Campbell verduyn professional authority after the global financial crisis; defending mammon in anglo america (2017)

1 Professional Authority and Anglo-AmericanProfessional Authority in Anglo-American Finance 2 Understanding the Explicit Ethical Emphasis 9 2 The Dynamism of Authority in Global Governan

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tion in higher education research and outreach It brings together leadinginternational researchers in the social sciences, policy makers, journalistsand opinion formers to reassess and develop proposals in response to thepolitical and economic issues posed by the current combination offinan-cial crisis, shifting economic power and environmental threat Building aSustainable Political Economy: SPERI Research & Policy will serve as akey outlet for SPERI’s published work Each title will summarise anddisseminate to an academic and postgraduate student audience, as well

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Authority After the Global

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Defending Mammon in Anglo-America

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Renewed Semi-Professionalism of Leading Anglo-American FinancialServices Firms”, Malcolm Campbell-Verduyn, Competition and Change,vol 19, no 5 pp 355-373 Copyright © 2015 Reprinted by Permission

of SAGE Publications, Ltd sagepub.co.uk/journalsPermissions.navParts of Chapters 3 and 6 originally appeared as “Merely TINCeringAround: The Shifting Private Authority of the Technology, Informationand News Corporations” De Gruyter [Business and Politics 18, no 2:143-170.], Walter De Gruyter GmbH Berlin Boston, [2016] Copyrightand all rights reserved Material from this publication has been used withthe permission of Walter De Gruyter GmbH

Parts of Chapters 4 and 6 originally appeared as “Moral Economese ofScale: Financial Crisis and the Persistent Authority of Economists”.Malcolm Campbell-Verduyn, Global Society 30, no 4, pp 507-530 ©University of Kent Reprinted by permission of Taylor & Francis Ltd,www.tandfonline.com on behalf of University of Kent

Sincere thanks are due to Christina Brian and James Safford at PalgraveMacmillan as well as to the SPERI series editors Anthony Payne and ColinHay for supporting the various proposals for this book; to BrendanOuellette for guidance in navigating the world of book publishing; toEric Helleiner for careful and constructive comments on the manuscript;

as well as to André Broome and Leonard Seabrooke for the extensivefeedback provided at the 2016 Warwick Manuscript DevelopmentSession Particular debts of gratitude are owed to Tony Porter for invalu-able advice at all stages of this project; to the professionals interviewed fortheir time and insights; to the Social Science and Humanities Council ofCanada for thefinancial support that enabled this book to be researchedand written; to Conny Steenman-Marcusse for enabling significant por-tions of this book to be written in an extremely inspiring setting at BBCC;

to my parents for sparking and continually supporting my scholarly ests; and last, but most certainly not least, to my partner Lorette Steenmanfor her everyday encouragement, love, and vital stress on balance Thisbook is dedicated to the memories of my grandmothers, Claire Campbelland Stony Verduyn

inter-vii

1 Professional Authority and Anglo-American

Professional Authority in Anglo-American Finance 2

Understanding the Explicit Ethical Emphasis 9

2 The Dynamism of Authority in Global Governance 19

Identities and the (Self-)Legitimation of Power 20

Professional Authority in Global Financial Governance 27

ix

3 The Dynamic Authority of Leading Financial Services

The Pre-crisis Authority of Financial Services Providers 34Financial Crisis and Contestations of Authority 38Defending Mammon: Re-legitimating Power in the

The Enhanced Ethical Emphasis of Leading Accounting Firms 47The Enhanced Ethical Emphasis of Leading Credit Rating Agencies 51The Enhanced Ethical Emphasis of Leading TINCs 55

The Pre-crisis Authority of Orthodox Economists 66

Financial Crisis and Contestations of Authority 69

Defending Mammon: Re-legitimating Power in the

The Expert Identities of Lawyers and Legal Groups 86

Financial Crisis and Contestations of Authority 89The Expert Identities of Actuaries in Crisis 90The Expert Identities of Legal Firms in Crisis 91The Expert Identities of Consultants in Crisis 93

Defending Mammon: Re-Legitimating Power in the Aftermath

The Enhanced Ethical Emphasis of Leading Actuaries 95The Enhanced Ethical Emphasis of Leading Legal Firms 96The Enhanced Ethical Emphasis of Leading Consultancies 98

Flawed Predictions, Descriptions, and Solutions 115Identification with Volatility and Continuing Challenges 120Islamic Finance, Volatility, and Professional Authority 120Sustainability, Volatility, and Professional Authority 122

7 Professional Authority in Anglo-American Finance and

The Dynamic Underpinnings of Professional Authority 129

How Generalisable is the Enhanced Ethical Emphasis? 134How Desirable is the Enhanced Ethical Emphasis? 137

Appendix A: Anonymous List of Interviewees By Date 141Appendix B: Interviewee Totals Per Profession 143

Appendix C: Prominent Orthodox Anglo-American

Appendix F: Other Documents Cited (Speeches,

Working Papers, Press Releases and Blogs) 167

A&O Allen and Overy

ABS Asset-Backed Security

ACCA Association of Chartered Certi fied Accountants

AIG American International Group

CDO Collateralised Debt Obligation

CDS Credit Default Swaps

CRA Credit Rating Agency

D&T Deloitte and Touche

DSGE Dynamic Stochastic General Equilibrium

EMH Ef ficient Market Hypothesis

EY Ernst and Young

GPE Global Political Economy

GHG Greenhouse Gas

IASB International Accounting Standards Board

IFoA Institute and Faculty of Actuaries

IFSB Islamic Financial Services Board

IIRC International Integrated Reporting Council

IMF International Monetary Fund

IR International Relations

ISDA International Swaps and Derivatives Association

MBS Mortgage Backed Securities

POEs Prominent Orthodox Economist

PwC Pricewaterhouse Coopers

S&P Standard and Poor ’s

SASB Sustainable Accounting Standards Board

TINC Technology, Information and News Corporation

TNC Transnational Corporation

<IR> Integrated Reporting

xiii

Fig 7.1 The dynamic underpinnings of professional authority 135 Table 1.1 Understanding explicit non-state actor engagement with

Table 1.2 The three-step genealogical analysis 15 Table 7.1 Normative issues emphasised by professionals since 2007 –8 131

xv

Professional Authority and Anglo-American

Finance in Crisis

“To suggest social action for the public good to the City of London is like discussing the Origin of Species with a bishop sixty years ago The first reaction is not intellectual, but moral An orthodoxy is in question, and the more persuasive the arguments the graver the offence ”

John Maynard Keynes ( 1926 ) The End of Laissez-Faire

“I have waited for four years, five years now, to see one figure on Wall Street speak in a moral language, and I ’ve not seen it once And that is shocking to me And if they won ’t, I’ve waited for a judge, for our president, for somebody, and it hasn ’t happened And by the way it’s not going to happen anytime soon it seems ”

Jeffrey Sachs, 31st Annual Monetary & Trade Conference, Philadelphia Federal Reserve, 17 April 2013 (cited in Black 2014)

The British and American financial services sectors have long beenregarded as devoid of morality Scholarly opinion and popular Anglo-American culture alike tend to portrayfinance as a largely technical andamoral realm whose expert actors hold little regard for ethics in theirself-interested pursuits of monetary gain In addition to the famouseconomists cited in the epigraph of this chapter, journalistic accounts(Luyendijk2015), novels like Other People’s Money (Cartwright2011),and cinematic adaptations offinanciers’ memoires, such as The Wolf ofWall Street (Belfort2007), have all contributed to the characterisation

© The Author(s) 2017

M Campbell-Verduyn, Professional Authority After the Global

Financial Crisis, Building a Sustainable Political Economy: SPERI

Research & Policy, DOI 10.1007/978-3-319-52782-6_1

1

of this industry as one that primarily serves mammon Derived fromthe Aramaic word for wealth and profit, mammon is the worldlymaterialism that the New Testament of the Christian Bible distin-guishes from the pursuit of ethical goals associated with serving God(Luke 16: 9–11; Matthew 6: 24).

