Wealth Effect : How the Great Expectations of the Middle Class Have Changed the Politics of Banking Crises

The politics of major banking crises has been transformed since the nineteenth century. Analyzing extensive historical and contemporary evidence, Chwieroth and Walter demonstrate that the rising wealth of the middle class has generated 'great expectations' among voters that the government is responsible for the protection of this wealth. Crisis policy interventions have become more extensive and costly - and their political aftermaths far more fraught - because of democratic governance, not in spite of it. Using data from numerous democracies over two centuries, and detailed studies of Brazil, the United Kingdom and the United States, this book breaks new ground in exploring the consequences of the emerging mass political demand for financial stabilization. It shows why great expectations have induced rising financial fragility, more financial sector bailouts and rising political instability and discontent in contemporary democracies, providing new insight to anyone concerned with contemporary policy and politics.

Jeffrey M. Chwieroth is Professor of International Political Economy in the Department of International Relations, and a Research Associate of the Systemic Risk Centre at the London School of Economics and Political Science. He is the author of Capital Ideas: The IMF and the Rise of Financial Liberalization (2010). He has published numerous articles on the political economy of international money and finance and on global governance. His research has been supported by grants from the Australian Research Council, the AXA Research Fund, the British Academy for the Humanities and Social Sciences, and the Economic and Social Research Council.

Andrew Walter is Professor of International Relations in the School of Social and Political Sciences at the University of Melbourne. He has received research grants from the Australian Research Council and the Centre for International Governance Innovation in Canada. He has published numerous articles on the political economy of international money and finance and their governance among and within countries. His books include Governing Finance: East Asia's Adoption of International Standards (2008), Analyzing the Global Political Economy (2009), China, the United States, and Global Order (Cambridge, 2011, with Rosemary Foot), East Asian Capitalism (2012, ed. with Xiaoke Zhang), and Global Financial Governance Confronts the Rising Powers (2016, ed with C. R. Henning).