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Posts Tagged ‘subprime mortgage

Where did this issue on relational work come from?

Fred Block,  Sociology,  UC Davis

The idea to convene a workshop around the theme of relational work came to me after teaching The Purchase of Intimacy in my graduate economic sociology class.   But some of the credit goes to a recent Ph.D. student, Jesus (Jesse) Hernandez, who was writing a dissertation (now completed) about subprime lending in Sacramento.  His main focus was showing how concentrated subprime lending was in the same neighborhoods that had historically been redlined—denied access to mortgage lending because the population was largely black and brown.   Jesse documented the predatory practices by which subprime brokers targeted minority homeowners, offered them attractive deals for refinancing that gave them immediate cash payouts, but did not disclose that the low teaser rate would reset to a much higher rate in 24 months or sooner if they had an adverse credit incident.  The consequence was that many hardworking minority homeowners lost both their homes and the equity that they had accumulated over the years.

It occurred to me that these predatory lenders were rational economic maximizers like other mortgage lenders, but their behavior was still quite different.  This difference could best be understood with Viviana Zelizer’s concept of relational work—which highlights the aspects of economic exchange that are usually ignored by economists, especially when they assume that both parties to a transaction have “perfect information”.   The reality, of course, is that both differential information and different resource endowments are pervasive in economic exchanges and have huge consequences for the relative gains and losses in any particular exchange.  Viviana’s concept of relational work makes it possible to bring these differences directly into the analysis of transactions.  In other words, even economic sociologists tend to default to the ideology of equal exchange and start with the assumption that the two parties are meeting at the table as equals.  But the trick is to be able to recognize the simultaneous presence of structured inequalities—gender, class, race, and so forth– and the legal fiction of equal parties voluntarily signing a contract.   Looking at the ways that parties do relational work can help us to see both these things at the same time.

Or to put it in other terms, we know that economic transactions are embedded in social, legal, cultural and ideational structures.  But the concept of relational work can help us to understand how this embedding process works.  It points us to the different resources—material, cultural, and legal—that the parties bring to the transaction, the representations that the two parties make either implicitly or explicitly, and the nature of the resulting relationship.  These factors then help us to understand the character of the resulting exchange.

My idea was that bringing together a group of people to explore these ideas both theoretically and empirically could jump start an important conversation for economic sociologists.  At the workshop, we had intense discussion of nine papers.  After revisions, six of those papers are included in the special issue of Politics & Society.   But these papers are just a beginning.  The hope is that by generating a body of work that interrogates relational work in a wide variety of economic exchanges, we will begin to see significant patterns and commonalities that will help us to build more robust theories about both the causes and consequences of different ways of doing relational work.

 

Written by fredthesociologist

August 28, 2012 at 12:31 pm