Should we be worried about finance socializing us?

August 18, 2016

By Suhaib Riaz. *

Is finance socializing us

“Socializing finance” has become shorthand to describe the research that many of us are engaged in related to social studies of finance. I understand it to mean: bringing finance into the realm of social studies; but also making the industry aware of other ways of thinking and doing, beyond their current status quo; this also often has an element of (social) interaction with the industry thrown in. All these are consistent with various meanings of ‘socializing’ and are much needed efforts.

But there is a flip side to this aspect. How critically aware are we that finance is also on a mission to socialize us – in the sense of influencing our thinking – even as we may attempt to ‘socialize’ it?

In my work (in collaboration most prominently with Sean Buchanan, Trish Ruebottom, Madeline Toubiana) and that of a few other scholars, this seems to be a theme too powerful and important to ignore.

Finance is indeed at work to socialize us – to influence our ways of thinking about it through various means. At the peak of the financial crisis, various categories of elite actors seemed bounded by these ways of thinking about the financial industry resulting in configurations of positions often in favor of status quo (see Riaz et al., 2011). More specifically, financial industry leadership may well see it as their task to defend the institutional framework in which the current version of their industry thrives; and accordingly work to ‘socialize’ the rest of us – all stakeholders- to accept their view of finance and its role in society as the ultimate one by claiming epistemic authority in this domain (see Riaz et al., 2016).

Similarly, the taken for granted nature of financial industry practices such as debt (see Riaz 2016 for a critical view) and how that is reinforced through discourse (Buchanan et al. 2016 presented recently at EGOS Naples) suggests that how we are socialized to understand the industry and its practices may in turn be contributing to the status quo regarding the relationship between the industry and society.

Such influence pertains not just to how we think about the financial industry, but also to how we now think about other businesses (see for example, arguments in Mukunda, 2014). In a study on a different context (with Israr Qureshi), we briefly point to financialization as worthy of investigation as an institutional logic whose influence may now be strong in prosocial organizing as well. Indeed, this influence has been argued to extend beyond business to several aspects of life in general (see for example, Davis, 2009).

Recently, attempts to influence the thinking of wider audiences have taken on more direct means, such as the post-crisis advertising campaign by Goldman Sachs focused on how it is “Committed to Progress”. To those of us following this ‘socializing’ work, it simply seems an elaborate and planned extension of CEO Blankfein’s arguments in our analysis on trying to establish the importance of the industry to society.

While my work with collaborators mostly focuses on influence via the public domain, there are other angles. In reviewing the excellent recent study by Jarzabkowski, Bednarek and Spee on the global reinsurance industry, Zbaracki reminds us of the importance of “social relations” in the industry. Such interactions may be a means of socializing others in specific ways of thinking. This is important not just in the industry but also for those outside the industry but bound to it through various roles. As Jeff Connaughton points out, at least one reason “Why Wall Street Always Wins” is that social interactions among regulators and lobbyists are so pervasive that the two groups may together be thought of as “The Blob” that moves together.

Engagement with the financial industry is essential to understand the phenomena. Yet, our analyses, locus of problematization (are we interested in solving effectiveness and efficiency problems as seen by the industry or thinking about the system as whole and its impact on society?), and audience may all depend on where we are coming from i.e. how critically aware we are of the socializing work of finance.

These are important issues that have a bearing on social welfare (Marti and Scherer, 2016) and socio-economic inequality (see Lin and Tomaskovic-Devey, 2013; Riaz, 2015; Cobb, 2016 and forthcoming: on how organizational practices that some associate with financialization are at play in increasing inequality).

While endeavoring to contribute to the industry, all its stakeholders, and wider society, our own embeddedness in the existing ways of thinking about the industry may socialize us in a manner similar to embedded war time reporters who can glorify and analyze issues of effectiveness and efficiency but often lack the reflexivity and perspective to critique the big picture. That would be a disservice to all concerned.

Our work on socializing finance is essential and must continue. But it also needs to continue adding new perspectives beyond the ones held by those bound to the industry’s way of thinking about problems. One way of ensuring this would be for us to be reflexive about our own positions and be critically aware about how and how much finance may be socializing us. Not only in our roles as citizens, consumers, borrowers, employees, investors, etc. but also in our roles as scholars.

