Lost in Translation: Rethinking the Politics of Sovereign Credit Rating

• Main Author: Johnson, James
• Language: en
• Published: University of Canterbury. Social and Political Science 2013
• Subjects: credit rating agencies; global finance; international political economy
• Online Access: http://hdl.handle.net/10092/8684

Our current understanding of credit rating agencies’ influence on national sovereignty relies on a dichotomised and highly antagonistic view of the relationship between states and the global economy. This perspective is locked into the discursive confines of the structuralist-sceptics debate within the field of international political economy. CRAs are said to either erode state sovereignty or represent a manifestation of it. By abandoning the state-market, public-private and national-global dichotomies embedded within this debate, and the zero-sum mentality they are predicated upon, this thesis offers an alternative – “transformationalist” – perspective to view the power of CRAs and their influence on national sovereignty. Defying traditional categorization, CRAs’ power is the result of a state-market, public-private confluence of interest and therefore has no determinative influence on national sovereignty. In the course of this analysis, a second assumption embedded within the study of CRAs’ influence is criticised: the fixation on the “big three” rating agencies (Moody’s, S&P and Fitch) and the neglect of the significance of the credit rating itself. Because the rating determination process is opaque, and the credit rating itself is a highly simplified expression of an intricately complex financial, economic and political reality, the causes of a sovereign rating change are often “up for debate”. Governments, within certain degrees of interpretation, are able to embed their own domestic political interests into the “causes” of a rating change, thereby co-opting and co-constructing the power and expertise of CRAs. This can, when successful, enhance governments’ internal sovereignty over domestic social forces and their external sovereignty as they “filter” the influence of a non-state actor. New Zealand’s interaction with the CRAs throughout 2008 to 2012 illustrates how this dynamic occurs and its limitations. The thesis seeks to highlight the diversity and heterogeneity involved in the processes of globalization in general, and CRAs’ influence in particular, and in doing so open up political space to consider possible forms of resistance.