The Societalization of Social Problems: Financial Crisis and Media Phone Hacking

Public lecture by Professor Jeffrey Alexander

Friday 20th October at 5 in New Kings 10

Early in June, 2012, in a featured op-ed in the New York Times, one of Germany’s most influential economists addressed the possibility of a bailout for Greece and other ailing European economies, declaring “it doesn’t make economic sense”. Hans-Werner Sinn was reiterating an archetypal position about the proper relationship between the civil sphere and its boundaries. “Such [bailout] schemes violate the liability principle,” Sinn explained, “one of the constituting principles of a market economy, which holds that it is the creditors’ responsibility to choose their debtors.” According to such a principle, “if debtors cannot repay, creditors should bear the losses.”  For states to backstop reckless creditors and debtors who cannot repay, gravely threatens this economic logic: “If we give up the liability principle, the European market economy will lose its most important allocative virtue: the careful selection of investment opportunities by creditors. We would then waste part of the capital generated by the arduous savings of earlier generations.”

Sinn’s argument can be viewed ideologically, as a politically conservative intervention in the ongoing Euro crisis; it can also be viewed analytically, as an unapologetic statement about how a modern society would work if it were to be organized upon market principles alone. There is, after all, a compelling logic that defines capitalist economic systems. Only if investors and lenders are economically rational when allocating scarce resources can capital be allocated efficiently and productively. To help ensure this outcome, markets must not only threaten; they must actually punish investors who demonstrate the lack of such prudence. If bad investors do not lose money, then scarce time and energy is wasted. When taking on debt, creditors carefully calculate future productive possibilities. If they are wrong, then their economic judgment is faulty; they must be penalized and punished in order to maintain the stringent yet economically productive rules of the capitalist game.

My interest here is not to challenge this argument from an economic point of view. The marketplace is vast and significant, and capitalist logic can be spectacularly effective in strictly economic terms. But the marketplace does not exhaust modern society, which is filled with places and positions that operate according to fundamentally different logics (Polanyi 1944, Somers 2008).  At the end of his peroration on behalf of market society, Hans-Werner Sinn referred with notable sarcasm to U.S. President Barack Obama, averring, “I am surprised that the president of the world’s most successful capitalist nation would overlook this [liability principle].”  He should not have been. The United States is not just capitalist but aspires to be civil and democratic. If Barack Obama urged EU financial support for Greece and other ailing European economies, he did so for the same reason that he had earlier advocated state support for American banks, creditors, and debtors alike. Elected to represent the civil sphere (Alexander 2010, Alexander and Jaworsky 2014), the President felt compelled to make the American state responsive to the human suffering of citizens, regardless of economic costs. Yes, creditors and debtors had been remarkably irresponsible as economic actors, but they were also members of the civil sphere, and deserved to be treated not only according to the logic of the market but as human beings.

How such multiple social logics are intertwined is my concern in this essay. I investigate recent eruptions in the boundaries between economic, religious, and mass media institutions, on the one hand, and the civil sphere, on the other — by reconstructing their cultural narration in major national newspapers.  I examine the Western financial crisis that exploded in 2008; the pedophile crisis in the Catholic Church commencing in 2002; and the UK phone hacking scandal that mushroomed in 2010. How did endemic, ongoing strains suddenly burst their sphere-specific boundaries and become explosive scandals in society at large? My argument is that social problems do not, in themselves, create such broad eruptions. Normally, even severe institutional strains are handled by inside authorities in ways that make them relatively invisible and un-troubling to those on the outside.  Problems become crises only when they move outside their own spheres, and appear to endanger society at large.  Such “societalization” occurs when the discourse and resources of the civil sphere are brought into play.  It is when sphere-specific problems become societalized that routine strains are carefully scrutinized; once lauded institutions become ferociously criticized; targeted elites are threatened and punished; and sometimes far-reaching efforts at institutional reforms are made.

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