The perception of Anglo-Americanfinance as an expert wealth-makingrealm was severely undermined in the 2007–8 global financial crisis Themost intense period of market volatility since the Great Depression chal-lenged the social legitimacy of the British and Americanfinancial servicesindustries Previously profitable firms were nationalised in the UnitedKingdom and rescued with significant injections of public funds in theUnited States Daily headline reports depicting laid-off employees and anindustry collapsing due to incompetence and hubris emphasised thelack

of expertise and wealth-making capacity of Anglo-American finance(Arestis et al 2015) The ability of this once revered realm to servemammon became widely questioned

A decade hence, scholarship and popular culture alike lament howprecious little has fundamentally changed in the wake of this historicperiod of volatility Academic studies reiterate how finance remains thedominant industry of the highly “financialised” Anglo-American econo-mies (Bell and Hindmoor2015; Fichtner2016; Young and Pagliari2017;Winecoff 2015) The persistent structural power of Anglo-Americanfinance was only minimally constrained by wide-ranging and intricatepost-crisis governance reforms (Moschella and Tsingou 2013; Helleiner

2014: Porter 2014) Award-winning cinematic adaptions of the 2007–8global financial crisis and its aftermath, such as Margin Call (Chandor

2011) andThe Big Short (Lewis2010; McKay2015), leave their viewers toconclude that the pre-crisisstatus quo largely persists This book examines

a question left largely unaddressed in either popular culture or academicstudies: how has the persistent pursuit ofmammon been justified in theaftermath of the 2007–8 global financial crisis?

PROFESSIONALAUTHORITY IN ANGLO-AMERICANFINANCEThe idea that “nothing-has-changed” since the 2007–8 global financialcrisis overlooks some significant transformations that did take place in theaftermath of this intense period of volatility One important changeinvolves how regulators at various levels of governance increasingly con-sider the potential for volatilities to arise from within the systemic

interconnections and innovations that continually characterise the globalfinancial system (Baker2013; Bell and Hindmoor2016; Best2016; Datz

2013; Nesvetailova 2014) These and other changes, however, areregarded as falling well short of the “double movement” predicted atthe height of the crisis that foresaw states and civil society counteractingthe failures of“free” markets (Joseph Stiglitz cited in Bases 2010; Polanyi

1944; see more widely Helleiner2010a)

This book emphasises underappreciated elements of both change andcontinuity by providing a nuanced account of attempts to justifymammon

in Anglo-Americanfinance following the 2007–8 global financial crisis Itsanalysis shifts away from the typical political economy focus on specificpolicy changes and the roles in post-crisis reform played by prominentmarket actors, such as the large globally operating banks (e.g Lall2012;Sinclair and Rethel 2012) The analytical scope is instead widened toconsider three groups of professionals– advisories, economists, and finan-cial service providers– whose roles and authority have been overlooked tovarying extents in the “rather narrow” post-crisis literature on financialgovernance (Pagliari and Young2014: 576)

Professionals are important to examine because of their often subtleclaims to balance self-interested pursuits of material gain with widercommon concerns These“special” non-state actors presume to overcomethe alleged impossibility of serving “two masters,” God and mammon(Matthew 6: 24) This book examines how specific groups of professionalshave overtly invoked wider ethical goals to justify the persistent pursuit ofmaterial gain in the wake of the 2007–8 global financial crisis Rather thanproviding a “how-to” guide for dethroning mammon (Welby 2016) ormerely critiquing bydecoding mammon (Dominy2012), this book ana-lyses how professionals have gone aboutdefending mammon whilst iden-tifying important implications for Anglo-American finance, society, andgovernance more generally

Four main arguments are advanced in this book First,overt claims

to expert knowledge and implicit claims to contribute to wider mon concerns underpinned professional authority in Anglo-Americanfinance prior to 2007–8 Professionals long positioned themselves ascompetent experts whose pursuit of mammon implicitly addressedwider social concerns Second, the 2007–8 global financial crisisundermined both the cognitive and normative claims underlyingprofessional authority Technical competence and contributions

com-to common concerns were each challenged as the activities of

Anglo-American professionals were revealed to be little different fromother self-interested non-state actors Third, professionals responded

to contestations of their authority by explicitly emphasising theirwider social contributions following the 2007–8 global financial crisis.Post-crisis defences of mammon relied on overt rather than implicitclaims to be serving wider common concerns Fourth, pre-crisis valuesand ideas underpinned the post-crisis enhanced ethical emphasis ofprofessionals Such continuities contributed to narrow justifications ofmammon, but to neither the wider legitimacy of professionals, nor tothe more fundamental reform of Anglo-Americanfinance in the wake

of the most severe period of instability since the Great Depression.Taken together, these arguments speak to wider concerns with author-ity in Anglo-America society generally, as well as to debates in the inter-disciplines of International Relations (IR) and Global Political Economy(GPE) more specifically This book links the more explicit emphasis onethical issues that has been noted at different individual, institutional, andsocietal levels since the globalfinancial crisis (Coeckelbergh 2016: 111)with the efforts of professionals to re-establish their authority followingthe purported“death of expertise” (Nicolas2017) Conceptually, a novelunderstanding of authority as a dynamic process rather than as a staticattribute of contemporary global governance is advanced Empirically,the range of actors exercising agency in Anglo-American finance andglobal governance is widened to include a number of non-state actorswhose roles have been overlooked to varying degrees in IR and GPE Theremainder of this chapter elaborates upon these contributions whilstdetailing the structure of this book

THE PROFESSIONALSEXAMINEDAttention to professionals is growing in the inter-disciplines of IR andGPE (Bigo2017; Banet al2016; Chwieroth2010; Kauppi and Madsen

2013; Malkin2016; Seabrooke and Tsingou2014; Seabrooke and Wigan

2016) This book focusses less on the roles of professionals in loosely

defined global “epistemic communities” (Cross2012; Haas1992) Ratherthe stress is on the dynamics of professional authority in the two jurisdic-tions hosting what remain, despite their central implication in the 2007–8crisis, the dominant globalfinancial centres: London and New York City(Norfield2016; Yeandle2016; Wójcik 2013) The Anglo-American pro-fessionals examined consist of three groups of the leading or most

prominent individuals orfirms based in the UK and US – the two tries that remain at the “undisputed core of global finance” (Fichtner

coun-2016: 22)

Afirst set of professionals analysed are financial services providers Theseactors include the leading accountingfirms and credit rating agencies (CRAs)familiar to GPE and IR scholars, along with the less well-known technology,information, and news corporations (TINCs) Despite playing key roles infinance, leading TINCs such as Bloomberg, Dow Jones, and ThomsonReuters have been subjected to little scholarly scrutiny Meanwhile, IR andGPE literature on the “Big Four” accounting firms and leading CRAsMoody’s and Standard & Poor’s has focused narrowly on governance stan-dards and “poorly informed and narrow economic or legal accounts”(Paudyn 2014: 10).1 The dynamic authority of these professionals in theaftermath of the 2007–8 global financial crisis is traced inChapter 3

