Finanzialisierung,Demokratie und Gesellschaft – zehn Jahre nach Beginn der Finanzkrise

This introduction to the special issue—ten years after the collapse of the investment bank Lehman Brothers and the beginning of a worldwide financial, economic, and debt crisis—reflects on the extent to which the economic crisis affected a turning point in society overall. The current state of research into the relationship between financialization, democracy, and social conditions strongly suggests that while the processes of financialization that favored the emergence of a crisis were influenced by the financial crisis, they were not completely reversed. In fact, the financial market regulation, which was changed in response to the crisis, did not exert any modifying pressure in terms of a restructuring of the financial system. An epochal shift in financial market regulation therefore cannot be identified from the steps taken in the reform process. Elseways there is clear evidence that the financial crisis has had a lasting impact on the European integration process, confidence in democracy, and political culture. The financial crisis is therefore likely to be perceived as a historical watershed, mainly due to its impact on societal areas beyond the financial system itself.     

Zwischen Staatsbedürftigkeit und Marktaffinität. Beeinflussen Wohneigentum und Erbschaften sozialpolitische Präferenzen?

Despite considerable inequalities, the long period of prosperity has led to an increase of wealth and assets in broad parts of the population. The article builds on the thesis that this “collective upgrading” is accompanied by a change of preferences concerning the role of the state and the market in matters of social security. On the basis of this assumption, we ask whether there is a relationship between home ownership and the receipt of a larger inheritance/gift on the one hand, and social policy preferences on the other hand. In order to answer this question, we analyze—based on the German Socio-Economic Panel—group-specific preferences of taking responsibility for financial security in old age in Germany in 2002 as well as their change between 1997 and 2002. Our results not only show that homeowners and homebuyers are more sceptical towards state solutions and more affine towards market solutions in 2002 than tenants, but also that in the course of time the former more strongly tend towards market solutions than the latter. The same is valid for the difference between heirs/donees and non-heirs/non-donees. Therefore, it can be concluded that the increase of wealth and the privatisation of retirement provision were an essential precondition for an increasing scepticism towards governmental redistribution ambitions.     

New Rage,New Perspectives?

The Eurozone crisis has led to a long and remarkable protest wave. Civil society raised its voice against the ever-harsher austerity measures implemented to deal with the crisis. The article focuses on the role of civil society and its potential to contribute new perspectives to the debate. Such a contribution would depend on two preconditions: 1. Civil society actors need to mobilize successfully to make their voices heard. 2. Civil society actors contribute a perspective that differs to the perspectives of actors from institutionalized politics. Both preconditions are analyzed empirically for two countries that are in very different situations in the crisis scenario: Greece and Germany. Greece has been hit most severely by the crisis; Germany is the most prominent country defining the crisis management, and it provides the largest share of credit guarantees for “crisis countries.” Social movement theory is used to explain the differing evolution of protests in the two countries. In the early phase of the crisis, the established landscape of political parties in both countries offered few opportunities for their citizens to vote in opposition to the crisis management, which is conducive to extra-parliamentary protest. Differences in deprivation, discursive opportunities and the resource basis of mobilization structures can explain differences in protest frequency but also to some extent the evolution of protest over time. Taking up Habermas’ argument regarding the specific perspective of civil society actors in the public debate, we then analyze to which extent the arguments of civil society actors deviate from those of more institutionalized actors. A discursive actor attribution analysis unveils that civil society actors are more sensitive to social problems and grand systemic questions. Moreover, civil society actors are less hesitant to blame actors on the EU level and other EU Member States, even though their overall contribution to the crisis debate is rather marginal.     

Die Finanzialisierung von Unternehmen

Since the 1990s the financialization of the enterprise is an increasingly important aspect of capitalist development also in Germany. However, more recently a growing number of scholars point at a problematic conceptual stretching of financialization. The term has been defined too differently and ambiguously and has not been distinguished sufficiently from seemingly similar concepts. Financialization has been prematurely identified with a set of fixed effects often condensed to stagist concepts of capitalist development. When analyzing effects financialization has been regarded in isolation without considering interaction effects with other structurations of fields and hence the multi-referentiality of the enterprise. In order to overcome these shortcomings the article proposes a concept for the analysis of firm level financialization which draws on a more general sociological concept of field structuration and dynamics in which the “multi-referential enterprise” operates. Based on this concept the article analyses episodes of financialization in Germany showing its dynamics and limits. Financialization of enterprises proves to be structurally limited, institutionally contested, and unfolds its effects in deferent actor constellations at firm level due to its multiple and contradictory embeddedness.     

