Abstract
The vulnerability of small nation-states leads them to innovate in the face of challenges and become stronger; hence the title of John L. Campbell and John A. Hall’s The Paradox of Vulnerability: States, Nationalism, and the Financial Crisis. A thoughtful comparative and historical sociology (CHS) of three nations, complemented by lighter accounts of two others, provides the authors’ empirical ground to discover causal mechanisms underlying apparent associations. By analyzing these nations’ response to a common event—the financial crisis beginning in 2007—Campbell and Hall keep the threat constant to focus on other variables nuancing their ideal-typical model.
Drawing on Katzenstein, Gellner, and others, the authors argue that perceptions of nation and state vulnerability—greater, ceteris paribus, in smaller states—tend to encourage more national solidarity. That helps to create thicker institutions, which enable more competent responses to threats like financial crisis.
This brilliantly designed and charming book exemplifies careful political-economic CHS. In the second chapter, the authors explain Denmark’s history and crisis response. Ireland brings nuance in the third. As a colony, and then under British protection, the Irish failed to develop thicker institutions that would foster crisis management. Even their 1990s economic takeoff was accompanied by clientelism and limited state capacity for regulation. Eurozone membership for Ireland was both a blessing and a curse. Legacies of civil war diminished trust, a problem the Greeks suffered even more.
In Chapter Four, we learn that while the Swiss are multicultural, over the centuries they developed institutions to assure solidarity in association with privatized and pragmatic governance. That combination enabled expert response to the systemic risk their huge banks brought to the economy at the end of the century’s first decade. Iceland didn’t have such economic expertise, but its thick political institutions, built on obvious cultural solidarity, made up after the financial disaster for its limited capacity for economic governance.
This is an elegant explanation, but the authors incorporate their interviews with leading figures from these nations to bring nuance to the actual process of policy response to financial crisis. In this they approach the contentiousness typical of historiography, even if that quality is hard to find in a parsimonious discipline’s conventional CHS. And here begins the invitation to think about what this book ought to inspire with its extensions into replication and debate.
What countries should be studied next? Estonia and Latvia? Poland and Hungary? Czechia and Slovakia? Slovenia and Albania? We hope our colleagues with contextual expertise in those regions consider replication. But the authors already acknowledge the problem: a precondition for success is decades, if not centuries, of a country’s independence. Greece has been plagued, as has Ireland, with the interference of external powers. So too all of the post-communist world. But Finland is actually a model for the authors—it managed its extreme geopolitical vulnerability, following devastating civil war, while building thick institutions.
Denmark and Finland manifestly inspire the book’s theory. The book’s ideal type is rooted in a Danish cultural frame. Of course the virtues of thick institutions and expertise around pragmatic consensus might be everyone’s dream (well, not Clinton’s when Sanders raised it in their 10/13/16 debate). Maybe most technocrats look at Denmark with envy. Irish bankers certainly can’t celebrate their last decade’s experts, of course, and the Swiss are, well, too distinctive to emulate. But Denmark is different, too. It is, as the authors remark, the former metropole of an empire now in a rump state with deep pools of expertise.
What if, however, interviews about the financial crisis and recovery weren’t based among the elite? Of course we couldn’t get at fixes in the financial system, but we would appreciate more how these nations are themselves imagined not only from above but also from below. The authors acknowledge their elite-centeredness, but their references are, at times, not only awkward but even apologetic. They insist that they are not celebrating Denmark’s cultural homogeneity, but just noting how it is a resource. But not for all crises.
What if instead of considering how nations managed the financial crisis we consider how they manage the refugee crisis? In passing references, but without real documentation, the authors note Irish superiority over Danes and Swiss here. They don’t mention it, but certainly the Greeks in practice have been better than the Italian authorities; the Germans have been more responsible than the Austrians, all of whom are better than Hungarian authorities. Americans and Canadians were once better than them all, but their nations are also much larger. With these comparisons, we might begin to extend their argument about the paradox of vulnerability beyond financial crisis.
We need theorize the nature of vulnerability, and therefore of crisis. We begin with theorizing qualities associated with unexpected flows generating instability. The movement of knowledge, people, wealth and weapons, and other things, occurs at different speeds and with different vehicles. In turn such variation invites different forms or regulation given their very different distributions of consequence. Even expertise in their oversight finds very different residences across social classes and citizenships, with various associations among global, state, elite, and popular interests.
Financial crisis, with its deeply layered expertise in oversight, closely associated with not only national but global elites and their political allies, is something more readily insulated from popular accountability. When the authors declare that trust in financial expertise is critical to innovation in its execution, they could just as readily say that the ruling class must be secure in its cultural hegemony for small states to become stronger. Sometimes that ruling class is rather social democratic (Denmark), sometimes it is obviously bourgeois (Switzerland), but it is never demagogic, populist, or egalitarian (pick your adjective). For then, the world’s ruling class would declare that disposition irresponsible, and thus, a failure. No small nation can survive such impudence, right Greece?
Small nations can, however, readily thumb their noses at a responsible global or regional management of refugee crisis. There is no ruling class ready to defend refugees against the impudent. Ideologies buttressing national sovereignty crush any attempt to make human rights lead in ways that those managing financial flows can ignore.
While the digital revolution might proclaim the death of distance for virtual capital, physical proximity matters for theorizing the institutions managing refugee crisis. Turkey, Lebanon, and Jordan support more than six times the number of Syrian war refugees than the whole of Europe. That does not mean, obviously, that they manage the crisis better, only that Europe has worked to keep refugees out. And here, then, is the trick we need to consider.
By focusing on one crisis and set of flows we can ignore others until they disrupt the intellectual division of labor. Only when nativist nationalism displaces polite systemic racism might some recognize the importance of a nation’s cultural politics for ordering political economy. Campbell and Hall begin to bridge those competencies, most especially from a financial elites’ perch. Beyond considering other nations and crises, then, we might also think about how cultural politics wind up establishing our intellectual division of labor, consequent standpoints from which we evaluate risks and resilience, and our leading questions.
For instance, need innovations be admirable? Perceived vulnerability to a small nation’s fiscal health may lead to policies sparking global elites’ acclaim, but perceived risks around refugees can lead to unprecedented solutions hardly worthy of celebration, much less emulation.
We might then explore the paradox of vulnerability not only with reference to the size of nations and thickness of their institutions but also in our questions about which solidarity counts, and whose vulnerability matters.