The Global Sociology Blog

Philippe Steiner‘s Les Rémunerations Obscènes is a pamphlet more than a book per se. With a 134 pages of text, it a short and clear read on the topic of the stratospheric compensations received by corporate CEOs and their lack of justification. However, the book is not just a rant against these compensations packages. Steiner systematically debunks one by one, armed with both economic and organizational sociology and some solid references to research, all the justifications commonly employed to rationalize the levels of CEO compensation.

The book is also shock full of data detailing the various levels of compensations, their evolution and trajectories, alongside some more well-known data on the increase of inequalities and wage stagnation for the rest of the population. The icing on the cake comes from some morceaux choisis from CEOs themselves, in their own words, explaining why they should be paid such obscene compensations. Finally, the book ends with a few suggestions as to what should be done.

The sociologists will also find in the book some constant references to classical (Weber, Durkheim) and more contemporary sociologists as Steiner goes through some SHiP (Structure / History / Power) demonstration to explain how we got to these levels of compensation, why the upward trend has been so steep and continues to this day irrespective of objective factors such as performance. Steiner has done his homework and the bibliographical references are quite extensive for such a short book.

Using Weber, Steiner argues that the obscene levels of compensation have nothing to do with capitalism, which is supposed to temper the irrational passion for profit-seeking through a variety of mechanisms. The unleashing of greed is not part of such mechanisms. The corporate übermenschen (as Steiner calls them, “surhommes”) have managed to disconnect themselves from social ties that would link them to social norms and a general sense of the way the mere mortals live. The strong ties to the political world also increase the amount control that these men (yes, men) exercise over their own enrichment. And has been recently exposed, it is Goldman Sachs world. The rest of us just live in it.

The strongest parts of the book are those where Steiner explains the organizational processes at work in determining CEO compensations, especially the work of compensation committees. These committees may be composed of other CEOs, and they may use information provided by consulting firms specialized in constructing remuneration packages. This is where social capital and social networks analysis is central. These compensation committees look like a game of revolving door and mutual back-scratching disguised under rationalizations such as preventing CEOs from leaving the country if they do not get a globally-competitive level of compensation, the ability to attract the best and brightest. In reality, this looks more like CEOs looking at each other’s compensation and saying “I want at least what they have!” The processes are those of a very close and tight-knit in-group.

What of the argument that compensations packages are often tied to performance (in terms of stock value) and therefore, there is a level of accountability? Steiner reviews the research and shows that that is simply not the case. First of all, there are all the anecdotes of golden parachutes. Second of all, compensations never decrease based on bad performance. They might not increase but that is it. Steiner shows that salaries and bonuses rise in ways unconnected to stock prices and values.

So, are CEOs so rare and so incredibly talented that their compensation levels have exploded? Steiner invokes his Micromégas regime of competition, with reference to Voltaire: minuscule differences between individuals translate into massive differences in compensation between CEOs and the rest. At the same time, CEO contribution to the value of firms is minimal. At the same time, throughout organizations and recruiting firms, there is the belief in extreme individual agency, that is, the belief that whatever firm results are fully attributable to CEO decisions. This belief is taken as religious dogma (except, of course, when the company collapse and all of a sudden, someone like Enron’s Jeffrey Skilling argues that he didn’t know anything that was going on in the firm). If “I” did all this, then, “I” deserve to appropriate such a high share of profits, not the hundreds, or thousands, or tens of thousands of people who have contributed to innovation, productivity, etc. And this appropriation has to be at a level comparable to that of other CEOs, worldwide.

On the other side of things, firms that design compensation packages tend to think that (1) they will not be able to attract the “right” candidates if compensation packages are not tempting enough, and (2) that a company would symbolically debase itself if it did not come up with a phenomenal compensation package (one that is more impressive than that of comparable firms). This triggers compensation inflation as chain reaction.  Companies offer enormous compensation packages as status signals that reflect on them.

Steiner also analyzes the current indignation regarding executive compensation using Durkheim’s concept of moral economy, that is, the social evaluation of the functions and compensation. The level of contestation has to do with the legitimation crisis that has been intensified by the economic crisis, itself revealing the disconnect between compensation levels and the collapse of their justifications. Of course, politicians have grabbed the theme of a moralization of executive compensation, but the tangled web of political/corporate connections guarantees that said moralization will not go beyond rhetoric.

