Hostname: page-component-7c8c6479df-ws8qp Total loading time: 0 Render date: 2024-03-29T12:23:57.465Z Has data issue: false hasContentIssue false

Structural power and the global financial crisis: a network analytical approach

Published online by Cambridge University Press:  20 January 2017

Abstract

How did the most severe global financial crisis since the 1930s affect the organization of the world political economy? Was Anglo-American structural power in finance eroded? I employ network methodologies that have been recently extended for use with weighted and directed networks to shed light on these questions. I draw from complexity science and political economy to link these empirics to prior theories of structural power, which I refine in several ways. This approach provides unique explanations for developments in global banking since the crisis, including expected outcomes that did not occur: the continuation – and even expansion – of Anglo-American prominence, the decline of continental European prominence, and the lack of emergence of the BRICS economies into the core of the global banking system.

Type
Research articles
Copyright
Copyright © V.K. Aggarwal 2015 and published under exclusive license to Cambridge University Press 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Abdollahian, Mark and Yang, Zining. 2014. “Towards Trade Equalisation: A Network Perspective on Trade and Income Convergence Across the Twentieth Century.” New Political Economy 19 (4): 601627.CrossRefGoogle Scholar
Barabási, A.-L., and Albert, R. 1999. “Emergence of Scaling in Random Networks.” Science 286: 509512.Google Scholar
Barnett, Michael, and Duvall, Raymond. 2005. “Power in International Politics.” International Organization 59 (1): 3975.Google Scholar
Bianconi, G. and Barabási, A.-L. 2001. “Competition and Multiscaling in Evolving Networks.” Europhysics Letters 54: 436442.Google Scholar
Block, Fred. 1987. Revising State Theory: Essays in Politics and Postindustrialism. Philadelphia, PA: Temple University Press.Google Scholar
Bonacich, Phillip. 1987. “Power and Centrality: A Family of Measures.” American Journal of Sociology 92 (5): 11701182.CrossRefGoogle Scholar
Borgatti, Stephen P. 2005. “Centrality and Network Flow.” Social Networks 27 (1): 5571.Google Scholar
Brass, Daniel J. and Krackhardt, David M. 2012. “Power, Politics, and Social Networks in Organizations.” In Politics in Organizations: Theory and Research Considerations, edited by Ferris, Gerald R., and Treadway, Darren C. New York, NY: Routledge.Google Scholar
Bremmer, Ian, and Roubini, Nouriel. 2011. “A G-Zero World.” Foreign Affairs 90 (2): 27.Google Scholar
Burt, R., Marsden, P., and Rossi, P. H. 1985. “A research agenda for survey network data.” Columbia University workshop on survey network data.Google Scholar
Cao, Xun. 2009. “Networks of Intergovernmental Organizations and Convergence in Domestic Economic Policies.” International Studies Quarterly 53: 10951130.Google Scholar
Cao, Xun. 2010. “Networks as Channels of Policy Diffusion: Explaining Worldwide Changes in Capital Taxation, 1998–2006.” International Studies Quarterly 54: 823854.Google Scholar
Cao, Xun. 2012. “Global Networks and Domestic Policy Convergence: A Network Explanation of Policy Changes.” World Politics 64 (3): 375425.Google Scholar
Cao, Xun and Ward, Michael D. 2014. “Do Democracies Attract Portfolio Investment? Transnational Portfolio Investments Modeled as Dynamic Network.” International Interactions 40 (2): 216245.Google Scholar
Carpenter, R. Charli. 2011. “Vetting the Advocacy Agenda: Network Centrality and the Paradox of Weapons Norms.” International Organization 65 (1): 69102.Google Scholar
Cohen, Benjamin J. 2000. “Money and Power in World Politics.” In Strange Power, edited by Lawton, Thomas C., and Verdun, Amy C. Surrey, UK: Ashgate Publishing.Google Scholar
Cohen, Benjamin J. 2008. “The International Monetary System: Diffusion and Ambiguity.” International Affairs 84 (3): 455470.Google Scholar
Cohen, Benjamin J. 2009. “A Grave Case of Myopia.” International Interactions 35 (4): 436444.Google Scholar