Chapter 4examines a second category of professionals: prominent dox economists (POEs) The shifting authority of two overlapping subsets ofPOEs is traced Afirst set includes individuals who have made considerablecontributions to orthodox economics, such as Gregory Mankiw, the author

ortho-or the leading introductortho-ory textbook to economics (Mankiw2014), alongwith the Nobel Memorial Prize-winners Paul Krugman and Robert Shiller Asecond set of POEs includes individuals who have not only made importantcontributions to orthodox economics but who have alsofilled key roles atinternational financial governance institutions – Kenneth Rogoff, JosephStiglitz, and Lawrence Summers – as well as at leading central banks: AlanGreenspan, Andrew Haldane, Raghuram Rajan Although some of thesePOEs, such as Krugman and Stiglitz, are often considered to be more radicaldue to their scepticism of markets, they all subscribe to and are considered toremain “firmly embedded” (Fridell 2011: 177) in an orthodoxy by those

“heterodox economists” at the margins of the wider profession (e.g Keen

2011).2Appendix C elaborates on the selection of the specific POEs ined in this book

exam-Individuals andfirms whose main value-added is the advice they vide are a third group of professionals whose shifting authority is consid-ered in Chapter 5 The broad roles of advisories in national and localgovernance have been detailed in public administration and public policystudies (Beveridge2012; Saint-Martin1998) Yet, more detailed analysis

pro-of the dynamic authority pro-of financial advisories as a specific subset offinancial service providers in the aftermath of the global financial crisishas been overlooked The leading advisories examined in this book include

UK- and US-based actuaries like David Li and Oliver Bettis; financialconsultingfirms such as AT Kearney and Oliver Wyman; as well as thebulge-bracket legal groups Allen & Overy, Baker & MacKenzie, andClifford Chance.

Accountingfirms, CRAs, TINCs, legal groups, and consulting firms,are often grouped together under the label“professional service firms”(e.g Boussebaa et al 2014) This book, however, examines thesediverse sets of actors separately in order to emphasise important differ-ences between them As GPE scholars Young and Pagliari (2017) havedetailed, capital is far from “united.” Likewise, professionals cannotsimply be considered as one homogenous group of non-state actors.One important axis of difference amongst them is their varying degree

of professionalisation Actuaries, accountants and lawyers self-governthrough more formal bodies than CRAs, TINCs, and consultants Theconduct of actuaries operating in various capacities in the UnitedStates, for example, is regulated through the American Academy ofActuaries, the Casualty Actuarial Society, and Society of Actuaries, toname but a few leading professional bodies By contrast, the TINCsself-regulate in the more general US Software and InformationIndustry Association

A second key difference amongst the professionals examined in thisbook is the varying degree of market competition each group faces On theone hand, inter-professional competition occurs due to continualencroachment on one another’s terrain For example, in offering theirown specialised consultancy services, the leading accounting firms,CRAs, and TINCs have long competed with advisory firms.3 On theother hand, intra-professional competition stems from the many smallercompetitors embracing new technologies to challenge their leading rivals,particularly the leadingfinancial services providers Nevertheless, the intra-and inter-professional competitionfinancial services providers and leadingadvisories face pales in comparison with other that faced by otherfinancialactors like bankers and insurers (Securities and Exchange Commission2015; Campbell-Verduyn2015: 360–362)

Restrained market competition along with the ability to self-govern arethe central characteristics distinguishingprofessionals from ordinary non-state actors These“special” (Hanlon1998: 843) traits are neither auto-matically nor naturally inferred Rather such “occupational privilege”(Collins et al 2009: 251) is politically and socially determined.Governments and other centralised political authorities grant and uphold

organisational autonomy and“shelter from the vicissitudes of the market”(Hanlon1998: 843) This book is however less concerned with whethersuch“special status” has been achieved or not than with how professionalauthority is asserted, contested, and changed Its focus is on the justifica-tions invoked and promoted in defendingmammon The non-state actorsexamined all self-identify as “professionals.” Their assertions of profes-sional status were long based on their expert knowledge These“knowl-edge actors” (Stone 2013) disseminated the “thought leadership”informing the decision-making of a range of market actors, regulators, aswell as popular and scholarly analysis The 2007–8 global financial crisisseverely contested the expert knowledge that underpinned professionalclaims to a “special social status” involving the benefits of restrainedmarket competition and self-governance How have professionals sought

to re-legitimate their persistent pursuit of mammon following the mostsevere period of volatility since the Great Depression?

THE EXPLICIT ETHICALEMPHASIS

A central claim of this book is that professionals in Anglo-Americanfinance sought to defend mammon in the aftermath of the global finan-cial crisis by stressing their contributions to wider common concerns,rather than solely explicitly emphasising their expert knowledge.Professionals increasingly engaged with and sought to exert“issue con-trol” (Henriksen and Seabrooke2016) over three overtly normative areasthat explicitly consider how the world should or ought to be Theirdispersed efforts culminated in what this book considers as the enhancedethical emphasis Afirst overtly ethical set of issues increasingly engaged

by professionals after the 2007–8 global financial crisis were nomic inequalities Consideration of this issue area necessarily entailstaking explicit positions in how societies should distribute wealth andresources in more or less equal manners (Beitz 1999; Sen 1992; vanden Anker 1995) A second set of overtly ethical issues increasinglyengaged by that Anglo-American professionals in the aftermath of theglobalfinancial crisis relate to the environment Issues of sustainability aswell as climate change that are “full of ethical sentiment” were moreovertly considered by professionals (Brassett and Holmes2010: 445) In

socio-eco-a third instsocio-eco-ance, professionsocio-eco-als incresocio-eco-asingly engsocio-eco-aged fsocio-eco-aith-bsocio-eco-asedfinance ingeneral and Islamicfinance in particular The latter “niche” (Perry andRehman 2011: 118) of global finance explicitly strives for “a financial

order of greater social justice, based on the principles of equity, mutualityand sustainability” (Rethel 2011: 82) Involving more or less strictadherence to a wide range of overtly moral values beyond self-interestedmaterial gain, Islamic finance is “intertwined by definition” with ethics(Fang2014: 1177; see more generally Kuran 2004; Maurer2005).The stress by professionals on these explicitly ethical issues in the post-crisis period contrasts with their backgrounding of moralities in the yearspreceding the globalfinancial crisis Prior to 2007–8, the once prominent

“values of honour, integrity, courtesy, and so on” (Thrift1994: 342 cited

in de Goede 2003) in Anglo-American finance gave way to an intensestress on individualistic, short-term profiteering that the former bankerPhilip Augar (2008) lucidly captured in The Death of GentlemanlyCapitalism.4Granted, overt moralising persisted (e.g Best2003), parti-cularly as Anglo-Americanfinancial professionals emphasised the “bour-geois virtues” (McCloskey2006) of integrity, confidentiality, conflicts ofinterest, and objectivity Thesemicro-level ethical issues continued to bestressed in individual voluntary professional codes of conduct prior to theglobal financial (Boatright 2010: 4) Yet, despite some “emerging”engagements prior to 2008 (e.g Thistlethwaite2011: 39), little systema-tic commitments were explicitly made to themacro-level ethical issues thatcan be distinguished due to their consideration of wider collective debates

on socio-economic and environmental sustainability, equality, stability,social responsibility, justice, and fairness

