Structural Power without the Structure: A Class-Centered Challenge to New Structural Power Formulations*

• DOI: http://doi.org/10.1177/00323292221126801
• Published date: 01 December 2022
• Date: 01 December 2022
• Subject Matter: Articles

Structural Power without the

Structure: A Class-Centered

Challenge to New Structural

Power Formulations*

Manolis Kalaitzake

University of Edinburgh

Abstract

This article argues for the utility in conceiving of two distinctive approaches to the struc-

tural power of f‌inance—New Structural Power (NSP) and Traditional Structural Power

(TSP). While both are crucial to political economy scholarship, this article highlights the

intellectual trade-off that is inherent to the adoption of one perspective over the other,

and it stresses the explanatory advantages of the TSP perspective specif‌ically. First, it

shows how the TSP framework can facilitate an understanding of when policymaker

ideas do and do not matter in the exercise of structural power, retaining the concept of

“automaticity”in structural power operations. Second, it demonstrates how each frame-

work is custom-built to explain substantively different aspects of the policy process, with

TSP research aimed at system-oriented limitation mechanisms and NSP research aimed

at agent-oriented selection mechanisms. Third, it contends that TSP formulations must

be embedded within a model of (contradictory) functional explanation, which is the best

way to gain empirical traction on the most important macrostructural developments in

contemporary f‌inance-led capitalism. Methodologically, this implies an agenda of “explana-

tion through commonalities”rather than the NSP-favored “explanation through variation.”

Keywords

structural power, f‌inancialization, class, capitalism, functional explanation

Corresponding Author:

Manolis Kalaitzake, Chrystal Macmillan Building, University of Edinburgh, Edinburgh, EH8 9LD, United Kingdom.

Email: mkalaitz@ed.ac.uk

*This special issue of Politics & Society titled “The Structural Power of Finance Meets Financialization”fea-

tures an introduction by Florence Dafe, Sandy Brian Hager, Natalya Naqvi, and Leon Wansleben and f‌ive

articles that were presented as part of the workshop series held at and funded by the Department of

International Relations, London School of Economics, November 2019, organized by Natalya Naqvi and

Florence Dafe, and at the Max Planck Institute, Cologne, June 2021, organized by Florence Dafe, Sandy Brian

Hager, Natalya Naqvi, and Leon Wansleben.

Article

Politics & Society

2022, Vol. 50(4) 655–687

© The Author(s) 2022

Article reuse guidelines:

sagepub.com/journals-permissions

DOI: 10.1177/00323292221126801

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Structural power denotes the capacity of business to exert indirect inf‌luence over public

policy on the basis that investment decisions within a capitalist system are predomi-

nately made by private holders of capital. This legal right of business to control the

allocation and use of capital generates the potential for elected off‌icials to be

swayed in their policy choices through anticipation of the investment consequences

that might follow. As job creation, growth, and overall prosperity are heavily depen-

dent on robust levels of investment, there is a recurring incentive for policymakers

to attend to the needs of business actors and foster the conditions under which business

owners might be encouraged to promote further economic activity. This dependence on

private investment decisions gives rise to a unique power dynamic between business

and government, whereby capital holders and their policy preferences—or, at least,

capital holders in specif‌ic areas of economic importance—are often said to enjoy a

privileged position within the policymaking process.

In the current era, it is the f‌inancial sector that appears to be a chief holder and ben-

ef‌iciary of structural power. Unsurprisingly, then, commentary on the structural power

of f‌inance has witnessed a renaissance since the 2007–8f‌inancial crash. Casting aside

the perceived rigidity and deterministic character of previous accounts of structural

power, a wide range of authors have made efforts to explain more precisely how

and why this mode of inf‌luence helps f‌inancial actors either win or lose in the policy-

making process. Chief among those promoting what I term the “New Structural Power”

(NSP) approach are Pepper Culpepper, Cornelia Woll, and the coauthored writings of

Stephen Bell and Andrew Hindmoor.

1

Such efforts are not limited to these authors, of

course, and the perspective is buttressed by a proliferating number of contributions.

2

Nevertheless, in explicating the core distinguishing features of NSP research, I shall

refer primarily to the works of Culpepper, Woll, and Bell and Hindmoor.

