Erin Lockwood, Ph.D.
eklockwo@uci.edu
Assistant Professor
University of California, Irvine
Year of PhD: 2017
City: Irvine, California
Country: United States
About Me:
I am an assistant professor in the Department of Political Science at the University of California, Irvine. I received my Ph.D. in Political Science from Northwestern University in 2017 and both a B.A. in International Studies and a B.S. in Economics from American University in 2011. My research focuses on the politics of financial regulation in global markets and the politics of global inequality.
Research Interests
International Law & Organization
Derivatives
Financial Regulation
Power And Authority
International Political Economy
Risk Regulation
Uncertainty And Risk
Inequality
Global Inequality
Judeophobia, Anti-Judaism, Antisemitism
Banking Regulation
Race And Finance
My Research:
My research focuses on the politics of international financial markets, from both the inside and the outside. My main project, and the subject of my book manuscript, examines the internal politics of the global market for derivatives, explaining how and why public regulators deferred to market participants, resulting in a massive and ungoverned crisis-prone system. More recently, I have become interested in the politics of global financial markets more broadly, and in particular, how non-elites experience and interact with these markets. Article- and chapter-length publications examine how various public audiences frame and filter their experience of financial markets through narratives of responsibility, how antisemitism infects and inflects populist backlashes against financialization, and how the extreme levels of income and wealth inequality fueled, in part, by financial markets, chart a new political landscape for scholars of International Political Economy, affecting everything from NGOs’ policy and strategy to presidential campaign rhetoric on international trade.My book manuscript focuses on the social relations and practices that contribute to the legitimacy of global derivatives markets and the enduring authority of financial actors following the 2007-2009 financial crisis. It addresses two specific questions: How did the market for derivatives traded outside traditional exchanges grow so large and crisis-prone with so little public regulation? And, why, given derivatives’ contribution to the 2008 financial crisis, were post-crisis regulatory reforms so limited? I argue that the answer lies in the authority of financial market actors and in public regulators’ perception of them as competent managers of risk, based on a set of practices that assured regulators that banks were limiting losses, guarding against default, and pricing assets accurately. My conclusions are based on an interpretive analysis of an original body of primary source regulatory and industry speeches, testimony, and reports. I find that particular market practices, including risk models and standardized contracts, made regulators overly confident in the benefits of derivatives and the abilities of market actors to prevent crises. Many of these practices failed to prevent systemic contagion during the crisis, but because they were so deeply entrenched in the operation of the market, the space for regulatory change was and remains highly constrained.My second area of research examines the politics of financial and economic globalization from the perspective of non-elites and those outside the epistemic community of traders, regulators, and other financial practitioners. This line of research takes up questions of global economic inequality and its implications for questions of responsibility, ethics, and international politics – the topic of my next book project. My article in Review of International Political Economy (2020) argues that, although closely linked to both national inequality and global poverty/comparative development in important ways, global inequality is politically distinct from both in terms of its ethical implications and instrumental politics. Also related to this topic is my research on how the 2016 presidential campaigns framed trade policy against a backdrop of national and global inequality, currently under review as part of an edited volume on global supply chains and U.S.-China relations. I further examine the political and ethical dimensions of economic globalization in a co-authored chapter with M. Christopher Sardo on political responsibility and finance in the Routledge Handbook of Political Responsibility (forthcoming 2021). Additionally, my work on the mass politics of financial globalization has led me to consider how antisemitism has, consciously and unconsciously, structured much of the populist backlash against financial power. My forthcoming article in New Political Economy argues that antisemitism has been a blind spot in much of International Political Economy scholarship, despite being deeply intertwined with the mass politics of financial innovation and crisis.
