I was recently asked to contribute to a piece on derivatives for an economics education website – with the brief being to explain why derivatives ‘matter in daily life’ for readers with no presumed or particular interest in finance. So far, I confess, I’ve not found it particularly easy. Derivatives are a funny kind of sociological object. We’ve almost all heard of them; many will have a sense that they (or some particular use of them) were implicated in the 2008 financial crisis; and it is reasonably likely that some of us will have come across one of the countless news items (or visualizations) that asks, along with sociologist Elena Esposito: “What is sold and bought in financial markets that move a mass of capital exceeding by 20 times the entire world GDP, which then clearly does not refer to the goods?” Such news items frequently earn the ire of derivatives enthusiasts, who are keen to point out that the ‘notional value’ of the world’s outstanding derivatives is not a proper measure of the market value of outstanding derivatives (see also here and here). The notional value, they would argue, refers to the ‘face value’ of the underlying asset from which the derivative ‘derives’ its value. But the amounts for which derivatives change hands can be fairly detached from the face value of the underlying asset*. And besides, as this article for Global Finance magazine points out, since “the parties to a derivative contract are seldom required to pay out the full value of the asset”, the notional amount outstanding does not reflect the “actual risk” that traders take.
If anything, this is likely to trouble the observer even further: How is it possible that derivatives derive their value from an underlying asset, but don’t have to pay the full value of that asset – or, in the case of most exchange-traded commodities futures, don’t have to deliver the underlying asset? As Mazen Labban points out in this brilliant Geoforum article, only 2-3% of the sweet crude futures traded on the New York Mercantile Exchange were settled for actual delivery in 2002. How can you enter into a contract to buy an asset at a set price on a given day (the value of the contract being derived from the value of the underlying asset), but not have to deliver that underlying asset when the contract matures? The simple answer is that exposure to derivatives trades are now frequently ‘netted out’ between the firms who trade them. But accounting for this state of affairs in historical and sociological terms is a little less straightforward.
For some of the earliest sociological and anthropological commentators on derivatives, Edward LiPuma and Benjamin Lee, the ascent of derivatives (especially currency derivatives) since the 1970s represents a shift in ‘the globalizing process’. more...
The U.S. Department of Veterans Affairs handles the claims, benefits, and memorial services for veterans as well as provide services for their spouses and dependents. However a long-standing problem with this office is the expected turn around with claims processing that often leaves many veterans and their families without adequate healthcare or other benefit support. Given the debate in the United States with the Affordable Care Act and its comparability to other Western Hemisphere countries that have initiated universal healthcare, the U.S, Department of Veteran Affairs offers juxtaposition to U.S. healthcare and other countries’ initiatives as well. With the public support for the troops in Operation Enduring Freedom (OEF) and Operation Iraqi Freedom (OIF) wars it seems there should be an equal amount of support for veterans’ benefits and policy implementing access to said benefits. more...
The depiction of crime in fictional mass media occurs differently for people depending on the color of their skin and what this color has come to symbolize in such a complex system of race, ethnicity, and stratification in the United States. more...
Writing for the Guardian’s Comment is Free blog yesterday, David Graeber warned that we may be heading towards yet another crisis of the kind we saw in 2007–08. In his Comment, Graeber takes to task George Osborne’s 2015 Mansion House speech (or rather the logic underpinning it), in which Osborne made a commitment to run a budget surplus in ‘normal times’, much to the consternation of dozens of academic economists. It seems that the utterly misleading and moralizing analogies so frequently made between well–disciplined householders ‘tightening their belts’ when times are tough, and the national government cutting its spending to pay down its debts – part of the mythos termed ‘mediamacro’ by Oxford macroeconomist Simon Wren-Lewis – simply won’t go away. And yet, as Graeber shows, “the less the government is in debt, the more everyone else is…If the government reduces its debt, everyone else has to go into debt in exactly that proportion in order to balance their own budgets.” Everyone cannot simultaneously ‘balance their budgets’ and continue to interact, because all money is debt, as the Bank of England ‘revealed’ in January 2014: “Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits.”
Similarly, at last week’s launch of his new bookBetween Debt and the Devil, Lord Adair Turner, who took over the Financial Services Authority as the 2007–08 crisis began to unfold, suggested that the UK has reached a position in which our debts are not being paid down, but simply shuffled back–and–forth between the public and private sectors – though the vast majority of ‘private sector’ lending is going into a game of property speculation played by the wealthiest, at the expense of the most vulnerable. For those seeking to make sociological sense of this scenario, the recent work of Stefano Sgambati, at the University of Naples Federico II, provides one of the most powerful pathways to making political and theoretical sense of money, debt and finance in the modern economy.
