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Poetics 40 (2012) 167–184 www.elsevier.com/locate/poetic
Ways of owning: Towards an economic sociology of privatisation William Davies Centre for Mutual and Employee-Owned Business, Kellogg College, University of Oxford, Oxford OX2 6PN, United Kingdom Available online 4 April 2012
Abstract Economic sociology has been preoccupied with the institution of markets, to the relative neglect of ownership. It has inherited certain technical and governmental problematics regarding that which can or cannot be internalised within the market price system, leading to the assumption that the ‘social’ or the ‘public’ is a type of empirical externality. But by shifting attention towards institutions of ownership, the public and the private come to appear as primarily normative appeals, used to challenge and justify the drawing of boundaries in economic life. Boundaries are judged for their justice, as well as for their empirical efficacy. Adopting a pragmatist approach, this paper outlines three possible ‘orders of appropriation’ which can be appealed to when justifying and criticising privatisation in economic situations: the socialist, the neoliberal and the liberal. Beyond any scientific or technical account of property, each of these offers an ‘ultimate’ basis on which to view ownership, according to different and incompatible philosophical anthropologies. # 2012 Elsevier B.V. All rights reserved.
1. Introduction The banking crisis of 2007–09, which subsequently led to a sovereign debt crisis and prolonged economic stagnation, was facilitated by one particular 19th-century institution: the limited liability, public company. Limited liability of shareholders means that equity investors can put forward risk capital to finance business growth, but are not liable for the full costs of any future business failure. This in itself carries particular risks in an industry such as banking, where the full potential costs of a failure vastly outweigh the capital actually invested in each business. Where a bank’s shares are sold on a stock market, the hope must be that shareholders ensure that
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managers act to protect the value of the shares, and in doing so save the public from financial disaster. Former Chairman of the Federal Reserve, Alan Greenspan, confessed in October 2008 that this had been his fatal guiding assumption.1 But where individual bankers are paid in relation to short-term profits, the incentive exists to take huge risks, thereby ‘privatising gains and socialising losses’ (Engelen et al., 2011). Shareholders themselves are also culpable for pushing for ever-higher profits and not considering the total cost of the risks being taken. Limited liability is therefore an intrinsically risky principle in finance, especially when combined with profitbased remuneration and weak public regulation (Bebchuk and Spamann, 2009; Haldane, 2011). The fact that many failed banks had converted from other forms of ownership (such as private partnerships and customer mutuals) in the twenty years leading up to the crisis, was therefore a necessary, if not sufficient, condition of the crisis occurring as it did. There are multiple and often conflicting definitions of the ‘public’ and the ‘private’ at work in this chain of events. The banks were public companies, owned by members of the public or by institutional investors on behalf of pension-holders and insurance policy holders. Yet their activities and much of their vast rewards were privatised, restricted from the gaze of public regulators (as in the case of ‘over the counter’ derivatives trades) and producing extreme concentrations of private wealth. Despite being talked about as one private ‘industry’ or ‘sector’ amongst others, finance plays a crucial role in making a private market economy possible at all. It receives tacit public support in doing so, via institutions of limited liability and central banking, which became explicit public support in the form of bailouts, guarantees and quantitative easing. Meanwhile, the fiscal crises afflicting many Western governments mean that other public institutions in areas such as arts, welfare and education are facing rapid funding cuts. It might be tempting to argue that the crisis is reconfiguring how categories of the public and the private are drawn, as an effect of market-based processes. Certainly, a new wave of privatisation appears to be one significant outcome, confirming Harvey’s definition of neoliberalism as ‘‘appropriation by dispossession’’ (2005). But this paper seeks to take a slightly different approach, in considering how multiple normative definitions of the public and the private are at work in the conduct and performance of economic life, not as an effect or outcome but a constitutive factor. Rather than considering them as technical–empirical categories (as the economic definition of a ‘public good’ might indicate), the suggestion is that economic sociologists need to address them as critical capacities, which are employed to designate where spillovers of value should and should not occur (Boltanski and The´venot, 1999). Disputes over the public and the private are never simply empirical and technical, but necessarily normative and critical. They arise out of conflicting philosophies of how boundaries should and should not be drawn in economic life. In this respect, they are always partly arguments about ownership, inasmuch as ownership implies a right to access and benefit from an entity, often to the exclusion of others. While the concept of ‘property’ would suggest that ownership rights can be rendered explicit and unambiguous, ‘ownership’ is now extended to such entities that can never be cleanly categorised as property. While the example par excellence of property is a land right, metaphors of ‘intellectual property’ imply an ideal of informational and discursive privatisation that can never
1 ‘‘I made a mistake in presuming that the self-interests of organisations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms’’ (Committee on Oversight and Government Reform, 2008).
