power, politics, and culture
By now you’ve probably read Simon Johnson’s piece in the Atlantic about financial elites and the current economic crisis. If you haven’t read it yet, what are you waiting for??? This is the best analysis I’ve read about the power dynamics behind the crisis. Johnson, a former head of the IMF, understands well the politics in making sweeping economic reforms and so he speaks with a credibility that few have. He also sounds a lot like an economic sociologist.
In a primitive political system, power is transmitted through violence, or the threat of violence: military coups, private militias, and so on. In a less primitive system more typical of emerging markets, power is transmitted via money: bribes, kickbacks, and offshore bank accounts. Although lobbying and campaign contributions certainly play major roles in the American political system, old-fashioned corruption—envelopes stuffed with $100 bills—is probably a sideshow today, Jack Abramoff notwithstanding.
Instead, the American financial industry gained political power by amassing a kind of cultural capital—a belief system. Once, perhaps, what was good for General Motors was good for the country. Over the past decade, the attitude took hold that what was good for Wall Street was good for the country. The banking-and-securities industry has become one of the top contributors to political campaigns, but at the peak of its influence, it did not have to buy favors the way, for example, the tobacco companies or military contractors might have to. Instead, it benefited from the fact that Washington insiders already believed that large financial institutions and free-flowing capital markets were crucial to America’s position in the world (emphasis mine).
There are many ways that the economic crisis could change the kinds of phenomena that economic sociologists study. One possibility is that it will reignite our interest in elite control and the power and politics of markets. Given the recent culture-ification of economic sociology, it might also be nice to blend these two programs by, for example, looking at how elites use cultural resources to sustain their positions of power and to win political battles.
Brayden — I haven’t had a chance to read it all yet (pesky dissertation). But Simon Johnson is a frequent guest and contributor to NPR’s Planet Money podcast and I have really enjoyed him there. It is a great podcast, especially for people interested in the intersection of economics, politics, and political economy (which is also known, I believe, as an economic sociologist).
mike3550
March 31, 2009 at 3:03 pm
I thought this was an interesting article about the power of the finance industry and I can’t help but wonder about the implications this oligarchy brings to business schools. I don’t have any empirical studies or anything, but it seems that business schools have greatly benefited from this oligarchy. If this concentration of power were to be broken up, how would that impact business schools? I think specifically about those MBA programs that are largely financially feasible only because of finance jobs (that no longer exist).
kz
March 31, 2009 at 4:43 pm
…or maybe “culture-ification” was part and parcel of the phenomenon Johnson identifies?
rick
April 1, 2009 at 2:09 pm
Can I also recommend the series of posts on The Situationist blog written by Jon Hanson on deep capture? A great example of the benefits of fusing political economy, social psychology and law.
“One cannot mention regulatory agencies without adding the observation that, of course, such agencies are likely to be ‘captured’ by the interests they are supposed to regulate. To suggest that matters are any different from this is to mark oneself as hopelessly naïve, or even disingenuous.”
–James Q. Wilson
ChristianS
April 1, 2009 at 2:17 pm