Economic sociology

Impacts of Finance & Financing of Impacts (session 2 of 3)

June 29, 2021 10:45
June 29, 2021 12:15

Lena Ajdacic, University of Lausanne; Felix Bühlmann, University of Lausanne; Fabien Foureault University of Lausanne; Noé Kabouche, University of Neuchatel & Sciences Po, Paris; François Schoenberger University of Lausanne


Thibaud Giddey, University of Lausanne and Malik Mazbouri, University of Lausanne

Felix Bühlmann (presenter), François Schoenberger, Lena Ajdacic and Fabien Foureault, University of Lausanne

François Schoenberger, University of Lausanne & École des hautes études en sciences sociales | EHESS, Paris

Morvant-Roux Solène, University of Geneva; Bertoli Max-Amaury, University of Geneva; Gelman Abel Claudio, University of Geneva; Saiag Hadrien, University of Geneva

Since the 1970s, financialization of economic life has turned finance, financial behaviors and financial mechanisms into omnipresent companions of our everyday life. Financialization is defined by Krippner (2005) as a “pattern of accumulation in which profits accrue primarily through financial channels rather than through trade and commodity production”. This evolution goes along with a massive spread of investment activities into social life, involving citizens in financial schemes (Boussard, 2017; Carruthers & Arriovich, 2010) and granting financial institutions a growing influence in domains such as politics, culture or health alike. In this workshop, we would like to discuss the concept of financialization and the impact finance has on governments, firms and individuals.

On the one hand, we shall examine the impacts of financial activities on our societies (Arrighi, 1994; Tregenna, 2009; Godechot, 2012; Lazarus, 2020). What influence does finance have on politics and policy making, for instance in the domains of taxation, housing or welfare? How does financialization transform business, corporate governance and organization of the economic processes (Davis, 2009; Baker & Smith, 1998)? How does financialization influence the distribution of wealth, risks and income? How does finance affect social justice and social equality (Lin & Tobias Neely, 2020)? From the aftermaths of financial crises on households to the inequalities of remuneration within financial institutions, we are interested how finance impacts our lives.

On the other hand, we would like to examine the concept of impact, but backwards, by focusing on a movement of finance that aims at investing in positive social impacts. Sustainable finance denotes practices that link social and environmental justice to financial activities, through authority of state and regulation (Chiapello, 2015; Knoll, 2015, 2019), as well as through action of NGOs (Soule, 2009) or private initiatives, with responsible investments (Sparkes & Cowton, 2004). Today, the actors of this sector claim that the financial sector has a major role to play in the main social challenges of our time, advocating for the spread of social and ecological investments, for instance known as microfinance, ESG investing or impact investing (Barman, 2015; Gregory, 2016; Höchstädter & Scheck, 2015).

For this workshop we welcome contributions from all theoretical and methodological approaches. Our aim is to create a dialogue between research papers that focus on one or both aspects of this proposal. This discussion shall enable us to think about the place and the role of finance in the current issues related to social justice in Switzerland and beyond.

Keywords: financialization, morality and markets, sustainable finance, inequalities

Crise et mortalité bancaire en Suisse (1850-2000) : les paradoxes d’une « financiarisation heureuse ». 

Thibaud Giddey, University of Lausanne and Malik Mazbouri, University of Lausanne

La place financière suisse, telle que s’est développée au cours du 20e siècle, est souvent présentée comme un environnement singulièrement stable et solide, qui échapperait aux crises et aux restructurations. Les acteurs dominants de cette place – les banquiers privés, les banques cantonales et les grandes banques commerciales – cherchent en effet à affirmer leur prépondérance en présentant leur propre développement, dans une vision téléologique, comme des success story à l’abri des soubresauts de l’histoire. Ce papier cherche à remettre en question cette vision en analysant l’évolution de la démographie bancaire en Suisse entre 1850 et 2000. En examinant les entrées et surtout les sorties de la statistique des établissements bancaires, nous identifions plusieurs périodes de crises et des restructurations. Proposant une nouvelle série statistique, l’article utilise la démographie bancaire historique comme une porte d’entrée pour comprendre plus largement les phases de transformation de la place financière. En repérant et en analysant la fréquence des crises bancaires, il s’agit également de comprendre comment les autorités politiques et monétaires y réagissent, et à quels coûts. Ce faisant, l’article intègre le concept de financiarisation dans une perspective critique et de longue durée et montre comment les milieux financiers disposent, en Suisse, d’un pouvoir d’influence significatif sur l’Etat, l’économie et la société. 

Educational credentials and the Access to the US Financial Elite. Has the Prestige of Elite Universities Increased Over the last 30 Years?