The enhanced professional engagement with such ethical issues after

2007–8 was paralleled by a wider emphasis on morality in Anglo-Americanfinance following the global financial crisis Governance institutions likethe US Federal Reserve and civil society actors such as the Archbishop ofCanterbury all denounced the“deep-seated cultural and ethical failures atmany largefinancial institutions” (Derby 2013) while calling for improve-ments tofinancial “ethics and culture” (Chon 2014) in the aftermath ofthis historic period of instability Mark Carney, the Governor of the Bank

of England, derided the “ethical drift” of the financial services industryand focused on individual “misconduct” in his role as chair of theFinancial Stability Board (cited in Chu 2016) The President of theFederal Reserve Bank of New York, meanwhile, called on banks to create

a harmonised database of individual moral failings, dubbed the“naughtylist” (Katz2015) A litany of out-of-court settlements between regulatorsand banks exchanged the criminal prosecution of fraudulent behaviour forpromises that suchfinancial conglomerates would embrace a more “ethical

culture” (Garrett 2014) In response to these and other demands “tointroduce an ethical spirit into the market” (Skapinker 2009) several

“moral codes” were developed by financiers themselves (Moodley

2014) More telling were reports of “steadily swelling numbers of shippers” attending places of worship in financial districts that theFinancial Times reporter Patrick Jenkins (2009) considered as“anecdotalproof, seemingly, that some of the bankers who contributed to the crisis ofthe past two years are seeking salvation or at least an understanding oftheir place in the world.” How can these explicit individual and institu-tional considerations of ethics, as underappreciated elements of change inthe aftermath of the globalfinancial crisis, be understood?

wor-UNDERSTANDING THE EXPLICITETHICAL EMPHASISSeveral GPE scholars have also identified an enhanced focus on ethics

in Anglo-Americanfinance following the 2007–8 global financial crisis.Chwieroth (2015) revealed the normative orientations of professionalstaff at the International Monetary Fund Young (2013: 12) noted ashift from “technical mastery” to wider “shared responsibility” in thecomment letters of industry lobbyists to US regulators Similarly,Cameron, Nesvetailova and Palan (2011: 129) reported a shiftingself-conception of the industry “away from that of a purely ‘economic’system (following internal, quasi physical or machinic rules), to that offinance as a social system: to a concept of finance embodying (orabandoning) values and morals.” These and further business and cul-tural studies (Curtis et al 2013; Fuller 2013; Hall and Appleyard

2012), however, identified the increasingly overt stress on ethical issues

in Anglo-American largely in passing This section examines why moresystematic enquiry of the explicit ethical emphasis following the globalfinancial crisis has not been forthcoming and then outlines the novelperspective provided in this book

Analysis of the enhanced ethical emphasis on Anglo-Americanfinanceafter 2007–8 stems in part from the widespread scepticism of overtly moralengagements by non-state actors Regarded as merely cynical attempts tomaximise profits, the objective widely taken to be the central responsibility

of market actors in Anglo-American societies (Friedman 1970), suspicion

of market engagement with ethics is both wide-ranging and long-standing(Jeucken2001; e.g Parr2009; Park2012) As the former banker MichaelLewis (1989: 215) lamented in his bestselling novelLiar’s Poker, “when

an investment banker starts talking about principles, he [sic] is usually alsodefending his interest and that he rarely stakes out the moral high groundunless believes there is gold under his campsite.”

There is certainly merit to the scepticism of overt engagement with ethics

by state and non-state actors The purely self-interest case forpersistentlyidentifying with and engaging the three particular ethical domains listedabove over the past half decade, however, is unconvincing Despite beingwidely trumpeted at the height of the 2007–8 crisis, faith-based as well associo-economically and environmentally sustainable financial marketsremained largely unprofitable niches of global financial markets The appeal

of the latter as sources of profit peaked and declined following widespreadhopes that the election of US President Barak Obama would usher in a

“green New Deal” and a “renewal of capitalism via decarbonisation”(Jankovic and Bowman 2014: 251) Similarly, the attractiveness of theformer as sources of profit peaked at the height of the 2007–8 crisis withwidespread hopes that actors adhering to Islamicfinancial principles wouldhelp to recapitalise the liquidity-starved Anglo-American financial system(Abbas 2008; Groneworld 2009; Hoggarth2016; Momani2009; Zemla2014) Despite exceptions in certain sectors, Islamicfinance as a whole didnot live up to the rapid profit-making potential that had enhanced its earlierappeal, prompting prominent Anglo-American financial actors to curtailtheir activities in what remained a niche sector (Jenkins and Hall 2011).5Notwithstanding similarly idiosyncratic exceptions, the wider momentum

of environmental and sustainable finance in Anglo-America declined after

2008, amongst others, due to turns towardsfiscal austerity and subsequentfailures of governments to address climate change through the integration

of various market-based investment schemes (Chestney 2011; Ho 2013;Jankovió and Bowman2014; Peters-Stanleyet al 2011)

That these overtly ethical issue-areas were persistently emphasised byprofessionals since 2007 despite underwhelming profit opportunitiesinvolved points to other dynamics potentially at work Rationalists mightunderstand the persistent stress on these issues as part of professionalattempts to switch from “reactive” responses to client demands to themore “proactive” enticement of customers into new markets (Susskindand Susskind 2015) Yet the “special status” of prominent professionalscan become imperilled if material gains are not eventually accrued Loss-making or slow-growing activities are rarely maintained for long either byaccounting, consulting and legalfirms as well as CRAs and TINCs seeking

profit or by actuaries, POEs and individual professionals pursuing steadyemployment, research funding, and career advancement.6

This book is concerned less with specific business and career strategies ofprofessionals than with the social legitimation strategies of these actors.That UK- and US-based professionals persistently emphasised overtlyethical areas as the globalfinancial crisis despite the underwhelming profitpotential involved is understood as a novel shift from reliance on expertknowledge to a more explicit stress on morality in attempts to restoreauthority The constructivist emphasis on legitimising the persistent pur-suit ofmammon complements the more traditional rationalist stress on theindividualist pursuit of worldly material gain The bridges this book pre-sents between the traditional rationalist suspicion of market engagementswith morality and the constructivist stress onsocial legitimacy are outlined

inTable 1.1and elaborated upon in further detail in the following section

LIMITS OF THEENHANCEDETHICAL EMPHASIS

Chapter 2outlines the key concepts and theoretical approach ning this book Drawing on notions of legitimation developed in con-structivist literatures on identities and practices in sociology, IR as well asGPE, this chapter re-frames authority as aprocess rather than an attribute

underpin-of global governance To overcome the neglect underpin-of discourse in vism, this chapter draws on post-structuralist insights and recent interdis-ciplinary studies emphasising the importance of discourses infinance andits contemporary governance (Andersson 2016; Chihara 2015; Holmes

constructi-2014; Karl 2013; Moretti and Pestre 2015; La Berge 2016; see moregenerally Lanchester2014) The wider structures limiting the discoursesthat actors can draw upon are also considered in order to avoid thetendency of interpretive studies7 that take the “insider view” to over-emphasise“the realm of choice” and underemphasise “the realm of con-straint” (Hollis and Smith1990: 206) A stress on structural factors, like

Table 1.1 Understanding explicit non-state actor engagement with ethical issues

Engagement with Macro-Level Ethical Issues Rationalist Profit potential and maintaining “special status” Constructivist Legitimacy and meaningful identities

the persistent dominance of pre-crisis ideas and moralities, is invoked incomplementing the focus on the agency exercised by professionals in thewake of the 2007–8 global financial crisis.

