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Kriopner Krippner is a historical sociologist with substantive interests in economic sociology, political sociology, the sociology of law, and social theory.
Her krippnee book, Capitalizing on Crisis: The book focuses on deregulation of financial markets during the s and s, encouragement of foreign capital into the U.
Krippner argues that state policies that created conditions conducive to financialization allowed the state to avoid a series of economic, rgeta, and political dilemmas that confronted policymakers as postwar prosperity stalled beginning in the late s and s. In this regard, the financialization of the economy was not a deliberate outcome sought by policymakers, but rather a way — as inflation has been before — for the state to preclude and allay social class backlash in the context of growing inequality.
She is also working on a book project that explores the problem of market freedom in American historical development.
I n the context of the recent financial crisis, the extent to which the U. If you could you come back on the very beginning of your academic career, how did you come to study financialization and what was your perception of the distinctive US fields of research orippner in financial gret In the s, social studies of finance were still in their early years.
When I began graduate studies in the mids, there was a lot of interest in trying to understand the proliferation of apparently new forms of organizing capitalist production. I was particularly influenced in those days by the French regulation school — a grea of work that raised questions about what had changed in the s that seemed to so dramatically alter the dynamics of capitalist economies.
Like many others, I initially mulled that question over in the context of the labor market, but gradually I redirected my attention to finance. Within economic sociology proper, grega were only a handful of people who wrote on financial markets at the time. Things have really gretx in the intervening years, of course. What is your own definition of financialization? This figure actually represents a conservative estimate of financialization insofar as it presents a simple sectoral i. For some writers, neoliberalism refers to a set of policies that privilege market outcomes e.
In the most general sense, neoliberalism is used as a kind of shorthand for a pernicious form of hyper-capitalist exploitation that I think can be more precisely captured with other language.
However, your work is often critical of mainstream economics. What are the economic references and influences you include in your own work, and what kind of dialogue do you have with economists? krippnrr
I am quite ecumenical in my tastes. Sociologists — even economic sociologists — tend to have low economic literacy and that is to our detriment. As a sociologist, most of the assumptions that are embedded in standard micro-economic models I reject, and unfortunately many of these assumptions are consequential for how we understand the world and cannot simply be set to one side.
So, for example, when the standard neoclassical model assumes away the exercise of power in the market and also requires individuals to form preferences in isolation from other individuals, these are very consequential assumptions, and they are of a very different sort than the assumption Marx makes when he requires that all commodities exchange at their value. This is one way of understanding the project of heterodox economics.
Heterodox approaches have adapted neoclassical modeling to allow the exercise of power in the market; similarly, these approaches incorporate more complex models of preference formation than in the standard neoclassical paradigm. Do you think sociologists should adopt a historical methodology more often? Sociologists absolutely should adopt a historical perspective more often although, happily, many do. I think there are at least two reasons for taking history seriously in our analyses.
The first is that, in a very basic sense, to understand something is to trace the process of its emergence. But nevertheless, we learn a lot by following the twisting path by which a given institutional configuration takes shape over time. This is my basic methodological orientation: I approach every question that interests me wanting to know how a particular situation or object came about; how it came about is a way of understanding what it is, and further penetrating the mechanisms by which it is reproduced and transformed through time.
The second reason for adopting a historical perspective is that, interrogating the past allows us to make taken-for-granted social institutions in the present unfamiliar and strange. In other words, a historical analysis allows us to see other possibilities contained within current social arrangements; we realize that the world does not have to be as it is, that the world is mutable and changeable.
In my work, I want to look at the social world in terms of possibilities that have at present been foreclosed but that perhaps could be recovered in some different future. Historical thinking offers a lot to a social science that, at root, seeks human emancipation. You also mention the fact that deregulation was well under way before the Reagan administration, and that most of its architecture was already there in the late s.
It seems to question the usual — and maybe misleading — view of the State, and of the political sphere in general, as providing a safeguard against financial markets. Could you explain more in depth the model of political decision you develop? You seem reluctant to talk about intentionality: Why did I emphasize the contingent, unplanned aspects of policy changes that I argue were consequential for creating conditions conducive to financialization?
For the simple reason that I think the account I give in the book is largely accurate in its depiction of policymakers stumbling toward financialization without any larger plan governing their actions.
Again and again, I saw the same pattern in my research: That we would expect them to immediately grasp the nature of these markets seems unrealistic, and offers a caution against reading the past too much from the perspective of the present rather than, to return to the earlier discussion of historical methods, reading the present from the vantage point of the past.
That said, rational design is overplayed in the social sciences. Yes, there are actors, they have interests, and they are aiming at certain things. But the social world is endlessly complex, continually changing, and efforts to intervene in social systems inevitably produce effects different from those intended.
Greta R. Krippner (Author of Capitalizing on Crisis)
Ten years after the subprime crisis, the collapse of financial markets has triggered unexpected forms of politics around the world. In the US, in Iceland, in Spain, in South Africa, in England, contestation of political regimes seems to be linked to financialization. Do you think it is the case? How exactly is financialization affecting politics? What we are seeing here is the re-emergence of a historical pattern that Giovanni Arrighi and Beverly Silver observed in Chaos and Governance: This makes intuitive sense as periods of financialization are also typically periods of widening wealth and income inequality, and this inequality appears to be directly related to the growth of finance.
