The MPIfG’s Research Program
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Connected with the theme of capitalist instability, the study of the eurozone has historically been a key axis of research at the Institute. Researchers analyzed early on the problems of a monetary union that brought together countries with very different institutional capacities, and they anticipated the competitiveness and current account imbalances that led to the sovereign debt crisis that started in 2010. Later, they criticized the governance measures that were introduced to stem the emergency (enhanced fiscal supervision and strong conditionality for access to bailout funds) for reducing both output and input legitimacy.
Other research on the European Union at the Institute investigates the social and cultural processes underlying support for or disapproval of European integration. With the coronavirus, the European crisis may enter a new phase. The crisis response will produce further public deficits and debt, which may lead to renewed tensions in international financial markets and between European governments. Research on the European Union at the Institute will closely follow these developments. Will the mandate of the ECB be further extended, will there be moves towards collectivizing sovereign debt in Eurobonds or similar financial products, will there be further austerity measures, and will political forces that demand to exit from the common currency become stronger? Whichever direction European integration takes, it is clear that the European Union is facing a period of unprecedented instability and uncertainty to be investigated by economic sociologists and political economists alike.
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Given the dominant role of financial markets in contemporary capitalism and its instability, the realm of finance will continue to play an important part in the Institute’s research agenda. Research at the MPIfG on financial markets and the monetary system has many facets but finds two focus areas in the investigation of public finances and debt regimes, and the monetary policy of central banks. One of the central shifts in the relationship between state, economy, and polity during the last forty years is that states have tended to step back from their role in mitigating inequality through their tax system and public spending policies. States have also renounced addressing the instabilities emerging from excessive financialization. Why this is the case is a vital question for political economy and economic sociology. A further important development to be observed is the increasingly important role of central banks in the steering of private and public investments and debt. In the course of this development, the shaping of expectations of financial market actors, investors, and consumers has become a dominant tool of monetary policy. Research at the MPIfG addresses the transformation of central bank policy and investigates closely the instruments central banks use and how they legitimate their actions vis-à-vis politics and the public.
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The Institute’s research will continue to investigate formal and informal institutions in a historical and comparative perspective. Institutions play a crucial role in ensuring the integration, stability, and functionality of any social order. Furthermore, a comparative historical perspective allows a privileged viewpoint for understanding how societies change. At the same time, the study of institutions will be part of a broader focus that also includes key policies – both macroeconomic and structural – and the social coalitions underpinning them, as well as the role of ideas, cognitive frames, and expectations. Institutions, politics, and cognitive frames stand in a mutual relationship where any one supports or undermines the others, thus contributing to the dynamics of the social order. Institutions are important in shaping policies (an example is the relationship between central bank independence and monetary policy), but so too are electoral politics and the culturally specific understanding of situations as perceived by the actors.
Methodologically, the Institute’s research will combine historical, ethnographic, qualitative, and quantitative methods. The Institute continues to understand methods as a tool whose application depends on the research question and not vice versa. Research will span the micro-, meso-, and macro-levels of analysis. More than in the past, large surveys will be used to study attitudes vis-à-vis various aspects of macroeconomic and other policies. Other methods may be used if the research questions require them, such as survey experiments. In studying public opinion, the intent is not to reify it, or pretend that individuals are fully informed or rational or consistent, but to understand how individual and group preferences and expectations change in response to new information or new discursive frames. The focus on preference and expectation formation should also enable fruitful exchanges between the different research clusters of the MPIfG.