3.3 A sociological perspective on the global financial crisis

Discussing the question, what is sociology, earlier in this resource, I suggested that, faced with a particular object of inquiry, sociologists will typically ask, what social practises and social roles does it involve, and what social relations do these give rise to? To be clear, sociologists ask many other questions besides, but nevertheless they are a useful starting point for our current discussion. For instance, a sociologist of organisations would want to study the internal structure or organisation of the financial institutions in which the financial crisis of 2008 had its origins, the US investment bank Lehman Brothers being the prime example. She or he might ask, what were the social practises through which Lehman Brothers conducted its business, and how did these contribute to its ultimate bankruptcy? For example, were there investment practises that were inherently risky? Similarly, sure he might ask, how is the firm structured, and what social roles did this involve? Did these roles ensure sufficient oversight of risk by senior management, for instance? Equally, sure he might ask what the internal social relations of the firm were like. Perhaps they were patterned in such a way that crucial layers of employees were disaffected or felt no responsibility for the well-being of the firm. All of those questions relate to what a sociologist would think of as the firm's social structure. But she or he would also be interested in the culture of the firm. In organisational sociology, culture and structure are frequently considered to be relatively separate. The same structures in terms of roles, practises, and relations, it is argued, can nevertheless house very different cultures. As in the hospital ward, where because matron sets the tone, the atmosphere can either be friendly and relaxed or tense and hostile. With that in mind, our sociologist might ask, what was the culture at Lehman Brothers like? Was it significantly different from equivalent firms with similar structures? Perhaps more arrogant, gung ho, or indifferent to risk? Did this contribute to Lehman Brothers' implosion in 2008? Those are the sorts of questions an organisational sociologist might ask. In contrast, rather than looking at the internal structure and culture of firms such as Lehman Brothers, a different kind of sociologist, one associated with what is sometimes called political economy, would want to investigate how those firms related to each other and to other major institutions, such as the central bank, financial regulators, and government. Were there flaws in the roles and relations that characterised the regulatory framework, for instance? Did these give rise to dangerous levels of risk-taking? Taking a wider perspective still, this sociologist would also ask questions about the organisational structure of the economy in those societies affected by the 2008 financial crisis. Is there perhaps something about capitalist economies that promotes recurrent debt crises? And is there something about the recent history of the financial sector in Europe and North America that fueled this tendency? Perhaps the way in which the financial sector has become increasingly separated from the concerns of manufacturing and the wider economy. Finally, sociologists would also be likely to seek to reframe or shift perspective on the global financial crisis. Indeed, this was precisely the strategy taken by a number of contributors to a 2014 special issue of the journal Sociology. For instance, one paper pointed out that the crisis of 2008 merely intensified adverse conditions that had long been affecting migrant workers, and from their perspective was merely a further round in a longer history of neoliberal labour exploitation. Similarly, other contributors sought to shift the focus away from analyses of the causes of the 2008 crisis and onto its consequences. In particular, they sought to focus on the ways in which the crisis was used to justify the imposition of austerity measures on public and welfare services at the same time as financial institutions received unprecedented handouts of public money. In summary, different kinds of sociologists would take different approaches to the 2008 financial crisis. Some would focus on the internal structures and cultures of the financial firms at the heart of the crisis. Some would focus on the organisation and structure of the economies most affected by the crisis. And some would seek to reframe the narrative of the crisis to ask different kinds of questions and focus on those most vulnerable to its consequences.