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quite succeed (Hardt and Negri, 2000, 2005; Moulier-Boutang, 2012). Securitisation, which was at the heart of the banking crisis, presumes to convert risks into a quasi-property form to be owned privately, yet this attempted privatisation was also intrinsically leaky. In that instance, privately owned property was insufficiently privatised with disastrous consequences for the public. The justification of public ownership of the banking crisis – sarcastically referred to as ‘socialism for the rich’ – was crucial to how it played out. Especially in an age of so much intangible and informational production, disputes over ownership, resting on different logics of privatisation and publicisation, are endemic. Yet economic sociology is strangely reticent in addressing these disputes or these logics. This paper seeks both to explain why this is so and to suggest a reorientation for economic sociology that might enable it to engage with conflicting processes of privatisation (and publicisation), without simply adopting a single normative position. As argued here, economic sociology (especially in its ‘new’ manifestation, that has grown since the 1980s) has been preoccupied with methodological and technical questions of the delineation of the ‘economic’ and the ‘social’, initially because of its own disciplinary battles with neo-classical economics. At the same time, it has been preoccupied with the institution of markets (and Polanyian questions of their social ‘embeddedness’), at the cost of studying ownership and property. This partial oversight has been recognised by ‘new’ economic sociologists themselves (Carruthers and Ariovich, 2004; Swedberg, 2003). Yet we can find important elements of an economic sociology of ownership in the work of Veblen and Durkheim, which need reviving if events such as the financial crisis are to be interpreted (Durkheim, 1991; Veblen, 1898). The reorientation advocated here is for economic sociology to follow the pragmatist turn, associated with the French Convention School, and study how categories of the public and private are used rhetorically and normatively to justify and criticise boundary-drawing in economic life. In doing so, technical–empirical questions of the economic and the social will become normative-political ones that are at work in dynamic and uncertain economic situations. The paper is structured as follows. In the next section I offer a critical analysis of economic sociology and show how its inheritance of a particular liberal problematic – the separation of the economic from the social – has shaped its mode of enquiry. In the following section, I adopt a pragmatist approach to look at how normative notions of the economic-as-private and the socialas-public imply different justifications and criticisms of ownership. These are the socialist, the neoliberal and the liberal, which I then examine ‘at work’ in the case of a shareholder-owned bank. The paper concludes by highlighting the possible virtues of radical liberal philosophy in providing a tacit or explicit normative basis for social science. 2. ‘Socialising’ the economic There are a number of situations where the vernacular dichotomy of the economic and the social corresponds to that of the private and the public. One example would be where ‘socialism’ is identified with a commitment to public ownership of some kind. Conversely, the term ‘economism’ refers to efforts, often on the part of public policy-makers, to calculate costs and benefits as if they were private or to employ techniques derived from the private sector (Wolff and Haubrich, 2006). This correspondence has also been criticised, prominently by Arendt who bemoaned the fact that modern capitalism had brought about a rise of the social in place of the public, where the latter was the zone of an active, political, distinctly human life, and the former was a side-effect of an economised, expertly governed world (Arendt, 1958). Echoing Arendt’s argument somewhat, I want to explore what is at stake in these two dichotomies, highlighting the
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technical–empirical elements of the economy/society distinction, and the rhetorical-normative elements of the public/private distinction. To the extent that economic sociology is a product of the former, and continues to frame its problems in such terms, it exaggerates the stability and objective clarity of economic situations. What is at stake here is the politics and empirics of boundary-drawing in economic life. To the extent that the language of the economic and the social does map on to that of the private and the public, it concerns competing logics of restraint and of spillage. The resonance between economic and private lies in the shared implication of withdrawal, limitation, delineation, protection and (implicitly or otherwise) exclusion. An ‘economised’ or a ‘privatised’ situation is one in which boundaries are functioning effectively and/or authoritatively and ambiguity over separate spheres has been reduced to a pragmatically sufficient level. Conversely, the resonance between social and public lies in a shared implication of overflow, excess, commons and (implicitly or otherwise) inclusion. A ‘socialised’ or ‘publicised’ situation is one in which boundaries have been abandoned, superseded or destroyed. But beyond these primitive identifications, how do these dichotomies pull apart and what are the implications of their doing so? The claim made here is that the problematic of the economic and the social emerges from a 19th-century liberal problematic of government and markets, whereas that of the private and the public is a more foundational philosophical concern regarding the morality of ownership. The former is concerned with identifying the empirical boundary between markets and society, whereas the latter is engaged in producing normative justifications for private and public economic realms. But economic sociology typically ignores its own implicit normativity, in ways that I now explore. 2.1. Identifying ‘the social’ A ‘new’ economic sociology emerged in the 1980s, following the pioneering network analysis of Harrison White (Granovetter and Swedberg, 2001). What was definitive of this programme was a renewed effort to use sociological methods to understand and explain apparently economic practices and institutions, such as markets, firms, prices, competition and so on. It was claimed that this represented a revival of the original sociological spirit of Weber and Durkheim, which had not (yet) withdrawn from studying economic territory. But what is ‘the social’, and why should it serve as a better explanation for economic life than ‘the economic’? In a sense, this methodological and empirical agenda is a legacy of 19th-century liberalism, while also an effort to escape it. A number of constructivist scholars have argued that the social arose as a problematic of liberal government, as a set of costs and risks which could not be contained within the mechanisms of market exchange, and became objectified thanks to the development of statistics and expert policy sciences (Desrosie`res, 1998; Donzelot, 1991; Foucault, 2007). The appearance of separate economic and social realms, which Polanyi identifies as the hallmark of economic liberalism, preceded the rise of separate disciplines of economics and sociology, though was then reinforced by that professional and methodological split (Polanyi, 1957). By this account, the practical, technical and policy problem of the social was a precondition of an objective science of the social, namely sociology. And the nature of that problem was that certain types of goods and risks could not be internalised within the price system of the market, requiring forms of governmental intervention and social insurance. The neo-classical tradition of welfare economics later codified this distinction with its technical concept of ‘externalities’, referring to types of cost or benefit which, by their objective nature, were unlikely to be traded efficiently in markets, because they tended to overflow the boundaries of contracts and impact upon third