Die europäische Schuldenkrise als Schub systemischer Vergesellschaftung: Von Partizipationsversprechen zu Partizipationszwang

The article presents a sociological conceptualization of the dealing with the recent sovereign debt crisis in the European Monetary Union (EMU), which is reconstructed as a push of “sociation” (vergesellschaftung in Simmel’s sense) that maneuvered populations of indebted states into de facto contractual obligations vis-à-vis their states’ creditors. Seen from this perspective, the sovereign debt crisis has led to an, if highly ambivalent, deepening of European “integration”. The article suggests a combination of Habermas’s distinction between system and life-world, which enables an interpretation of contract-like relationships as systemic mode of integration potentially harking back on the life-world, with David Graeber’s emphasis on the asymmetrical and hierarchical processes of sociation inherent in contractualized and marketized creditor-debtor relationships. Far from postulating an evolutionary development of processes of debt-related sociation that might be associated with the modernization-theoretical proclivities in Habermas’s theory, the article analyzes the role of financial market publics in creating a structure of legitimation that supported the political interpretation of the financial crisis as a sovereign debt crisis in the EMU, thus bestowing justification on the treatment of populations as “debtors of last resort”.     

Die Legitimität von Finanzregimen

In this article we propose a financial regime typology that adds the role of cultural legitimacy to financial market regulation. Bridging Comparative Political Economy and Economic Sociology we refer to a German Weberian tradition of institutionalist research that has stressed the intermediate position of institutions between social values and concrete market action. Financial regimes do not only define formal rules and organizational patterns, they also install symbolic boundaries between legitimate and illegitimate finance, providing cultural acceptance to these morally and historically “problematic” markets. The article then explores four fields of institutional regulation of stock exchanges in Germany and UK since the 19th century: (1) the creation of an official arena, (2) rules of market access, (3) the legitimate trading goods and (4) rules for penalizing misconduct. We show that German financial regulation was integrative and wanted to protect the real economy by corporatively embedding finance and restrain harmful transactions. In contrast, British financial regulation was segmental and tried to protect the real economy by installing a socially exclusive club of traders governed by professional expertise and hierarchy. This new typification of financial regimes will help to understand the resilience of national financial regulatory patterns across crises and the obstacles to a transnational harmonization of rules. Political reform-making is tied to institutional principles of the past.     

Warum es kaum Pensionsfonds in Deutschland gibt. Kapitalmarktrisiken,Finanzindustrie und die Politik der Mindestverzinsung

Studies of the rise of private defined-contribution pension plans have traditionally focused on social policy concerns about the allocation of risks and costs for beneficiaries and employers. There is however another dimension of pension privatization, which situates it in the context of financial markets and—more broadly—the economic system. Here, regulations forcing private pension providers to guarantee a minimum rate of return on individuals’ pension assets make a crucial difference for financial markets because they incentivize fund managers to invest a greater chunk of plan portfolios in fixed-income securities and therefore away from equities. While different segments of the financial industry have divergent preferences over minimum return guarantees, politicians are caught in a dilemma: Should they prioritize predictable benefit levels or the development of equity markets? Using the case of the introduction of the German Riester Rente, we argue that, as politicians linked the introduction of private defined-contribution plans with cuts in statutory pensions, insurance firms in coalition with trade unions insisted on minimum guarantees, thereby restricting the expansion of equity markets in Germany.     

Der lange Arm der Bildungsexpansion: Die Bedeutung zunehmender elterlicher Bildungsressourcen für die Bildungsbeteiligung von Frauen in Deutschland

The study combines survey data from the German General Social Survey (ALLBUS) and the German Socio-Economic Panel (GS?O?E?P) to address the role of changing parental resources in explaining the long-run historical trend of women’s rising educational attainment in Germany. For West German cohorts, the analysis suggests a distinction between two historical periods: a first one for birth cohorts up until the mid-1960s, when daughters’ educational attainment increased uniformly across all social strata, and a second period among women from younger birth cohorts, for whom all observable change in educational attainment can be explained as a pure compositional effect due to rising levels of parental resources. Rising educational attainment among East German cohorts has followed a more complex historical pattern, however, as women first benefitted from rapid educational expansion and the equalization of educational opportunity during the first two decades of the GDR. With educational policies reversed since the 1970s, East German women saw their educational progress stalled, and class-specific educational attainment actually in decline up until the point of German reunification. With reunification, women’s educational attainment increased sharply, but, as among Western cohorts, mostly as a reflection of the growth of parents’ private resources. In both parts of Germany, parental education rather than class has been the key factor at the family level, and increasingly so the rising education of mothers.     

