reich, Supercapitalism: The Transformation of Business, Democracy, and Everyday Life (New York: Knopf, 2007).
10. Gerald Epstein, "Introduction: Financialization and the World Economy," in Epstein, Financialization and the World Economy, 3-16.
11. Samuel Bowles and Herbert Gintis, "The Revenge of Homo Economicus: Contested Exchange and the Revival of Political Economy," Journal of Economic Perspectives 7.1 (1993): 83-102.
12. The U.S. Federal Bureau of Investigation recognized the existence of widespread mortgage fraud in the United States during the period in which the subprime mortgage market was expanding rapidly. See http://www.fbi.gov/news/ stories/2008/january/fin-fradu013108.
13. Hyman Minsky, Stabilizing an Unstable Economy (New Haven, Conn.: Yale University Press, 1986).
14. Lourdes Benería, "Towards a Greater Integration of Gender in Economics," World Development 23.11 (1995): 1839-50;
15. Diane Elson, "Gender Aware Analysis and Development Economics," Journal of International Development 5.2 (1993): 237-47;
16. Stephanie Seguino, "The Global Economic Crisis, Its Gender and Ethnic Implications, and Policy Responses," Gender and Development 18.2 (2010): 179-99.
17. This can happen when the shocks associated with a crisis period have long-run consequences. for example, episodes of unemployment have been shown to negatively affect future earnings (Wiji Arulampalam, "Is Unemployment Really Scarring? Effects of Unemployment Experiences on Wages," Economic Journal 111 [November 2001]: F585-F606).
18. Similarly, transitions into the labor market during bad economic times appear to have long-run effects on career paths (Lisa Kahn, "The Long-Term Labor Consequences of Graduating from College in a Bad Economy," Labour Economics 17.2 [2010]: 303-16).
19. Stephanie Seguino and James Heintz, "Contractionary Monetary Policy and the Dynamics of U.S. Race and Gender Stratification," American Journal of Economics and Sociology 71.3 (forthcoming).
20. Charles W. Mills, The Racial Contract (Ithaca, N.Y.: Cornell University Press, 1999);
21. William Darity, "Stratification Economics: The Role of Intergroup Inequality," Journal of Economics and Finance 29.2 (2005): 144-53. Mills uses the concept of a "racial contract," in contrast to the "social contract" construct of contractarian social theory and ethics, to describe forms of collective action among whites that promote their collective interests and subordinate those who are not white.
22. William Darity, Patrick L. Mason, and J. Stewart, "The Economics of Identity: The Origin and Persistence of Racial Norms," Journal of Economic Behavior and Organizations 60.3 (2006): 283-305.
23. Darity, "Stratification Economics"; Rhonda Williams and William Spriggs, "How Does It Feel to Be Free? Reflections on Black-White Economic Inequality in the Era of 'Color-Blind' Law," Review of Black Political Economy 27.1 (1999): 9-21.
24. Stephen S. Cohen and J. Bradford DeLong, The End of Influence: What Happens When Other Countries Have the Money (New York: Basic Books, 2010), 5.
25. The Flow of Funds Accounts are produced by the U.S. Federal Reserve and contain estimates of financial assets and liabilities for various sectors of the U.S. economy. for more details, see http://www.federalreserve.gov/apps/fof/.
26. Gary Dymski, "Discrimination in the Credit and Housing Markets: Findings and Challenges," in Handbook on the Economics of Discrimination, ed. William M. Rodgers (Cheltenham, U.K.: Elgar, 2006), 215-59.
27. A. J. Fishbein and P. Woodall, Subprime Locations: Patterns of Geographic Disparity in Subprime Lending (Washington, D.C.: Consumer Federation of America, 2006);
28. Fishbein and Woodall, Women Are Prime Targets for Subprime Lending: Women Are Disproportionately Represented in High-Cost Mortgage Market (Washington, D.C.: Consumer Federation of America, 2006).
29. See www.bls.gov. Hourly wages were inflation-adjusted using the consumer price index for all urban consumers. Estimates of hourly wages came from the Bureau of Labor Statistic's Current Employment Survey program.
