Resilience Governmentality: The Genealogical Origins of Systemic Risk Regulation in the United States from the New Deal to the Dodd-Frank Act of 2010

The global financial crisis of 2008 revealed the limits of neoliberal governmental mechanisms to manage the systemic catastrophe risks nested in financial systems. In response, policymakers in the United States and elsewhere introduced a new regulatory regime called systemic risk regulation to reduce such risks. Allowing regulators to reach all the way into systemically important financial mammoths like Citibank and make executive decisions on their daily daily operations, this regime deploys a puzzling form of intervention that is too intrusive to be neoliberal, and yet too cautious and restricted to be “interventionist.” As a result, the conventional wisdom, particularly among economists and critical social scientists, has been to assess it around whether it is “too much” or “too little” government. This paper argues that unraveling the significance of systemic risk regulation within the history of liberal economic governance requires a different approach to thinking about and characterizing economic governance, one that does not involve more versus less state, but one that traces the genealogical origins and historical formation of the governmental logic that constitutes systemic risk regulation, namely resilience governmentality.  The paper further argues that this governmental form is the hidden facet of liberal economic governance as it works in tandem with its visible face, macroeconomic governmentality, making possible for the economic governor to govern the economy at a distance, without interfering with its material, internal processes.  It envisions the economy as a complex of vital but vulnerable economic systems and seeks to enhance their resilience by reducing the vulnerability of systemically important points in these systems to highly catastrophic but infrequent and thus unpreventable disturbances. The paper first traces the origins of this logic back to the New Deal resource planning agencies of the 1930s where experts invented the economy as a potentially resilient and yet vulnerable economic system. Blaming the Great Depression on certain critical price inflexibilities in the price system, they envisioned reducing the system’s vulnerability by regulating such prices with the help critical material stockpiles. Then the paper examines the implementation of this governmental technology in the newly created domain of national security in the postwar period after the demise of the New Deal. In the newly created peace-time Cold War defense mobilization agencies, experts developed ever more precise and effective systemic analysis tools to reduce the industrial system’s vulnerability to demand shocks from limited war mobilizations, which could have crippled the peacetime civilian economy as demonstrated by the Korean mobilization. The paper finally shows how this governmental technology was first gradually deployed for managing raging inflation of the postwar period as mainstream Keynesian macroeconomic approaches failed in the mid-1960s and was finally remapped on to a financial ontology on the onset of the Latin American debt crisis in the early 1980s. The creation of systemic risk regulation, thus, marks a decisive rupture in the history of liberal economic governance as it rearticulates monetary government with the systemic tools developed for resource and mobilization planning during the New Deal and the Cold War.