Furthermore, I shall refer to previous research on the structural power of business

and f‌inance—against which NSP works are explicitly pitched—as “Traditional

Structural Power”(TSP), most prominently advanced by authors such as Charles

Lindblom, Fred Block, Claus Offe, and Stephen Gill.

3

There are three primary moves made by NSP authors that distinguish their analyses

from the TSP approach.

First, there is a f‌irm consensus that structural power is a variable. Thus, as the inf‌lu-

ence and strength of that power f‌luctuates depending on the specif‌ic context under

examination, policy outcomes are considered highly contingent and conditional.

This is especially true regarding the operation of structural power within and across

different national contexts, as countries have substantially distinct institutional arrange-

ments on the domestic front, and divergent levels of economic/political capacity on the

international front, both of which impinge on the relative inf‌luence of f‌inancial f‌lows

and investment decisions over policymaking processes.

This perspective strikes at what is considered to be the Achilles’heel of TSP formu-

lations, which depicts structural power as functioning to “automatically”discipline the

independent motives of policymakers through unconscious market mechanisms. As

such, TSP research is said to offer a highly deterministic reading of policy battles

whereby capital owners are almost always assured victory, in an undifferentiated

manner. Rejecting this approach, Culpepper claims that the presence of structural

656 Politics & Society 50(4)

power “implies neither a deterministic outcome nor that the exercise of structural

power must happen automatically and apolitically.”

4

Instead, variable structures of

f‌inancial markets create opportunities for some, constrain others, and shape the

terrain upon which political contestation and bargaining is waged. A central motivation

of NSP work, then, is to investigate the specif‌ic contexts in which the structural power

of f‌inance is rendered effective (or ineffective) for f‌inancial actors to prevail (or

founder), and to different degrees. This is illustrated by the detailed work on how struc-

tural power inf‌luenced the character of distinctive bailout packages across countries,

and how differences in their design benef‌ited certain f‌inancial f‌irms over others, or

allowed some states to resist taking on a greater portion of the costs compared with

their international counterparts.

5

A second key feature of NSP work is that actors are placed front and center of the

analysis. This coheres with the desire to produce more f‌ine-grained accounts of struc-

tural power, but also to supersede the more system-oriented (i.e., capitalism or market

societies) focus of TSP writings that are “based on relatively underdeveloped notions

of agency.”

6

Culpepper suggests that NSP research places “agents in the foreground as

political actors taking advantage of the resources provided by structural power, rather

than [showing] how the structure of capitalism advantages all business actors in the

same mechanistic way against non-business actors.”

7

Hence, contingency and variabil-

ity present agents (be they f‌irms, business associations, policymakers, etc.) with

genuine and meaningful choices, allowing them to act with purpose and ref‌lexivity

to further widen the scope of possible outcomes.

It is little surprise, then, that NSP authors uniformly stress the strategic capacities of

actors. Culpepper and Reinke, for instance, introduce the notion of “strategic structural

power”—deployed intentionally by f‌inancial f‌irms in negotiations with policymakers.

This resource is determined by the level of a f‌irm’s prof‌it generated overseas, with

higher levels offering those f‌irms scope to ignore the threat of regulatory sanction

by state off‌icials.

8

Similarly, Woll proposes that certain banks are able to leverage

their structural power effectively by adopting a “strategy of inaction”when it comes

to engaging in coordinated measures to stabilize the economy.

9

Woll elaborates

upon this logic through a game-of-chicken metaphor, with two cars driving toward

each other at full speed. If governments are convinced that f‌inancial actors are too dis-

organized to participate in collective action solutions to a crisis, then state actors will be

compelled to swerve f‌irst, and thus, carry the burden of saving the economy from

all-out f‌inancial collapse. None of this is a forgone conclusion, however, and the

outcome depends crucially on highly contextualized political strategies, institutional

legacies, business-government interactions, and the perceptions of different agents.

This links to the third key move of NSP research, namely, the salience of ideas in

affecting the strength and inf‌luenceofstructuralpower. In this respect, NSP writings

lean heavily toward a constructivist analysis, whereby a variety of idea-centered, inter-

subjective understandings—normative values, discursive tactics, ideological commit-

ments, shared beliefs about market reactions, etc.—play a crucial role in “mediating”

policy outcomes in the context of f‌inancial market pressures or capital f‌light.

The most forceful proponents of this perspective are Bell and Hindmoor, who claim

there has been a considerable backlash against the f‌inancial sector because of the

Kalaitzake 657