Sovereign debt and economic policy: a relational sociology of debt in the United Kingdom, 1960s–1980s
Labarca, José Tomás
This thesis studies how what I call relational fiscal practices shape government elites' (and non-government actors') understandings of economic policy options. It examines how symbolic fiscal practices, classification struggles, and interwoven relations contour policymakers' communication of these options to relevant stakeholders—Parliament, voters, financial investors, international organisations, etc.—and structure political debates over the size of the state and the allocation of resources to different purposes. Building on the relational frameworks proposed by economic and political sociologists (Block, 2012; Bourdieu, 2010; Tilly, 2005; Zelizer, 2005, 2012), I develop a relational approach to sovereign debt. With this aim, I define relational as comprising (1) inter-organisational relations, (2) intra-organisational relations, and (3) semantic relations—relations between concepts and categories at the core of symbolic fiscal practices. My central argument is that to grasp the political, economic, and sociological significance of public borrowing we must study how historical agents within and outside government distinguish borrowing according to who the creditor is and what the government borrows for. This entails looking beneath the overall quantity of debt and/or the problem of debt repayment per se, which have traditionally been at the centre of social science research on sovereign debt. Drawing on original archival evidence, parts II and III develop the empirical argument. Part II studies the role of numbers and budgetary reporting in framing economic policy through an analysis of how symbolic fiscal practices—the accounting and conceptual decisions, technologies, and devices that compose budgetary reporting—are crucial sites from which sovereign debt and deficits acquire their historical and sociological meaning. By studying the social processes behind the production, uses, and understandings of public finance statistics, chapters 3-5 inquire why certain macroeconomic indicators become more salient and consequential for policy than others. They theorise symbolic fiscal practices and public knowledge infrastructures as key devices for structuring the relationship between economic policy and the climate of general and expert opinion. As non-neutral classification systems that result from classification struggles over what and how to report, symbolic fiscal practices influenced how people thought of the economy, government, and economic policy in the 1960s-1980s. The politics of official knowledge conditioned the terms and standards of economic policy debate. The three chapters analyse the interaction between (i) efforts at managing public opinion; (ii) attempts at managing financial market expectations; (iii) attempts at managing international creditors' assessments; (iv) intra-state bureaucratic conflicts; (v) the mobilisation of epistemic authority; (vi) the legacies of past classification struggles; and (vii) conflicts between evolving fiscal schemata. Part III zooms in to specific fateful relational processes between government and key counterparties in the 1970s. It traces how (i) strategic interactions between relevant actors and (ii) specific policy and cognitive devices combined to constrain government elites' perceived menu of available policy options. Chapter 6 studies the strategic interactions between policymakers intending to legitimise an active fiscal policy and uncooperative financial markets in the 1970s. It argues that the institutional and cognitive underpinnings of the relational setting of sovereign debt shaped government elites' (and financial investors') understandings of economic policy options, and proposes the notion of an economic policy trilemma to explain and theorise the way in which financial confidence became a binding constraint to government policy. Chapter 7 offers a novel interpretation of mid-1970s economic policy as cumulative polyvalent performances. It situates the 1976 IMF crisis within a larger relational process and presents the story of how relational pondering, polyvalent performances, and opposite matching games influenced the negotiations between the government and relevant counterparties during 1975 and 1976. Overall, the thesis joins recent work in economic sociology by proposing a relational approach to public finances in general and public debt in particular. Beyond that theoretical contribution, the vast amount of original archival work conducted allows the empirical chapters to engage actively in scholarly debates relevant to the specific processes, topics, and periods considered.