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Abstract

Financialization requires a regulatory framework that allows markets to emerge and expand. What explains growing political acquiescence to relevant market-enabling rules? The present article identifies feedback processes whereby such rules lock in over time. First, as markets expand, market proponents grow more numerous and develop increasing stakes. Second, potential challengers find it increasingly difficult to mobilize protest, because routinization reduces salience and because market exposure renders protesters more vulnerable. Third, potential challengers lose incentives to protest, because market exposure eliminates some non-market structures that inspire defensive action, and because ‘constrain-thy-neighbor’ dynamics encourage the further spread of market-enabling rules as a means of self-defense. The case of market-enabling takeover regulation in Britain since the 1950s illustrates how these processes gradually changed the preferences and resources of bankers, institutional investors, corporate managers and employees and thereby help explain why parliamentary interest in market-restraining counter-measures grew weaker over time.