In his book, Timothy J. Sinclair makes a strong theoretical and empirical contribution to the growing political economy literature on the increasing influence of nonstate actors. More specifically, he draws upon a cogent interweaving of rationalist and constructivist approaches to reveal the various forms of power exercised by American bond raters, such as Moody's and Standard & Poor's. Moreover, by means of detailed case studies on the rating of corporations, municipalities, and national governments, he demonstrates the broad political implications of rating agency power in terms of both geopolitical and distributive questions. In both cases, Sinclair's central argument is that “rating agencies help to construct the context in which corporations, municipalities, and governments make decisions. Rating agencies are not, as often supposed, ‘neutral’ institutions. Their impact on policy is political first, in terms of the processes involved, and second, in terms of the consequences of competing social interests” (p. 149).

To demonstrate these points, Sinclair makes three supporting arguments related to his analytical categories of investment, knowledge, and governance. In terms of investment, he seeks to challenge neoliberal views on the decentralized and “automatic” nature of capital allocation, which have been reinforced by the trend towards distintermediation. Disintermediation occurs when corporations and governments raise capital directly from individual investors through the selling of stocks and bonds, rather than indirectly from depositors through bank loans (where banks act as intermediaries between depositors and borrowers). By reducing the influence of the banking intermediaries, disintermediation is said to remove the “gatekeeper” role from financial markets in a way that leads to more decentralized investment judgments and, in turn, to a more efficient form of capital allocation. The author challenges this view by examining how disintermediation has created an information gap related to the creditworthiness of bond issuers that has been filled by the very small number of rating agencies. The result, he argues, is a type of recentralization of investment judgments in which American bond raters have emerged as one of the new gatekeepers. In making this argument, he adds much to our understanding of capital mobility and the structural power of capital by highlighting the role that ideas, and the “embedded knowledge networks” that promote them, play in coordinating the decisions of millions of unconnected investors.

Turning to the ideas themselves in his analytic category of knowledge, Sinclair challenges the notion that rating agency judgments are simply the product of a neutral and technocratic process. Instead, he argues that “[r]ating agencies produce knowledge that is socially and politically partial, and then objectify this knowledge, making it authoritative” (p. 59). From his critical and constructivist perspective, he views the creation and assessment of knowledge as the product of conflicts between competing social forces; ideas are thus connected to interests, and interests and power thus help to determine which ideas are assessed as valuable. At the same time, ideas that become widely or intersubjectively held can help to construct and reproduce specific policy ideas and broader ways of knowing. While careful to avoid any suggestions of direct or deliberate prejudice, the author persuasively demonstrates the bias of raters toward neoliberal policy ideas and synchronic, instrumental forms of knowledge, which take existing structures of world order as unquestioned givens.

Having established the bond raters as powerful gatekeepers who employ “biased” forms of knowledge, Sinclair goes on to examine the political implications of rating agency power through his analytic category of governance. While far more nuanced than can be detailed here, his key argument is that “the logic of rating is linked to a particular form of social organization and set of interests. It does not represent a universally beneficial system” (p. 62). The form of social organization he is referring to is one that is broadly neoliberal in character. The set of interests who benefit most from it are investors in distributive terms and the United States in geopolitical terms.

Taken together, Sinclair's supporting arguments related to investment, knowledge, and governance add up to a convincing and highly accessible account of American bond raters as a significant form of nonstate governance in the emerging world order. They also add up to a strong theoretical contribution to the constructivist and critical international relations literatures. As such, this book will be of interest well beyond the cadre of “usual suspects” who work on the political economy of global finance. Particularly good for this wider readership is Sinclair's theoretical chapter on “Unconscious Power,” his empirical case study on the “Global Growth of the Rating Business,” and his chapter “Good, Bad or Indifferent: The Emergence of Rating,” which provides a first-rate historical account of the emergence and growth of the rating industry. For finance specialists in economics, political economy, and history, the more empirical chapters on corporate, municipal, and sovereign ratings and on “blown calls” related to Orange County, the Asian crisis, and Enron are the further additions that make the book as a whole a must have.

Notwithstanding its many strengths, The New Masters of Capital does have a few small sins of commission and omission. In the former case, some of the statistical information (such as on the extent of disintermediation, p. 55) could have used more updating. The theoretical chapter, particularly when discussing the political implications of rating agency power, could have used more specific empirical examples. Though provided in later chapters, such examples would make this aspect of the argument that much clearer at the start. In terms of omissions, a bit more discussion of the rating agencies as sites of struggle might have been interesting. While Sinclair does deal with the emergence of non-American raters, he might have examined some of the proposals for including environmental and social criteria in the rating process, what the implications of this might be, and how, if at all, the agencies have responded to such proposals. These very minor points aside, this is an extremely well-written, carefully researched, and theoretically nuanced book that will be of interest to scholars from a wide range of disciplines and perspectives.