Neoliberalism, fraud and expertise: A triangle of reinforcing influences?
by
Henri Guénin-Paracini, Ph.D., CGA
Faculté des sciences de l‟administration
Pavillon Palasis-Prince
2325, rue de la Terrasse
Local 5234
Université Laval
Québec City (Québec)
Canada G1V 0A6
Tel.: (418) 656-7746
E-mail: [email protected]
Yves Gendron, Ph.D., C.A.
Faculté des sciences de l‟administration
Pavillon Palasis-Prince
2325, rue de la Terrasse
Local 6224
Université Laval
Québec City (Québec)
Canada G1V 0A6
Tel.: (418) 656-2131 ext. 2431
E-mail: [email protected]
Jérémy Morales, Ph.D.
ESCP Europe – Département CPO
79, avenue de la République
75543 Paris Cedex 11
France
Tel.: +33 1 49 23 22 40
E-mail: [email protected]
March 2011
We benefited from the comments made by one conference reviewer and David Cooper. We
acknowledge the financial support of the Social Sciences and Humanities Research Council
of Canada, and of the Faculté des sciences de l‟administration, Université Laval.
Neoliberalism, fraud and expertise: A triangle of reinforcing influences?
Abstract
This paper investigates why substantive change is infrequent following financial crises,
focusing on the interplay between governmentality, fraud and expertise. The inspiration for
our study ensues from the empirical observation that neoliberal governmentality reproduces,
and perhaps even extends its ascendancy over the political economy, in spite of significant
financial crises. Our thesis is that the resilience of neoliberalism relates to processes of
collective sense-making surrounding crises – processes which involve an individualizing
conception of fraud and fraudsters, contextually supported through distinctive systems of
expertise. Drawing on the work of anthropologist René Girard, we first argue that the
reproductive capacities of neoliberalism ensue from the way in which financial crises have
tended to be interpreted and analyzed across society, through a collective focus, almost on the
verge of obsession, on the detection of individualized fraudulent acts and the punishment of
fraudsters. The argument is illustrated through an analysis of media accounts of the great
financial crisis “of 2007 to the present” – in which investment banks and bankers were
collectively designated as scapegoats. Our point is that deeply-rooted patterns of causality
collectively developed between the immorality of investment bankers and the turbulence
associated with the crisis, thereby preventing systemic issues from being seriously
considered. Drawing on a Foucauldian angle, the second part of our paper analyzes the role
played by systems of expertise in “setting the stage” for financial crises to be interpreted
through individualizing angles – sustained especially through the propagation of expert
representations promoting a sense of causality between economic turmoil and the occurrence
of individualized fraudulent acts. Sociologically speaking, neoliberal economies are
characterized with a proclivity towards social reproduction, sustained through a web of
reinforcing influences between governmentality, fraud and expertise.
Key words: Expertise; Fraud examination; Individualization of financial crises; Neoliberal
governmentality; Representations; Scapegoat.
1
Neoliberalism, fraud and expertise: A triangle of reinforcing influences?
Introduction
Neoliberal governmentality is today widely influential across societies, from healthcare
provision to the resolution of environmental problems, where carbon markets are seriously
considered as a way of regaining control over the atmosphere of the planet (Andrew,
Kaidonis, & Andrew, 2010). Although neoliberalism is now normal practice, it has not
always been within the boundaries of customariness. This art of governance originally
emerged around the end of the Great Depression of 1929, just as most of the richest countries
had adopted the Keynesian model (Foucault, 2004b). In order to oppose the rise of
totalitarianism, the Welfare State essentially sought to guarantee “greater levels of freedom
[freedom to work, freedom to buy, political freedom, etc.] through greater levels [...] of
intervention” (Foucault, 2004b, p. 69).1 Yet in the eyes of neoliberal economists, Keynesian
interventionism was doomed to produce the tyranny that it aimed to avoid (Foucault, 2004b,
p. 71 and pp. 110-119), and had thus to be vigorously fought. For that sake, upholders of
neoliberalism began to theorize their doctrine in the early 1930s; 2 they then disseminated
their vision of the world through think tanks, universities and the media; they gradually
secured a number of political victories (Foucault, 2004b; Gélinas, 2000); following the
stagflation of the 1970s, their ideas were finally brought to power by newly-elected heads of
state; 3 since that time, neoliberalism is buttressed by powerful discourses of legitimation,
being for instance associated with notions of freedom, openness, dynamism, multiculturalism,
innovation, growth and so on (Bourdieu & Wacquant, 2001).
