The London School of Economics and Political Science Narrating Boom
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The London School of Economics and Political Science Narrating boom and bust: The life-cycle of ideas and narrative in New Labour’s political economy, 1997-2010 Kate Alexander Shaw A thesis submitted to the Department of Government of the London School of Economics and Political Science, for the degree of Doctor of Philosophy, London, March 2018 Declaration I certify that the thesis I have presented for examination for the MPhil/PhD degree of the London School of Economics and Political Science is solely my own work other than where I have clearly indicated that it is the work of others (in which case the extent of any work carried out jointly by me and any other person is clearly identified in it). The copyright of this thesis rests with the author. Quotation from it is permitted, provided that full acknowledgement is made. This thesis may not be reproduced without my prior written consent. I warrant that this authorisation does not, to the best of my belief, infringe the rights of any third party. I declare that my thesis consists of 94,893 words. 2 Acknowledgements This research has been generously supported by the Economic and Social Research Council, grant no. ES/J00070/1. My sincere thanks to the ESRC and to the LSE’s Doctoral Training Centre. I am inordinately grateful to Jonathan Hopkin for being the calmest and most collaborative doctoral supervisor one could wish for. His feedback has been unfailingly constructive and well-judged, and his mentorship of this early part of my career has been generous spirited throughout. I hope my subsequent career will follow his example. I am likewise grateful to Mark Blyth for his early vote of confidence in the project, for his characteristically robust feedback, and for extending me the opportunity to spend time at the Watson Institute at Brown University in 2013. My time in Providence was a pivotal moment for the research and everything that academic life should be. Thanks are also due to David Woodruff for his excellent suggestions at various points in the research, to Ed Page for his advice on elite interviewing and to Cheryl Schonhardt-Bailey for hers on content analysis. Tony Travers’ British Government @ LSE research group was an invaluable network in opening up the empirical part of the research, with particular thanks due to Martin Rogers for organising the many Britgov events that were a highlight of my time at the LSE. Further afield, Colin Hay and Tony Payne’s conference programme at SPERI provided wonderful opportunities for an early-career researcher to test new thinking in a supportive but intellectually lively environment. Finally, of course, thanks go to Jeremy. Seven years is a long time and doctoral research is a selfish business. His incredible support has allowed me to pursue a very large dream. This thesis is dedicated to him, and to our girls. 3 Abstract This research contributes to the growing subfield of ideational political economy, by developing a theory of narrative in economic policymaking. Economic policymakers operate under conditions of perpetual uncertainty, but must achieve and project certitude in order to support confidence, and as a basis for policy. This dilemma is principally resolved through the construction of economic narratives: causal stories that mobilise a set of economic ideas in order to define the economy, its relationship to policy, and its expected future trajectory. Such narratives should be understood as social constructions, not as projections of, or diversions from, the material facts. However they are vulnerable to events that fall outside their account of the economy, a vulnerability which tends to increase with time. Constructivist political economy has historically been oriented more to the explanation of change than continuity. The resilience of neoliberal policy frameworks through the crisis of 2008 has therefore posed challenges for a subfield that has tended to treat ideas and discourse as a source of creative political agency, and a counterweight to the conservatism of interests and institutions. The thesis presents a case study of the New Labour government of the UK (1997-2010) in which ideas and narrative are shown to be largely change- resistant, generating political, and to some extent policy, continuity through crisis. The case study disaggregates two properties of economic policy narratives: internal validity, which is concerned with consistency and coherence, and external validity, which relates to the perceived external conditions. By tracing the evolution of the two validities across the lifetime of an economic narrative, we see that rhetorics which begin as the expression of political agency evolve, over time, into structural conditions that impose powerful cognitive and ideological constraints on their narrators. A theory of the life-cycle of economic policy narratives is proposed, comprised of four evolutionary phases: construction, reinforcement, crisis and fragmentation. 