Chapters 3 to 6 examine the dynamics of professional authority inAnglo-American finance through a series of genealogies NeitherFriedrich Nietzsche, who originally developed this research method, norMichel Foucault (1977), who refined it a century thereafter, provided a

“comprehensive description” of what genealogies entail (Flyvbjerg2001:119) More recently, IR scholars have conceived this research technique asthe historical tracing of discursive (dis)continuities in the (re)constitutions

of identities Genealogies investigate the piecemeal production of identity

at various moments over time They assume that identities are neither aninevitable nor stable, but rather outcomes of accidental and unintendedprocesses (Hansen2006; Klotz and Lynch2007: 30–37)

Although they can be likened to process tracing, genealogies foundly differ from positivist social science methods Rather than thecausal origins of “what happened and why?” genealogies examine theconditions making identity (dis)continuities possible (Vucetic 2011:1303) Instead of hypothesis testing or providing future predictions inpurportedly neutral manners, genealogies are expressivelypolitical meth-ods of analysis The method underlying the analysis of this book seeks toreveal historical contingencies of temporarily accepted truths in order toprovide openings for alternative conceptions (Milliken1999: 243; Walters

pro-2000: 10–11; Flyvbjerg 2001: 113–115; Andersen 2003: 17–23) Indoing so, genealogies reveal possibilities for alternative conceptualisations

of identities, authority, and social organisation (e.g de Goede2005).Genealogies help interpret the dynamism of professional authority inthree manners First, this method moves beyond the traditional IR andGPE focus on “trans-historical or essential structures, epochs, or socialforces, be these Capital, The State, The Economy, or Modernity”(Walters 2000: 10) Instead, genealogies consider “multiple sites ofpower” (Price 1995: 88) and locate “history where it is not expected

to be – within moral institutions and practices” (Price1995: 87) Putdifferently, genealogies examine attempts by particular actors to settleidentity and meaning at specific moments in time (Jackson2006) Suchattempts are considered as“the marriage of chance occurrences, fortui-tous connections, and reinterpretations” that can lead identities to

“often change in such a way that they come to embody values differentfrom those that animated their origins” (Price 1995: 86) Genealogies

therefore consider the agency exercised by specific actors in manners thatcan ultimately result in different identities than might have beenintended.

Second, and relatedly, genealogies helpfully stress productive ratherthan merely instrumental forms of power The method assumes thatdiscourses are not merely instruments harnessed by actors Rather, dis-courses constitute the identities of the very actors that“use” them Ratherthan permanently and rationally fixed, identities are “constituted in dis-course” (Bacchi 2009: 22, cited in Lauber and Schenner 2011: 511).Genealogies therefore consider actor identities as stemming from thespecific discursive positions taken over time Third, and most importantly,genealogies focus on the specific moralities invoked in efforts to legitimateparticular identities Nietzsche originally developed genealogy as “amethod specifically concerned with interpreting the origins of moral inter-pretations” (Price1995: 86) Genealogies usefully problematise the mor-alities promoted in particular discourses and the roles they play inlegitimising certain identities above others

The genealogies undertaken in this book investigate the dynamism ofprofessional authority through a stress on broader notions of discourse, theagency exercised by specific actors in attempts to settle identities at parti-cular moments in time, and the roles of moralities in legitimising suchidentities Chapters 3 to 6 interpret the manners and limits of varyingefforts by professionals in Anglo-Americanfinance to defend mammon

A three-step genealogical analysis is undertaken for each set of sionals In afirst step, the sources of pre-crisis professional authority andits contestation in the 2007–8 global financial crisis are located Outliningexpert identities and their contestations sets the stage for the second step ofanalysing multiple, dispersed efforts to re-legitimate the power of Anglo-American professionals to pursuemammon in the wake of the most severeperiod of instability since the Great Depression The third step undertaken

profes-in Chapter 6 exposes significant limits to the attempts to re-legitimateprofessional power in the aftermath of the 2007–8 global financial crisis

In overtly emphasising macro-level ethical issues, professionals inAnglo-Americanfinance undertook significant and hitherto underappre-ciated changes in the aftermath of the globalfinancial crisis Importantelements of continuity, however, constrained the impacts of such changes.First, the explicit consideration of ethics was not paralleled by changes inexpert knowledge Second, the emphasis on macro-level moral issue-areascontinued to emphasise key liberal values of individualism, economic

growth, transparency, and market self-governance Despite being quitesignificant from market perspectives, the stress on explicitly ethical issueswas quite limited from the perspective of wider calls to fundamentallyreform the ideas and values underpinning Anglo-Americanfinancial capit-alism The enhanced emphasis on macro-level ethical issues by profes-sionals, in other words, was underpinned by “a set of minormodifications” (Morgan 2015a: 531) that merely provided “a newtwist” to the expert identities that had long underpinned the pre-crisisauthority of professionals (Boltanski and Chiapello2005: 20).

These elements of continuity in turn undermined post-crisis defences ofmammon and wider attempts to re-legitimate professional power In afirstinstance, continual cognitive failures involved professionals in persistentscandals and volatilities In a second instance, overtly moral niches ofglobal finance were integrated into a volatile Anglo-American financialsystem marked by crises of increasing frequency and severity IntegratingIslamic and environmental finance into the volatilities of mainstreamfinance in such manners undercuts the authority of UK- and US-basedprofessionals by implicating these non-state actors in further volatility.Together, these dynamics lead to the conclusion that the enhanced stress

on overtly moral issues persistently undermines rather than enhancingprofessional authority

Chapter 6 more generally concludes that restoring both sional authority and the place of finance in Anglo-American societydepends crucially on the ideas and values underlying efforts to defendmammon An overt stress on macro-level ethical issues through anongoing emphasis on pre-crisis ideas and values may be sufficient tolegitimate the power of professionals in the narrow communities inwhich they operate Yet attempts to more widely re-legitimate profes-sional power in Anglo-American society are limited by the persistentprioritisation of values and ideas that implicate professionals inongoing volatilities

profes-Such vulnerability to continual contestations in scandals and periods ofcrisis not only undermines attempts to restore professional authority, butalso limits the post-crisis governance reforms of Anglo-Americanfinance.The persistence of pre-crisis ideas and values in this crucial sector con-tinually conflicts with wider social values of socio-economic and environ-mental sustainability, equality, and stability Tensions between financialprofessionals and thefinancial sector as a whole are likely to persist untilmore profound cognitive and normative changes integrate a wider range

of alternative values and ideas The possibilities of further integrating thelatter are considered in the concluding chapter of this book The threegenealogical steps, their mainfindings, and implications are summarised in

Table 1.2 below Before outlining the central contributions of this book,the following section describes the data underlying its analysis

THE DATAUNDERLYING THISBOOKGenealogies require a wide variety of detailed sources The corpus of dataunderlying this study stems from what the sociolinguist NormanFairclough (1989) describes as the three orders of discourse First arelightly institutionalised discourses of social actors themselves In thisbook, these include the discourses in official press releases, annual andquarterly reports, communication booklets, newsletters, and policy papersreleased by professionals Second are more institutionalised discourses ofprofessional organisations Self-governance institutions such as theInternational Actuarial Association and the American Bar Association, aswell as trade publications like The Actuary and The Lawyer, rearticulateand reproduce individual and firm-level discourses on an industry andprofession-wide basis Third, are broader scholarly studies and journalisticreports by both the general press outlets like theNew York Times as well as

Table 1.2 The three-step genealogical analysis

Step One

Stage Setting

Step Two Tracing Agency

Step Three Problematising

Objective Locating the sources

“achievement” thereof)

Exposing the continuities in efforts

to legitimate power (versus measuring their “success”) Chapter(s) Three through Five Three through Five Six