Nevertheless, since the early 1990s, several key intellectuals have energetically
opposed the dominance of neoliberalism (Beck, 2003). The latter (so they claim) destroys
democracy (Bourdieu, 1998; Brown, 2003; Chomsky, 1999), generates significant social
inequalities (Bourdieu, 1993; Krugman, 2008) and suffering at work (Dejours, 1998),
engenders major economic imbalances (Allais, 1999; Stiglitz, 2003), and is deeply harmful to
the environment. For about 20 years, alter-globalization has also gained in visibility and
1
Unless indicated otherwise, the excerpts drawn from documents originally published in French were translated
in English by a specialist.
2
Interestingly enough, contrary to what most people think, the neoliberal program elaborated as part of the
opposition to state intervention is not merely an updated version of the old doctrine of “laissez-faire” (Foucault,
2004b, p. 120 and pp. 135-136). From the neoliberal standpoint, the state, if left unchecked and unmonitored,
will tend to expand and degenerate, becoming ultimately a totalitarian state. Such is its inherent tendency – it is,
in short, “absolute evil” (Foucault, 2004b, p. 119). The market by contrast has no inherent deficiencies, but a
number of structural conditions (demographic, technical, cultural, legal, topographic, climactic ones, but not
strictly economic) need to be met to guarantee its efficiency. According to the neoliberals, to fulfill these
conditions is precisely the role that the state must play. The state needs to govern for the market and to seek to
build the framework required by the economy – the framework it needs to produce the best results. In classical
liberal thought, the state plays a key role in monitoring the market – seeking to strike the right balance between
state intervention and laissez-faire. In neoliberalism, the market is required to become the key principle of
organization and regulation, the “permanent economic tribunal” (Foucault, 2004b, p. 253). In other words, the
shift from liberalism to neoliberalism involves a shift from a “market under state surveillance” to a “state under
market surveillance” (Foucault, 2004b, p. 120): “laissez-faire becomes a „do not laissez faire‟ the government,
in the name of a law of supply and demand that will enable a measurement and appreciation of each of its
activities” (Foucault, 2004b, p. 253). The core idea of liberalism is thus to some extent turned on its head.
3
Thatcher in 1979 and Reagan in 1981, to cite only the most well-known examples.
2
popular support. In some countries, a number of people have begun to oppose a number of
key neoliberal reforms. Further, the litany of crises affecting all or part of neoliberal
governmentality has stimulated the clusters of resistance, to the extent that they have
succeeded in denting, to a degree, the legitimacy of the existing regime in the eyes of a
number of stakeholders – at least in appearance.4
Accordingly, when the financial crisis that began in August 2007 eventually
submerged the world economy, as had the financial crisis of 1929 (Allais, 1999), many
commentators began to predict that the end of an epoch had come. The great crises of
capitalism had tended invariably to generate a new form of governmentality (Foucault,
2004b, p. 71), and the wider context in 2008 appeared likewise to suggest the beginning of a
new era. However, while the resistance to neoliberalism had a unique opportunity to prevail,
it only emerged weakened from the crisis – a crisis that eventually resulted in a series of
superficial regulatory changes. Although change had previously characterized the history of
the modern art of governance (Foucault, 2004b, pp. 71-72), it is the preservation (even the
consolidation) of the neoliberal model that appears to be making history today. It is as if this
model is capable of resisting opposition under any circumstances, and even to feed off and
emerge strengthened from such resistance. Far from weakening it, the succeeding crises
helped neoliberalism to strengthen its hold. The purpose of this paper is to better understand
the production of this paradox, and the central role played by accusations of fraud (in the
public sphere, not necessarily in the legal arena) and modern forms of expertise in the
process.