4 Contents Page PART I: Theorising Narrative In Political Economy 1 Introduction: Materialist and constructivist 10 approaches to economic policy narratives 2 Theory and literature: Making sense of ideas and 28 discourse in economic policy 3 Research design: Operationalising the study of ideas 55 and narrative PART II: New Labour’s Economic Narrative, 1997-2010 4 Constructing the great moderation: Narratives of 77 stability and prudence, 1997-2007 5 Embracing the market: Narratives of globalisation 120 and financial capitalism, 1997-2007 6 Crisis, Part I: Content analysis of New Labour’s 161 resilient neoliberalism, 2007-2010 7 Crisis, Part II: Narrative continuity and policy change 192 in the financial crisis, 2007-2010 PART III: Conclusions 8 Conclusions: Ideas, confirmation bias and the 241 resilience of fragile narratives PART IV: Methodology M1 Content analysis and interview methodologies 273 Bibliography 307 Index of speeches cited in the text 320 5 List of tables and figures Page Table 1.1 Two materialist accounts of Labour’s stability 18 narrative Table 3.1 Competing explanations of New Labour non- 62 change after crisis Figure 3.2 Three levels of political language 65 Table 4.1 Stability and Prudence as causal stories 87 Figure 4.2 Annual GDP growth rate, forecast at Budget and 93 outturn, 1997-2006 Figure 4.3 Quarterly GDP growth (%), 1997-2007 93 Figure 4.4 Inflation rate, forecast at Budget and outturn, 96 1997-2006 Figure 4.5 Three measures of inflation, 1997-2007 96 Figure 4.6 House price growth, annual % change, 1997- 97 2007 Figure 4.7 Macrostability rhetoric (frequency) 1997-2007 104 Figure 4.8 Prudence rhetoric (frequency) 1997-2007 104 Figure 4.9 Variants of prudence, by audience 104 Figure 4.10 Current budget surplus, budget forecasts and 105 outturn, % of GDP Figure 4.11 Quarterly average yields on 10 year government 109 securities, 1984-2007 Table 5.1 Globalisation as a causal story 126 Figure 5.2 Globalisation rhetoric (frequency) 1997-2007 131 Figure 5.3 UK growth ranking in G7, 1997-2007 132 Table 5.4 Financial capitalism as a causal story 143 Figure 5.5 Financial sector rhetoric (frequency) 1997-2007 144 Figure 5.6 Subcategories of regulatory rhetoric, 1997-2007 147 Table 6.1 Names for the crisis, Alistair Darling speeches 176 6 Table 6.2 Names for the crisis, Gordon Brown speeches 177 Table 6.3 Naming the crisis as “recession” 178 Figure 6.4 Crisis names, percentage of all descriptors by 180 speech, Darling Figure 6.5 Crisis names, percentage of all descriptors by 180 speech, Brown Figure 6.6 Macrostability rhetoric (frequency) 1997-2009 184 Figure 6.7 Prudence rhetoric (frequency) 1997-2009 184 Figure 6.8 Globalisation rhetoric (frequency) 1997-2009 185 Figure 6.9 Financial sector rhetoric (frequency) 1997-2009 185 Figure 6.10 Subcategories of financial sector rhetoric, 1997- 185 2009 Figure 6.11 Thematic rhetoric in Gordon Brown speeches, 188 crisis corpus Figure 6.12 Thematic rhetoric in Alistair Darling speeches, 188 crisis corpus Figure 7.1 Stability rhetoric (frequency) in Budget 204 statements, 1997-2010 Table 8.1 The narrative life cycle of New Labour’s economic policy 244 Figure M1.1 Four themes coding framework 284 Figure M1.2 Coding framework for prudence and financial 287 regulation sub-codes Figure M1.3 Crisis names coding framework 289 Table M1.4 Speeches included in the Main corpus 301 Table M1.5 Speeches included in the Crisis corpus 305 7 A note on referencing The thesis makes reference to a large volume of primary sources in the form of political speeches. For clarity and greater ease of reference, it has been decided to index these materials separately from the main bibliography, with in-text citations using a set of reference codes rather than the (author, date) format otherwise used. A full index of speeches cited in the text is duly provided after the bibliography. Reference codes are designed to indicate the nature of the speech, and the year in which it was delivered: for example, the 2008 Budget statement becomes (BUD08). The identity of the speaker is generally made clear in the surrounding text. The two exceptions to this rule are: speeches that appear as secondary citations from other texts, and speeches by actors other than the New Labour government. These are cited (author, date) and appear in the bibliography in the usual way. Parliamentary proceedings are referenced in accordance with the advice in Leston-Bandeira, C. & Thompson, L. 2013. Referencing Parliamentary Material: A Guide for Lecturers and Students’, which is produced by the UK Parliament Outreach Service and recommended by the Political Studies Association. For example, House of Commons proceedings are listed by parliamentary session and Hansard column number: HC Deb. 2005-06: 441 col.1494. 8 Part I: Theorising Narrative in Political Economy 9 1. Introduction Materialist and constructivist approaches to economic policy narratives This project is about the politics of economic policy: specifically, about the business of translating economic ideas, and economic events, into a viable political narrative.