Invoking The Spirit Level, Steiner ends by noting that obscene compensation is a social pollution, contributing to rising inequalities and their deleterious effects. The book is a bit short on solution (fiscal policy), which is a shame but changing the structural nature of obscene compensation probably would take a whole book in itself.

In light of the current crisis and the imposition of “sacrifices” on populations across the Western world, this topic is highly relevant. In the context of the upcoming French presidential election, and as the main candidates start to unveil their platforms, this book comes out at the right time and should be mandatory reading to said candidates.

You must read this first-person account of a former Goldman Sachs “quant” (that’s how analysts are called) with a degree in physics (meaning, he can do fancy maths). There is a lot to love.

The hierarchy:

“There were other characters in this drama. The sales guys were complete tools, with a total IQ, summing over all of them, still safely in the double digits. The traders were crafty and quick-witted, but technically unsophisticated and with the attention span of an ADHD kid hopped up on meth and Jolly Ranchers. And the quants (strategists in Goldman speak)? Mostly failed scientists (like me) who had sold out to the man and suddenly found themselves, after making it through two years of graduate quantum mechanics, with a bat-wielding gorilla peering over their shoulder (that would be the trader) asking them where their risk report was.”

The organizational rituals that would make Durkheim proud:

“To cite a particularly grotesque example, once a year, one of the partners would buy a pallet of White Castle burgers and first-year analysts and associates would have a burger-eating competition (with some nominal amount donated to charity). All trading on the Goldman Sachs trading floor would stop as every man on the floor would gather ’round to watch the plebes stuff themselves.

Trading turned from interest-rate swaps (minimal notional size: $50MM) to the over/under on the burger count for a particular analyst. Occasionally, one poor schmuck would puke, and the partner would rush to catch it with a plastic trash bin.”

The cult-like culture and behavior:

“Wall Street, like Scientology, has an all-inclusive and claustrophobic value system all its own. Particularly at Goldman Sachs, which prided itself as a breed apart from other firms, this provincialism went even further. Former employees who had left Goldman were rarely mentioned. The unanimous phrase for it was ‘no longer with the firm,’ said in the same tone used to describe the passing of a family member.

This tendency reached the height of comedy inside the strategies division, where some of the quants published academic papers on the more theoretical aspects of their work. If an author quit Goldman though, his name would be removed from the official version of the publication. It got to the point that some papers had no authors, and had apparently written themselves. So it goes. No longer with the firm.

(…)

Wall Street is even simpler than religion. Your entire worth as a human is defined by one number: the compensation number your boss tells you at the end of the year. See, pay on Wall Street works as follows: your base salary is actually quite modest, but your ‘bonus’ is where the real money is. That bonus is completely discretionary, and can vary anywhere from zero to a manifold multiple of your base salary.

So, come mid-December, everyone on the desk lines up outside the partner’s office, like the communion line at Christmas Mass, and awaits their little crumb off the big Wall Street table. An entire year’s worth of blood, sweat, and tears comes down to that one moment. And the entire New York economy marches to the beat of that bonus drum.

Without that number though, your privileged place in the New York hierarchy goes away. Gone is the house in the East Hamptons. Gone is the $2mm duplex on the Upper West Side. Gone is your kid’s $25K/year pre-school.

And that’s why Wall Street has that roach motel property: people check in, but rarely check out. By the time you’ve been through a couple of bonus cycles and seen that wad of cash hit your bank account in mid-January, you can’t imagine a life without it.”

Read the whole thing.

Stephane Béaud’s Traîtres À La Nation – Un Autre Regard Sur La Grève Des Bleus en Afrique du Sud (en collaboration avec Philippe Guimard) is perfect and great example of public sociology. It very nicely and powerfully shows what sociological analysis can do, especially with respect to a very high-profile event, such as the “strike” by the French football team during the 2010 World Cup in South Africa.

I really do hope that this book will get an English edition. If that were the case, I would jump on it and make my students use in my undergraduate classes. It is written at the perfect level, uses a lot of concrete examples. There isn’t too much jargon but the sociological analysis is crystal clear and very powerful. And, of course, the topic is guaranteed to get people’s attention. One can point at this book and say “this is what sociology does.”