Felix Bühlmann (presenter), François Schoenberger, Lena Ajdacic and Fabien Foureault, University of Lausanne

In the literature, scholars argue that over the last decades the competition for elite jobs has intensified. To achieve prestigious, well-paid and powerful positions in the US economy, in particular in its financial sectors, it would have become ever more important to possess credentials from the most prestigious educational institutions – to the detriment of the length or the content of the education, which would have become increasingly subsidiary. Beyond academic competences, alumni networks and upper-class polish, these “super elite universities” (Rivera, 2011) would convey a specific signal to employers. In this contribution, we statistically test this claim by raising two core issues: a) Does the prestige of these super elite universities raise over time? Does a degree from Harvard, Yale, Princeton or Stanford (Rivera’s top four) become more important in the US financial sector during the period 1990 to 2018? b) Does education play a different role for recruiting and promotion in the finance industry compared to other industries? Is the prestige of universities more important in Wall Street firms than in Main Street firms? In order to answer these questions we combine a Boardex based sample of top executives recruited at the major US banks between 1990 and 2020 (n=805) with a large sample of US top executives in the years 2005 and 2018 (n=5034) – including a fine-grained categorisation of financial industries and a diverse selection of non-financial industries. Our descriptive longitudinal results show, against our initial hypothesis, that degrees from elite (and super elite) universities do not become more important in the period 1990 to 2018 in financial top management – we can even observe a slight decline of the importance of those degrees. However, a series of logistic regressions comparing the educational credentials of top executives show that the prestige of universities is more important in the financial sector than in the non-financial sector. In particular within “interactional” types of finance with the highest compensations, such as private equity, degrees from elite universities are highly valued. We conclude that education, in particular an affiliation with a super elite university is more important in finance than in non-financial sectors. However, we do find no evidence that this gulf between financial and non-financial elites has widened over the last 30 years. 

Keywords: Finance, elite universities, cultural capital, USA  

An impact? Which impact? The blindness of finance to its effects on companies

François Schoenberger, University of Lausanne & École des hautes études en sciences sociales | EHESS, Paris

"It's no longer his problem. He sells his shares and that's it. The fund is the only one responsible. If they can’t see that they're killing the company, that's their problem. » Managing Partner of a Swiss boutique 

The aim of this paper is to examine the factors that make investment bankers blind to the social impacts of M&A on companies. An investment bank is responsible for advising a seller or a buyer in a corporate transaction. Valérie Boussard had already shown that the way banks are organised makes bankers ignore employees: their offices are all in beautiful neighbourhoods, they are exclusively friends with each other and, on a strictly professional level, they commonly see the company solely as an abstract and quantified object (and therefore free of any qualitative consideration). 

However, the compelling social homogeneity of investment bankers has not yet been analysed. A very large majority of bankers come from the upper class, in particular from the business upper class and liberal professions. In this contribution, we thus hypothesize that the fact that bankers come from these privileged regions of the social space induces shared ways of representing the social world in which the interests ofemployees have no place. The question raised by this paper is therefore the following: do the social characteristics of bankers explain their disregard for the interests of employees? 

To answer this question, we draw on three sources of material. Firstly, a one-year ethnography in an investment bank in Switzerland, secondly, eighty interviews with investment bankers (and other professionals involved in corporate transactions), and thirdly, thirty interviews conducted with business school students at the time of their entry into working life and just before. 

We will see that the professional socialization described by Valérie Boussard is allowed and reinforced by the social characteristics of bankers who share a conservative representation of the social world where the legitimacy of social hierarchies is so obvious that it cannot be questioned. Therefore, they share a financial ethos in which the company belongs solely to shareholder so that corporate profit should belong to them only. In this perspective, employees have no say. More fundamentally, bankers share perception schemes of the social world that divide what is important (therefore desirable or, conversely, subject to indignation) from what is insignificant (i.e. employees’ interests). These dispositions come first from the family, then are reinforced by school socialization and, only at the end of the chain, by professional socialization. Thus, not everyone can become an investment banker; this profession is the consequence of a harmonious combination between dispositions and a professional space structured by the financial ethos (which materialises in norms, tools and conventions). Consequently, the theoretical contribution of this communication is to show that tools and conventions ("non-humans") do not act in themselves; they only exist as tools at the service of individuals desiring certain things. 

Keywords: finance, corporate finance, ethnography, working rich  

Survival debts versus accumulation debts: financialisation and social inequalities in Switzerland 

Morvant-Roux Solène, University of Geneva; Bertoli Max-Amaury, University of Geneva; Gelman Abel Claudio, University of Geneva; Saiag Hadrien, University of Geneva 

Relying on a theoretical background developed in contexts of "peripheral" capitalism that sheds light on the plurality and intermingling of different types of debts, the article sheds light on a very unequal distribution of debt according to social affiliations in the Swiss context. Certain categories of the population are confined to 'problematic' survival debts, while 'accumulation' debts concern the most privileged. The centrality of debt in employer-employee and homeowner-tenant relationships contributes to feeding and freezing social hierarchies at the same time as it reinforces the vulnerability of those, Swiss and non-Swiss alike, who, in order to get out of paying off their debts, end up accumulating unprotected employment and housing. 

Keywords:  debt, financialisation, inequalities, households, Switzerland