How culture displaced structural reform: problem definition, marketization, and neoliberal myths in bank regulation

Mikes, Anette and Power, Michael ORCID: 0000-0001-8148-3953 (2023) How culture displaced structural reform: problem definition, marketization, and neoliberal myths in bank regulation. Journal of Business Ethics. ISSN 0167-4544

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Abstract

We use content analysis to show that the diagnosis of the financial crisis of 2007–2009 shifted significantly from a focus on the need for structural change in the banking industry to an emphasis on culture and reform at the organizational level. We consider four overlapping subsystems in which this shift in problem–solution clusters played out—political, regulatory, legal, and consulting—and show that the “structural reform agenda,” which was initially strong and publicly prominent in the political arena, lost attention. Over time it was displaced by a neoliberal managerialist turn, which watered down or abandoned structural solutions and instead played up a new “culture and conduct reform agenda.” We explain this shift in terms of the marketization of regulation, which—following Mautner (Language and the market society, 1st ed. Routledge, 2010)’s model of interdiscursive alignment—we detect in the shifting language of financial-services reform across the four subsystems in scope. We argue that a neoliberal turn took place with a discursive closure that made the structural reform alternative gradually unsayable and, in the end, unthinkable. At the same time, the discourse turned to embrace the neoliberal agenda, built on the myth of self-regulating actors and markets, manifest in the culture problematic. This managerialist turn was able to mobilise, and be operationalised by, an industry of consultants, whereas structural change came to be seen by regulators as too risky to implement. We claim that these dynamics reveal how a form of “collective strategic ignorance,” based on powerful institutional myths, was systematically oriented to ignore and reject structural sources of crisis. Finally, we suggest that the observed pattern of displacement—whereby initial calls for structural change become later displaced by managerial and procedural solutions—is common to other social issues, such as audit reform and corporate social responsibility.

Item Type:	Article
Official URL:	https://www.springer.com/journal/10551
Additional Information:	© 2023 The Author(s)
Divisions:	Accounting
Subjects:	H Social Sciences > HG Finance H Social Sciences > HF Commerce > HF5601 Accounting H Social Sciences
JEL classification:	E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E50 - General
Date Deposited:	28 Sep 2023 14:24
Last Modified:	25 Apr 2024 07:51
URI:	http://eprints.lse.ac.uk/id/eprint/120300

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