11th Global University Network ConferenceYichang, 22-25 April, 2014

LEARNING FROM THE GLOBAL CRISIS: OPTIONS FOR THE DEVELOPMENT

OF SOCIOLOGICAL THEORY

Prof. Dr. sc. Nikolai GenovSASS, Slovenia

Let‘s look back – and then forward

The historical turning point was September 2008-The bankruptcy of Lehman Brothers bank on 14 September...-The IMF‘s projections in October 2008 for 2009 and the reality...- Hank Paulson‘s interview on 15.09.2008- The famous speech of Peer Steinbrück on 25.09.2008 - Cognitive deficites? Or camouflage and camouflage of camouflaging? Both were there...

IMF: October 2008:World GDP +3% in 2009IMF: April 2010: World GDP -0.6% in 2009

The politicians:On 15 September 2008 Henry Paulson praised „the soundness and the resilience of our financial system”Paulson, Henry M., Jr. 2010. On the Brink: Inside the Race to Stop the Collapse of the Global Financial System. New York: Business Plus. On 25 September 2008 Peer Steinbrück:“the financial crisis is above all an American problem”Bradford, Colin I. and Linn, Johannes E. 2011. ‘A History of G20 Summits: The Evolving Dynamics of Global Leadershiip’. Journal of Globalization and Development, vol. 2, 2, 1-21.

It is alarming:

-Where were the social scientists? Nobody rang the bell before the crisis!-Are the social scientists able to put adequate diagnosis of our times indeed? -Is there a burning need to reconsider the conceptual tools of social sciences – mostly sociology? (Mannheim, Beck).

The conditions: Controversial processes in the transnational space

-The technological division of labour - growing divercity and immense concentration;-Disconnection of financial flows from the exchange of goods and services;-The global political integration dramatically lags behind the level of the global technological and economic integration.

Growth of the global net FDI (left) and the global exports of goods and services 1992-2010

Sociological attempts at reducing the over-complexity I (Talcott Parsons)

„The System of Modern Societies“ (1971)Society: „the type of social system characterized by the highest level of self-sufficiency” (nation-states); (+) Development of universalized concepts (functions AGIL, applied on societal systems)(-)The relations in the system of modern societies = international relations; The approach: methodological societalism;

Sociological attempts at reducing the over-complexity II (Immanuel Wallerstein)

-Methodological approach as “embedded in the history of the modern world system” (2004:1);-Historical sequence of world systems; -A step backwards from Parsons analytical concepts; -”Universalistic theoretical explanations were rejected and the historicity of the social science was embraced” (Chase-Dunn 2006)Historicist methodological globalism

The suggested solution: Concepts of four global trends

-No functionalist societalism; -No historicism.-Focus on the concepts of analytically differentiated and mutually influencing global trends: -Upgrading the rationality of organizations;-Individualization; -Spread of instrumental activism; -Universalization of value-normative systems.

Indicators of rationalization -What kinds of individual or collective, cooperative or hostile, conservative or radical, etc. actors might be identified in intended, attempted or achieved upgrading of organizational rationality? -What kinds of domination or equality, affinity or animosity, cooperation or conflict, etc. characterize their relations? -What kinds of processes of stagnation or change, differentiation or integration, long-term or short-term change, etc. predominate in the analyzed cases of upgrading the organizational rationality?

Indicators of individualization Indicators about social-structural conditions: -To what extent is autonomous orientation of individuals under the given circumstances possible? -To what extent is autonomous decision about individual action under the given circumstances possible? -To what extent is autonomous action under the given circumstances possible? Indicators about the conditions of learning: -Are the economic circumstances fostering or hindering the individual learning? -Are the political conditions fostering or hindering the individual learning? -Are the cultural circumstances fostering or hindering the individual learning?

Indicators for the spread of instrumental activism

-To what extent is the typical thinking and behavior under given historical circumstances focused on the ultimate values of religion or religion-like ideology? -To what extent is the typical thinking and behavior under given historical circumstances focused on values of in-worldly material advantages and consumption?

Indicators for value-normative universalization

-What kind of value-normative system (polytheist, monotheist, secular, etc.) is already predominant or tends to become predominant under given historical circumstances? -Can the value-normative system play its integrative role in the long-run or not?

Four global trendsConditions Institutional Long-term dynamics Emerging of a new New conditions

of action frame of four global trends institutional frame of action

-Natural -Natural

environment environment

-Technology -Technology

-Economy -Economy

-Politics -Politics

-Culture -Culture

Legend of global trends:

A/ Upgrading the rationality of organizations B/ Individualization

C/ Spreading of instrumental activism D/ Universalization of value-normative

systems

A

B

C

D

Application I: Upgrading the rationality and rising irrationalities

-The US state supported the companies Fannie Mae and Freddie Mac to guarantee the housing mortgages; -The financial institutions massively offered easy mortgages to financially non-reliable clients with payment rates adjusted to the housing prices. -Domestic and international investors increasingly wrapped their assets in the housing market in financial derivatives for upgrading the organizational rationality.

Annual change of foreign-owned assets in U.S. and U.S. owned assets abroad (1990-2009, in $billion)

The globalization of the national crisis of the American housing market

-The US American subprime mortgage crisis immediately developed into a global financial and economic crisis in 2008.

-What seemed to be a rationalized system for financing the US housing market by international investors turned out to be irrational in its speculative fundaments and in its consequences.

Application II: Individualization –The American housing mortgages

- Millions of Americans signed housing mortgages with interest rates adjusted to the prices of housing. -Bankers, managers of hedge funds and other investors in the United States and abroad competed in the speculative housing business. -Both on the demand and supply side there was a strong individual interest to get involved in the booming speculations with housing mortgages.

Morgage liabilities

Total housing mortgage liabilities of U.S. households and nonprofit organizations from 1990 to 2010 (in billion U.S. dollars)

1990 2000 2005 2007 2008 2009 20100

2000

4000

6000

8000

10000

12000

Application III: The extreme marketization of housing

-There was no other identifiable cause for the tremendous rise of housing prices between 2004 and 2006 there than the individually driven and well-organized massive speculations.

-The speculative rise of housing prices had immediate effects on the adjustable rate of mortgages.

The bubble of profit making

Actual monthly payment for principal and interest of median first-time buyer (1981-2005)

Application IV: Universalization of value-normative systems - Human rights

Personal savings rate 1959-2007 (Personal savings as percentage of the disposable income)

The global crisis was also due to contradictions between global trends

-The universal right for profitable economic activity (spread of instrumental activism) and accumulation of property was abused in such a large scale that the commercial rationality of major institutions turned out to be dubious, the success in individualization achieved in this way became questionable and the spread of instrumental activism turned out to be no more morally and legally legitimate.

THANK YOU SO MUCH FOR YOUR ATTENTION!