Cohen, Benjamin J. 2013. “Money, Power, and Crisis.” Presented at the Annual Meeting of the International Studies Association, San Francisco, CA.Google Scholar
Cohen, Benjamin J. and Benney, Tabitha M. 2014. “What Does the International Currency System Really Look Like?Review of International Political Economy 21 (5): 10171041.Google Scholar
Cohen, Stephen S., and Bradford DeLong, J. 2010. The End of Influence: What Happens When Other Countries Have the Money. New York, NY: Basic Books.Google Scholar
Cooley, Alexander, and Nexon, Daniel H. 2013. “‘The Empire Will Compensate You’: The Structural Dynamics of the US Overseas Basing Network.” Perspectives on Politics 11 (4): 10341050.Google Scholar
Cox, Robert W. 1987. Production, Power, and World Order. New York, NY: Columbia University Press.Google Scholar
Cranmer, Skyler J., and Desmarais, Bruce A. 2011. “Inferential Network Analysis with Exponential Random Graph Models.” Political Analysis 19 (1): 6686.Google Scholar
Culpepper, Pepper D. 2011. Quiet Politics and Business Power: Corporate Control in Europe and Japan. New York, NY: Cambridge University Press.Google Scholar
Culpepper, Pepper D., and Reinke, Raphael. 2014. “Structural Power and Bank Bailouts in the United Kingdom and the United States.” Politics and Society 42 (4): 427454.CrossRefGoogle Scholar
Drezner, Daniel W. 2007. All Politics Is Global: Explaining International Regulatory Regimes. Princeton, NJ: Princeton University Press.Google Scholar
Drezner, Daniel W. 2014. “The Irony of Global Economic Governance: The System Worked.” World Politics 66 (1): 123164.Google Scholar
Eichengreen, Barry. 2011. Exorbitant Privilege: The Rise and Fall of the Dollar and the Future of the International Monetary System. New York, NY: Oxford University Press.Google Scholar
Emmenegger, Patrick. 2015. “The Long Arm of Justice: US Structural Power and International Banking.” Business and Politics 17 (3): 473493.CrossRefGoogle Scholar
Farrell, Henry. 2013. “There is No Alternative.” Aeon April 25.Google Scholar
Farrell, Henry, and Newman, Abraham. 2014a. “Domestic Institutions Beyond the Nation State: Charting the New Interdependence Approach.” World Politics 66 (2): 331363.Google Scholar
Farrell, Henry, and Newman, Abraham. 2014b. “The New Politics of Interdependence: Cross-National Layering in Trans-Atlantic Regulatory Disputes.” Comparative Political Studies 48 (4): 497526.CrossRefGoogle Scholar
Farrell, Henry, and Newman, Abraham. 2015. “Structuring Power: Business and Authority Beyond the Nation State.” Business and Politics 17 (3): 527552.CrossRefGoogle Scholar
Freeman, Linton C. 1978. “Centrality in Social Networks: Conceptual Clarification.” Social Networks 1: 215239.Google Scholar
Germain, Randall D. 1997. The International Organization of Credit. Cambridge, MA: Cambridge University Press.Google Scholar
Germain, Randall. 2009. “Financial Order and World Politics: Crisis, Change and Continuity.” International Affairs 4: 669687.Google Scholar
Germain, Randall. 2011. “Power, the State and Global Politics After the Great Freeze: Towards a New Articulation?” In Uniting Struggles: Critical Social Research in Critical Times, edited by Fanelli, Carlo, and Lefebvre, Priscillia. Ottawa, ON: Red Quill Books.Google Scholar
Gilardi, Fabrizio. 2012. “Transnational diffusion: Norms, ideas, and policies.” In Handbook of International Relations, edited by Carlsnaes, Walter, Risse, Thomas, and Simmons, Best. SAGE Publications.Google Scholar
Gill, Stephen R. and Law, David. 1989. “Global Hegemony and the Structural Power of Capital.” International Studies Quarterly 33 (4): 475–299.Google Scholar
Gourinchas, Pierre-Olivier, and Rey, Hélène. 2007. “From World Bank to World Venture Capitalist: US Extenal Adjustment and the Exorbitant Privilege.” In G7 Current Account Imbalances: Sustainability and Adjustment, edited by Clarida, Richard H. Chicago: University of Chicago Press.Google Scholar
Graeber, David. 2011. Debt: The First 5000 Years. Brooklyn, New York: Melville House Publishing.Google Scholar
Gray, Julia, and Potter, Philip B.K. 2012. “Trade and Volatility at the Core and Periphery of the Global Economy.” International Studies Quarterly 56 (4): 793800.Google Scholar
