Doing God's Work or Sucking Humanity's Blood?: The Controversy over Goldman Sachs' Role in the U.S. Financial Crisis (2007 – 2010)
The Controversy over Goldman Sachs’ Role in the U.S. Financial Crisis (2007 – 2010)
Abstract: This article builds on Boltanski and Thévenot’s theory of justification to analyze the controversy over Goldman Sachs’ role in the U.S. financial crisis (2007 – 2010). The examination of the bank’s specific actions leads to a (re)evaluation of its roles and responsibilities, and to a (re)interpretation of the interplay between morals and markets. I develop my theory by studying three national newspapers (The New York Times, The Wall Street Journal, and USA Today) from summer 2007 to summer 2010. The rationale for focusing on the media is two-fold. The media shapes and is shaped by collective processes of sense-making. It adequately reveals the evolution of the public discourse. But the media is not only a forum for public opinion. It is also a key motor of social change. Actors draw a line between moral and immoral behavior through their public games of accusation and counter-accusation. I analyze the justifications deployed by different stakeholder groups to ground their accusations and answers. At an aggregate level, their justification work contributes to renegotiate existing arrangements, which become open to evaluation in times of crises. At stake is the definition of legitimate practices, status hierarchies and regulatory frameworks. Economic crises make visible both the forces and relations of production, which become subject to conflictive negotiation. The recent crisis opened the black box of financial organizations such as Goldman Sachs. It permitted to reveal their inner workings, to question their functions, and to interrogate their obligations. The obligations of Goldman Sachs towards its clients, towards its shareholders, towards society as a whole are reconsidered in times of turmoil. The recent crisis also revealed the massive financialization of the American economy, a culture of excessive risk taking and lavish compensations that prevailed in the financial and mortgage industries, and the overall laissez-faire attitude of Washington. All these aspects of the American economy, which were sometimes unknown to the general public, became open to evaluation. At a group level, stakeholders’ justification work reflects both the type of crisis at play, and actors’ structural position and political orientation. However the analysis reveals a dynamic interplay between logics of justification. Stakeholder groups draw on each other’s logic, while struggling to maintain consistency. This justification game forms a fragmented world where different institutional logics coexist. The dominance of a composite logic depends on power games, cultural resonances, and appropriate framing of justifications. The CEO of Goldman Sachs arguing that his company is “doing God’s work” typically fails on the third variable. The analysis thus refocuses the attention on the reception rather than on the emission of justifications.
Key words: Legitimacy, Orders of Worth, Financial Crisis, Goldman Sachs.