Key Finding Dissonance between

practices and expert

identities

Emphasis on level ethical issues of broader common concern

macro-Structural limits to enhanced ethical emphasis and continued implication

in volatility Implication

for Authority

Professional authority

undermined

Professional authority narrowly self- legitimated

Limits to efforts to more widely assert professional authority

business media like asThe Economist and the Financial Times that duce professional and industry-level discourses on a wider social scale.Data from a series of expert interviews also underpin the analysis of thisbook Twenty-seven one-on-one interviews were conducted with a range ofprofessionals in Anglo-American finance between April and August of

repro-2014 Interviewees listed in Appendices A and B were identified using acombination of reputational and non-probabilistic snowball sampling tech-niques Interviewees consisted primarily of executives such as directors andchairmen as well as mid-level managers and partners Men formed themajority of interviewees Interviews took place over the phone, Skype, and

in person in the keyfinancial centres of London and Manhattan

Some professionals were far more open to interview requests thanothers Individuals in the accounting, actuarial, and legal professionsformed the majority of the interviewees as those in the consulting, creditrating, economics, and TINC profession were much more hesitant to beinterviewed The hesitancy of the latter stems in part from the generalperception that their opinions and insights are valuable commodities to besold rather than “given away” without compensation Analysis of theshifting underpinnings of the professional authority of the latter reliedmuch more on available documentation Analysis of POEs for instancerelied on short “op-ed” articles and interviews published in mass mediaoutlets, commentary published in more specialised outlets such asProjectSyndicate and VoxEU as well as in longer-form scholarly journals andbooks Appendix D lists the specific documents consulted

SUMMARY, CONTRIBUTION,AND AUDIENCES

This book enhances understanding of the changing nature of professionalauthority in the aftermath of the globalfinancial crisis The changing nature

of professional authority is of relevance to scholars, policy-makers, andcitizens affected by the 2007–8 crisis The efforts of professionals to re-establish authority in particular ways is pertinent beyond Anglo-Americanfinance for examining other crisis-prone fields characterised by contestations

of authority Energy production is one such area, as exemplified by the longrunning Fukushima debacle in Japan In scrutinising the attempts of profes-sionals to legitimate their persistent power to pursuemammon in the after-math of crisis, this book provides critical examination of changing patternsand types of authority (Graz and Nölke 2007; Hansen 2008) Its

conception of authority as a dynamic process continually shaped over time ispertinent to those interested in the processes and actors underpinningcontemporary global governance Finally, this book engages ongoingdebates both within GPE and IR, as well as between these and other socialscientific disciplines First are efforts to enhance focus on moralities indisciplines that long sought to“purge” explicit considerations of ethics indeveloping what was considered to be more scientifically rigorous scholar-ship (Jackson 1996: 204; see also Walker 1993) This book resists suchefforts while responding to calls to recognise the importance of morality inpolitical economy in general (e.g Sayer 2000; Fourcade et al 2013;Wiegratz 2015) It does so by building on wider interdisciplinary efforts

to integrate ethics into the study offinancial governance in particular (e.g.Arestis et al 2015; Coeckelbergh 2016; Clarke 2015; Orban 2016).Second, the empirical focus on professionals in Anglo-American financecontributes to interdisciplinary engagement between GPE and IR andeconomic sociology as well as organisation studies (Harrington 2015;Faulconbridge and Muzio 2012; Hasselbalch 2015; Henriksen andSeabrookeforthcoming) This book is therefore relevant not only to stu-dents and scholars at the intersections of these disciplines, but also to thosemore widely interested in how power, legitimacy, identity, and authority arelinked together in the manners elaborated in the following chapter

3 Further examples in post-crisis global financial governance reforms and elsewhere are elaborated in Seabrooke and Tsingou ( 2014 ) Abbott ( 1995 ), Dezalay and Sugarman ( 1995 ), Stone ( 2013 ), and Susskind and Susskind ( 2015 ) detail such competition more generally.

4 See Fraser ( 2006 ) for a parallel account in the United States.

5 One particular barrier to the growth of Islamic financial markets in the United States have been attempts in nearly twenty states to ban products

and practices with word “sharia” or conforming to Islamic laws (Barbara

2011 ; Murphy 2014) For further consideration of the role of finance in the Anglo-American “War on Terror” see de Goede ( 2008 ).

6 The centrality of profit to the ideas and actions of POEs is also detailed by Chernomas and Hudson ( 2016 ).

7 Rather than focusing on “who gets what, when, and how” interpretive studies consider the meaning of events informing agents “who they are” and “what they want” (Widmaier et al 2007 : 749).

The Dynamism of Authority in Global

A third section summarises and concludes

DYNAMICPROCESSES OFAUTHORITYAttribute-based understandings of authority long stressed power and legiti-macy (Krieger1977; e.g Hurd1999: 400–1) The central contention is thatauthority is a quality of actors whose power is regarded as legitimate (e.g.Fuchs and Kalfagianni2010: 8) Further features, such as acceptance, obliga-tion, responsiveness, and trust, are equally emphasised in this static andfixedunderstanding of authority, understood as the status gained by certain actors

in global governance (Hall and Biersteker2002: 4; Fuchs2007: 61).German understandings stressing beliefs were influential in shiftstowards more active conceptions of authority Max Weber (1978), for

© The Author(s) 2017

M Campbell-Verduyn, Professional Authority After the Global

Financial Crisis, Building a Sustainable Political Economy: SPERI

Research & Policy, DOI 10.1007/978-3-319-52782-6_2

19

instance, suggested that power relations are legitimate when affectedactorsbelieve such relations to be so This belief-in-legitimacy conception

of authority was refined in understandings of authority as less of a product

of personal beliefs than asthe process of making power congruent with broadsocietal values (Grafstein 1981) Authority is thereby understood as thecorrespondence of power with the broader expectations and values ofsociety This understanding of authority persistently stresses power andlegitimacy, yet in a more active manner For David Beetham (1991: 11,emphasis added),“[a] given power relationship is not legitimate becausepeople believe in its legitimacy, but because it can bejustified in terms oftheir beliefs.” Beliefs, Beetham then specifies, are the broader principles “ofjustice, of right, of social utility– necessary to the justification of powerrelations” (ibid; see also Bourricaud1987) In this conception, authority isless a static attribute than the dynamic process through which powercorresponds to what is more widely considered to be “‘right’ on thebasis of moral convictions” (Fuchs and Kalfagianni2010: 46)

Two important considerations stem from more dynamic conceptions ofauthority First, the emphasis on justification focuses attention on theprocesses involved with power’s legitimation Second, and relatedly,authority as the congruence of power with moral principles is less depen-dent on interests and bargaining as stressed in rationalist accounts Rather

it is more concerned with identities as stressed in constructivist tives Authority here is less the degree to which power corresponds withspecific interests than the extent to which power is aligned with theidentities of specific individuals or groups of social actors In otherwords, authority stems less from the self-interested pursuit of set actorpreferences than from the integration of power with social values (Katsikas

perspec-2010: 4) This section elaborates upon each of these implications in turnbefore considering the roles of discourses in both enabling and structuringthe legitimation of power

IDENTITIES AND THE(SELF-)LEGITIMATION OF POWERAuthority is understood in this book as the justification of power withwider beliefs The degrees to which processes of legitimation underlyingauthority are considered to be “inherently social” (Reus-Smit 2007),however, remain contested For some, the legitimation of power involves

a wide audience of relevant stakeholders (Best2007; Brassettet al2012).For others it involves a relatively narrower set of social actors In

distinguishing between these two conceptions of legitimation, sociologistRodney Barker (2001) usefully specifies notions of “self-legitimation”.Here, the “self” refers to “either an individual or the group with which

an individual identifies or wishes to identify” (Chilton2004: 17) Leaningtowards but not necessarily entailing“automatic legitimation” (Reus-Smit