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parties (Pigou, 1912). The category of externality elevates the public policy problematic of liberalism to the status of a methodological principle, delineating the appropriate limits of economics and sociology. Within the liberal problematic, the appropriate object of economics is dyadic, calculated exchange (where costs and benefits are restricted to the parties involved) whereas the appropriate object of sociology is triadic, uncalculated activity, often organised through hierarchies and rules. This is what Stark (2009) has referred to as ‘Parsons’ pact’, which can be explained as ‘‘you, economists, study value and we, sociologists, study values’’. Thanks to this particular confluence of liberal policy problematics and social sciences, the categories of the social and the economic are rendered seemingly objective and the distinction between them is one which appears under the gaze of the government policy-maker and/or the social scientist. An object or problem is ‘social’ if it is external to the market price system, whereas it is ‘economic’ if it is internal to that system. Within the jargon of welfare economics, particularly acute problems of externalities can be classed as problems of public goods. If the costs or benefits of an activity are both ‘non-rival’ (they are not affected by their number of users) and ‘non-excludable’ (they cannot be easily restricted to certain users), then it can be technically referred to as a ‘public good’, which typically requires some form of government intervention to optimise – global warming and street-lighting are both examples of public good ‘problems’, by this technical definition. This is close to Dewey’s pragmatist definition of a public, as ‘‘all those who are affected by the indirect consequences of transactions to such an extent that it is deemed necessary to have those consequences systematically cared for’’ (Dewey, 1927, p. 16). This question of the public is a technical–empirical one, of whether or not a particular problem can be dealt with locally by those directly interested or whether it has spilled over to affect third parties. These technical definitions of the social and of the public share two things. Firstly, they arise as a side-effect of a liberalism which privileges the separation of markets from society. Institutionalised market liberalism is therefore an important precondition of separate sciences of the economic and the social, even if that separation was not completed methodologically until after the marginalist revolution in economics of the 1870s. The social and the public are ‘external’ in a particular and very technical sense, that they are things that cannot be priced. Markets remain a privileged institution, both for the self-identity of economics, but also for the rival, non-identity of sociology. Secondly, they are visible to expert social scientists, statisticians and public policy-makers, but rarely to actors themselves in economic situations. These expert discourses and techniques enable decisions to be made on the basis of social and economic data and numbers, and for socioeconomic populations to (in Desrosie`res’ term) ‘hold together’ as objective entities. But inasmuch as the economic is bounded and calculable, and the social is open and incalculable, this is attributed to the objective capacities of particular objects themselves (namely markets) and not to deliberate strategies or politics on the part of any actors. The break-down of this liberal problematic began when Coase (1937) sought to explain the existence of firms, giving birth to transaction cost economics. By using neo-classical economics to explain non-market forms of coordination (namely firms, but later law, contracts and much else), Coase broke Parsons’ pact and challenged the separation of the social from the economic. Arguing that ‘‘economists have no subject matter’’, Coase ensured that the classification of the economic was an effect of economics as a tool of scientific analysis, rather than of markets as institutions of pricing and exchange (Coase, 1988, p. 3; Davies, 2010). In a direct attack on welfare economics and the concept of externalities, Coase denied that there were types of cost or benefit that could not be internalised within economic calculation, so long as new forms of property right, contract and tort were invented with which to deal with them (Coase, 1960).
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The ‘economic imperialism’ of the Chicago School of Economics, whereby economists have analysed crime, families, addiction, public bureaucracy and communities in terms of psychological incentives and a metaphor of prices, follows Coase’s lead (Fine, 2002; Fine and Milonakis, 2009). Crucially, the economic imperialists do not claim that such institutions are identical to markets, nor that they are inferior to markets, nor that individual goals are ultimately all monetary; as Becker (1976) has argued, it is a flexible enough ‘approach’ to recognise that altruism or public service are genuinely valued and chosen by individuals on their own terms. But they seek to analyse and explain human behaviour as if it took place in a market, that is, they see social aspects of human behaviour as costs and benefits that accompany dyadic market exchange. The social is not ignored, denied or derided, but rendered economically calculable, thereby bringing it within the scope of the economic. The ‘new’ economic sociology represents a guerrilla insurgency against a disciplinary imperialism that was already well established by the 1980s. If Coase, Becker et al. sought to show that ‘external’ costs and benefits could actually be calculated by individuals, and thereby explained in terms of dyadic exchange, the ‘new’ economic sociologists sought to show that even apparently efficient and unambiguous forms of market transaction were conditioned by broader contexts, which were entirely external to their calculations. Parsons’ pact therefore mutated from an apportioning of separate empirical–institutional fields, to an apportioning of separate methodological premises. From the 1980s onwards, the split between Chicago-style economics and the ‘new’ economic sociology could be understood as ‘‘you, economic imperialists, presume that interaction is restricted and dyadic until there is a social spillover; we, sociological guerrillas, presume that interaction is social and unrestricted until there is an institutional or technical effort to render it calculable’’. Studying the institutions and techniques for this restriction – money, markets, accounting, regulatory frameworks – became the focus of the ‘new’ economic sociology. But it is worth noting that, as a distant legacy of liberal policy problematics, this field of enquiry remains effectively oriented around the character and ontology of a single institution: the market.
2.2. Implicit and explicit normativity of the social Where liberalism was predicated on a logic of separation of economy, society and state, neoliberalism is predicated on a reintegration of these domains (Crouch, 2011; Foucault, 2008). With Parsons’ pact called off, economists were free to reduce all social relations to the economic, while economic sociologists effectively inverted this, in reducing all economic relations to the social (Caliskan and Callon, 2009). Once the objective or institutional quality of the economy/ society divide has disappeared, and it is recognised as primarily discursive and constructed, then the problem of the social as a designated sphere of government also dissolves (Rose, 1996). There is no longer any problem or object which is distinctly economic in its objective nature, any more than there is one which is distinctly social in its objective nature. Under neoliberalism, markets are treated as constructed institutions like any other, transcending traditional divisions between economics and sociology (Mirowski, 2009). Meanwhile, the social has reappeared as a sphere of private profit-seeking business activity, as seen in ‘social media’ and ‘social networking’ platforms. The choice between economic and social explanation, then, risks becoming arbitrary, once each of these spheres loses its specific problematisation or relation to government. What is really at stake in this choice? Pragmatically speaking, why might a ‘social’ explanation or analysis be normatively superior to an ‘economic’ one or vice versa?