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[* Acknowledgements: I thank the organizers and participants of two excellent workshops (first and second) at the recent Academy of Management conference (2016) where these thoughts were crystallized. Special thanks to Daniel Beunza for encouraging me to write these thoughts in blog form.]

(image courtesy: pixabay)

4 Responses to “Should we be worried about finance socializing us?”

  1. danielbeunza Says:

    Thanks for this thoughtful post. I think “the Blob” should become a standard expression for us at Soc Finance. But before recasting my identity as blogger against the Blob we need to see things in perspective, and the big picture I believe is that finance became delegitimized since 2008 and nothing has moved the needle for eight years. That’s eight years of all bankers, including central bankers, IT professionals, or even humble credit card processing clerks, being branded robber barons. Wall Street, I would argue, has failed to make a dent in the public battle of ideas. My own worry is that financialization, now seen as an extension of global warming and obesity-inducing foods (i.e. bad things of our times), might end up as a partially useful and positive development that is cast aside in favor of its alternative, which is fat cats in boardrooms devising cars with cheating devices, and politicians who exploit the public trust as they do in Southern Europe.

  2. Emilio Marti Says:

    Thanks, Suhaib, for your excellent blog post! I think that you are spot on. There is strong evidence that financialization has reshaped how the economy works, and has even influenced our everyday life (as argued by Davis 2009). If so, we should give serious attention to the possibility that financialization also influences academics who study financial markets, even the “socialized” ones. Put differently, if “cultural capture” happens among regulators, could this not also happen among researchers? So I think that you are raising a very important question: Has financialization influenced our thinking as academics and, if so, how? I wished that you had also started to answer that question, but that would be to ask too much for a blog post. Particularly because this is a very tricky question…

  3. Nathan Coombs Says:

    Thanks for the post Suhaib. But I’m not entirely convinced by your more critical comments. Your argument, as it pertains to SSF research, seems to be that in studying finance and finance professionals, scholars might succumb to ‘cultural capture’ where they come to identify with the problems, world-view and language of their objects of study. In so doing, they can lose sight of the ‘big picture’ and the broader socio-economic landscape in which their small area of study is situated. Issues such as societal injustice and inequality recede from view in favour of in-depth elaboration of the technocratic problems grappled with by financiers and regulators.

    The reason that I am sceptical about this argument is that it echoes a sentiment one encounters in certain parts of critical political economy community concerning the dangers of ‘fraternising with the enemy’ – the sense that in stepping out of the scholarly safe space one is liable to be seduced by the power and epistemic authority of financial professionals. This may be a problem worth reflecting on, but I think it underestimates the agency and reflexive awareness of scholars in SSF.

    The point of SSF research is to immerse oneself in epistemic cultures of finance and understand practitioners’ motivations, decision-making processes and way of seeing the issues they deal with (their ‘practical metaphysics’ as Latour puts it). That’s the field’s USP, so to speak. If an individual decides that there is value in undertaking such laborious research, then they probably already have good reasons for wishing to do so. Some might simply have fairly sanguine views on the state of the world and be drawn to the technocratic aspects of the field. Others may be of a more critical inclination but see the need to expand the stock of knowledge around which existing debates revolve. Either way, it’s hard to envisage scholars who travel to banks, trading firms and regulatory bodies to conduct their research being so weak willed as to lose their ability to sort the wheat from the chaff. Indeed, there are examples of ‘guerrilla anthropologists’ like Brett Scott who have spent long periods working in finance only to later emerge as radical public critics.

  4. Jessica Weinkle Says:

    This is great, thanks for the thoughtful post. From my world of Science & Technology Studies and Science & Technology Policy, it seems that you are asking about how to maintain accountability of the scientific community (I include social scientists in that) and avoid the politicization of the information we produce.

    I think a step in the right direction is nipping the whole thing in the bud way ahead of time, as you are doing now. Deeper consideration of the role we (individually and collectively) play in the decision making process and constructing truth is a practice in self reflection, a collaborative effort among supportive and willing scholars, and at times, a lesson in democratic process.

    Fun read! Again, thanks!


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