Structural power and bank bailouts in the United Kingdom and the United States
Title: Structural power and bank bailouts in the United Kingdom and the United States
Citation: Politics & Society, 2014, Vol. 42, No. 4, pp. 427-454
The 2008 bailout is often taken as evidence of the domination of the American political system by large financial institutions. In fact, the bailout demonstrated the vulnerability of American banks to government pressure. Large banks in the United States could not defy regulators, because their future income depended on the American market. In Britain, by contrast, one bank succeeded in scuttling the preferred governmental solution of an industry--wide recapitalization, because most of its revenue came from outside the United Kingdom. This was an exercise of structural power, but one that most contemporary scholarship on business power ignores or misclassifies, since it limits structural power to the automatic adjustment of policy to the possibility of disinvestment. We show that structural power can be exercised strategically, that it is distinct from instrumental power based on lobbying, and that it explains consequential variations in bailout design in the UK, US, France, and Germany.
First published online : September 24, 2014
Type of Access: openAccess
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