Hacker, Jacob S. and Pierson, Paul. 2010. “Winner-Take-All Politics: Public Policy, Political Organization and the Precipitous Rise of Top Incomes in the United States.” Politics and Society 38 (2): 152204.Google Scholar
Hafner-Burton, Emilie, and Montgomery, Alexander. 2006. “Power Positions: International Organizations, Social Networks, and Conflict.” Journal of Conflict Resolution 50 (1): 327.Google Scholar
Hafner-Burton, Emilie, Kahler, Miles, Montgomery, and Alexander H. 2009. “Network Analysis for International Relations.” International Organization 63: 559592.CrossRefGoogle Scholar
Hart, Jeffrey. 1974. “Structures of Influence and Cooperation-Conflict.” International Interactions 1: 141162.Google Scholar
Hart, Jeffrey. 1976. “Three Approaches to the Measurement of Power in International Relations.” International Organization 30 (2): 289305.Google Scholar
Helleiner, Eric. 1994. States and the Emergence of Global Finance. Ithaca, NY: Cornell University Press.Google Scholar
Helleiner, Eric. 2010. “A Bretton Woods moment? The 2007–2008 crisis and the future of global finance.” International Affairs 3 (April): 619636.Google Scholar
Helleiner, Eric. 2011. “Understanding the 2007–2008 Global Financial Crisis: Lessons for Scholars of International Political Economy.” Annual Review of Political Science 14: 6787.Google Scholar
Helleiner, Eric. 2014. The Status Quo Crisis: Global Financial Governance After the 2008 Meltdown. New York, NY: Oxford University Press.Google Scholar
Keohane, Robert O. 1984. After Hegemony: Cooperation and Discord in the World Political Economy. Princeton, NJ: Princeton University Press.Google Scholar
Keohane, Robert O. 2002. “The Globalization of Informal Violence, Theories of World Politics, and the Liberalism of Fear.” Dialogue IO 1 (1): 2943.Google Scholar
Keohane, Robert O. and Nye, Joseph S. Jr. 1977. Power and Interdependence: World Politics in Transition. Boston, MA: Little, Brown.Google Scholar
Keohane, Robert O. and Nye, Joseph S. Jr. 1987. “Power and Interdependence revisited.” International Organization 41 (4): 725753.Google Scholar
Kindleberger, Charles. 1973. The World in Depression, 1929–1939. Berkeley, CA: University of California Press.Google Scholar
Kirschner, Jonathan. 2007. Appeasing Bankers: Financial Caution on the Road to War. Princeton, NJ: Princeton University Press.Google Scholar
Kirshner, Jonathan. 2014. American Power after the Financial Crisis. Ithaca, NY: Cornell University Press.Google Scholar
Knoke, David. 1990. Political Networks: The Structural Perspective. New York, NY: Cambridge University Press.Google Scholar
Knoke, D. and Burt, R. S. 1983. “Prominence.” In Applied Network Analysis: A Methodological Introduction, edited by Burt, R. S., and Miner, M. J. Beverly Hills, CA: Sage Publications, Inc., pp. 195222.Google Scholar
Lake, David A. 2009. “Open Economy Politics: A Critical Review.” The Review of International Organizations 4 (3): 219244.Google Scholar
Lindblom, Charles E. 1977. Politics and Markets: The World's Political Economic Systems. New York, NY: Basic Books.Google Scholar
Malkiel, Burton. 1973. A Random Walk Down Wall Street. New York, NY: W.W. Norton and Company.Google Scholar
Milner, Helen, and Snyder, Jack. 1988. “Lost Hegemony?International Organization 42 (4): 749750.Google Scholar
Newman, M. E. J. 2005. “Power Laws, Pareto Distributions and Zipf's Law.” Contemporary Physics 46: 323351.Google Scholar
Nexon, Daniel H. 2009. The Struggle for Power in Early Modern Europe. Princeton, NJ: Princeton University Press.Google Scholar
Nitzan, Jonathan, and Bichler, Shimshom. 2009. Capital as Power: A Study of Order and Creorder. London: Routledge.Google Scholar
Norrlof, Carla. 2014. “Dollar Hegemony: A Power Analysis.” Review of International Political Economy 21 (5): 10421070.Google Scholar
Oatley, Thomas. 2011. “The Reductionist Gamble: Open Economy Politics in the Global Economy.” International Organization 65 (2): 311341.Google Scholar
Oatley, Thomas. 2015. A Political Economy of American Hegemony: Military Booms, Buildups, and Busts. New York, NY: Cambridge University Press.Google Scholar