Publications:
Journal Articles:
While national inequality has made headlines in recent years, income is far more unequally distributed globally than it is within any state. It is striking that global economic inequality has garnered so little attention in International Political Economy (IPE), given the field’s longstanding interest in the distribution of resources and the structure of the global economy. This paper argues that IPE should regard the unequal global distribution of wealth and income as a central research concern and outlines a research agenda for doing so. Drawing on recent work by economists, it argues that global inequality is distinctively political in cause and consequence and sufficiently different from both global poverty and national inequality to constitute a unique object of inquiry. IPE has the theoretical and conceptual tools to study global inequality, but doing so will require bridging divisions between those who consider distributional consequences, though primarily in a national perspective, and those concerned with global hierarchies, but with less regard to national agency and economic policymaking. The effort is worth it, however, given the rich substantive agenda that foregrounding global inequality opens up on a series of topics that have not all (to date) been recognized as the core of the field.
At the core of the 2008 financial crisis was a massive, un-publicly regulated market of complex financial products, which transmitted losses in the US residential mortgage market throughout the global financial system. How did the market for over-the-counter (OTC) derivatives grow so large and so risky with so little public supervision and regulation? At the heart of the matter, I contend, are changes in how both derivatives and risk have been understood as objects of governance. This article focuses on the decade preceding the passage of the 2000 Commodity Futures Modernization Act to demonstrate how competing and ultimately shifting understandings of both derivatives and financial risk put in place the conditions of possibility for the definitive deregulation of this market. Through a detailed interpretive analysis of regulatory documents, I show that changes in OTC derivatives regulation have been driven by changes in how regulators interpret derivatives themselves in a context of changing beliefs about risk and its management. Although regulators were acutely aware of OTC derivatives’ contribution to systemic risk as early as the early 1990s, they ultimately concluded that derivatives’ ability to serve as tools of risk management and generators of financial profits was consistent with their goal of promoting deep and liquid financial markets and thus took a decisively hands-off approach to regulation. The article concludes with a discussion of what shifts in interpretation and regulation of derivatives can tell us about the limits and potential for lasting post-crisis changes in financial governance.
This article argues that the role of antisemitism in the populist backlash to financial power represents an empirical blind spot in IPE. I argue that the uncertainty and complexity of finance is such that attributing responsibility for financial crises and disruption is difficult within the conventional narratives people use to make sense of power. When people struggle to gain traction over the scale and workings of a system that is opaque, complex, entrenched, and seemingly unassailable, their reactions to the economic dislocation that financial power brings about find targets among already marginalised groups. This has, in turn, fuelled opposition to financial power from both the right and left that draws upon – sometimes implicitly, sometimes explicitly – antisemitic tropes and narratives. A longer historical lens on populist reactions to financial innovation reveals the longstanding connections between antisemitic myths and tropes and backlash to financial power. This dynamic should be understood as constitutive of financial power to the extent that it displaces criticism and responsibility away from the complex networks, systems, and structures that sustain financial capitalism. It also illustrates the need to contextualise the present moment and its multiple crises in a longer history of financial crisis and change.
Starting from an observation about the high-profile predictive failures of Value-at-Risk (VaR), an internationally instituted financial risk model, this article has attempted to make sense of its continued use by analyzing its productive, rather than predictive, power. This line of inquiry leads me to identify VaR’s (counter)performative effects and the way in which it produces banks as authoritative, responsible managers of an uncertain financial future. Viewing financial markets through the lens of Keynesian uncertainty and model performativity helps explain VaR’s failures by revealing VaR to be an inherently limited and potentially destabilizing practice. Its use participates in the construction of a financial system that is only temporarily stable and controllable. At the same time, VaR is an important source of authority for banks vis-à-vis regulators and the public because it represents the future as statistically calculable and expert prediction as the optimal, objective mode of preparing for that future. This, in turn, makes less thinkable other responses to uncertainty – ones that might be better suited to contend with the possibility of devastating losses unforeseeable – and perhaps produced by – the widespread use of VaR.
