Should we be worried about finance socializing us?
August 18, 2016
By Suhaib Riaz. *
“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.
[* 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)