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Pareto ... witnessing, at the turn of twentieth century Italy, the simultaneous and steady increase in the power of the “class of wealthy speculators and the class of wage earners,” the former representing a “plutocratic” tendency, while the growing power of wage earners a “democratic” tendency” (1984, p. 55), recognized that they were political allies profiting from the weakness of the Italian state—and that therefore neither side would support any restraint on their freedom. Pareto understood that the “plutocrats” had an advantage:
plutocrats are able to forge an effective union because they are astute and can deceive the masses by manipulating public sentiment. This gives rise to the widely observed phenomenon of demagogic plutocracy (p. 55).
This self-serving strategy of manipulation by financial elites, Pareto thought would eventually lead to a “transformation of democracy,” as the masses understood the deception of the plutocrats and began vying for a stronger elite to bring the plutocrats under control. Military plutocrats, elites who recognized the dislocations and suffering eventually created by speculators, would capitalize on discontent to propose an authoritarian solution to the crisis, argued Pareto.40 Unlike speculators, who relied on manipulation and cunning, military plutocrats would resort to force and coercion. Pareto thus predicted the rise of Fascism.
In the United States, Pareto would similarly predict the emergence of an authoritarian, militaristic, and repressive state, precisely because, unlike early twentieth century Italy, where a new, previously marginalized class—the working class –was now a political participant, in early twenty first century United States no organized class of debt holders exists. Thus one could argue that in the US context, the demagogical potential of a military-plutocratic turn would find no organized obstacle. Whether this is realistic in the current US context is partly a matter of speculation ... (pp.379-80)
Polillo, Simone. 2011. “Wildcats in Banking Fields: The Politics of Financial Inclusion.” Theory and Society 40(4):347–83.
What are the sources of modern social order? Yingyao Wang (Brown) and I recently wrote a contribution for the Handbook of Contemporary Sociological Theory where we dissect the issue of power at three levels of analysis in descending order: macro, meso, and micro. While existing theories of power either treat power as a causal force originating within macro entities, or as an exercise in leveraging and positioning within micro-level social relationships, this chapter probes power dynamics at the organizational level. It first of all describes historically how organizations became the major avenue in which power is mediated and regulated in our present social world. It contends that organizational rules, routines, differentiation, and depersonalization obscure power discretions and reduce the perception of domination. Yet, the pluralistic and generative logic of power production in organizations also create unexpected opportunities of innovation and empowerment. By drawing attention to the distinctive forms and nature of power relations at this meso-level, the chapter finally extends power analysis from the macro and micro-level to analytical interactions among all three levels of analyses. Power flows both upwards and downwards, we argue, so that the interaction and conversion of different forms of power at different levels can generate new sets of emergent and interstitial structures and relations. Interested? Email me and I will send you a copy of the chapter.
Why does the Efficient Market Hypothesis win out over competing ways of modeling financial markets? Answering this question requires an understanding of how creativity, collaboration, and communication work within the field of financial economics. Here's one possible way of looking at it.
Tognato's dramaturgical theory dramatically enhances (no pun intended) our understanding of the macro-determinants of economic behavior. This is an excellent contribution to economic sociology.
For a short (about 10 minutes) interview on Conservatives Versus Wildcats, aired on April 25th, click here. The quality of the questions was impressive!
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This appeared last week on UVa Today. Enjoy!
In this paper, I use an original dataset of 95 prestigious financial theorists to assess the relative strengths/weaknesses of performative approaches to finance economics. Find it here. And here's an abstract:
Constructing Financial Innovations: Performativity and Prestige in Financial EconomicsThis paper investigates the diffusion of financially innovative ideas, not by looking at the spread of individual financial practices, but rather by analyzing the intellectual realm where such ideas acquire prestige: financial economics. Using a dataset of 95 financial theorists, it shows that while some theorists have indeed succeeded in gaining intellectual recognition for innovations that find direct application in financial markets, as scholars focusing on the performativity of economics would predict, the more important pathway involves the exploitation of what Collins and Guillén (2012) have recently dubbed “mutual halo effects:” eminence builds up across generations and in terms of linkages between successful people. Training at Chicago appears to be an important source of innovative success, and the paper discusses why this is the case. The conclusions show how an understanding of financial economics as a field that turns its interdisciplinary origins into a professionally closed field (Whitley 1986b) invites new questions about the sources of its success, in particular its influence over how universities invest their endowments.
Very useful debate on the value-added that relational approaches bring to economic sociology over at orgtheory.org. Viviana Zelizer kindly mentions my work in a post, in the context of discussing macro-oriented relational work. Check it out!
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