Doubtless I am not alone among the contributors to Sociology Lens in having been exposed, during my first year as an undergraduate, to an array of foundational thinkers in sociology (and anthropology) who present human history as a movement away from ‘traditional’, ‘face–to–face’ or ‘kinship–based’ societies, towards those in which interaction and identity is less relational, and more individualized. Such theorizing is not only limited to the classical sociologists who wrote in the 1900s, like Ferdinand Tönnies and Émile Durkheim; it resurfaces again in the sociology of the 1990s. In the writings of Anthony Giddens, “the self” is seen less as a product of interactions and relations with others, and more as a matter of individual “self–fashioning.” Or, as Giddens (now Baron Giddens) wrote in 1991, “in the context of a post–traditional order, the self becomes a reflexive project” (p. 32).
And yet, this literature on individualization and self–fashioning as the signature mode of existence in ‘modernity’, associated not only with Giddens but also with Ulrich Beck and Zygmunt Bauman, becomes increasingly difficult to square with the ongoing proliferation of apparently ‘social’ measures and projects: from ‘social enterprise’ or ‘social business’ and ‘social return on investment’, to the even more ubiquitous social media platforms and social marketing initiatives. In the UK, the National Centre for Social Marketing describes social marketing as an approach that uses behavioural economics (see Roger Tyers’ post for Sociology Lenshere) to change behaviour for the benefit of “society as a whole.” Similarly, the UK’s national body for social enterprise describes such enterprises as businesses that “trade to tackle social problems…when they profit, society profits.” And the New Economics Foundation’s vision of social return on investment tools are described as alternatives to conventional cost–benefit analysis, which “does not consider anything beyond simple costs and price.” Social return on investment tools thus incorporate “social factors” when accounting for the value generated by an investment. more...
Yesterday I had to pinch myself when I saw Jeremy Corbyn on the front benches of the House of Commons, facing David Cameron as the leader of the British Labour party. Corbyn is the man who has spent all of his adult lifetime on the fringes of mainstream politics, an unapologetic socialist campaigner who has fought many of the battles of the left: against South African apartheid and Thatcherite deindustrialisation in the 1980s, against the introduction of university tuition fees in the late 1990s, against the invasion of Iraq in the 2000s, against government austerity since 2010, and, like me, a lifelong campaigner against nuclear weapons. Since becoming an MP in 1983, Corbyn’s been a member of the awkward squad on the far-left of the Labour party, someone who could usually be ignored by his old bosses Blair, Brown and Miliband.
The New York Times recently published an article about one of Norway’s maximum security prisons, Halden Fengsel – i.e. the “world’s most humane” prison. The article doesn’t seem real. Flowers, barley, open fields, live cows. Since 1998, Norway’s sentencing has focused on rehabilitation. This particular prison model – one that is designed from its inception for rehabilitation – was the first of its kind in Norway. Even I, with my bright-eyed naiveté and mid-20s progressive agenda can’t help – just for a moment – think that the stars just aligned for Norway. Maybe things are just different in Norway?
The reality is that’s just not the case. Magic justice dust was not sprinkled on Norway. Similarly, America is not too heterogenous or too populated or too developed (and therefore crime-ridden). It is simply is too broken.
Make no mistake, Norway still faces serious crimes. Extremist Anders Behring Breivik set off a bomb that killed eight people and systemically hunted down and shot sixty nine others, many teenagers at a summer camp for the Labor Party. He was sentenced to the maximum 21 years in prison.
Compare Breivik’s story to that of Kalief Browder. The New Yorker followed Browder’s story to its tragic end. Mr. Browder was arrested ten days before his 17th birthday for allegedly stealing a backpack. Since he was unable to pay bail, he spent the next three years at Rikers Island in New York awaiting trial. The trial never happened and he was released after the government dismissed the case. During those three years, he spent two in solitary confinement. In 2015, only 22 years old, Kalief Browder committed suicide in his parents home.
Mr. Browder’s story is not an anomaly. The extent to which this happens, the number of people to which it happens, its disproportionate racial impact on black Americans, and its disproportionate economic impact on the poor is unique to the United States. I’m not telling you anything you probably don’t already know. With all of the publicity, change in America’s prison infrastructure has seemed imminent for years, but something seems to be holding back the floodgates.
Policy questions regarding prison reform often focus, first, on money, and then, on balancing rehabilitation and punishment. However, even before issues of punishment and rehabilitation, there are fundamental hurdles to overcome: what do human beings deserve from the State? Do prisoners qualify for these entitlements? Do prisoners deserve something less? If so, what? There are of, course, some nuances that warrant consideration depending on the nature of the crime, but let’s start with the basics.