2007: 159), self-legitimation involves the congruence of power with thesocial values of relatively narrow groups of actors

Both forms of legitimation overlap in a stress on identities Central tobroader social legitimation are the identities of wider“political commu-nities” that social actors inevitably operate within (Symons 2011).Individual self-identities, or what Anthony Giddens (1991) labels“narra-tives of the self,” meanwhile, are key to self-legitimation In both forms oflegitimation, identities are the stories or biographies through which socialactors distinguish themselves from other social actors Identities can beindividual as well as serve to connect broader groups of individualsthrough common norms and goals that foster what Weber referred to asZusammengehorigkeitsgefuhl, the feeling of belonging together (Brubakerand Cooper2000)

Identities are frequently considered permanently fixed The rationalperspectives dominant in most social sciences regard identities as consis-tently egoistic and self-interested In contrast, this book draws uponnotions of identities as contingent, open-ended, and only evertemporarilyfixed At any moment in time one or several identities dominate whileothers remain at the margins Following sociologists Brubaker and Cooper(2000: 8), identities are furthermore considered to be“unstable, multiple,fluctuating, and fragmented.” While they may be rational, the (self-)identities of social actors can also be relational In the latter case, socialactors identities are produced through forms of“othering” that establish

“meaning through difference” with other social actors, as well as with theirpreviously held identities (e.g Ville and Orbie2013: 6) Rather thansolelyinstrumentalist advantage-maximising, identities can be defined relation-ally, vis-à-vis other social actors

Regarded as contingent andfluctuating entails, identities are continuallyre-articulated Temporarily fixed identities that are brittle and contingentcan be challenged and undermined by certain actions and events (Walker

1993: 13) Crises, as periods of dislocation (Koselleck 2006), serve asparticularly strong“trigger mechanisms” (Guzzini2012) in revealing parti-cularly practices to be incongruent with temporarilyfixed actor identities(Flockhart 2016; Mattern 2005) Such tensions and dissonances may

undermine temporarilyfixed (self-)identities and lead to moments of ivity in which actors seek to revise and transform identities (Steele2008).The need to continually re-produce identities opens possibilities for chal-lenge and contestation, as well as for reconfiguring identities in ways thatalter the basis of authority Identities that are continually changing therebyunderpin dynamic understandings of authority But how precisely is thereconfiguration of identities and authority undertaken?

reflex-DISCOURSE, AGENCY,AND STRUCTURE

José van Dijk (1998: 260) argues that legitimation is best understood as a

“complex social act that is typically exercised by talk and text.” Yetdiscourse is regarded as “non-essential” in the “soft,” “conventional,”

“modern,” “middle ground,” and “thin” constructivist approaches of IRand GPE (Epstein 2013: 300) This dominant form of constructivismconceives discourses as tools to rationally transmit ideas in ways that may

or may not advance actors interests By contrast, in “hard” variants ofconstructivism, discourses are conceived as ensembles of sequences ofstatements establishing systematic relationships between difference andsimilarity (Andersen 2003) Discourses here are combinations of differ-ential or relational ideas that produce the identities social actors by posi-tioning them vis-à-vis others (Paul 2009) The very discursive positionstaken by social actors are hallmarks of their identities (Epstein2008) AsGPE scholars Abdelal, Blyth and Parsons (2010: 14) put it, “creatingsalient identities is an on-going process wherein agents, rather thanbeing socialized into a particular fixed role, are constituted as distinctsubjects by their position within a particular discourse and by performingdistinct roles within that discourse.”

Yet the agency exercised by actors in “voluntaristic self-constitutiveidentification processes” (Flockhart 2016: 22) certainly “does not meanthat ‘everything is possible’” (Krook and True2012: 109) Interpretivestudies that take the“insider view” and stress the agency of social actors toposition themselves in discourse can rightly be criticised for“overempha-sizing the realm of choice and underemphasizing the realm of constraint”(Hollis and Smith 1990: 206) A key element constraining the range ofdiscourses social actors can select from and incorporate is the need to draw

on ideas, values, and beliefs that have the potential to permeate theirlegitimising communities, the political communities that grant legitimacy(Symons2011) Justifying new values within the wider structures in which

social actors operate social can be done in novel manners One suchmanner is by combining hostile “legitimation principles” with identities

“whose legitimacy is guaranteed” to construct an identity that rates its own critique” (Boltanski and Chiapello 2005: 486) In otherwords, social actors can re-position themselves in discourses in mannerssimply give“a new twist” to their previously held identities (ibid: 20).Actor identities and the underpinnings of authority are thereby“pro-duced” through the dynamics of both agency and structure Navigatingthese are discourses that constitute the identities of actors and give rise tohow actors make sense of the world around them Put differently, dis-courses produce how actors understand their very roles, interests, andpossibilities; what is considered to be natural and taken for granted asnormal“common sense”; as well as what is considered to be possible andmoral (Ville and Orbie2013; Watson1995) Which actors possess agency

“incorpo-to undertake the structures of contemporary global governance?

EXERCISINGAUTHORITY IN GLOBALGOVERNANCE

One of the “deficits of poststructuralism” identified by Bieler andMorton (2008: 113) is the tendency to refrain from engaging “thewho of power.” What is alternatively called “hard,” “critical,” “post-modern,” “radical,” or “thick” constructivism can be criticised for con-signing authority to the broad rationalities and governmentalities thatare regarded as being everywhere but nowhere in particular whilst“per-meating the entire social order” (Brush2003: 25; see also Marshet al

2015) At the same time, more traditional “soft” constructivisms andrational approaches alike tend to stress the authority exercised by elected

officials and political leaders This narrow universe of actors exercisingauthority stems from a constrained division of actors “in” and “an”authority The former actors are said to exercise authority throughtheir inherent “right to command” (Hansen 2008: 2) and abilities toissue legally “binding decisions” that others are “obliged to follow”(Katsikas 2010: 128) Other actors, like scholars and other specialists,are considered“an” authorities by holding “demonstrated knowledge,skill, or expertise concerning a subject matter or activity” (Flathman

1980cited in Katsikas2010: 117) and conveying“respect and credibilitydue to knowledge, practice and expertise” (Hansen2008: 2) Lackingformal power or means of coercion, “an” authorities are ultimatelyconsidered“non-authoritative” (Katsikas2010: 120)

The widely invoked division between “an” and “in” authority isproblematic because it locates authority largely – if not solely – in a

“public sphere.” This separation distinguishes between actors “inauthority” from a “public realm” and actors that are “an authority”operating in a“private realm” inclusive of everything that is not part ofthe nation-state (Büthe 2004: 281; Hall and Biersteker 2002: 203;Weintraub 1997: 28) The central problem is that this distinction, asCutler, Haufler and Porter (1999: 18) succintly assert, is that it perpe-tuates the assumption that“the private sphere cannot in fact act author-itatively” because this sphere is regarded as anarchic in the absence ofstate authority (Hurd1999: 383)

These assumptions are criticised in two IR and GPE literatures that thissection briefly considers in specifying who exercises authority in contem-porary global governance A first sub-section engages literature on “pri-vate authority” that has usefully detailed various types of authorityexercised by non-state actors A second sub-section engages a more recent

