Explanations of the Financial Meltdown and the Present Recession

The concern of this article is to locate the unfolding literature that seeks to explain the present financial crisis into three dimensions of contestability. The major areas of disagreements between various authors include: the role of government; the issues of whether the recession was unavoidable or whether it was inevitable; and the area of ideas and ideals and how economic ideas shaped and influenced the policy process. These explanations include the pragmatists and all that literature that had a time dimension of major actors trying to produce policies that aimed to stabilise the financial markets. These policy makers did not have the benefit of hindsight but were concerned that the financial markets were so fragile that there was no other choice but for governments to intervene. By contrast, there were the market fundamentalists who argued that the pragmatists had got it wrong and were therefore highly critical of the Federal Reserve and the Treasury and tended to blame the recession on government housing policy. Institutionalists have argued that the regulatory system is broken, while structuralists tend to focus on growing income inequalities, the concentration of wealth and how the changing structure explains the recession in the sense that households took the avenue of higher debt on their homes to sustain higher levels of consumption. Finally, there is the Keynesian Collectivist argument that points to the limits of Rational Expectations and Efficient markets. No one really know who is right, but the fierce debate that is emerging is highly important in that each explanation seeks to provide a framework for policy making     

The Professors on Public Life

Many academics misunderstand public life and the conditions under which policy is made. This article examines misconceptions in three major academic traditions—policy as science (e.g., ‘evidence‐based policy’), normative political theory, and the mini‐public school of deliberative democracy—and argues that the practical implications of each of these traditions are limited by their partial, shallow and etiolated vision of politics. Three constitutive features of public life, competition, publicity and uncertainty, compromise the potential of these traditions to affect in any fundamental way the practice of politics. Dissatisfaction with real existing democracy is not the consequence of some intellectual or moral failure uniquely characteristic of the persona publica, and attempts to reform it are misdirected to the extent that they imagine a better public life modeled on academic ideals.     

PLANNING AND CONTROLLING PUBLIC EXPENDITURE IN THE UK, PART II: THE EFFECTS AND EFFECTIVENESS OF THE SURVEY

Part I of this article [spring 19921 examined and explained the processes by which the Treasury plans and controls public expenditure through the Public Expenditure Survey. This second part analyses the survey's effects and effectiveness. Throughout we assess the survey by the extent to which the principal functions of planning, allocating, controlling and evaluating public expenditure are articulated and performed. We use four sets of criteria. Firstly, the survey is assessed as a means of regulating the interdependent relationships of the principal participants. Secondly, as a system for making decisions about public expenditure, the survey is judged by the extent to which it has enabled governments to achieve their broad spending objectives. Thirdly, the survey is assessed b the extent to which it provides directly for the participation of ministers collectively in tie process of decision-making, and how they decide the relative priority of both the total of public expenditure and its composition. And fourthly, its effects are measured by analysing the outputs of the system - the allocation of spending to departments and agencies. In the concluding section we address directly the question of whose interests are best served by the survey.