“There will of course be the usual hysterical debate between those prone to view the riots as a matter of pure, unbridled and inexcusable criminality, and those anxious to contextualize events against a background of bad policing; continuing racism and unjustified persecution of youths and minorities; mass unemployment of the young; burgeoning social deprivation; and a mindless politics of austerity that has nothing to do with economics and everything to do with the perpetuation and consolidation of personal wealth and power. Some may even get around to condemning the meaningless and alienating qualities of so many jobs and so much of daily life in the midst of immense but unevenly distributed potentiality for human flourishing.
If we are lucky, we will have commissions and reports to say all over again what was said of Brixton and Toxteth in the Thatcher years. I say ‘lucky’ because the feral (wild, red.) instincts of the current Prime Minister seem more attuned to turn on the water cannons, to call in the tear gas brigade and use the rubber bullets while pontificating unctuously about the loss of moral compass, the decline of civility and the sad deterioration of family values and discipline among errant youths.
But the problem is that we live in a society where capitalism itself has become rampantly feral. Feral politicians cheat on their expenses, feral bankers plunder the public purse for all its worth, CEOs, hedge fund operators and private equity geniuses loot the world of wealth, telephone and credit card companies load mysterious charges on everyone’s bills, shopkeepers price gouge, and, at the drop of a hat swindlers and scam artists get to practice three-card monte right up into the highest echelons of the corporate and political world.
A political economy of mass dispossession, of predatory practices to the point of daylight robbery, particularly of the poor and the vulnerable, the unsophisticated and the legally unprotected, has become the order of the day. Does anyone believe it is possible to find an honest capitalist, an honest banker, an honest politician, an honest shopkeeper or an honest police commisioner any more? Yes, they do exist. But only as a minority that everyone else regards as stupid. Get smart. Get Easy Profits. Defraud and steal! The odds of getting caught are low. And in any case there are plenty of ways to shield personal wealth from the costs of corporate malfeasance.”
Yes, and this reminds me of something I posted a while back regarding how social norms were suspended for traders to unleash their creativity and power/ Let’s have a little flashback
The Trader as Myth
In the current context, the question of traders’ compensation (translation: the humongous bonuses) have made headlines and attracted political attention. By and large, and following Bourdieu, Colombi argues that compensation reflects not just their position within economic structures of remuneration but also within symbolic structures reflecting relationships of legitimacy as part of their power position in the field of economic relations. The myth (as in foundational culturally-accepted story) of the traders serve to provide legitimacy to their compensation, that is, to make acceptable for a variety of actors, especially political actors. In the current context, one could argue that traders are facing a crisis of legitimacy: their compensation is now viewed with some skepticism even though the structure of the field itself might remain unaffected.
So, what is the myth or social representation of the trader? Christian Bale in American Psycho? The trader has become a shortcut for any kind of “Wall Street” worker, a player in the world of wealth and finance (Colombi also mention the crush of my youth, Largo Winch although the feminist in me might probably cringe at some of the stuff). The trader has also become personified in the media through the highly-publicized cases of Nick Leeson and Jérôme Kerviel, embodying the typification (in Schütz‘s sense) of the trader. The persuasive strength of the representation is based on the idea of extreme power that can impress as much as terrify because competence at playing high-stakes financial games is borderline sociopathic. The Golden Boy can easily be turned into the psycho-killer but both representations involve some super-human powers in terms of capacity to influence and manipulate social reality on a global scale… which is why the two traders mentioned above contribute to the persuasiveness of the myth of the super-powerful being who can single-handedly destroy giant transnational financial institutions as much and generate enormous wealth for them.
Traders have power of life and death (in terms of employment and livelihood) over the masses below them on the social ladder. In that context, indifference to human life is a job qualification. The price to pay for enormous competence only accessible to a few. After all who can understand global financial mechanisms (not even the players themselves apparently)… Didn’t Thomas Friedman tell us years ago that no one was in charge of globalization? Traders are the only ones who have access to the esoteric knowledge that allows them to navigate the global financial system and manipulate it. At least that’s the representation.