The starting point of the book, obviously, is the strike by the players of the national French team during the World Cup, followed by their shameful exit from that competition in the early stages (after a very controversial qualification), and the social and political fallout from these events. Considering how discussed these events have already been, what does sociology have to bring to the table? First off, most of the discussion has been tainted by moral, classist and racist considerations. Exit the glorious days of the “black, blanc, beur” winning team of 1998, now, the strike is denounced by politicians as the work of low-class, highly-paid little bosses and the hapless followers. The media and politicians engaged in moral condemnations. Putting oneself in the position of judge, prosecutor and jury is not what sociology does. The job of the sociologist, for Béaud, is the Weberian injunction of Verstehen.

The point of sociological analysis then is to put these events in the proper context (what I call SHiP – structure, history, power) and to retrace the sociological factors that shaped this French national football team (especially in contrast with the 1998 team). What Béaud engages in is what he calls “live sociology” in which moral judgment is suspended and social action is re-situated in is (muli-layered) context, understood as a system of constraints in which individual behavior occurs. That is, the challenge is to treat this event as a social fact (in Durkheim’s sense): the strike is a product of the deregulation of French professional football, structural causes, changes in recruitment, training and socialization of French footballers, the internationalization and precarization of football careers (based on changes in the legal framework). Alongside these structural factors are more institutional and symbolic factors, such as relationships between players and the media, as well as the group dynamics within the French team.

For those of you who don’t remember, the strike of the French team occurred after France’s main sports daily newspaper published the photo to the right, on its front page, after the defeat against Mexico. The comment between quotation marks is supposed to have been said by Anelka against French coach Domenech in the locker rooms. Following the alleged incident, Anelka was expelled from the team by the French Federation.

Arguing the fact that what goes on in the locker rooms is supposed to stay there, and never be divulged to the public, the players went on strike and issues a communiqué (actually drafted by the attorney of one of the players) also blaming the Federation for mismanaging the situation.

For Béaud, this reflects the growing tensions that have been building up between players and the media as well as the changes in these relationships. Whereas these relationships used to be simple and straightforward, if not friendly, they have become more formal, complex and marked by the professionalization of the players. While players used to be approachable, and locker rooms were not closed off to the press, interactions with players are now mediated by the entourage that is characteristic of the main players (attorneys, PR consultants, etc.) and the creation of mixte zones in stadiums is a perfect reflection of that. As a result, it is more difficult to get more than canned talking points out of the players who are already uncomfortable with public speaking.

At the same time, Béaud shows that what happened was not the product of the “little bosses” from the projects pushing the other players into the strike. The French team was indeed divided but not along racial and ethnic lines but rather into group statuses such as established players (incumbent players, those more or less guaranteed to play) versus substitutes. The established group is composed of players who have the most sport legitimacy and credibility, which puts them in positions of leadership.

Compared to other players also from the project, the established players are more sensitive to any feeling of symbolic humiliation and injustice, and they are more likely to experience a relative frustration with the poor game strategy of the French team in recent years, under the leadership of a discredited coach. So, in the 2010 French team, one finds the dominated group, the newcomers, and the recently selected players from African origin. Their lack of either integration in the team or football capital reduced the probability that they would go against the decisions of the established group. And the newspaper frontpage gave the team a unity it had never achieved before.

Add to this the role of the French Football Federation and its incomprehensible to reappoint a discredited coach (which appointing his successor right before the World Cup, thereby undermining him even further), the respective relationships between the players and this coach (certainly, several players from the established group had a grudge against him), the conflict between the FFF and the other major institution involved, the Professional Footballers League. And finally, the infiltration of the political and social tensions from the housing projects into the team all created a bundle of tensions that were bound to explode at some point… and did.

These events are also a reflection of the change in recruitment of players in French football. In the post-War period, one finds most French football players came from the blue-collar working-class (especially the clubs from Northern France). The trajectories of these players are quite different than what they are today. They usually spent their youth years in amateur football, still going to school to obtain technical and vocational qualifications. They become professional relatively late (in their 20s). Therefore, they receive a rather typical working-class socialization. The 1998 team is basically the last fling of that generation of players, with a specific sport and social ethos based on humility, collectivism, respect for the elders and explicit patriotism. This is the working-class before the precarization of the working-class of the deindustrializing years and the defeat of its political power. And the players of the 1998 team who did grow up in the housing projects did so before the ethnic contraction and marginalization of these areas and increased polarization.

There are three major differences between the 1998 team and the 2010 team, sociologically speaking:

(1) There are now more players in the great and economically powerful European teams of England, Italy and Spain. A minority of them now play for French teams.