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Economic sociology has scarcely ever addressed its own critical position or normativity, at least not outwardly. But there is latent normative potential in its methodological premise, namely that triadic networks are a condition of dyadic exchanges, and not vice versa. In more expressly political terms, the presupposition of economic sociology is that economic activity can never be entirely sealed off from society or a public. Leakage and spillover are normal features of economic activity, which, to be prevented, require considerable political and technical work. This remains a methodological premise, but one with an implicit prioritisation of public over private action. As Callon has argued, economists themselves do a great deal of this work in preventing spillovers, or rendering them calculable by other means, assuming that ‘economist’ includes accountants and other technicians responsible for monetary commensuration (Callon, 1998). Economists seek to prevent externalities from occurring, or rather they seek to create limits around them, to prevent them from becoming incalculable or technically ‘public’. Callon addresses this as a technical exercise, but there is a necessarily normative dimension to it as well. Economic work is done so as to prevent the ‘socialisation’ or ‘publicisation’ of costs and benefits. Economics is, in this respect, a technology of privatisation, in the sense that it seeks to delineate costs and benefits and apportion them in a clear and unambiguous fashion. Conversely, economic sociology can recognise its own implicit normativity, in highlighting spillovers and the publicness of economic calculations and transactions. Economic sociology constantly reveals ever more externalities, debunking the claims that economic exchanges can ever be successfully sealed off from the public. If the normative vocation of the economist is to integrate more externalities within the price system, the implicit vocation of the economic sociologist is to demonstrate how the price system is dependent on social externalities which it cannot account for. Technical acts of calculation are implicitly revealed as political acts of privatisation: strategies for the exclusion of the public from forms of production and exchange which it has contributed to, or which implicate it (it is important to remember that certain acts of privatisation will benefit the public, namely the privatisation of harms, costs and risks). There is necessarily an element of social-ism in economic sociology, just as there is necessarily an element of economism in economics. The reason this normativity remains implicit is because, for genealogical reasons already explored, economic sociology has remained preoccupied with the institution that first created the ‘two worlds’ of ‘economy’ and ‘society’, namely the market. The social and the public remain politically and critically inert categories, so long as they continue to be employed in opposition to a naı¨ve liberal view of markets (which few economists even hold any longer). The claim can be made that markets are not sealed off from society, that dyadic exchange does implicate third parties; but as I have already explored, this is readily accepted by the economic imperialists of the Chicago School. The social begins by being a technical side-effect of markets, namely their inability to fully contain costs and benefits; it then reappears as a methodological premise of economic sociologists. But in neither case is its normativity confronted. Economic spillover is either an empirical property of market institutions or a methodological premise of sociologists. It is not viewed as a deliberate strategy, pursued for normative and political reasons, by actors in economic situations. What would it mean to address the normativity of the ‘social’ directly? Should economic sociology confess to an implicit socialism? Callon demands that social scientists take responsibility for their involvement in the performing of the economic and the social, arguing that ‘‘whatever they decide to do, they will be unable to evade the logic of framing/overflowing. They are already a part of it’’ (Callon, 1998, p. 264). However, sociologists potentially gain some distance from these processes if they can return to foundational concerns that pre-date liberal
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problematics of government. By doing so, a form of economic sociology might be possible which would not be defined as a reaction to neo-classical economics and markets, but which would start with a recognition that morally endowed actors determine where boundaries are drawn on the basis of normative considerations which they can articulate, and that technical artefacts of policy and social science come later. This has two inter-related dimensions. Firstly, it needs to be accepted that economic boundary-drawing is never a primarily technical phenomenon. Neo-classical economics seeks to reduce the public to a type of technical and governmental problem, namely that which resists or evades market pricing. But there are plenty of goods and problems which actors choose to deem as ‘public’ for the normative reason that they should not be restricted, regardless of whether they could technically be restricted. There is nothing technically public about a park, for example, in the sense that it could have a fence put around it and access made available to paying users. It is a normative sense that a park should be public which prevents this from happening (or not). In a sense, it is not an externality to the market, but an exemption to the market. Allowing economic sociology to be defined in opposition to neo-classical economics has led it to under-explore the extent to which privatisation is actively and deliberately resisted and criticised, regardless of its technical feasibility. Equally, much privatisation proceeds on normative grounds that it is good, and only latterly on the technical grounds that it is efficient, assuming that such a technical argument can be made at all. Or rather, competing technical accounts of privatisation are derivative of competing moral and philosophical accounts in ways that are similar to those analysed by pragmatist sociologists (Boltanski and The´venot, 2006; Wagner, 1999). In Callon’s terms, a great deal of ‘framing’ and ‘overflowing’ occurs because people demand and value it, not primarily because of the calculative apparatuses available to perform it or the characteristics of economic assets themselves. Callon has rightly argued that the publicness or privateness of science is a strategic achievement of economic actors, not an objective trait of knowledge itself; but this still misses the normative dimension of such strategies (Callon, 1994). Secondly, by focusing upon the primary normativity of the public and the private, sociology will inevitably return to an institution that is prior to markets, namely ownership. The seemingly amoral world of markets enabled the development of seemingly amoral social sciences and governmentality. But ownership can never be emptied of its moral character to the same extent. As Durkheim and Veblen both recognised, contra the Lockean liberal assumption about property as earned wealth, the defining quality of all property is that it has the capacity to exclude certain users (Durkheim, 1991; Veblen, 1898). Ownership stems from a sense of where boundaries should or should not be recognised and depends on members of a community recognising its justice, or for Durkheim, its sacred aura (Durkheim, 1991, p. 143). Common or public ownership also possesses a moral character and authority, which is prior to its technical means of enforcement. A defining feature of common or public ownership is that it should not be restricted to certain users, and is exempt from private property rights. Any disagreement about ownership eventually runs into unmistakably moral principles regarding the justice or injustice of inclusion and exclusion per se. Such normative injunctions can be reinforced through technical assistance. But in many circumstances technologies of ownership become necessary because the justice of a certain boundary is not being adequately recognised. Digital rights management creates a technical defence of private intellectual property out of fear that it will not be normatively recognised. Public institutions, such as libraries, use surveillance and forms of constraint to ensure that individuals do not act against the common interest by stealing or otherwise privatising benefits (Hajer and Reijndorp, 2001). But where the problematics of liberal government, which indirectly