30. Robert Reich, Aftershock: The Next Economy and America's Future (New York: Vintage, 2011);
31. Branko Milanovic, Two Views on the Cause of the Global Crisis (Washington, D.C.: Carnegie Endowment for Peace, 2009), www.carnegieendowment. org/publications/index.cfm?fa=view&id=23053;
32. Seguino, "Global Economic Crisis."
33. Debbie Gruenstein Bocian, Wei Li, Carolina Reid, and Roberto G. Quercia, Lost Ground 2011: Disparities in Mortgage Lending and Foreclosures (Durham, N.C.: Center for Responsible Lending, 2011).
34. General Accountability Office, "Troubled Federal Reserve System: Opportunities Exist to Strengthen Policies and Processes for Managing Emergency Assistance," GAO-11-696 (Washington, D.C.: General Accountability Office, July 2011);
35. General Accountability Office, "Troubled Asset Relief Program: Status of Efforts to Address Transparency and Accountability Issues," GAO-09-296 (Washington, D.C.: General Accountability Office, January 2009). According to a story published by Bloomberg Market Magazine on November 27, 2011, based on the analysis of documents obtained through a freedom of information request, the Federal Reserve had committed $7.7 trillion to bail out the financial system by March 2009, http://www.bloomberg.com/news/2011- 11-28/secret-fed-loans-undisclosed-to-congress-gave-banks-13-billion-in-income. html.
36. See the op-ed by Neil M. Barofsky, who was the special inspector general for the Troubled Asset Relief Program, "Where the Bailout Went Wrong," New York Times, March 29, 2011.
37. In reality, white borrowers accounted for a significantly larger absolute number of foreclosures and delinquencies than African American or Latino borrowers (Bocian et al., "Lost Ground 2011").
38. Adrian Blundell-Wignall and Patrick Slovik, "A Market Perspective on the European Sovereign Debt and Banking Crisis," Financial Market Trends, February 2011, 1-28.
39. Deborah Zandstra, "The European Sovereign Debt Crisis and Its Evolving Resolution," Capital Markets Law Journal 6.3 (2011): 285-316. Two stability mechanisms were used to administer the rescue programs: the European Financial Stability Mechanism and, when more substantial interventions were required, the European Financial Stability Facility.
40. Blundell-Wignall and Slovik, "Market Perspective."
41. Manuel Pastor, "Latin America: The Debt Crisis and the International Monetary Fund," Latin American Perspectives 16.1 (1989): 79-109.
42. David Felix, "Latin America's Debt Crisis," World Policy Journal 7.4 (1990): 733-71.
43. Ibid.; Pastor, "Latin America."
44. Felix, "Latin America's Debt Crisis."
45. Léonce Ndikumana and James Boyce, Africa's Odious Debts: How Foreign Loans and Capital Flight Bled a Continent (London: Zed Books, 2011).
46. For a much more detailed examination of the relationship between economic and social rights and macroeconomic policy, see Radhika Balakrishnan and Diane Elson, eds., Economic Policy and Human Rights: Holding Governments to Account (London: Zed Press, 2011).
47. We do not consider here the question of whether human rights can be said to exist prior to the legislation or legal institutions that define those rights. for a fuller discussion of these issues, see Amartya Sen, "Elements of a Theory of Human Rights," Philosophy and Public Affairs 32.4 (2004): 315-56;
48. Sen, The Idea of Justice (Cambridge, Mass.: Harvard University Press, 2010).
49. See, for example, M. W. Mutua, "Savages, Victims, and Saviors: The Metaphor of Human Rights," Harvard International Law Journal 42.1 (2001): 201-45. Mutua argues that traditional human rights discourse creates "savages," "victims," and "saviors," which reinforce existing global stratifications (e.g., the saviors are represented by governments and human rights organizations in the global North that attempt to rescue victims from savages in the global South).
50. David Kennedy, The Dark Side of Virtue: Reassessing International Humanitarianism (Princeton, N.J.: Princeton University Press, 2005).
51. Thomas Nagel, "The Problem of Global Justice," Philosophy and Public Affairs 33.2 (2005): 113-47.
52. Sen, Idea of Justice.