(2) Players are now recruited by training centers (famous institutions that detect football talents and develop them over several years, with hopes of professionalization right after graduation. These centers have made France the second exporting countries – after Brazil – when it comes to footballers, but they also close off earlier and earlier any real education and occupy a greater part of the players’ socialization) at an earlier and earlier age, and especially from the lower classes. Fewer players now come from the working-class French heartland, and more and more from the housing projects on the outskirts of France’s largest cities.

(3) There are now more players of African origin, especially sub-saharan Africa, as opposed to the Maghreb, and from players from France’s territories (Antilles, Guadeloupe, etc.).

This greater internationalization of football out of France is directly connected to the legal context created by the Bosman Ruling, which allowed players to have greater freedom of movement from one club to the next. This greater freedom has also led to the massive inflation of footballer compensation. All of a sudden, the most powerful European clubs were able to recruit players from all over Europe, and the players were able to demand higher pay for their services. These teams have been accused of pillaging other countries for their own benefit. If French football creates great players, the French teams are not economically strong enough to retain them once these players fully develop their potential. This has led former players to deplore the lack of “fidelity to the jersey”. This also means that teams are less likely to have a trademark style of play, as the recruitment is no longer local and long-term.

Now, a player will typically enter a training center around 15 years old (if not pre-training centers that recruit even younger players) and they may leave for a non-French team even before their training is complete to start playing for the club that has recruited them. And the Bosman Ruling allows these young players to change club more easily (making more money in the process). As a result, their trajectories are much less smooth and their socialization more chaotic as they leave their families at a fairly young age. For the lower-class parents of these players, to sign a professional contract is a way out of the project for their son and club scouts start contacting parents as early as possible (the competition is extreme), making them incredible offers. From the clubs’ perspective, these young players are commodities, and they expect rather rapid returns on investment, so as to re-sell the players at an even higher price than they paid for him.

This means that, at a young age, players have to be surrounded by a whole entourage of agents, attorneys for themselves and their parents, along with the usual trainers, PR people, etc. But in the context of increased precarization for the lower classes, social tensions in the projects, and the ever-more repressive policies put in place by the Sarkozy government, who could resist?

So, Béaud argues that the strike of 2010 in South Africa is an act of civil disobedience and also a reflection of all these structural and cyclical factors: the changes in socialization of the players, transformation of the labor market for French football players, the impact of geographical and sport migration and the corresponding social uprooting, along with the pressures tied to the obligation to perform earlier, faster and better in a very competitive context… on top of the group dynamics and the interpersonal and institutional issues mentioned above.

Béaud wraps up his study with an analysis of the evolution of the players of Maghreb origin in French football, inserting it as well in the social context of immigration and integration. The last two chapters of the book are less directly related to the 2010 fiasco but they additional layers to an understanding of French football in its social context.

As I mentioned above, this book is a great read (something that does not happen enough in sociology!) and a great example of public sociology and live sociology. Highly recommended… if you can read French.

Anyone teaching sociology must watch this series on CBS and make students watch as well:

It’s all there: the organizational, gender and class disconnect between the company’s layers. How the gender of workers is assumed when rules are made up (male is default). How treating workers like human beings improves morale and productivity more than dumb clock rules as well the embedding of labor into other parts of the social structure.

At the same time, the usual frustration is present: it’s as if changes can only come from individuals and keeps the system untouched. Yes, this company might operate better, but ultimately, it is to the benefit of the company (as well as SOME individuals), but the system is not questioned.

Among the sociological topics I like reading about, I particularly enjoy sociology of labor, especially those based on deep ethnographic work combining micro-analysis of social relationships in the workplace with macro-analysis of structural inequalities.

So, this is why when my colleague Mike recommended Christine L. Williams‘s Inside Toyland: Working, Shopping, and Social Inequality, it was a no-brainer for me to jump on that book. It also has to do with the fact that I am always on the lookout for potential sociological readings for my freshmen / Sophomore classes.

For this audience, good qualitative sociological work is often much more palatable than peer-reviewed articles with incomprehensible statistics (for their level). Part of it is because I remember, as a first year student, how refreshing it was to read Howard S. Becker’s Outsiders or anything by Goffman compared to Lazarsfeld.

Inside Toyland is an ethnography of work in toy retail. Williams spent time working at two different toy stores, catering to different social classes and therefore with different normative expectations of what service is and of employee relations. It is a book that is a rather quick read, with very little jargon but a lot of sociological content as Williams closely relates her ethnographic experience with social theories and works relating to her work. One will find references to Bourdieu’s cultural capital and habitus as well as domination, alongside Hochschild’s classical study of emotional labor and time bind, among many others. But overall, the writing is fairly informal and the insertion of a lot of examples from her field notes breaks up the reading in pleasant ways.