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structured the methodological premises of economic sociology, treat privatisation and publicisation as primarily technical, even accidental properties of market society, re-focusing on ownership means rediscovering the fact that boundary-drawing is also deliberate, conscious and accompanied by justifications and criticisms. The technical–empirical boundaries which accompany different forms of ownership can always be criticised, regardless of how well they are functioning, indeed they may be more liable to criticism when they are functioning successfully. The logical priority of property over markets is quite plain, once one considers that there are many ways for property to circulate in the absence of markets, but there can be no market circulation in the absence of property. Moral claims about ownership rights and access can occur entirely independently of what is technically feasible via market exchange. Property can be inherited, seized (legally or not) or offered as a gift. The looting of branded, high-street goods that occurred during the English riots of August 2011 demonstrated that the consumerist lust to own property can overflow the legal constraints of the market price mechanism. Much of the time, property may not circulate at all, yet still exert a powerful economic force. Ancient land rights and claims have all the more force for being – or appearing – permanent and immovable in nature. Many policy-makers are beginning to consider that inequality in property and wealth is just as significant a problem as inequality in income, but the former may operate according to processes that have little to do with markets. Equally, where debates in the past have focused on the merits and dangers of ‘stock market’ influence on firms, there is now an increasing concern about how organisations are being purchased by small, concentrated ‘private’ owners (such as private equity, sovereign wealth funds and oligarchs) who cut out the stock market altogether. Property, and associated notions of privacy, is a very different type of sociological object from markets. When it transpires that markets are not sealed off from society, this is an empirical discovery; when it transpires that property is not sealed off from the public, this is a political concern that invites some type of political or legal response. The concepts of public and private are critical resources that facilitate the constant re-drawing of boundaries, the exclusion of some, and the inclusion of others. Observing these distinctions at work in the economy is to recognise that individuals are endowed with their own capacity to judge and criticise where boundaries should and should not exist, where spillovers and overflows are and are not acceptable. The task is to study the multiple ways in which the limits of the public and the private are delineated and justified, by actors in everyday situations, with varying levels of power and authority. It is to examine how acts of privatisation are conducted, but also to study the ways in which they necessarily fail, and are resisted by rival notions of the private and the public. There are multiple registers of the public and the private, and never any absolute distinction between the two. As the legal philosopher Tony Honore´ (1987) argues, there are multiple formal and informal characteristics that we attach to the notion of property and it is impossible to point to an empirical example of something which is the ‘ultimate’ case of private property. How to address such normative ambiguity without simply adopting a single normative position? 3. Moral orders of appropriation An alternative path for economic sociology involves acknowledging the implicit and explicit normativity of the economic and the social, and the extent to which they are active rhetorical and technical components in the construction and performance of economic life. It involves investigating the ways in which boundaries are drawn, contested and re-drawn in economic situations, with moral appeals to the public or private nature of certain goods, costs, problems and issues. And yet we would want to avoid simply committing to socialisation, as ‘new’ economic
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sociology implicitly does with its methodological starting point, just as we would want to avoid a simple commitment to ‘economisation’ as neo-classical economics implicitly does. But by learning from the example of pragmatist sociology, we might instead consider how there are rival ‘orders of appropriation’ at work within economic situations, that is, critical capacities that actors employ in order to judge and criticise the drawing of economic boundaries on moral and subsequently technical grounds. These can be seen as plural and liable to conflict with one another or often mutate into one another. Pragmatist sociology seeks to exit the methodological dilemmas of competing social sciences, to look instead at how individuals draw upon potentially incommensurable critical and normative accounts of the common good in empirical situations when seeking agreement with each other (Boltanski and The´venot, 2006; Wagner, 1994, 1999). It assumes that people do not ordinarily act without resort to moral justification or purely on the basis of domination and power, but typically appeal to metaphysical philosophies of justice in the course of their actions. These philosophies in turn can only hope to persuade others, and to facilitate agreement between actors, if they are accompanied by relevant ‘tests’ capable of proving the worth of humans and things in seemingly objective terms before an audience. Hence, questions of moral judgement and social scientific proof are treated on a rhetorical continuum, with the latter a standardised way of executing the former. Given the multiple philosophies of the common good, there can be no final or irrefutable justification for pursuing one course of action rather than another. Equally, given that these multiple philosophies translate into multiple apparatuses of testing and social science, there are necessarily incommensurable measurements and facts regarding the social world. Social sciences such as economics and sociology are derivative of competing metaphysical theories of humanity and justice, and arise in response to the pragmatic needs of actors (especially policymakers), in ways that have already been explored. What is most instructive about the pragmatist approach is the way in which it highlights the priority of the normative over the empirical in the rhetoric and lived experiences of actors. Subsequently, it highlights normative pluralism as an endemic and existential feature of social life, which can only be resolved politically and rhetorically and not philosophically or scientifically. For the purposes of the economic sociology of ownership pursued here, this means recognising that human agents are endowed with the capacity to judge, justify and criticise boundaries in economic life; they are only subsequently endowed with varying capacities to construct and overflow such boundaries. Often, technical boundaries are constructed only because moral boundaries have apparently already failed (as with the example of digital rights management); technical instruments of public governance (such as closed-circuit television) are only introduced when normative respect for public space or conduct are already deemed to have failed. The notion of a boundary being introduced in a total normative vacuum is exceptional, in the exact sense of the term that rules and laws have been suspended as an emergency (Agamben, 2005). Three ‘orders of appropriation’ are examined here – the socialist, the neoliberal and the liberal. Each represents a metaphysical grammar, which is available to individuals when justifying and criticising the containment or openness of economic goods. Each of these represents a conduit of substantive philosophies of the public and the private into empirical situations of modern capitalist societies. They draw on a priori accounts of the public and the private, that derive from competing philosophical anthropologies and critiques of modernity; as Wagner (2008) has argued, rival critical interpretations of modernity, its promises and uncertainties, structure how it is practiced an experienced. Yet they are also embedded in particular technical policy questions specific to modern capitalist societies. These orders of appropriation are therefore critical and technical resources, metaphysical and physical
