Socio-Economic Review - Advance Access

Legitimacy in financial markets: credit default swaps in the current crisis

Morgan, G. — Sun, 08 Nov 2009 22:12:08 PST

The current financial crisis appears to be a moment of epochal change, an archetypal ‘legitimation crisis’. This paper examines the impact of this collapse on one particular section of the financial markets that concerned with credit default swaps. This paper shows how and why the markets for these products expanded and why they were integral to the financial crash. The consequence of the crash was a huge loss of legitimacy for these markets. This paper examines the processes whereby this legitimacy is being reconstructed. In particular, it distinguishes between the re-establishment of pragmatic legitimacy, which is the primary concern of the market participants, and the re-establishment of broader political legitimacy, which concerns governments and regulators. It argues that these two forms of re-establishing legitimacy work in different ways and proceed at different rates. It explores the tensions to which this leads in terms of reconstructing the financial system.

Producing legitimacy at the World Trade Organization: the role of expertise and legal capacity

Conti, J. A. — Sun, 08 Nov 2009 22:11:50 PST

This qualitative study of disputing at the World Trade Organization (WTO) examines how expertise is acquired and maintained over time and how it influences perceptions of legitimacy held by WTO practitioners. The research demonstrates that expertise is derived from individuals' direct experience with disputing. Trade delegations employ or acquire expertise through the development of in-house experts, contracting private legal representation and seeking legal assistance. Institutionalizing expertise acquired by individuals is a primary challenge for building legal capacity and is linked to serial participation, building informal professional relationships and creating economies of scale in expert practitioners. Nonetheless, challenges remain, particularly related to the cost and difficulty of maintaining expertise over time and the role of market power in retaliation. How countries are able to gain expertise underwrites the legitimacy perceptions of practitioners, which emphasizes opportunities to acquire expertise over the persistence of inequalities in legal capacity.

Marketing and selling transnational 'judges' and global 'experts': building the credibility of (quasi)judicial regulation

Dezalay, Y., Garth, B. G. — Thu, 05 Nov 2009 05:43:01 PST

Drawing on examples from the fields of international commercial arbitration and international human rights, in particular, and also on trade, intellectual property and governance, this article explores the processes through which transnational norms are created and legitimated. The article rejects approaches that presume an international consensus around norms or simply the imposition of Northern norms and technologies on the South, showing instead how the fields are developed, the advantages that favour ideas and approaches that are credible in the North, and also how limited openings to individuals from the South subtly modify the norms—which in turn reinforces their legitimacy. The article also shows that legal processes, courts and court-like approaches serve to capture both the hierarchies of the field and the processes that can allow a slow evolution that produces some change—but no challenge to the basic orientation.

Right place, right time: serendipity and informal job matching

McDonald, S. — Fri, 30 Oct 2009 01:22:24 PDT

Chance is a prominent feature in the processes by which people become aware of job openings, yet current theories—which emphasize the instrumental job search activities of workers—do not provide a framework for understanding the unsolicited receipt of job leads. The concept of serendipity is discussed as a way to understand the role that chance plays in informal job finding. Interviews with 42 workers in an engineering firm reveal that job information often comes from unlikely sources in unexpected situations. Moreover, nationally representative survey data are used to assess the non-random experience of serendipity, finding that personal, contextual and relational characteristics structure the unsolicited receipt of job leads. The results from this mixed methods approach help to supplement the current theories of job matching and offer a promising research agenda for future investigations of the conditions under which serendipitous job finding is likely to occur.

Donald MacKenzie An Engine Not a Camera: How Financial Models Shape Markets. Cambridge, MA, and London, MIT Press, 2006; Material Markets: How Economic Agents are Constructed. Oxford, Oxford University Press, 2009

Hodgson, G. M., Ingham, G. — Wed, 07 Oct 2009 00:44:10 PDT

What if Robin Hood is a social conservative? How the political response to increasing inequality depends on party polarization

Finseraas, H. — Sat, 13 Jun 2009 06:45:10 PDT

This paper examines how political competition on a non-economic dimension affects redistribution. More specifically, the paper argues that a high degree of party polarization on a non-economic policy dimension modifies the political response to growing income inequalities. Data from the World Values Survey and the Comparative Manifesto Project are employed to show that party polarization on a traditional moral dimension of politics is associated with a weaker relationship between income and subjective position on the Left–Right scale. Because party polarization is associated with a weaker relationship between income and leftism, the paper claims that the political response to increases in inequality will be weaker in polarized countries. The empirical analysis using redistribution data from the Luxembourg Income Study demonstrates that the positive effect of increases in market inequality on redistribution is lower when party polarization on the non-economic dimension is high.