When it comes to compensation, their stratospheric levels are based on two elements of the myth, according to Colombi:
- The trader has an important job involving high risks not just for him (he’s a man, of course… capitalism ain’t for girls or the faint of heart) but for society as a whole, as exposed by the financial crises experienced by the global system in the past 20 years.
- The trader needs these super-human qualities to exercise such a dangerous function. In order to properly “work” the system, he needs certainly some diplomas and degrees (as classical or traditional legitimation) but also to be exempt from some of society’s moral restraints(I might add) along with charisma and exceptional personality.
All this is part of the justification discourse on high compensation.
In times of economic crisis, these elements can turn against the traders or their employers (the Enron tapes were damning for the entire company). In good times, the traders are treated like the high priests of global finance, endowed with special knowledge, incomprehensible for us mere mortals. But this means that when things go South, the entire class suffers from contestation of their power and a loss of legitimacy. After all, society lets them roam free based on the idea that they will police themselves (like that ever worked) and besides, one for the source of legitimacy of the traders is the principle of rational efficiency: the good ones make money, the bad ones don’t and the system sorts them out without any need for outside interference.
When things become critical (as “in crisis”), all trading activity becomes “speculation” as the questionable activity of gambling for gambling’s sake without any social utility. In this sense, speculation becomes the archetype of the disembedded economic activity but with devastatingly real consequences that the traders never considers or suffers. All of a sudden, societies discover in their midst social actors with no sense of citizenship and civility.
Trading Power (pun intended)
For Colombi, as much as the crisis might cause a loss of legitimacy of the traders, as class, it does not undermine the relationships of economic power that underpins their existence as class, again. For instance, high compensations are presented as a means to motivate them to work harder and more effectively (Thanks, VeganProf for finally explaining the difference between effectively and efficiently to me!) in the interest of their employers and not just themselves. However, the bonuses that have been so discussed and questioned (by Presidents Sarkozy and Obama, for instance) are not distributed on a class basis but on an individual basis. If bonuses are incentives, as the common discourse goes, rather than rewards, they cannot be attributed individually.
Citing Olivier Godechot‘s work, Colombi proposes an alternative: rather than rewards or incentives, bonuses are part of hold-ups (ransom?). When an individual loses or leaves a job, s/he takes with her/him a body of knowledge, competencies, information and relationships which will allow them to demand greater compensation from her/his next employer who will want to acquire such knowledge, competencies, information and relationships, all social and cultural capital that can be translated into economic capital. And these social relationships are essential. Far from being a purely rational world dominated by abstract laws, the market is actually highly personalized (hence the importance and utility of economic sociology). The possession of a network of relationships is therefore a major source of power especially when the individual trader is the only link between two other nodes in the network.
However, social capital takes time to build along with a network. This means, according to Colombi, that the banks, as employers, invest in a trader for the months that it will take for him to build social capital in a profitable fashion. The problem is that social capital is highly transferable once someone has it. The return on investment might go to another employer. As much as social capital is collectively produced (it takes more than one individual to create it), it is individually enjoyed and will derive high financial compensation for whoever possesses it.
And indeed, when talks of capping or even eliminating bonuses started in the United States, for companies that took bailout money, the pushback from the financial world was immediately that the oh-so competent traders were all going to leave and go work in other countries, for competitor companies. For Godechot, this potential blackmail (“give me my bonus or I’ll leave and you’ll be hurt”) is the equivalent of the armed robber holding a gun to the cashier’s head. Is it only hold-up or truly hostage-taking?
– End of flashback –
Guess what, other people took the suspension of norms to heart as well and did the same thing traders and bankers did. While the former looted the system and various countries treasures, looters made out with TV sets. That is the real trickle-down that occurred as the state and the political and economic elites lose legitimacy.
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