Do We Have Confidence in Economic Institutions?
Opening the Black-box of the Household
A Qualitative Investigation into ideas and Practices of Cultures of Expertise
Principal Co-Investigator: Dr. Johnna Montgomerie
Johnna is a reader in International Political Economy at King’s College London. Her research unpacks the significance of debt-dependent growth in the contemporary global political economy. In particular, she focuses on the spatial relations of debt and the importance of place in determining who has access to, and ultimately benefits from, financialisation.
For example, she is interested in evaluating the degree to which the pattern of distribution of private debt within and across households create new forms of inequality. The current unprecedented scale of private debt complicates established understandings of income and wealth inequalities.
Principal Co-Investigator: Dr. Ryan Davey
Ryan Davey is a social anthropologist specialising in debt and class inequality based at Bristol. His research has used ethnographic fieldwork on a housing estate in England to argue that de-industrialisation and financialisation have transformed the foundations out of which class-based identities arise. Many UK citizens today rely on consumer credit and welfare benefits to get by, which makes them vulnerable to eviction or their benefits being stopped. The power of lenders and welfare officials to administer these sanctions contributes to class inequality. This means that class-based oppression can result from inequalities in people’s relation to the means of legal coercion, and not just to the means of production.
Co-Investigators: Ryan Davey (Bristol), Ann Pettifor (PRIME Economics), and Sue Himmelweit (Open University & Women’s Budget Group).
The household is an institution. Though it is very familiar to us, and while we do not always think of it in this way, the household is a highly specific way of organising social relations. It is one that has become deeply integrated into market society and features prominently in early macroeconomic thinking about redistribution. However, contemporary macroeconomics treats the household as a ‘black-box’ by assuming it is the functional equivalent of all goods and services produced and consumed in a national economy. This research project, funded as part of the Macroeconomic Institutions Hub of Rebuilding Macroeconomics, seeks to unpack the household as an economic institution through in-depth qualitative investigation.
Two parallel streams of investigation will be conducted by Dr. Johnna Montgomerie (KCL) and Ryan Davey (Bristol) to interrogate both the top-down and bottom-up perspectives on the household as economic institutions.
The research stream led by Dr. Davey, uses the household to explore connections between financial stability, consumer protection and economic inequality. It will produce empirical material on the street-level effects of current policy attempts to optimise the stability of the UK’s financial system by balancing the healthy growth of consumer credit markets against the systemic risk posed by household indebtedness. We will use Bank of England data in 2018 on the recent expansion of consumer credit in the UK as well as the setting of capital buffers, to ensure lenders are able to absorb severe losses. Household indebtedness is growing and the high risks this pose to financial stability is undeniable. But current thinking overlooks the crucial role of economic inequality as a mediating factor between protecting consumers and stabilising the financial system. Thus, the purpose is to investigate the effects on economic inequality of consumer protection and financial stability though detailed ethnographic research – a method of research based on building up informal social relations to see everyday life in its full complexity. Focusing on household financial debt relations operating in low- to middle-income households in the UK, it will provide evidence to demonstrate the wider impacts of inequality on systemic risk which currently underestimates the problems created by unsustainable levels of debt that are contributing to the impoverishment of large sections of the population.
The research stream led by Dr. Montgomerie uses the household to explore how macroeconomic policy-makers in different institutional landscapes (such as finance ministry, central bank, and regulators) understand the household as economic actor, agent or institution. This project uses in-depth qualitative methods to investigate how ideas about the household exist within the cultures of expertise across different macroeconomic institutional landscapes. This research seeks to translate conceptual innovation into policy relevance by building a set of methodological tools for recognising the household as an economic institution and determine the capacity for agency that households possess in a way that can inform macroeconomic ways of framing, aggregating and modelling national-scale economic activities. The interdisciplinary nature of this project offers macroeconomics ways to innovate its policy relevance by furthering understanding into how the real-life everyday economic activities of the household configure and inform the macroeconomic tools used by policy makers.
The results of this project will provide new ways of considering the central role that households play in configuring macroeconomic inequality because inequality occurs not only between households but also within them. This makes conceptualising what the household is crucial to the empirical investigation of inequality or the distributional effects of macroeconomic policy ‘on the ground’. Our aim is to eliminate artificial separations between the household and the macroeconomy, and between ‘the household’ in general and those households with unsustainable debts in particular, because it ensures the role of economic institutions remains largely under-theorised and under-utilised in economic policy making.
By focusing on distribution within the household and redistribution across households we will provide an innovative theoretical framework for understanding the contingent agency of households to configure macroeconomic phenomena. Deploying an interdisciplinary approach, the research will be cutting edge in linking current macroeconomic questions around financial governance with state-of-the-art economic anthropological approaches to livelihood, labour and inequality, making the household conceptually and empirical visible and, thus, deployable in macroeconomic policy analysis.