In Visions of Financial Order, Kim Pernell examines the evolution of systems of financial regulation in three countries—the United States, Canada, and Spain—over more than two hundred years, starting with the creation of banking systems in the late 18th century and following their development through the aftermath of the 2008 financial crisis. Any comparative historical researcher would find managing multiple cases over such an extensive time period to be a significant challenge. When we also consider the technical complexity of Pernell’s subject matter, which involves detailed knowledge of arcane banking rules, Visions of Financial Order is truly astonishing in its ambition and scope. Pernell not only manages this complexity, but actually turns it to her advantage, elaborating an artful puzzle that sits at the heart of the book’s analysis: why, she asks, did the United States, Canada, and Spain diverge from each other in key respects in constructing regulatory regimes (even though they were responding to similar pressures arising from the global economy), and why did each country also diverge in significant ways from its own past experiences? This double difference—from other countries at the same point in time, and from prior experience within each country over time—allows Pernell to set her account apart from prevailing explanations of financial regulation that emphasize convergence and stability in regulatory infrastructures rather than divergence and change. In order to explain patterns of divergence and change, Pernell develops a convincing analysis of culturally distinct “visions of financial order” that provide broad structuring principles that guide regulators in constructing and reconstructing financial systems in the face of shifting economic and political challenges.

Theorizing about societal-level cultural models that provide an underlying symbolic logic to economic systems has a long pedigree in sociology, and here Pernell follows in the footsteps of Frank Dobbin,Footnote ¹ Richard Biernacki,Footnote ² and Marion Fourcade,Footnote ³ among others. What sets her work apart from this illustrious group of scholars is that rather than organizing her analysis around a single cultural model that structures economic practices within each society, Pernell establishes a dominant and a latent principle governing economic action in the United States, Canada, and Spain. These dominant and latent principles compete with each other, regularly changing places, so that an idea that is latent in one moment may emerge as dominant in another, and vice versa. This gives a great deal of subtlety to Pernell’s analysis, and it also allows her to sidestep some well-worn critiques of “national culture” type arguments, namely that such arguments can be a bit too tidy, endowing cultural systems with greater coherence in theory than they might have in practice. Because Pernell’s argument emphasizes recurrent patterns of conflict between multiple competing principles of economic ordering, she breathes life into these cultural formations, allowing them to contain seemingly contradictory elements. The result is a very compelling framework that organizes a tightly controlled narrative of continuity and change over more than two centuries of financial history.

What precisely are these ordering principles? To name them quickly: in the United States, financial regulators drew on the principle of community sovereignty, which signaled the importance of avoiding concentrations of economic power; they also drew on the principle of market competition, which emphasized the role of markets in imposing order on financial systems. In Canada, financial regulators promulgated rules that reflected the principle of elite autonomy, the idea that societal elites ought to be allowed ample deference in ordering their economic affairs; at other moments, they endorsed the principle of public regulation, the idea that the state has some obligation to protect the public interest, and particularly to protect those who are most vulnerable to exploitation by powerful actors in society. Spain’s regulators hewed both to the principle of corporatist harmony, which indicated that financial regulations should respect and preserve social hierarchies embedded in society, and to the principle of state sovereignty, which insisted on enhancing the state’s authority in managing the economy. What is noteworthy about each of these principles is while they reflect distinct cultural traditions, they also map a shared polarity between “right” and “left,” as Pernell notes in passing in the conclusion of the book. That is, on the one hand, these are principles that, if enacted, would give freer range to market forces and support the wealth and power of societal elites; and on the other hand, these principles endorse the authority of the state or local communities to resist concentrations of economic power and to govern in the public interest.