It seems to me that the issue of prison reform distills down to two essential questions:
Once a person does something “criminal,” does that diminish that person’s status as a human being? and/or
What is the bare minimum that a human being is entitled to by the State?
The second question is more complicated, but easier to answer. We’ll start there. The caveat with this question is that it requires us to think about we need, regardless of whether we commit a criminal act. Barring protecting the safety of others or the safety of ourselves, no matter what we do, what resources should we be entitled to as human beings?
Ethical theorists have been ruminating over what human beings need – not what we want, but what we need. What is the bare minimum that a human being is entitled to? In its contemporary iterations (and the ones I’d like to apply to prison reform in this post), this conversation has centered around international development. Two theorists who have changed the face of this field are Martha Nussbaum and Amartya Sen with their separate works on the “capabilities approach.” To simplify, they have both argued that human beings are entitled to certain “capabilities” or “functionings.” A person is entitled to more than just food, water, and shelter but also an environment that enables productivity, creativity, and – dare I say it – happiness.
Their work was revolutionary, not just because it increased international pressure for aid and nation-state funded welfare but because it redefined human dignity. People deserve to be happy. It is a matter of human dignity.
The capabilities approach is only one of many frameworks that may be applicable to prison reform efforts. It certainly resolves some of the inhumane practices present in American prisons. However, jumping to considerations of rehabilitation/punishment without first addressing the bare minimum that each prisoner is entitled to may result – and I would argue, has resulted – in an inefficient use of resources and slow, scattered policymaking. Though not a fixture, this concept isn’t foreign to the American criminal justice and prison system. Correctional facilities have culinary programs, professional certifications, and arts programs. However, these programs rely heavily on outside funding and volunteers; they are often not a part of prison infrastructure.
Of course, each of these stories is deeply unsettling. They can only be written off as a case of mishandling by someone else (much less ethical, much less competent than any of us would ever be) so many times until we must confront the uncomfortable reality that our world – one that we cannot disclaim responsibility for (try as we might) – doesn’t treat human beings as such. Status as “criminal” and “human being” though perhaps not mutually exclusive are certainly at odds to some degree, enough that the stories I’ve mentioned above are not a mere handful.
Though there are nuances of sentencing and resource allocation to be handled in policy meetings, thoughtful prison reform will remain a distant goal until uncomfortable confrontations are made. Confrontations about how how our courts and our prisons treat people who commit crimes in terms of (1) their status as human beings and (2) what capabilities and/or resources those individuals are entitled to.
The importance of these preliminary issues is paramount. The consistent to failure to confront them has left a broken prison system that has harmed our friends, families, and communities. Behind the cages of America’s prisons are human beings just like you and me. People who are entitled to our respect and, indeed, their own happiness.
The economist Karl Marx believed for society to change, there was a need for an uprising, and an overthrowing of the ruling class; the bourgeoisie. To Marx, no person would truly be free unless this rebellion would occur. Marx is known for his theories about the economy, workers, and social life. One concept, of his, that appeals to my attention is the division of society into two classes. However, what Marx failed to realize, was by this division, he, essentially, enabled a space to create gendered spaces; or, what I will label a sexual differentiation of space. more...
Roy Jenkins famously described Tony Blair’s task in getting Labour into power in 1997 as “like a man carrying a priceless Ming vase across a highly polished floor”. This has now become something of a truism of electioneering. According to this view, winning power is about damage-limitation, about notmessing up, and it implies a strategy of ‘triangulation’ – co-opting voters from other parties whilst keeping your own voters onside. It implies a certain lack of ambition, trying to carry as many disparate sections of the electorate with you, limiting embarrassment to oneself and limiting offence caused to others. more...
On paper, it had all the makings of a perfect scandal – tax evasion aided by a household-name bank, the prime minister dishing out jobs to his City friends, bankers dishing out parcels of untraceable banknotes to account holders in Zurich. But, somehow, the story of HSBC’s Swiss banking arm’s ‘dodgy’ dealings let the genie out of the lamp ever-so-briefly, only for it to be sucked it again in no time at all. That particular scandal of money and politics passed after a few days’ headlines, only for another one to replace it.
So what happened there? Are we so used to the 1% taking advantage of us that it’s no longer news-worthy? Are we becoming so ADHD as media-consumers that journalists have to give us a fresh fix of hate and outrage every few days? Or, as Charlie Brooker argues, are financial news stories just a bit dull? more...
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Sociology Lens aims to offer a lively and informative venue for faculty, graduate students and the wider public to discuss current issues in sociology. The site is a companion to the online review journal, Sociology Compass.