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grammars, that are employed by individuals in organising goods into realms of the public and the private, often independently of markets. They are foundational philosophies, which seek a route beyond the liberal problematics of government, through political transformation. It needs acknowledging that pragmatist sociologists have also examined more localised, ‘familiar’ forms of justification that do not make the same appeal to the universal good (Boltanski and The´venot, 2000; The´venot et al., 2005). The spectrum between general, impersonal judgement and deeply relational, personal recognition (as manifest in love) does itself correspond to the opposition between the public and the private, though also challenges the simplicity of that separation. In that sense, each of the orders of appropriation offered here already makes some implicit appeal to the public, inasmuch as each offers moral accounts that can be generalised beyond specific cases. By and large, pragmatist sociology avoids sociology’s implicit privileging of the social, but it does not quite avoid political philosophy’s implicit privileging of the public. Hence, even the most ‘anti-public’ forms of justification and critique (namely, the neoliberal, as seen below) are themselves still offered as a basis for public government of property rights, boundaries and exclusions. The three orders of appropriation offer competing means of justifying and criticising the delineation of public and private as economic categories, in ways that can be rendered tangible and technical. They offer a route between metaphysical visions of an ideal political economy and physical delineations of ownership and access. What is ultimately at stake in each is a theory of the relationship between human discourse and non-human goods. Different presuppositions about this relationship structure different normative visions of the public and the private, which produce different demands regarding ownership and non-ownership in empirical situations. The de-materialisation of various forms of capitalist production – the rise of ‘immaterial labour’, ‘cognitive capitalism’, ‘risk management’ – adds additional forms of conflict between these orders of appropriation, as it becomes unclear whether categories of public and private are being extended to economic assets or to political discourse. It also adds urgency to these three critical programmes. 3.1. Socialist order of appropriation The socialist order of appropriation begins with a suspicion of private ownership of goods as concealing its underlying political quality. Restrictions placed around inanimate things are really restrictions placed around people (for instance, via the fiction of a labour market), indeed the illusions and fictions of the ‘commodity’ end up bestowing far greater freedom on speechless things than upon human beings. Yet this remains concealed by the liberal myth of self-ownership: the body as economic asset. The economic phenomenon of ‘private property’ is, as argued by Rousseau, the entry point into civil society, which becomes a sphere in which certain individuals seek to dominate others politically, eventually using law and techniques of the modern state (Rousseau, 1984). Political inequality is an outcome of economic inequality, and the pursuit of political inclusion and entitlement is necessarily tied up with the pursuit of economic inclusion and entitlement. A democratic public sphere is unattainable without public ownership and the eradication of boundaries which restrict human movement and access to certain goods. There is a necessary temporal dimension to this critique, granting it a modern selfconsciousness. It assumes that private property relations are an unnatural technical artefact that persists in the present, in alliance with political inequalities, but which did not exist in some distant past, and will eventually disappear again in some distant future. As Marxian and modernist sensibilities relate, capitalism is a particular historical epoch, which attempts
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unsuccessfully to repress the inevitably social nature of human beings. Efforts to restrict and to privatise eventually fail, because they run contrary to the ‘natural’ properties of people and goods. The dematerialisation of capitalist production adds weight to the socialist critique, as it involves extending private property rights further into the realms of public liberty and science (via intellectual property rights), undermining the plausibility of the bourgeois public realm and liberal ideals of Enlightenment. It involves subjecting more intangible forms of production and experience to a logic of private ownership. Yet at the same time, these privatising activities potentially add additional optimism to socialist critique, as they pursue forms of private ownership which are ever harder to enforce, and suffer ever greater forms of legitimacy crisis in the face of competing normative orders of appropriation (Hardt and Negri, 2000, 2005). The socialist critique of private property rights sits in a deeply ambiguous relationship with its primary empirical object, the capitalist commodity. In the Marxian tradition, this is attributed to paradoxical qualities of that commodity form itself. The critical ambiguity stems from the fact that capitalism also represents an unprecedented degree of sociability and co-operation on the part of human beings. This is primarily manifest in the central institution of capitalist production, namely the firm, subsequently the business corporation. The success of the firm (dependent on the science of management) resides precisely in its capacity to overcome forms of private individualism amongst its employees, that is, to suspend conventional economic and private logic. This is recognised by neo-classical economics via the theory of transaction costs (Coase, 1937). It also requires managers to develop socialist rhetorics of their own, such that they can resist tendencies towards privatisation of effort, information and sociability on the part of employees (Boltanski and Chiapello, 2007; Thrift, 2005). Elsewhere, a socialist critique of bourgeois private life or capitalism may animate advertising, in order to prevent consumption being subjected to an excessively calculative logic (Ewen, 1976; Frank, 1997). The state increasingly recognises (and often pays) the costs of excessive individualism and privatisation, which are manifest in their impact on mental health and social cohesion (Davies, 2011). Hence, the critique of private ownership – of ideas, things and selves – is as much an immanent justification for capitalism, as it is its negation. 3.2. Neoliberal order of appropriation The neoliberal order of appropriation is founded upon a conservative suspicion of language as intrinsically frail and liable to mislead. It contrasts deliberative relations between persons with ownership relations between persons and things, where the former are mired in ambiguity and misunderstanding, and the latter have the political merit of being unambiguous. Deliberative interaction is, at best, unnecessarily costly (Coase, 1960) and, at worst, leads to forms of moral disagreement resulting in violence (Friedman, 1953). Meanwhile, private property rights have a transparency and clarity around them which alleviates the existential and political threats of pluralistic, secular societies. The neoliberal order of appropriation treats the very notion of a public (be it discursive or material) as a threat to the freedoms (both political and economic) of individuals. Private ownership rights, combined with a competitive market order, unintentionally produce a quasi-democratic system; however, the converse is not true, and democratic systems cannot be relied upon to defend private ownership rights or competition. It is therefore far safer to opt for a quasi-democratic commitment to unambiguous private ownership and competition, than to opt for a fully democratic commitment to ambiguous forms of public deliberation. This political faith in private ownership depends on a particular interpretation of property as a form of monopoly, that is, unambiguously exclusive access to and control over a certain good.
