Challenges of balancing scholarly engagement and critique: A reflection on social studies of finance

By Suhaib Riaz. *

“Socializing finance” has become shorthand to describe the research that several scholars (including me) are engaged in related to social studies of finance. This stream of work involves: bringing finance into the realm of social studies; but also making the industry aware of other ways of thinking and doing, beyond their current status quo; this also often has an element of (social) interaction with the industry thrown in. All these are consistent with various meanings of ‘socializing’ and are much needed efforts.

But there is a flip side to this aspect. How critically aware are we that finance is also on a mission to socialize us – in the sense of influencing our thinking – even as we may attempt to ‘socialize’ it?

In my work (in collaboration most prominently with Sean Buchanan, Trish Ruebottom, Madeline Toubiana) and that of a few other scholars, this seems to be a theme too powerful and important to ignore.

Finance is indeed at work to socialize us – to influence our ways of thinking about it through various means. At the peak of the financial crisis, various categories of elite actors seemed bounded by these ways of thinking about the financial industry resulting in configurations of positions often in favor of status quo (see Riaz et al., 2011). More specifically, financial industry leadership may well see it as their task to defend the institutional framework in which the current version of their industry thrives; and accordingly work to ‘socialize’ the rest of us – all stakeholders- to accept their view of finance and its role in society as the ultimate one by claiming epistemic authority in this domain (see Riaz et al., 2016).

Is the Volkswagen Scandal Surprising? How Profitability Pressures Drive Corporate Misconduct

By Stephan Manning.

The Volkswagen diesel scandal has been dominating recent news headlines. The U.S. Environmental Protection Agency (EPA) is accusing the German automaker of using a ‘defeat device’ that manipulates results of health-threatening nitrogen oxides emissions tests by switching the engine to a low-emissions mode when detecting a test. Following the accusations two weeks ago, VW’s stock price has dropped by 40%; Martin Winterkorn has lost his job as CEO; VW will be removed from the Dow Jones Sustainability Index; and the German multinational is facing a lasting damage to its long-built reputation. On top of that, the automaker will need to refit up to 11 Million diesel cars and vans running with the ‘defeat device’ worldwide, incurring costs of $7.3 Billion or more. Current investigations focus on various top executives responsible for letting the fraud happen, including research and development (R&D) managers Ulrich Hackenberg and Wolfgang Hatz. But is the scandal just the result of the ‘criminal energy’ of individuals, or is it a more systemic problem? Do rising pressures in a competitive global economy – meeting customer needs and shareholder expectations, driving down costs, adhering to norms and standards – perhaps promote individual cheating and corporate misconduct?