Markets on Trial: The Economic Sociology of the U.S. Financial Crisis
Edited by Michael Lounsbury & Paul M. Hirsch (2011, Emerald)
Going beyond conventional Economic theories, Economic Sociologists enhance our understanding of the recent financial crisis and provide policy recommendations
The current global financial crisis, visibly catalyzed by the rapid drop in securitized mortgage valuations in the summer 2007, has entailed a dramatic decrease in the availability of credit, wealth destruction linked to stock market valuations, the failure of banks and insurance companies, numerous other bankruptcies, the growth of governmental intervention, a deep and protracted recession, and a general rise in the uncertainty of Capitalist institutions. It is in unsettled times such as these that hegemonic and taken-for-granted ideas and institutions may be challenged, and new alternatives cultivated. In the context of the early 21st century, it is the neoliberal ideal of free markets and market-based solutions that are on trial.
While the conceptual apparatus of micro-economics has been a dominant force in the structuring of financial market policy and design, the recent crisis has led many economists to question the intellectual underpinnings of their policy prescriptions. To wit, in October of 2008, Alan Greenspan admitted that he was in a state of “shocked disbelief” because “the whole intellectual edifice” supporting his hands-off deregulatory approach to financial markets had “collapsed.” In contrast to the deregulatory emphasis of neoliberalism and contemporary micro-economics that was embraced and purported by Greenspan and his contemporaries, economic sociologists have alternatively emphasized that markets are not naturally self-regulating, but are complex institutions that require rules, regulatory frameworks and related infrastructures that enable markets to function.
Economic sociology offers a robust alternative to the current psychologizing fashion in behavioral economics that emphasizes the role of "animal spirits" or "overconfidence" in explaining the crisis (e.g., Akerlof, Thaler etc.). Focusing more on how economic activity is fundamentally interpenetrated with social, political and cultural dynamics, the lens of economic sociology offers a conceptual approach that is better able to shed light on how crises are socially produced and managed. In addition, this intellectual canon has policy implications that can usefully expand current discussions of how to develop more efficacious regulatory structures and policies that may facilitate economic growth and development in a way that is more equitable and less volatile.
Despite the fact that economic sociologists have engaged policy debate in limited ways to-date, we have used this historic opportunity to gather some of the most prominent economic sociologists in North America to provide fresh analyses of the recent financial crisis and to develop policy implications and insights based on their work. To support the development of this enterprise, a workshop was held in October, 2009 at the Kellogg Graduate School of Management, and a special volume of Research in the Sociology of Organizations was edited by Michael Lounsbury (University of Alberta) and Paul M. Hirsch (Northwestern University).
The Volume includes contributions from the following scholars:
Mitch Abolafia (State University of New York at Albany)
Tim Bartley (Indiana University)
Tom Beamish (University of California at Davis)
Nicole Biggart (University of California at Davis)
John Campbell (Dartmouth College)
Fred Block (University of California at Davis)
Bruce Carruthers (Northwestern University)
Jerry Davis (University of Michigan)
Rich DeJordy (Boston College)
Frank Dobbin (Harvard University)
Neil Fligstein (University of California at Berkeley)
Mary Ann Glynn (Boston College)
Adam Goldstein (University of California at Berkeley)
Mauro F. Guillén (University of Pennsylvania)
Doug Guthrie (New York University)
Paul M. Hirsch (Northwestern University)
Stefanie Hiss (University of Jena)
Jiwook Jung (Harvard University)
Greta Krippner (University of Michigan)
Michael Lounsbury (University of Alberta)
Michael Maher (University of California at Davis)
Gerald McDermott (University of South Carolina)
Mark Mizruchi (University of Michigan)
Don Palmer (University of California at Davis)
Charles Perrow (Yale University)
Jo-Ellen Pozner (University of California at Berkeley)
Akos Rona-Tas (University of California at San Diego)
Anna Rubtsova (Emory University)
Marc Schneiberg (Reed College)
David Slocum (New York University)
Mary Katherine Stimmler (University of California at Berkeley)
Sandra L. Suárez (Temple University)
Richard Swedberg (Cornell University)
Mayer Zald (University of Michigan)
Ezra Zuckerman (MIT)