Book Chapters:
This chapter explores the rhetorical framing of global supply chains (GSCs) in U.S. politics in the context of rising inequality and shifting geopolitics. A growing body of international political economy has focused on the distributional consequences of globalization for demographic groups in the global North and South, and I am interested in how political actors’ interpretations of GSCs have framed contemporary debates over trade. This chapter analyzes the debate over trade centered on the Trans-Pacific Partnership (TPP) agreement during the 2016 U.S. presidential primary and general election campaigns. I find that when expressing their support for or opposition to the TPP, candidates largely relied on conventional protectionist and liberal framings of trade. With a handful of exceptions, the specificities of GSCs were absent from the political debate surrounding the TPP on the presidential campaign trail, despite the dominance of GSCs in the trade relationships covered by the treaty. Nonetheless, the effect of supply chains on international trade was implicitly reflected in candidates’ identification of the uneven distributional consequences of contemporary trade policies. In: Geopolitics, Supply Chains, and International Relations in East Asia. Ed. Etel Solingen. Cambridge University Press: Forthcoming 2021.
(With Bruce Carruthers) This chapter examines the direct and indirect means through which foreign lenders have influenced borrowing states’ autonomy, beyond the conventional focus on multilateral loan conditionality. We focus on four historical periods, beginning with nineteenth-century relational banking, when underwriting banks exercised considerable power in the form of private information on borrowers’ creditworthiness and bondholder committees allowed creditors to collectively restructure debt. We look next at the era of early twentieth-century dollar diplomacy, when the United States leveraged private credit to Latin American states as a tool of expanding its regional influence. The next major changes occurred in the interwar era, when regulatory changes chipped away at prestige banks’ monopoly on credit markets and empowered private credit rating agencies. Finally, we examine contemporary sovereign lending, focusing on contractual clauses that have constrained borrowers’ autonomy and on how derivative contracts written on sovereign debt indirectly affect state issuers of debt. In: The Oxford Handbook of Institutions of International Economic Governance and Market , eds. Eric Brousseau, Jean-Michel Glachant, and Jerome Sgard.
This chapter analyzes one of the most significant post-crisis regulatory reforms in derivatives markets: mandatory central clearing of over-the-counter (OTC) contracts through central counterparties (CCPs). Why has a key regulatory mandate, specifically intended to counteract the risk associated with waves of defaults in a highly complex network, ended up reproducing some of the same dynamics? I argue that focusing on the technologies and practices used to govern derivatives markets helps explain the absence of more radical regulatory policy shifts in derivatives regulation. Specifically, I contend that although there has been a significant shift in who regulates OTC markets, much less has changed at the level of the specific practices that govern these markets. CCPs are much more important players in the OTC market now than they were prior to the crisis and they have changed the structure of trading in significant ways. Nonetheless, the tools they use to manage the risk of counterparty default are quite similar to those cited by key regulatory authorities prior to the crisis as guaranteeing the markets’ capacity to govern itself. While these tools may be reasonably well-suited to organize and manage markets during ordinary times, their inadequacy during times of crisis, when complexity and uncertainty dominate over the regularities on which most risk management tools are premised, has already been demonstrated. Chapter 6 in Governing the World’s Biggest Market: The Politics of Derivatives Regulation After the 2008 Crisis. Eds. Eric Helleiner, Stefano Pagliari, and Irene Spagna. Oxford University Press, forthcoming in 2018.
Authored with Stephen C. Nelson. Chapter 9 in Peter J. Katzenstein and Lucia Seybert, eds. Protean Power: Exploring the Uncertain and Unexpected in World Politics. New York: Cambridge University Press (Cambridge Studies in International Relations, forthcoming in February 2018).
Media Appearances:
Radio Appearances:
Radio interview about Biden administration's choice of OCC head, aired Feb. 1, 2021.
radio interview comparing proposed industry bailouts in response to COVID-19 to the financial crisis bailouts under TARP
radio interview on CFPB/OCC fines against Wells Fargo
radio interview on Federal Reserve’s proposed Volcker Rule requirements changes
Newspaper Quotes:
Quoted in article about the Office of Comptroller of the Currency and racial equity, Feb. 5, 2021.
Quoted in article about the Office of Comptroller of the Currency and racial equity, Feb. 19, 2021.