“public practices” literature that, in blurring the “public-private divide”,has helpfully highlighted the“publicness” of non-state actor activities Athird sub-section concludes by identifying professionals as actors who, instraddling the public-private divide and undertaking “public practices,”exemplify the dynamism of authority in global governance

Before proceeding a brief clarification of what global governance entailsmore precisely is in order In addition to international order provided bythrough the formal policies, rules and treaties of nation-states and inter-national organisations, global governance is equally inclusive of informalnorms, ideas, and knowledges (Barnett and Duvall2005; Hoffman and Ba

2005) Like authority itself, global governance is a highly fluid – andprecarious – process stemming from the interconnected and unevenlydistributed power and legitimacy of a wide diversity of state and non-state actors operating at multiple micro– and macro – levels Literature onglobal governance has long been concerned with authority, yet efforts tospecify its precise underpinnings are lacking, a lacuna addressed in thisbook (Albert and Knopp-Malek2002; Katsikas2010)

AUTHORITYBEYOND THESTATEScholarship elaborating various private forms of authority has usefullyrevealed the extent to which authority is not solely confined to the publicsphere This literature1illustrates how authority is“de facto de-coupled

from electoral processes” associated with nation-states (Hodess 2001:142) as non-state actors have long been“functioning like governments”(Culter2002: 32) Private forms of authority are regarded as occurring

“when an individual or organization has decision-making power over aparticular issue area and is regarded as exercising that power legiti-mately…such authority does not have to be associated with government”(Cutleret al1999: 5)

Five particular forms of private authority have been identified in thisliterature Actors such as crime syndicates achieve illicit authority inlegitimating their power through thefilling of “capacity gaps” or “func-tional holes” left by states through activities that contravene widelyaccepted social norms (Hall and Biersteker 2002: 171) Market actors,such as corporations, attain market authority when their power corre-sponds with the perceived“superiority of a private-sector way of doingthings, which includes the right to maximize one’s own wealth and themerits of markets more generally” (Porter: 7) such as entrepreneurialism.Moral authority is attained by actors such as religious movements whentheir power becomes congruent with wider societal and individual moralprinciples (Hall 1997) Popular authority is exercised as the power ofindividual leaders corresponds to the interests and identities of theirfollowers (Hall and Biersteker2002) Finally, experts possess technicalauthority in referencing scientific principles (Porter) These “multiplemanifestations” of private authority are said to frequently overlap and

“exist concurrently” (Hansen2008: 2)

These forms of private authority usefully problematise the“in” and

“authority” distinction as well as the separateness of “public” and

“private spheres.” Nevertheless, the concept of private authority isbased on the separateness of private and public spheres that is “inher-ently problematic and often treacherous” (Weintraub 1997: 38) Thenotion of private authority perpetuates the distinction between a“pub-lic sphere” that is “uniquely concerned with what is ‘common’ to thewhole community” (Wolin1960: 2) and a“private sphere” consisting

of “what is individual or pertains only to an individual” (Weintraub

1997: 5) Within this separation of public and private, non-state actorsare largely2 considered as lacking concern with the “collective out-comes” (ibid) that are held to be the “primary driver” of public actors(Ruggie2004: 17) Rather, market actors are considered to be driven

by “factional greed…profit and efficiency considerations”: in short,with individual rather than common wealth (ibid)

PUBLIC AND PRIVATEPRACTICESThe turn towards practices in IR and GPE has foregrounded“meaningfulpatterns of socially recognized activity” that are inclusive of everydaydiscourses as well as material actions (Best and Gheciu2014: 26) Thepublic practices of non-state actors and the private practices of publicactors further challenge the separation of “public and private spheres”,

as well as the notion that some actors are“in” and “an” authority On theone hand, the notion that state actors inherently fulfil “public” goals isundermined by the widespread privatisation of previously state-led func-tions along with the“capture” by individual interests of ostensibly publicgovernance functions at multiple levels (Bó 2006; Carpenter and Moss

2013; Urpelainen and van der Graaf 2015) and of multiple sectors,especiallyfinance (Pagliari2012a) While states and state actors continue

to fulfil public functions in many instances, as Tony Porter (2014: 223)suggests,“[w]e can no longer simply assume that activities associated withthe state or its citizenry as a whole are public” solely because they mightonce have been On the other hand, non-state actors may not only beconcerned with individual gain but also with the“collective outcomes”believed to solely motivate public actors (Weintraub1997: 5) Attempts tojustify“private” power more widely with ethical principles exemplify suchinterlinking of public and private “spheres.” Moral forms of privateauthority, for instance, illustrate the extent to which the actions of non-state actors“express common concerns” (Porter2014: 226)

The seemingly “perpetual embrace” (Cohen 1986: 68) of public andprivate “spheres” through practices of “private-in-public and public-in-private” (Sheller and Urry2003: 108) has led others to propose that“weare best off if we give up the effort to force all moral, political, andtheoretical issues into a dichotomous public/private framework” (Wolfe

1997: 182) More productively though others have sought to distinguishwhat specific actions and actors can be considered as public in nature (Bestand Gheciu2014; Haufler2001; Hurt and Lipschutz2015) Like identi-ties, and the reframed concept of authority more generally, what is regarded

as“public” can be regarded continuously socially constructed “Publicness”can be reframed as a set ofad hoc actions undertaken through differentprocesses, at different moments in time, by different sets of actors (Porter

2014) As a dynamic process, “publicness” challenges an attribute-basedunderstanding of the public as simply a“collective assets and goods held

in common and [which] cannot be bought or sold on open market”

(Drache2001: 43) As a set of continually asserted practices,“what counts

as public” at any given moment in time can be “subject to contestation,particularly during times of socio-cultural disruption” (Best and Gheciu

2014: 25) Just as they can undermine temporarilyfixed identities and theunderpinnings of authority, crises can serve to disrupt and, in turn, trans-form seemingly settled notions of what is“public.”

Non-state actors can attempt to redefine their activities as entailing thepursuit of common or individual purposes, or both, at different moments

in time Indeed, as Best and Gheciu (2014: 4, emphasis added) argue,

“whether an actor is regarded as public or private depends much more onwhat they are seen to bedoing, than on where they are located.” IR andGPE long tended to focus on the public and private practices of firms,NGOs, and civil society organisations The next subsection turns to aspecific category of social actors exercising authority in global governancebeyond the so-called public-private“spheres” in global governance

PROFESSIONALAUTHORITY INGLOBALFINANCIALGOVERNANCEProfessionals are “special” since they are subject neither to the samecompetitive forces nor to similar government oversight as other marketactors (Hanlon1998: 843) Benefiting from “a monopoly over an area ofwork” (Bellis 2000: 321) and from a degree of detachment “from thenaked forces of the market” (Strange1996: 142), professionals profit from

a high degree of “occupational privilege” (Collins et al 2006: 251) and

“social prestige” (Coffee 2006: 106) The qualities invoked to justify

“special status,” however, have historically varied across countries andover time Bellis (2000: 318) argues that these have generally involvedorganisational traits comprising the ability to self-govern, cognitive traitsreferring to the possession of expert knowledge, and normative traitsentailing commitments to the broader, collective well-being This subsec-tion examines each trait of professionalism in turn before noting overlapsamongst them and implications for authority

Organisational traits of professionalism involve the fulfilment of tions traditionally associated governance, such as rule-making, discipline,and punishment The private authority literature regards professionals asnon-state actors able to self-regulate through associations and organisa-tions that“develop and enforce binding obligations on their members andoften for the industry as a whole” (Cutler et al1999: 13) Such organisa-tional autonomy and self-governance capacity is undertaken either by