Political pragmatism and principles in times of crisis : the role of pragmatist political crisis management during the U.S. financial crisis

Abstract

Based on philosophical pragmatism, this study builds a model of pragmatist crisis management at the political-strategic level and contrasts it with a principle-guided approach towards political crisis management. It identifies four cornerstons of pragmatist political crisis management and builds a model based on them: anti-dualism, fallibilism, experimentalism and deliberation.

This model is applied by analyzing two key political decisions during the U.S. financial crisis: the decision to let the investment bank Bear Stearns fail and the decision to save Lehman Brothers. The empirical analysis reveals how the Bush administration engaged in pragmatist crisis management and overcame its political principles when saving Bear Stearns. The decision to let Lehman Brothers fail, however, is understood as a switch back to principle-guided crisis management.