Backing the Winners: Financial Policymaking and the Role of Professional Services Firms
Building upon these ideas of ‘leveraged interests’ and ‘actor plurality’ I examine the role of tax-accountancy-legal consultancy firms in affecting financial policymaking outcomes, focusing in particular on the ‘big four’ professional service providers: PwC, Ernst and Young, Deloitte and KPMG. Through the use of process tracing analysis, I investigate the involvement of these firms in the cases of the Alternative Investment Fund Managers Directive (AIFMD) and the Financial Transaction Tax (FTT) - two regulatory initiatives pursued at the EU supranational level. Ostensibly situated in a classic conflict of interest position - giving advice to both financial institutions and public officials - I provide evidence that professional service firms are in fact key allies of the financial industry. Despite the pretence to neutrality, the big four are functionally interconnected with the industry through symbiotic market relationships and informal business network associations. Crucially, professional service firms offer a wide range of political support to financial institutions including advice on effective lobbying strategies and assistance in the formulation of a coherent and unified oppositional message. In addition, the ‘big four’ habitually adopt financial actor perspectives on policy matters and regularly emphasise the potentially undesirable effects of regulation in their advice to governments and the broader public.
The study advances understanding of the unequal power relations which permeate financialised societies and which have major implications for the democratic functioning of EU policymaking.
Pagliari, S. and Young, K. L. (2014). Leveraged interests: Financial industry power and the role of private sector coalitions. Review of International Political Economy, 21(3), 575-610.