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The rise of new types of property right (such as intellectual property rights and securitisation of risks) is not, therefore, a contingent or ‘exogeneous’ technological occurrence within neoliberalism. On the contrary, it is one of the main achievements of this type of normative critique of the public, bringing even language within the bounds of ownership. In its later, neoclassical form, the neoliberal justification of private property rights becomes framed in terms of aggregate efficiency. But this conceals a philosophical anthropology, which views human beings as unable to adequately deal with discursive ambiguity and an absence of clear boundaries. The neoliberal therefore shares the socialist view of property rights as political-legal artifices, but argues that they are unrivalled in their capacity to facilitate peaceful coordination of actors. Hence, constructing new private property rights is a public policy tool, via which to deal with previously public problems such as carbon emissions (Levin and Espeland, 2002), fish stocks (Helgason and Pa´lsson, 1998) or economic development (Mitchell, 2005). The socialist perspective is entangled with its object of critique, which is the capitalist commodity. The neoliberal one is equally entangled with its object of critique, which is the modern state (Harvey, 2005; Peck, 2010). The socialist sees the roots of a future democratic public lying within capitalist firms, practices and technologies, which themselves become remade and legitimised through drawing on varieties of socialist critique. Equally, the neoliberal sees the state as a vehicle for privatisation and the abolition of the public, through privatisation, antitrust policy and the construction and enforcement of property rights. Yet public, state institutions can also be tested and justified by subjecting them to economistic forms of critique. For example, public goods of various kinds can be defended and invested in by analysing them as if they were private ones, using economic techniques such as ‘willingness to pay’ surveys (Fourcade, 2011). The neoliberal order of appropriation remains stuck in a paradoxical relationship with state sovereignty, from where it draws the power to enforce boundaries in an unambiguous way, but which it also seeks to subsume within a privatising economic rationality. 3.3. Liberal order of appropriation As its critics as well as its advocates have recognised, liberalism rests upon a moral logic of separation of economic, social and political realms (Polanyi, 1957; Walzer, 1983). This separation is undone by both socialism and neoliberalism, both of which seek a reintegration, either through achieving a priority for political democracy or a priority for private property rights. Yet a revived, politicised, critical liberalism can be understood as offering its own normative rejoinder to these alternatives, which stresses the distinction between spheres of restricted ownership and spheres of unrestricted deliberation. The liberal order of appropriation defends and criticises private ownership, in pursuit of a re-separation of ontologically and morally different domains of exchange. Private property rights can be justified, through establishing their legitimate limitations, which are transgressed when they come to interfere with public deliberation. Meanwhile, public institutions and ownership can also be justified through establishing their legitimate limitations, which are discovered when they infringe upon private and domestic lives. The boundary between public and private is viewed as necessary for the benefit and integrity of each. There is no perfect or technically necessary boundary between the two, but a normative and ambiguous one, which is never final. This type of ‘radical’ liberalism departs from the technical programme of ‘liberal government’, in seeking to revitalise possibilities for public political action, as an alternative to expert policy. Property rights are an important institution in the separation of public and private, from this liberal perspective. But their authority derives as much from their capacity to produce a
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deliberative, public realm, as from their capacity to privatise certain types of assets and values. The liberal order of appropriation stresses the ambiguity of all ownership rights and the fact that they mediate between public and private interests. Hence, institutions such as copyright and patents exist in order to promote publishing of artistic works of scientific discoveries, on the basis that individuals need adequate private incentive and recognition to do so; they are not viewed simply as absolute monopolies, as the neoliberal views them. The normative dimension of ownership rights remains explicit, rather than being reduced to their technical or governmental components, meaning that they can be moderated, challenged and shifted. They are explicitly subject to moral logics of exemption and not only to technical logics of externality. Unlike the neoliberal property right, which depends upon the state and various apparatuses of enforcement and control, the liberal property right aspires to a limited degree of permeability, such that the separate domains of public and private can penetrate each other without collapsing into each other. Confronted by socialism and neoliberalism, liberalism criticises concentrations of power in the hands of both private property-holders and states. Given that ownership is a messy, compromised and ambiguous institution, there is the opportunity to invent new forms of ownership which mediate between the public and the private, such as mutualism (in which organisations are owned by members, not shareholders), or the sharing of ownership rights between competing interests, such as the financiers and the users of assets (Davies, 2009; Frenkiel, 2010; White, 2009). Pluralism is celebrated at both a societal and an institutional level, such that competing normativities can co-exist. Somehow this must also involve an awareness that even the division between the public and the private is subject to multiple interpretations and justifications. What liberalism cannot renounce, however, is its commitment to that division existing at all. The resonance between this pluralistic liberalism and the ethos of pragmatic sociology might now be apparent, an issue that I return to in the conclusion. 3.4. Orders of appropriation in action: the case of a shareholder-owned bank How do controversies between these orders of appropriation manifest themselves? What types of claims and proofs do they put forward in criticising one another and defending themselves? We can briefly illustrate these controversies by returning to the example touched on at the outset, namely the ownership of stock-market-listed banks, an institution in which Greenspan confessed to have placed excessive faith. A public company is a curious socio-economic institution, inasmuch as it is both an association of employees and managers, and also an item of tradable property. Boltanski and The´venot (2006, p. 60) note that all firms have to combine conflicting normativities of market and industrial worlds; yet they also face a problem of combining normativities of privatising and sharing. A corporation necessarily relies on dialogue and co-operation internally, while also appearing as chunks of private property which circulate on stock markets. It consists of its own internal deliberative public, where dialogue is justified as inclusive and sits within broader publics, including those who may choose to buy its shares (making it a Public Company). Its private stockholders receive a form of public insurance in the form of limited liability. Banks in particular have undergone major transformations in how relationships and assets are combined and separated: traditional retail banking (taking deposits and offering loans) was once heavily ‘relational’, but these relationships themselves came to be treated as risks that could be owned, thanks to securitisation and the merging of retail with investment banking during the 1990s. Shareholder-owned banks are constituted by entanglements of public and private, competing justifications for restraint and spillage of assets and discourse.