The late nineteenth-century episode of financialization, in which the dominance of finance in the U. From this perspective, what is puzzling about the most recent episode of financialization is not that we see a relationship between the growth of finance and widening social and political conflict, but rather the delayed onset of contention. Until the mortgage market imploded infinancialization seemed to assuage rather than amplify social and political conflict, as I argued in Capitalizing on Crisis.
This is very unlike late nineteenth-century financialization, in which the American economy was plagued by periodic capital shortages that affected the Southern and Western regions where protest was most active especially severely see Quinn Forthcoming. Following the collapse of financial markets, in the United States as around the world, we saw a resurgence — at least temporarily — of a kind of rationing in credit markets that we had not seen for some time.
Consequently, distributional politics returned with a vengeance.
Could you explain this point, and how it can shed light on the social consequences of financialization? Of course, Streeck theorized much more explicitly something that was left largely implicit in my account — namely, that the form in which debt accumulated mattered. Financialization occurred in phases, in which households, corporations, and the state passed debt around like a hot potato.
This gives some insight, I think, into the endless adaptability and inventiveness of capitalism as a social form, which is certainly one of the most striking features of financialization. As we are investigating, in this special issue, social classes and social categories shaped by financialization, could you explain this assertion?
The book has received some criticism for downplaying the power of financial actors and the complicity of the state in underwriting so to speak this power. The case of financial deregulation is a case in point. Attempts to undermine Glass-Steagall regulations that separated investment and commercial banking were underway almost as soon as the ink on the legislation was dry, but these attempts languished for decades because the various interest groups that stood to benefit from deregulation were affected in different ways and hence wanted different legislation.
Similarly, in the case of the repeal of Regulation Q, large banks, small banks, thrifts, and other financial players were affected differently by proposed legislation, and hence lobbyists for different segments of the financial industry tended to undercut one another.
This might explain too why the Dodd-Frank legislation enacted in the wake of the financial crisis — which did not resurrect the functional barriers between segments of the financial industry — may ultimately be more vulnerable to repeal, as appears likely at the current moment. What does it mean? My fundamental, guiding interest revolves around the inherent contradictions between democratic politics and market institutions under capitalism.
On the one side, a newly enfranchised working class enacts various forms of protective legislation, imposing restrictions krlppner profits that capitalists bitterly resent. In either case, there is an intractable conflict between two distinct systems that operate on incompatible principles, with the result that democracy is increasingly vulnerable to subversion by anti-democratic forces.
Bell understood rgeta while markets are in some ways remarkable instruments for the allocation of goods and services, they are indifferent to content. In other words, markets have no means of telling us what we should prefer, or kriplner should be privileged in the distribution of social resources. How does it relate to growing global inequalities? It is linked to a specific ideology? I am examining this problem in the context of the evolution of insurance markets. Of course, what insurers really need krippber group-level characteristics because risk can only be calculated at the level of a group: In short, the problem of how we distribute risk has direct implications for how we think about individuals and how we think about grega and the relationship between them; these are questions that are at the heart of liberal political theory, as grta as deeply embedded in the history of sociological thought.
When compared to your first book, this question seems to be a shift in you research, which now focuses more on inequalities and wealth redistribution. Is it possible to re-read your first book with the problematic of your next one? But ultimately, financialization produces a very volatile economy that massively shifts risk on to those in our society who are least ggreta to absorb it.
This is even clearer in comparative research. So I think having first examined the origins of financialization — a system that really amplifies risk — a natural next question was to explore how our society distributes risk, and then legitimates that distribution. Much has been said on the growing inequalities caused by financialization.
Easy access to credit offers a way to support living standards in a context in which doing so directly through wage policies, support of collective bargaining, traditional welfare spending, and so on has become politically more difficult. While many aspects of financialization were inadvertent as we already discussedI think policymakers understood one thing very well: But as your question suggests, these tensions were not soothed indefinitely, and in the context of more difficult economic conditions, they have inevitably resurfaced.
European economies have tended to be more cautious about the role they allow credit to play in their domestic economies, and this creates a very different politics see especially Trumbull on the U.
The Politics of Financialization
Do you think this rather counter-intuitive statement can be generalized, or is it just a lone example? And why do you use the comparison with the wage relation, where the equality is only fictional and never empirically grounded?
One of the points I make in the article is that the credit relation has emerged as a key site of economic citizenship in U. In contrast, not only has the wage relation received substantial attention from scholars, it is taken as paradigmatic in defining the grreta of quid-pro-quomarket-based citizenship that is prevalent krippnwr Anglo-American societies see Somers It is precisely the failure of the capitalist to live up to this fiction that gives her claim moral legitimacy: In contrast, consider the apparent weakness of the borrower in the credit market, where we start from the assumption of inequality rather than equality!
This itself may not be news to observers of American political economy, but what I think is novel in my argument is the observation that the potency of the discourse of ownership derives in part from the collective nature of these claims.
Consider the tax revolt that began in the United States in the lates and continues, almost unabated, to the current day.