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The Ideational Shaping of State Power and Capacity: Winning Battles but Losing the War over Bank Reform in the US and UK


This article extends a recent line of research arguing that the power and capacity of political actors (including states) is not just the product of particular fixed attributes but is also the outcome of political relations between key interlocutors, including ideational relations. State elites, especially government leaders, have persisted with a mindset that still values the economic centrality of a large and complex banking sector. This way of thinking has conditioned the relationship between, on the one hand, the US and UK governments and, on the other, Wall Street and the City of London and has led to a form of ‘dysfunctional embeddedness’. Government leaders may have been able to win high-profile policy victories over the banking sector in the post-crisis period, but in accepting a large, complex and constantly evolving financial system with high levels of systemic risk, they have unwittingly placed themselves at a continuing disadvantage in the regulatory arena.

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Stephen Bell is Professor of Political Science at the University of Queensland. Contact email:

Andrew Hindmoor is Professor in Politics at the University of Sheffield. Contact email:

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This list contains references from the content that can be linked to their source. For a full set of references and notes please see the PDF or HTML where available.

V.V. Acharya , N. Kulkarni and M. Richardson (2011), ‘Capital, Contingent Capital and Liquidity Requirements’, in V.V. Acharya et al. (eds), Regulating Wall Street: The Dodd–Frank Act and the New Architecture of Global Finance (New York: Wiley): 143180.

A. Baker (2010), ‘Restraining Regulatory Capture? Anglo-America, Crisis Politics and the Trajectories of Change in Global Financial Governance’, International Affairs, 86: 647663.

A. Baker (2013), ‘The New Political Economy of the Macroprudential Shift’, New Political Economy, 18: 112139.

S. Bell (2012), ‘The Power of Ideas: The Ideational Shaping of the Structural Power of Business’, International Studies Quarterly, 56: 661673.

S. Bell and A. Hindmoor (2009), Rethinking Governance (Cambridge: Cambridge University Press).

M. Blyth (2003), ‘Structures Do not Come with an Instruction Sheet: Interests, Ideas and Progress in Political Science’, Perspectives on Politics, 1(4): 695706.

A. Giustiniani and J. Thornton (2011), ‘Post-crisis Financial Reform: Where Do we Stand?’, Journal of Financial Regulation and Compliance, 19: 323336.

C. Hay and B. Rosamond (2002), ‘Globalisation, European Integration and the Discursive Construction of Economic Imperatives’, Journal of European Public Policy, 9: 147167.

R. Lall (2012), ‘From Failure to Failure: The Politics of International Banking Regulation’, Review of International Political Economy, 19: 609638.

M. Moran (2003), The British Regulatory State: High Modernism and Hyper-Innovation (Oxford: Oxford University Press).

M. Richardson , R.C. Smith and I. Walter (2011), ‘Large Banks and the Volcker Rule’, in V.V. Acharya et al. (eds), Regulating Wall Street: The Dodd–Frank Act and the New Architecture of Global Finance (New York: Wiley): 181212.

S. Suarez and R. Kolodny (2011), ‘Paving the Road to “Too Big to Fail”: Business Interests and the Politics of Financial Deregulation in the United States’, Politics and Society, 39: 74102.

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Government and Opposition
  • ISSN: 0017-257X
  • EISSN: 1477-7053
  • URL: /core/journals/government-and-opposition
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