Did we trade freedom for credit? Finance, domination, and the political economy of freedom
| Author | Joshua Preiss |
| Published date | 01 July 2021 |
| Date | 01 July 2021 |
| DOI | http://doi.org/10.1177/1474885118806693 |
| Subject Matter | Articles |
Article EJPT
Did we trade freedom
for credit? Finance,
domination, and the
political economy
of freedom
Joshua Preiss
Philosophy, Politics, and Economics, Minnesota State
University-Mankato, USA
Abstract
This article concerns freedom and financial markets. First, I consider the republican
case for liberalization, extending Robert Taylor’s economic model of republicanism to
financial markets. This case adopts what I call a “philosopher-king” approach to political
theory, arguing by reference an ideal or first-best set of policies or reforms. Then,
I investigate the negative externalities of several decades of financial market liberaliza-
tion, including the erosion of political accountability and the growing concentration of
political and economic power in the hands of those best suited to profit from the rise of
finance. From this “political economy” perspective, the impact of liberalization is clear:
we paid for greater access to credit with political and economic domination. In repub-
lican terms, we traded freedom for credit. My analysis, moreover, has implications for
republican debates on freedom and the market. In second-best worlds, where reforms
will almost certainly be incremental, shaping the balance of power in ways that impact
future policy, judging reforms by reference to a vision of domination-free markets will
often suggest policies that make individuals less free. The political economy approach is
far more relevant to debates about which economic institutions further or hinder
freedom as non-domination.
Corresponding author:
Joshua Preiss, Philosophy,Politics, and Economics, Minnesota State University-Mankato, Mankato, MN 56001,
USA.
Email: Joshua.preiss@mnsu.edu
European Journal of Political Theory
2021, Vol. 20(3) 486–509
!The Author(s) 2018
Article reuse guidelines:
sagepub.com/journals-permissions
DOI: 10.1177/1474885118806693
journals.sagepub.com/home/ept
Keywords
Credit, domination, finance, freedom, liberalization, markets, realism, republicanism
Introduction
The economic conditions of freedom are increasingly at the forefront of republican
political theory, as republicans ask whether the proper orientation toward markets
should be celebratory, critical, or somewhere in between (Anderson, 2015, 2017;
Arnold, 2017; Casassas and De Wispelaere, 2016; Dagger, 2006; Gourevitch,
2015a, 2015b, 2016a, 2016b; Pettit, 2006; Roberts, 2016; Taylor, 2013, 2017).
Most of these debates, which I introduce in the second section, concern workplace
domination. This article, by contrast, considers freedom and financial markets,
asking two basic questions. First, what should republicans think about financial
liberalization and the growing importance of finance in contemporary political
economy? Second, what (if anything) does this analysis tell us about republican
debates on freedom and markets in general? Borrowing insight from pro-market
republicans such as Robert Taylor and Philip Pettit, the third section considers the
republican case for free financial markets. This case, which parallels popular and
economic arguments for liberalization, adopts what I call a “philosopher-king”
approach to political theory, arguing by reference an ideal or first-best set of pol-
icies or reforms. Extending Robert Taylor’s economic model of republicanism,
republicans can embrace financial liberalization as a way of furthering economic
competition and making more widely available the resources that help citizens to
secure their interests. Free financial markets limit the ability of individual agents to
invasively interfere in the choices of others.
In the fourth section, then, I consider the impact of several decades of liberal-
ization. In both popular and academic usage, liberalization refers to the expansion
or opening up of markets, often with emphasis on removing or weakening regu-
lation.
1
Key forms of financial liberalization include the lowering of reserve and
equity requirements, the repeal of laws that separated commercial banking from
investment banking, and the removal of barriers to capital mobility, interest rate
caps, and other forms of macroprudential regulations. Focusing of freedom in a
person rather than freedom of choice, I argue that citizens of modern republics
paid a high price for greater access to credit. The negative externalities of several
decades of financial market liberalization include the erosion of the political
accountability of institutions that structure markets and the growing concentration
of political and economic power in the hands of those best suited to profit from the
rise of finance. From this “political economy” perspective, the impact of liberali-
zation on freedom as non-domination is clear: we traded freedom for credit. This
result is significant for anyone concerned with domination.
2
In addition, my anal-
ysis has implications for republican debates on freedom and the market. While
political theory should not limit itself to what is currently feasible, theorists need to
Preiss 487
To continue reading
Request your trial