Inside Toyland is a rather short book but it covers all the bases of sociology of work and labor relations. Williams addresses a multiplicity of topics from changes in the US workforce, to the stratification within each toy store along with the privileges associated with each status. The book deals with class, gender and racial issues in the workplace within and between stores as structural inequalities are a major topic. It does a great job of exposing the invisible flip side of racial discrimination: white privilege and the naturalization of white entitlement.

But the book is also a study in the sociology of consumption, that is, not simply where people buy toys (by social class, for instance) but also what and how people consume toys and the various meanings and social relations symbolized through toy consumption.

In other words, Inside Toyland covers all the aspects I emphasize to my students in terms of the sociological imagination: SHiP, structure, history and power. In that last respect, the book goes into some details into the ways in which management tries to control shop floor workers (associates) in contrast to the ways in which associates find ways to resist such attempts at control and how social interactions in the workplace contribute to the reproduction to social inequalities on the macro level.

The fact that the ethnographic locus of the book is toy stores also means that there is a lot in the book about parent-children relationship (with obligatory reference to Lareau) based on social class, within the context of US individualistic and consumerist culture. Overall, the book shows how much Lareau’s class-based parenting styles are incarnated in shopping practices.

As I mentioned above, this book is a rather quick read that covers a lot of sociological territory at a level acceptable for undergraduates. It certainly illustrates the rich aspects of participant observation and introduces a lot of sociological thinkers in an approachable manner.

“As soon as one observes the formation and operation of real markets, it becomes obvious that none of [their] dynamism is possible without deep involvement by entrepreneurs, managers, workers, firms, and governments. The people who run firms have to conceptualize opportunities, figure out ways to exploit them, and motivate others to help attain those ends. They have to obtain funding, secure raw materials, and build an organization. They have to figure out ways to stabilize their interactions vis-à-vis their principal competitors. Finally, the conflict between owners and those who work for them is under constant negotiation.

Moreover, firms operate against an extensive backdrop of common understandings, rules and laws. These are most often supplied by the government. One cannot overestimate the importance of governments to modern markets. Without stable, more or less non-rent-seeking states, modern production markets would not exist. War, plunder, and mercantilism would dominate and swamp entrepreneurs.

(…) These social structures, social relations, and institutions have not been created automatically in market society. They have been long-run historical projects ongoing in all industrial societies that have worked through waves of crisis (sometimes violent). Solutions that have been  crafted required social experimentation during specific market crises and more general economic depressions (not to mention during upheavals produced by war and conquest).  These events have pushed people to think about the ways that they needed to organize in order to make and take advantage of market opportunities.

(…) Technological change certainly can have independent effect on social structures. But technological change can have these effects only where the social organization exists that makes technology relevant. So, for example, a hunter-gatherer society has little use for highways and telecommunications. But a society in which lowering the costs of transportation and communications makes it easier for firms to move goods and services where there are opportunities to sell them gives huge incentives to firms that can figure out how to lower those costs.

(…) Similarly, competition produces social-organizational responses as well. Firms try to find ways to control the worst aspects of competition in order to continue to exist. Much of the market-making project is to find ways to stabilize and routinize competition. Much of the history of the largest corporations can be read as attempts to stabilize markets for these forms in the face of ruinous competition and economic downturns.

(…) In order to take advantage of new technology, firms need to establish stable relationships to their suppliers, workers, and principal competitors. The ability to establish these relationships is itself dependent on the production of stable societal institutions such as governments and law. In every advanced industrial society, governments, firms, and workers have solved their collective problems by producing rules to help stabilize their interactions. These solutions have varied historically and across societies. They depend greatly on the relative power of different groups to produce the modern state. Modern states have produced social welfare systems, money, and the rule of law and have worked to find solutions to the conflict between labor and capital. They have promoted competition, protected workers, and provided opportunities for basic research, thus developing new technologies. Stable, non-rent-seeking governments make the difference between societies where markets are possible and those where they are not.”

Neil Fligstein (2001), The Architecture of Markets – An Economic Sociology of Twenty-First-Century Capitalist Societies, Princeton, NJ: Princeton University Press, pp. 1 – 5.

First excerpt with more to come.