Introduction

This chapter examines how American monetary authorities managed to establish a new kind of control over the dynamics of financial expansion. The attention paid in this book to the evolving institutional ties between financial intermediation, social life, and the state’s regulatory authority allows for a more precise interpretation of the turn to neoliberalism and monetarism at the end of the 1970s. It is important to situate the insights generated through this particular lens with respect to other views on the role of institutions in the neoliberal age. For by itself an emphasis on the continued salience of institutions in the era of financial globalization and neoliberalism is hardly new. One of the central theoretical points of recent work in IPE has been the role of the state in fostering the globalization of financial markets. Moreover, it is widely recognized that neoliberal policies do not involve a literal retreat of the state from society and that deregulation is always reregulation – that “freer markets” mean “more rules” (Vogel 1996). However, such interpretations tend to generate conceptual problems characteristic of a Polanyian understanding of markets, which stresses, on the one hand, their many institutional preconditions and, on the other, their periodically surfacing tendency to escape from that environment. That is to say, even if it is acknowledged that markets are always dependent on institutional supports, neoliberalism still tends to be considered in terms of the declining capacities of states vis-à-vis financial markets. Helleiner, for instance, describes the monetarist turn as the implementation of an austerity program that indicated America’s willingness to accept external discipline and limit its own policy autonomy – that is, “to submit to the discipline of international financial pressures” (Helleiner 1994: 133). The point that tends to get lost is that monetarism involved a process of institutional reconfiguration that adjusted some of the key parameters of the relations between U.S. monetary authorities, American finance, and global finance in a way that enhanced rather than diminished the infrastructural capacities and policy autonomy of the American state.