Pernell’s careful mapping of the terrain of financial regulation provides important insights into how regulators draw from culturally specific constellations of ideas in configuring regulatory infrastructures. I am particularly taken with how Pernell conceptualizes the lingering effects of latent principles of economic ordering, an idea that seems broadly transferable to other domains outside financial regulation. But while Pernell’s analysis has much to offer other scholarship, her account does leave me with some questions. Most critically, Pernell’s account leaves unspecified (or at least underspecified) exactly when and how we might expect changes in systems of financial regulation to occur. Pernell’s argument suggests that in any given moment the system of financial regulation within a particular society will be organized by a dominant principle. When that principle comes under stress, especially in the context of an economic crisis, regulators will look to latent principles long suppressed but still available within the repertoire of economic ideas to chart a new (or rather old) path. Beyond this, Pernell does not elaborate expectations about how change unfolds, other than that it will involve regulators periodically searching for new models as current techniques of financial management fail. As Pernell herself acknowledges, there is a great deal of indeterminacy in this account.

Such indeterminacy is not necessarily a weakness and may even be considered a strength of Visions of Financial Order. In fact, Pernell offers us an interpretative account, not a structuralist one, as she tells us in her well-crafted introductory chapter. But what if she leaned a bit more into structural arguments in exploring the patterned changes of financial regulatory systems? The right–left polarity common to all these visions of financial order that I mentioned a moment ago feels broadly Polanyian to me: the “right” prioritizes the freedom of the market, and the “left” prioritizes a defensive movement of state or society against the market. While reducing Pernell’s argument to a state/society versus market opposition arguably loses some of its nuance, it is also the case that approaching commonalities between these cases in more structural terms might provide more robust expectations regarding when and why we observe regular pendulum swings between forms of financial regulation. Whatever the limitations of the Polanyian framework (there are many), it does provide a mechanism that leads us to expect regular alterations between moments of greater market freedom and moments of greater market control, much as we observe in Pernell’s cycling between latent and dominant principles of economic ordering. Without insisting that this account be forced into a Polanyian mold, I wonder whether it would be possible to extract from Pernell’s argument some account of the larger forces that generate these recurrent phases of market freedom and market regulation?

Viewing Pernell’s account through a Polanyian lens also offers something else. For Polanyi, “society” (admittedly, a nebulous concept in his account) is centrally involved in these back-and-forth movements between market freedom and market regulation. In this regard, I wondered as I read Pernell’s account about social actors outside of the state. Is it just the regulators who choose between available cultural models? Pernell clearly (and I think appropriately) wants to step back from theories of “regulatory capture” that suggest that those inside industry dictate regulatory rules, but what about other (especially non-elite) social actors? Vigorous popular movements shaped money-creating institutions from their origins,Footnote ⁴ but these movements are largely absent from Pernell’s narrative. In the United States, monetary politics were a matter of everyday contention in the latter decades of the nineteenth century, with questions of how to organize and regulate the currency actively debated in Grange halls and industrial workshops.Footnote ⁵ Later, as the global economy collapsed in the 1930s, social movements stirred again; appeasing social protest motivated regulators and determined, in part, their response to the spreading crisis.Footnote ⁶ In the 1970s, soaring inflation produced deep social discontent, and the resulting social dislocations gave rise to a consumer movement that demanded—and achieved—significant financial reforms.Footnote ⁷ The most recent financial crisis produced Occupy Wall Street and analogous movements in other societies. Beyond protest, the financial crisis left in its wake a deep and enduring undercurrent of anger that has remade the political landscape yet again.

And perhaps the economic landscape too. It is too soon to say, but from the vantage point of the United States at least, financial regulation in the Trump administration seems to conform closely to the market competition principle that Pernell identifies: financial markets themselves provide order and should be left to their own devices. But there is something else too—something that arguably we have not seen before in our history—a weaponization of financial flows in service of the brute exercise of political power. Is this then a departure from the fixed menu provided by dominant and latent principles in our society? How then to account for what appears to be a pure innovation, and how best to call up the (now) latent principles of economic ordering that could restrain it? Let’s hope that Pernell’s rich and informative account of our financial past can also provide some guidance in navigating its troubled future.