Evolution Through Resilient Networks? The Practice and Politics of Financial Systems

Regulatory responses to the financial crisis have positioned themselves apart from the prevailing image of errant bankers, irresponsible borrowing/lending, and ‘moral panic’. Instead, a range of innovative policy agendas have sought to foster a new ethos of resilience: financial networks are rephrased as (one among several) complex, inter-dependent systems that must adapt to a range of global uncertainties. Once recognised, regulators (and network agents alike) can begin to model the likelihood of system wide ‘events’, such as sovereign defaults, capital flight/crunch, even terrorist attacks, in a manner that (supposedly) enhances both their predictability and the efficacy of contingency planning. In broad terms, the goal of such regulation is to foster evolution through resilient networks, embracing the reality of risk, while building adaptable relationships throughout the system. In this working paper, we map one instantiation of financial resilience embodied in the Bank of England’s recent turn to complexity modelling and its correlative, somewhat metaphorical, ethos of ‘clear thinking’ in ‘complex times’. In our view, there is much scope for innovation within such moves; in particular, we highlight the potential return of ‘local agency’ in the discourse of financial resilience – through ideas about local banking, reciprocity, and inclusion. However, by engaging the more critical literature on resilience, we argue that important dilemmas are likely to remain for policy makers who try to marry complexity with clarity in a financial system that remains politically contested and contestable. We conclude by outlining a pragmatic agenda for further experimentation.