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Rhetorical Metrics Building Securities Regulation in America’s Era of Booms and Busts, 1890-1940

Published online by Cambridge University Press:  17 April 2019

Pierre Pénet*
Affiliation:
University of Geneva Paul Bairoch, Institute of Economic History [pierre.penet@unige.ch]
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Abstract

How do regulators regulate with metrics? This article offers a rhetorical approach to this question, using early U.S. securities regulation as a case in point, and reliance on credit ratings as empirical illustration. A rhetorical approach challenges economists’ claim that metrics are limited to providing technical guidance to policy formation: the fact is that the role of metrics in regulation can be appreciated only if technical and social aspects are considered together. A rhetorical perspective also fills an important gap in sociological studies of “co-production” that claim that procedural deliberation enhances the legitimacy of regulation but underemphasize the role of quantification when procedural rules are lacking. This article suggests that rhetoric is not suboptimal or irrational but a vital form of deliberation in contexts of uncertainty, when decision-making requires some amount of persuasion outside a procedural context. I observe that metrics can be a powerful vehicle of rhetorical change. Two components of rhetorical metrics are highlighted. First are cognitive clutches, or the capacity to shift prevailing models of attention. Second are actionable arguments, the capacity to embed cognitive deviance into a compelling argument for change. I conclude with reflections on the legacy of rhetorical decisions on current policy debates.

Résumé

Comment les régulateurs régulent avec des métriques ? Cet article répond à cette question au moyen d’une approche rhétorique. Le recours à la notation du crédit dans la régulation du marché obligataire américaine au début du xxe sert de cas empirique. Une approche rhétorique permet de relativiser l’idée répandue chez les économistes que les métriques n’ont d’autre utilité que de servir de référence technique dans l’élaboration des politiques publiques. On part de l’hypothèse alternative que le rôle des métriques dans la régulation ne peut être apprécié qu’en étudiant conjointement leurs aspects techniques et sociaux. Une approche rhétorique vient également combler une lacune dans les études sociologiques de la « co-production ». Ces travaux suggèrent que la régulation gagne en légitimité lorsqu’elle s’incarne dans des règles formelles de délibération mais négligent le rôle de la quantification lorsque ces règles font défaut. Cet article suggère que la rhétorique n’est pas sous-optimale ou irrationnelle mais une forme essentielle de délibération dans des contextes d’incertitude, lorsque la prise de décision exige de la persuasion dans des contextes d’informalité. On observe que les métriques peuvent être un puissant vecteur de changement rhétorique. Ces « métriques rhétoriques » impliquent deux composants : premièrement un « embrayage cognitif » pour réorienter les modèles d’attention des acteurs vers des sentiers nouveaux ; ensuite un « argument décisionnel » pour convertir la déviance cognitive en un argument convaincant de changement. On conclut avec une réflexion sur la postérité des décisions rhétoriques dans les débats actuels autour de la régulation.

Zusammenfassung

Wie regulieren Regulatoren mit Hilfe von Metriken? Auf diese Frage antwortet der Beitrag mit einem rhetorischen Ansatz. Als empirischer Fall dient hier die Verwendung von Ratings im Rahmen der Regulierung des US-Anleihenmarktes zu Beginn des 20. Jahrhunderts. Dank des rhetorischen Ansatzes kann die unter Ökonomen verbreitete Idee relativiert werden, dass Metriken ausschließlich als technische Referenz bei der Entwicklung öffentlicher Politiken dienen. Wir gehen von der alternativen Hypothese aus, dass die Rolle der Metriken bei der Regulierung nur gewürdigt werden kann, wenn gleichzeitig ihre technischen und sozialen Aspekte untersucht werden. Der rhetorische Ansatz schließt ebenfalls eine Lücke in den soziologischen Studien der “Koproduktion”. Diese Untersuchungen legen nahe, dass formale Beschlussregeln die Regulierung stärken, ihr Fehlen jedoch die Rolle der Quantifizierung mindert. Dieser Artikel legt nahe, dass Rhetorik nicht suboptimal oder irrational ist, sondern eine wesentliche Form der Überlegung in Unsicherheitskontexten darstellt, sobald Entscheidungen im informellen Kontext Überzeugungsarbeit erfordern. Metriken können ein starker Vektor rhetorischer Veränderungen sein. Diese “rhetorischen Metriken” umfassen zwei Komponenten: erstens eine “kognitive Kupplung”, um die Aufmerksamkeitsmodelle der Akteure auf neue Wege zu lenken; dann ein “Entscheidungsargument”, um die kognitive Abweichung in ein überzeugendes Argument für Veränderung umzuwandeln. Wir schließen mit einer Reflexion über die Berechtigung rhetorischer Entscheidungen in aktuellen politischen Debatten.

Type
Varia
Copyright
Copyright © A.E.S. 2019 

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