MORE MORTGAGES,LOWER GROWTH?

In newly collected data on 46 economies over 1990–2011, we show that financial development since 1990 was mostly due to growth in credit to real estate and other asset markets, which has a negative growth coefficient. We also distinguish between growth effects of stocks and flows of credit. We find positive growth effects for credit flows to nonfinancial business but not for mortgage and other asset market credit flows. By accounting for the composition of credit stocks and for the effect of credit flows, we explain the insignificant or negative growth effects of financial development in recent times. What was true in the 1960s, 1970s, and 1980s when the field of empirical credit‐growth studies blossomed, is no longer true in the 1990s and 2000s. New bank lending is not primarily to nonfinancial business and financial development may no longer be good for growth. These trends predate the 2008 crisis. They prompt a rethink of the role of banks in the process of economic growth. (JEL E44, O16, O40, C33)     

Dienstleister der Finanzialisierung: Fragmentierte Organisation und kalkulierte Profite in der Immobilienwirtschaft

The financial crisis of 2007 has brought questions about the social order in capitalist societies back into the limelight. Economic sociology in particular emphasizes the growing influence of financial markets?? actors and logics. Most research focuses on macro phenomena or intra-organizational and individual perspectives. In contrast, concepts of financialization that explicitly take an inter-organizational perspective are in their infancy. Therefore, this article investigates the business and financing practices of a Europe-wide real estate firm. The historic case study shows the importance of service firms in the real estate sector and analyzes cooperation between different financial service firms (banks, estate agents, notaries, auditing firms, customers). Furthermore, it investigates how they jointly organize border-crossing and the relocation of legal liabilities and economic accountability. The article thus contributes to the current financialization debate in two ways: for one, it analyzes and explains inter-organizational cooperation between different service firms as being constitutive for financialization dynamics. For another, it points to the importance of calculative practices for establishing financialized corporations.     

Exporting stimulus and “shared prosperity”: Reinventing foreign aid for a retroliberal era

The global aid world has changed, partly in response to the reconfigurations of geopolitical power and to the global financial crisis (GFC). Paradoxically, in the face of recession in most northern economies, collectively foreign aid contributions have not fallen. However there has been a qualitative shift in its narrative and nature. This new regime—which we term retroliberalism—projects the concept of “shared prosperity,” but constitutes a return to explicit self‐interest designed to bolster private sector trade and investment. Drawing evidence from New Zealand and the United Kingdom, we argue that aid programmes are increasingly functioning as “exported stimulus” packages.     

Desynchronisation und Populismus

This contribution takes its starting point from the assumption held by a theory of differentiation that the political shaping of society is challenged by an increasing desynchronization of distinct social sub-areas. Drawing upon the example of financial market regulation, we demonstrate how this political shaping capability is to a great extent successfully sustained or retrieved through the employment of hybrid organizations such as the German Federal Financial Supervisory Authority (BaFin), of which we undertake an in-depth analysis in this paper. However, this comes at the prize of another (vertical) desynchronization at the intersection of well-established political institutions and the elementary processes of the formation of a democratic will. As a consequence, we develop an interpretation of post-democratic tendencies that exceeds common diagnoses of post-democracy and populism by offering a structural-temporal explanation of the perception that the formation of a democratic will and the political establishment are drifting apart.     

Kulturwandel im Geldgeschäft? Potenziale einer ethischen Selbsterneuerung im Banken- und Finanzwesen

Following the financial crisis in 2008 a debate about the social benefit of the financial industry, which operates without considering its real-economic consequences, was initiated. The financial industry responded by offering strategies of cultural change (“Kulturwandel”) which foster a more socially responsible financial practice. At the same time the expansion of “ethical” banks aims to establish a banking business avoiding negative externalities of the banking sector. Following the conceptual assumptions of the sociology of critique we study the collectively shared interpretation of a “good” and legitimate financial practice beyond publicly communicated standards of practice. Against this backdrop we evaluate the potentials of normative self-regulation in banking and finance. Our results show that cultural or ethical change is only partly feasible if it exclusively focuses the motives, values and personalities of the individual subjects but neglects the structural as well as institutional conditions of a “good” financial practice.     

