Rhetorical Metrics Building Securities Regulation in America’s Era of Booms and Busts, 1890-1940

Abstract

AbstractHow do regulators regulate with metrics? This article offers a rhetorical approach to this question, using early U.S. securities regulation as a case in point, and reliance on credit ratings as empirical illustration. A rhetorical approach challenges economists’ claim that metrics are limited to providing technical guidance to policy formation: the fact is that the role of metrics in regulation can be appreciated only if technical and social aspects are considered together. A rhetorical perspective also fills an important gap in sociological studies of “co-production” that claim that procedural deliberation enhances the legitimacy of regulation but underemphasize the role of quantification when procedural rules are lacking. This article suggests that rhetoric is not suboptimal or irrational but a vital form of deliberation in contexts of uncertainty, when decision-making requires some amount of persuasion outside a procedural context. I observe that metrics can be a powerful vehicle of rhetorical change. Two components of rhetorical metrics are highlighted. First are cognitive clutches, or the capacity to shift prevailing models of attention. Second are actionable arguments, the capacity to embed cognitive deviance into a compelling argument for change. I conclude with reflections on the legacy of rhetorical decisions on current policy debates.