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The socialist order of appropriation is instrumental in resisting the logic of private ownership, both from within the firm and from without. Internally, the principle that value can be restricted to owners is actively resisted and the abstraction of the commodity form is seen through. Following the 2008 crisis, it transpired that many bankers were entirely aware that they were constructing abstract financial assets whose contents could not be known and whose consequences could be devastating. Greenspan’s assumption that shareholders and bankers operate from within the same order of appropriation, underestimates the particular form of anti-capitalism exhibited by bankers, which consisted of attacking the limits of the private, to breaking point. The result (widespread national bail-outs and public ownership of banks) produced the form of ‘social ownership’ of financial institutions that many socialists have argued for (e.g. Blackburn, 1991). Neoliberal critique focuses upon the explicitness of private ownership, seeking to drive this explicitness into public spheres and institutions however possible. In the case of public companies, the ‘shareholder value’ movement focused upon aligning the incentives of management with those of shareholders, through offering large quantities of stock-based remuneration. Yet managers’ privileged access to the social world they manage means that this mechanism has tended to work far better for executives than for shareholders. The neoliberal order of appropriation stresses the need for maximum clarity around the ownership of risks and assets, be they shares in a bank or any assets (such as securitised debt) that the bank sells. Any failure is a failure of explicitness and an excess of discursive and public ambiguity (otherwise referred to as ‘moral hazard’). It is in this way that some neoliberal critics blamed the crisis on regulation, which quite aside from the empirics of this claim, is unable to understand the normative justifications for subjecting private goods to public control. Finally, a liberal order of appropriation seeks to uncover and reverse the collapse of the public into the private, and vice versa. It focuses on the mechanisms which separate and mediate between the two. Relations are seen as both discursive and proprietorial, in varying degrees. For example, limited liability represents a public privilege for private shareholders, that is an object of justification and criticism for liberals (Zhiyuan, in press). The public–private nature of a shareholder-owned bank, which is capable of restricting gains to its employees, and externalising losses upon its ‘private owners’ and ‘the public’ demands critical investigation, to re-separate that which is privately restricted from that which is publicly deliberated. This will require rethinking the property rights and obligations associated with shares in public companies, and what types of relationships are necessary to accompany the privatisation of risks and benefits, in something like securitised debt. A liberal critique of both socialist and neoliberal orders of appropriation is that they simply invert one another, and this was proved when the institution of banks flipped from the status of unambiguously private to unambiguously public during autumn 2008. Its rejoinder is that banks are necessarily and ambiguously both, to varying degrees, which need excavating and recognising. Economic sociology has already received valuable contributions and criticisms from the realm of science and technology studies, in the suggestion that it engage with ‘calculative devices’ (MacKenzie et al., 2007). Conducting research on a case such as this would require a similar engagement with the study of legal artefacts and devices, rather than calculative ones. What discursive and material constructions are at work, in the interface of different orders of appropriation? How, for example, is the public–private nature of a public company’s ownership negotiated at the level of contract and governance? Watching the company mutate from the status of an inanimate piece of property, to that of a deliberative association of people, to being a combination of the two, will reveal multiple orders of appropriation in play, which exploit essential ambiguities in how property and contractual relationships are fixed and defined.
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4. Conclusion: reviving liberal normativity? There is a confluence between the ethos of pragmatism and that of liberalism, in the sense described here. Boltanski and The´venot (2000) have recognised resonances between their pragmatist enquiry into varieties of justification and Walzer’s liberal theory of ‘complex equality’ as separation of institutional spheres. If economic sociology carries an implicit normativity which defends socialisation through highlighting externalities, the pragmatic turn in sociology carries a normative commitment towards translation of competing rhetorics, metaphysical grammars and social scientific disciplines, thereby facilitating their mutually respectful coexistence. In this it is antipathetic to both neoliberalism (which assumes that moral translation is doomed to failure) and socialism (which typically fails to theorise the difficulty of public deliberation in a plural society). The aftermath of the financial crisis has raised the profile of liberal modes of critique, which seek a re-separation of private economy from public realm (preventing ‘too big to fail’), which seek forms of ownership which are not simply unambiguous private monopolies (such as mutual and co-operative ownership), and which reassert justifications for financial regulation which do not depend entirely on arguments about efficiency measured as shareholder value. As Crouch (2011) has argued, this may involve accepting large corporations as permanent parts of the public–private economy, but exploring them as hybrid public–private entities. A pragmatist and a radical liberal perspective explains crises, such as the financial crisis, in terms of the excessive faith that is placed in any single type of institution or any single mode of moral and technical justification. What Stark terms ‘heterarchy’, the co-existence of rival moral orders, is a liberal good in its own right (Stark, 2009). A pragmatic and political orientation for the economic theorist therefore arises, whereby balance and compromise is sought between a privatising and a publicising ethos. Part of this involves finding negotiations between the ‘economism’ of economics and the ‘socialism’ of sociology, rather than continuing with the mutual colonisations and conflicts that occur between the two, or returning to a purely technocratic notion that sociology deals with that which falls outside of the price system. Returning a privatising normativity to a private economy, and a publicising normativity to a public realm, uncovering the areas of ambiguity between the two (which focus heavily on intangible assets, intellectual property and risks) is now an ethical project in its own right. In this respect, whether implicitly or explicitly, radical, post-neoliberal liberalism provides a normative basis on which to criticise political and economic activity. Acknowledgements I am grateful to the editors of Poetics, to two anonymous reviewers for their comments on this article, and to attendees of the ‘Nylumni’ workshop in Ottawa, April 2011, for various thoughts on how the paper could be developed. Above all, I’d like to thank Melissa Aronczyk and Ailsa Craig for all their work in organising the workshop and editing this special issue. References Agamben, G., 2005. State of Exception. University of Chicago Press, Chicago. Arendt, H., 1958. The Human Condition. University of Chicago Press, Chicago. Bebchuk, L.A., Spamann, H., 2009. Regulating bankers’ pay. Georgetown Law Journal 98, 247–287 http://papers.ssrn. com/sol3/papers.cfm?abstract_id=1410072 (accessed 25.02.12).
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