„Neue Berater braucht das Land?“ – Eine empirische Analyse der Charakteristika potenzieller Nachwuchskräfte in der Finanzdienstleistungsbranche und Konsequenzen für das Employer Branding

Demographic change and associated shortage of skilled labor as well as changing values in future generations of employees are omnipresent. In addition, financial service providers are facing further challenges such as impacts caused by the financial crisis and the commission remuneration model in order to reach suitable employees, so that a target group oriented employer branding strategy plays an important role.Therefore, this paper investigated characteristics of potential employees who are interested in the financial services industry and also in salary models based on commission rather than fixed pay. To that end, we conducted an online survey with students as representatives of future employees. The questionnaire investigated expectations of potential applicants regarding their employers, their information seeking behavior (especially regarding online media), values, and personality characteristics. Results give insights into successful media use and corporate presentations of employers, but also illustrate the low attractiveness of the financial services industry and also commission remuneration models. Therefore, the importance of a successful employer branding strategy is emphasized.     

Wildcats in banking fields: the politics of financial inclusion

Rightwing theorists argue that we owe the current financial crisis to the democratization of credit, or financial inclusion: politics interfered with the market to benefit marginalized actors, only to cause instability and risk. Leftwing theorists focus instead on financialization: namely, the shift of profit-making activities from industry to finance. These views implicitly draw on Schumpeter and Marx. Much like their intellectual progenitors, they emphasize exogenous processes to explain financial change. Here I claim that the connection between financial innovation and financial inclusion is endogenous. I suggest two main typologies of financial innovators: Market Utopians (MUs) and Populist Innovators (PIs). Financial inclusion, I submit, is the byproduct of the quest for power of the latter.     

Crisis and quality of work in the Nordic employment regime

The Nordic countries have been renowned for labour markets with high-quality jobs. The key question for the article is whether this also holds in the current financial and Eurozone crisis. Focus is on the initial years of the crisis, and indicators from the European Working Conditions Survey are used to trace changes in job quality. Physical job demands are on a lower level in the Nordic region compared to the European level. Instead, time pressure and working to tight deadlines are more common. In general, the downturn in the economy seems to have decreased the intensity in the work situation of employees. Temporary employment and job insecurity are more present in Finland and Sweden than in Denmark and Norway. Still, the Nordic employment regime is characterized by a large proportion of jobs where employees have influence and autonomy, and are rather satisfied with their job. One possible explanation for these encouraging results is the high level of unionization that has persisted through the crisis.     

Bridge over Troubled Waters. Die EZB,die Euro-Rettung und die Politisierung der Geldpolitik

On the one hand, the European Central Bank’s (ECB) crisis management has revealed the structural deficits of the monetary union. On the other hand, neither the governments nor the citizens of the Eurozone member states are willing to legalize the ECB’s necessary but extraordinary monetary policies for future scenarios. The paper identifies the unresolved institutional contraction between French and German monetary traditions as one of the main factors underlying this functional as much as legitimatory dilemma.     

From Economic Gains to Social Losses

This paper analyzes how stories shaped treasurers’ expectations in municipal swap activities and contributes to the sociological debate on the mechanisms of expectation formation. Employing a deductive variant of process tracing, it synthesizes the literature on expectations in economic decision making with the literature on the diffusion of “ideas,” “myths,” and “fashions” in organization theory and management studies. The swap story has spread since the mid-1990s among German municipalities. At the heart of this story is the replacement of traditional borrowing with active portfolio optimization; financial instruments known as swaps play a leading role. This paper examines how stories shape expectations. Specifically, it delves into how the swap story, as a solution to the financial woes of local governments, shaped these governments’ expectations despite the uncertainty resulting from the instruments’ complexity. We argue that the effect of stories on expectations depends on timing. Expectations at an early stage are shaped by economic analyses to reduce uncertainty, while expectations at a later stage are primarily shaped by societal pressures and an established trend. These two distinct mechanisms produce expectations related to economic and social consequences, respectively. Selecting four typical cases, our analysis confirms that stories affected the formation of treasurers’ expectations regarding the use of swaps through these different mechanisms.     

Institutional Deterioration in Transition Economies: Playing Follow-the-Leader During the Global Financial Crisis?

Economic transition was a systemic change of institutions from those that facilitated a planned, communist economy to those suitable for a market economy. This paper examines the state of this political and economic institutional development in 28 transition economies, focusing on the global financial crisis years of 2007–2012. According to various metrics of institutions, institutional regression has indeed occurred but has been somewhat localized in the countries of the CIS. However, property rights have regressed in some countries in Central/Southern Europe, while financial sector institutions have uniformly degraded across the entire transition space.