Oatley, Thomas, and Kindred Winecoff, W. 2012. “The Domestic Rooting of Financial Regulation in an Era of Global Capital Markets.” In Research Handbook on Hedge Funds, Private Equity and Alternative Investments, edited by Athanassiou, Phoebus. London: Edward Elgar Publishing.Google Scholar
Oatley, Thomas, Kindred Winecoff, W., Bauerle Danzman, Sarah, and Pennock, Andrew. 2013. “The Political Economy of Global Finance: A Network Model.” Perspectives on Politics 11 (1): 133153.Google Scholar
Opsahl, Tore, Agneessens, Filip, and Skvoretz, John. 2010. “Node Centrality in Weighted Networks: Generalizing Degree and Shortest Paths.” Social Networks 32 (3): 245251.Google Scholar
Panitch, Leo, and Gindin, Sam. 2012. The Making of Global Capialism: The Political Economy of American Empire. London, UK: Verso.Google Scholar
Roos, Jérôme E. 2013. “Between the Streets and the Trading Floors: Popular Resistance and the Structural Power of Financial Capital in the European Debt Crisis.” Presentation at the 4th Annual Meeting of the International Initiative for Promoting Political Economy, The Hague, Netherlands, July 9–11.Google Scholar
Simmons, Beth A. 2001. “The International Politics of Harmonization: The Case of Capital Market Regulation.” International Organization 55 (3): 589620.Google Scholar
Simon, Herbert A. 1962. “The Architecture of Complexity.” Proceedings of the American Philosophical Society 106 (6): 467482.Google Scholar
Slaughter, Anne-Marie. 2012. “A Grand Strategy of Network Centrality.” In America's Path: Grand Strategy for the Next Administration, edited by Fountaine, Richard, and Lord, Kristin M. Center for a New American Security pp. 4356.Google Scholar
Smith, Jason M., Halgin, Daniel S., Kidwell-Lopez, Virginie, Labianca, Giuseppe, Brass, Daniel J., and Borgatti, Stephen P. 2014. “Power in Politically Charges Networks.” Social Networks 36: 162176.Google Scholar
Sobel, Andrew C. 2012. Birth of Hegemony: Crisis, Financial Revolution, and Emerging Global Networks. Chicago, IL: University of Chicago Press.Google Scholar
Starrs, Sean. 2013. “American Economic Power Hasn't Declined – It Globalized! Summoning the Data and Taking Globalization Seriously.” International Studies Quarterly 57 (4): 817830.Google Scholar
Strange, Susan. 1982. “ Cave! hic dragones: a critique of regime analysis.” International Organization 36 (2): 479496.Google Scholar
Strange, Susan. 1987. “The Persistent Myth of Lost Hegemony.” International Organization 41 (4): 551574.Google Scholar
Strange, Susan. 1988. “The Persistent Myth of Lost Hegemony: Reply to Milner and Snyder.” International Organization 42 (4): 751752.Google Scholar
Strange, Susan. 1998. States and Markets. 2nd ed. London, UK: Bloomsbury Academic.Google Scholar
Strogatz, Steven H. 2001. “Exploring Complex Networks.” Nature 410: 268276.Google Scholar
Subramanian, Arvind. 2011a. Eclipse: Living in the Shadow of China's Economic Dominance. Institute for International Economics.Google Scholar
Subramanian, Arvind. 2011b. “Renminbi Rules: The Conditional Imminence of the Reserve Currency Transition.” Peterson Institute for International Economics Working Paper 11–14.Google Scholar
Tooze, Roger, and May, Christopher. 2002. Authority and Markets: Susan Strange's Writings on International Political Economy. Basingstoke, UK: Palgrave Macmillan.Google Scholar
Wallerstein, Immanuel. 2010. “Structural Crises.” New Left Review 62 (March–April): 133142.Google Scholar
Ward, Michael D., Ahlquist, John S., and Rozenas, Arturas. 2013. “Gravity's Rainbow: Dynamic Networks Models of International Commerce.” Network Science 1 (1): 95118.Google Scholar
Winecoff, W. Kindred. 2013. “Global Banking As a Complex Political Economy.” Presented at the Annual Meeting of the American Political Science Association, Chicago, IL.Google Scholar
Woll, Cornelia. 2014. The Power of Inaction: Bank Bailouts in Comparison. Ithaca, NY: Cornell University Press.Google Scholar
Young, Kevin. 2015. “Not by Structure Alone: Power, Prominence, and Agency in American Finance.” Business and Politics 17 (3): 443472.Google Scholar
Zakaria, Fareed. 2009. The Post-American World. New York, NY: W.W. Norton.Google Scholar