World Culture and Transnational Economic Governance: Theory and Evidence Aaron Major* Department of Sociology, University of Albany Abstract The current global financial crisis has led to renewed efforts to strengthen the formal rules and organizations of transnational economic governance. A substantial body of research in sociology and related fields suggests that the informal norms, values, expectations, and ideas that make up a world culture are equally important for understanding why countries cooperate, and why those cooperative efforts sometimes fail. This article explores these insights, showing how they can be applied to current debates about transnational economic governance, by paying particular attention to the emergence, adoption, and evolution of the Basel Capital Accords. Introduction In 1988, the central bankers of the wealthiest industrialized nations, under the auspices of the Bank for International Settlements, finished their work on a new international stan- dard regulating bank capital. Known as the Basel Accord, the new standard established a minimum level of reserve capital that internationally active banks had to hold against their portfolio of assets. The hope was that rationalizing, and increasing, their level of reserves would restore stability to global financial markets. By 1992, more than 100 countries with significant overseas banking operations had signed onto the Accords and taken significant steps toward implementing them (Tarullo 2008). The Basel Accord offered the promise that broad international cooperation could prevent global banking crises. Yet, in 2008, major financial institutions like Bear Stearns, Lehman Brothers, and AIG collapsed, leading to a global financial crisis and putting such hopes to rest. While there were many causes, the crisis was owing in large part to the fact that the world’s largest financial institutions held far too little capital reserves against which to protect themselves from defaults and falling asset prices. This, in other words, was precisely the sort of crisis that the Basel Accord was designed to prevent. The rise, and subsequent failure, of the Basel Accord brings into focus two processes, seemingly at odds with each other, shaping the global economy. On the one hand, the acceleration of economic globalization over the last 20 years has created new demands for transnational governance of the economy (Evans 2000). Indeed, over that time, we have witnessed the growth and integration, of a massive organizational architecture designed to manage and govern the global economy, one that is international in its form and scope and includes both official, governmental cooperation and unofficial cooperative efforts from non-governmental agencies. On the other hand, this vast, and growing, institutional apparatus appears powerless to exert any kind of order over global financial markets. Recent data from the International Monetary Fund (Laeven and Valencia 2007) show that between 1970 and 2007, the world economy has been hit by 124 systemic banking crises. The Latin American debt Sociology Compass 4/4 (2010): 230–240, 10.1111/j.1751-9020.2010.00277.x ª 2010 The Author Journal Compilation ª 2010 Blackwell Publishing Ltd