Political Standards: Accounting for Legitimacy

University of Chicago Press, Forthcoming

8 Pages Posted: 14 Dec 2014 Last revised: 14 Jan 2015

See all articles by Karthik Ramanna

Karthik Ramanna

Harvard Business School; University of Oxford - Blavatnik School of Government

Date Written: December 11, 2014

Abstract

I develop the notion of “thin political markets.” These are esoteric areas of market rule-making where corporate managers possess the technical expertise necessary for informed regulation, enjoy strong economic interests in the outcome, and face little political opposition. The motivating phenomenon for thin political markets is the political process of accounting rule-making. I present evidence suggesting that managers use their political and substantive advantage in thin political markets to subtly structure the rules of the game to their advantage. On one level, this action is entirely consistent with the capitalist spirit à la Milton Friedman – “The social responsibility of business is to increase its profits.” But there are serious questions as to whether such actions sustain the long-term legitimacy of market capitalism. In the conclusion, I offer some suggestions on how we might address this problem.

Suggested Citation

Ramanna, Karthik, Political Standards: Accounting for Legitimacy (December 11, 2014). University of Chicago Press, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2537088 or http://dx.doi.org/10.2139/ssrn.2537088

Karthik Ramanna (Contact Author)

Harvard Business School ( email )

Boston, MA 02163
United States

University of Oxford - Blavatnik School of Government ( email )

10 Merton St
Oxford, Oxfordshire OX1 4JJ
United Kingdom

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