Foucault and Post-Financial Crises by John G. Glenn

Author:John G. Glenn
Language: eng
Format: epub
ISBN: 9783319771885
Publisher: Springer International Publishing

Beyond Neo-Liberal Resilience

As Foucault stressed, those who ‘resist or rebel against a form of power cannot merely be content to denounce violence or criticise an institution. Nor is it enough to cast the blame on reason in general. What has to be questioned is the form of rationality at stake’.12 The concluding part of this chapter uses a Foucauldian framework to demonstrate how understandings of, and solutions to, the financial crises have been enframed in such a manner that they fit within a wider neo-liberal discourse. In addition, Foucault’s acknowledgement of social differentiations and the way in which these are often sedimented in institutional forms serve to remind us that the discourses associated with these enframings do not emerge in a power vacuum. We can therefore understand the emergence of resilience, in part, as a result of the conditioning effect of an abiding neo-liberal imaginary and as a result of the entrenched interests of political and economic elites. The outcome has been that, far from representing a radical departure, resilience serves to support the continuation of a highly volatile financial system, the further reduction of welfare commitments and employment rights and further privatization of national assets.

At first glance, the financial reforms, promulgated by institutions such as the Basel Committee on Banking Supervision (BCBS) and the Financial Stability Board (FSB) appear to resonate with post-modern resilience thinking’s argument that ontological complexity is leading to new forms of resilience governance. Following the financial crisis, attention did shift towards complex systems analysis, the sources of instability within them and how to make them more resilient. Indeed, as Melinda Cooper highlights, such work tentatively began in 2006 but came to the fore after the crisis with several papers analysing the banking system as analogous to natural ecosystems (Cooper 2011, pp. 371–2). Although this work fully recognizes the Knightian uncertainty and unpredictability of complex financial systems, rather than abandon modernist notions of intervention, such reforms have focussed on instilling ‘order in far from equilibrium conditions’ (Cooper 2011, p. 381; Jarvis 2011, p. 308).

Accordingly, the focus of post-financial crisis reforms has been on resilience and the ‘performative adaptability’ of the financial system to ‘withstand, re-route and recombine in the wake of a potentially catastrophic event to maintain systemic operability’ so that it can ‘withstand, recover and bounce back from crisis’.13 Systems with high degrees of connectivity are said to be highly vulnerable to network spill over effects and therefore less systemically resilient, that is, where the failure of one financial institution or nodal point has negative knock-on effects throughout the system. In order to increase the resilience of the financial system overall, those financial institutions that have the potential for being ‘superspreaders’ (Global Systemically Important Banks) of instability in times of stress have been identified (Haldane and May 2011, p. 354).14 The emphasis is on increasing the ‘absorptive capacity of each of the nodes in the financial network in response to external shocks’ in order to reduce systemic risk (Ibid.). One consequence of this systemic concern is that the capital adequacy requirements for banks have been significantly increased.

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