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This article first appeared in the Paris newspaper La Tribune on February 9, 2010, and is translated and adapted here with permission of the authors. Paul Lagneau-Ymonet is a member of the Research Group Institution Building Across Borders at the MPIfG.

To date, the organization of securities markets has not yet benefited from the feigned attempts of reform presented by authorities since the outbreak of the current crisis. However, speculative opportunities like the risks incurred also depend on the markets on which one operates. It is for this reason that the coming revision of the European Markets in Financial Instruments Directive (MiFID), which came into effect on November 1st, 2007, is such a considerable challenge.

This Directive reflected an incredible faith in the coordinating virtues of the market – the central idea being that competition between exchanges and other trading venues would reduce transaction costs, increase trading volume and, as a result, lower the cost of capital for issuers. The MiFID notably abolished the ‘concentration rule’, which, in a number of countries (i.a. France), imposed intermediaries to carry out most of their transactions on a single regulated market, so as to concentrate the liquidity and to establish, for each security, a “fair price” known to all. Eventually, the directive has made possible the emergence of various opaque trading venues that challenge more transparent regulated markets.

Reports from the Committee of European Securities Regulators (CESR) and from the French Association of Financial Markets (AMAFI) reveal the extent of the disillusionment. The lower fees that resulted from unleashed competition have only benefited to a few internationally operating banks, namely about ten institutions that are responsible for three-quarters of the financial transactions in Europe. But the end clients – private individuals, in particular – do not fare as well. Read the rest of this entry »

This post is provided by our guest blogger Peggy Levitt. Peggy Levitt is Professor of Sociology at Wellesley College and a Research Fellow at The Weatherhead Center for International Affairs at Harvard University where she co-directs The Transnational Studies Initiative. Together with by Sanjeev Khagram she has published the transnational studies reader, in which they among other things criticize methodological nationalism and present different ways on how to conceptualize transnational phenomena. Her entry is part of a series in which we discuss concepts and phenomena in the field of transnational studies and follows previous discussions we had on transnationalism and methodological nationalism.

Methodological nationalism is the tendency to accept the nation-state and its boundaries as a given in social analysis. Because many social science theories equate society with the boundaries of a particular nation state, researchers often take rootedness and incorporation in the nation as the norm, and social identities and practices enacted across state boundaries as the exception.  But while nation-states are still extremely important, social life does not obey national boundaries.  Social and religious movements, criminal and professional networks, and governance regimes, to name just a few, regularly operate across borders.

In a 2004 article, Nina Glick Schiller and I proposed a notion of society based on the concept of social field and drew a distinction between ways of being and ways of belonging.  Social fields are multi-dimensional and encompass structured interactions of differing forms, depth, and breadth that are differentiated in social theory by terms like “organization,” “institution,” “networks,” and “social movement.”  National social fields are those that remain within national boundaries, while transnational social fields connect actors, through direct and indirect relations, across borders.  Neither domain automatically takes precedence; rather determining the relative importance of nationally restricted and transnational social fields is an empirical question.

Read the rest of this entry »

Book review:

Milford Bateman, 2010: Why Doesn’t Microfinance Work? The destructive rise of local neoliberalism. London: Zed Books.

Since the inception of this blog, one issue which has been critically explored again and again is the dominant position of microfinance in the field of international development. For instance, a series of blog posts in early 2009 was aimed at unmasking the popular myths spun by microcredit’s advocates, from presumed gender empowerment to the purported win-win situation in which profits would go hand-in-hand with social impacts. More recently, we followed how, in the wake of two high-profile randomised studies which failed to show increases in poor people’s income, even some mainstream media have begun taking a more critical view of microfinance.

Indeed, 2009 and 2010 may have brought some disillusionment to many who believed that small loans would create “a world without poverty”. But still the microfinance industry and its epistemic community remain fiercely defensive of the reputation as a solution to poverty; still the international donor community unquestioningly pours money into a concept with much promise but little proof; and still Muhammad Yunus’ award shelf continues to fill up with precious metal as the hype around microfinance continues to enthrall the socially-concerned masses.

A few full-fledged books critiquing present microfinance practices may have been published to date, but these have addressed themselves mainly to microfinance insiders and development experts. Milford Bateman’s brand-new book (released this summer) however is the first critical book capable of crossing the border between academia and the lay world; it reaches out to convince a wider audience of questioning those accepted wisdoms which underlie the first big development hype of the 21st century. Read the rest of this entry »

This post is provided by our “guest blogger” Bernhard Brand. Bernhard Brand works as research assistant at the Institute of Energy Economics at the University of Cologne. This contribution is the first of a series of critical reviews of transnational economic governance arrangements, based on an analysis of policy reports undertaken by graduate students of Sigrid Quack’s seminar on Transnational Economic Governance during the summer term 2010.

The Siemens corruption scandal of the year 2007 was one of the largest bribery cases in the economic history of Germany. It ended with a number of (suspended) jail sentences for high-ranking executives and a painful €2.5 billion penalty to be paid by Siemens for running an extensive worldwide bribery system which helped the Munich-based company to win business contracts in many foreign countries, as for example in Russia, Nigeria or Greece. Interestingly, if the bribery case just had happened a few years before, there wouldn’t have been any sentence at all for Siemens: Until 1999, the practice of bribing officials and decision makers in foreign countries was not considered a crime in Germany. And even worse: The German law allowed companies to deduct bribes from their tax declarations – under a tax law provision ironically termed “useful payments” (in German: “nützliche Aufwendungen”). This incentive for the German industry to perform corruption in the international business became abolished under the pressure of the OECD Anti-Bribery Convention. The convention criminalizes the so-called ‘foreign bribery’, the act where a company from one country bribes officials of a ‘foreign’ country.  Germany, as well as the other OECD members had to align their legislation to the new OECD standards, enabling their courts to punish the person or entity who offers the bribe – even if the bribing action originally took place somewhere else in the world. Read the rest of this entry »

Standards have two major functionalities: for one, they coordinate and – depending on their stickiness due to network effects – regulate human behavior. For another, they function as signaling devices. Which of the two functionalities is dominant and how these two are interrelated are of course empirical questions. In the case of certain private labelling standards, for example,  a broad bundle of rules and minimum standards are condensed into one label or brand, whose premium value in turn shall attract both (additional) producers and consumers to adhere to the standard (see also “FCE goes Fair Trade“).

In the case of Creative Commons‘s alternative copyright licensing standards, James Boyle explicitly referred to this important (albeit unintended) signaling role of licensing standards on a discussion panel at Harvard’s Berkman Center (after 42:50):

“What we didn`t understand was the most important thing about the licence was not that they were licences, it was that they created space, a focal point around which people would make communities.”

Markus Lang, research student in our research group not only pointed me to this quotation of James Boyle but also put it in the broader context of Julia Black’s (2002, jstor) notion of “regulatory conversations”. In applying a discourse theoretical perspective on both public and private regulation, she delineates how coordination of practices is achieved via communicative interactions. Read the rest of this entry »

The Book

Governance across borders: transnational fields and transversal themes. Leonhard Dobusch, Philip Mader and Sigrid Quack (eds.), 2013, epubli publishers.
July 2010
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