We argue that the resilience of neoliberalism relates to the way in which financial
crises have tended to be discussed and analyzed throughout society – an approach which
involves a specific conception of fraud and fraudsters supported through distinct systems of
expertise or disciplines. In other words, our paper puts forward a triangle of symbiotic and
reinforcing relationships between neoliberalism (in its reproductive capacities), financial
crises (which tend to be problematized through a conception of fraud), and expertise (which
plays a central role in constructing crises as problems of fraud). The great financial crisis of
“2007 to the present” allows us to flesh out these linkages, specifically in examining the role
of collective sense-making and professionalized disciplines in constructing the crisis as a
problem of fraud and fraudsters, thereby establishing conditions of possibility favourable to
the reproduction of neoliberalism. Our main argument is as follows: problematizing financial
crises through the individualistic lens of fraud (the blame being put on specific and deviant
actors) protects the regime of neoliberal governmentality from systemic questioning. In order
to re-establish the regime‟s legitimacy, relatively minor adjustments are made (rhetorically to
make it more difficult for future acts of fraud to take place) – but certainly not reformative
changes.
We examine the most recent financial crisis because of its magnitude and potential in
providing conditions of possibility for neoliberalism to be seriously questioned. However,
4
According to Laeven and Valencia (2008): 124 banking crises, 208 exchange crises, 63 sovereign debt crises,
multiple cases of proven fraud, between 1970 and 2007, i.e. in less than 40 years.
3
this episode is not an isolated case. The proliferation of accusations of fraud that are an
integral part of scandals has become a characteristic feature of the neoliberal era (Aglietta &
Rebérioux, 2004). Over the last decades there have been innumerable cases of crisistriggering scandals, themselves conceived as instances of fraud (Power, 1994; Sikka &
Willmott, 1995).5 Many institutions – such as the Serious Fraud Office established in 1987 in
the UK – were born of the phenomenon.
In sum, in times of crisis in neoliberal society, fraud is generally a cause of outrage,
and the outrage it causes is so resounding that it tends to stifle systemic debate. As noted
above, there are “dissident” voices – those who denounce the system rather than criticizing
actors within the system. But these remain a minority. Drawing on Foucault (1972, 1980), it
can be argued that fraud – as a major source of concern for public opinion, as the main raison
d‟être of corporate governance, as a key focus of many political reforms, and as a core object
of study in a wide range of academic disciplines – poses a problem. Specifically, we maintain
that the way in which it is problematized tends to protect the legitimacy of the system and the
status of the group to which the designated fraudsters belong. In order to better understand
the resilience of neoliberalism, this paper thus concentrates on two intertwined questions:
a) Why, in the context of financial crises, does fraud tend to be perceived as the root
cause of turmoil, and as the consequence of a lack of personal ethics among key
actors, whose group is subsequently consolidated in functions deemed to be cardinal?
b) What is the role of systems of expertise in problematizing financial crises as instances
of fraudulent behaviour?
The literature on the reproduction of neoliberalism is not thoroughly developed. For
instance, Foucault (2004b) carried out an extensive analysis of neoliberalism without
elucidating its resilience.6 To address the first question, we rely especially on the work of
René Girard (1961, 1982, 1990). Though showing no interest in the new art of governance,
Girard provides an illuminating interpretation of allegations of crime, which arguably play a
central role during social and financial crises, when community members seek to make sense
and understand the “problem(s)” at the origin of the crisis. While Girard‟s scapegoat theory
has exerted considerable influence in a number of disciplines in the social sciences, research
in accounting has yet to make a systematic use of these lines of theorizing. 7 Drawing on these
lines, we argue that collective acts of sense-making surrounding crises, reflective of blaming
processes targeted on deviant fraudsters, are deeply involved in the reproduction of the
regimes that govern economic behaviour. To investigate the centrality of fraud as social
5
For example: BCCI, Maxwell, Polly Peck, Levitt Group, Barlow Clowes, Dunsdale, Sound Diffusion, Enron,
WorldCom, Tyco, Qwest, Xerox, Vivendi Universal, Ahold, Parmalat, Satyam.
6
At the time of Foucault‟s death in 1984, resistance to neoliberalism was quite embryonic, with the exception of
Marxist critique, which is more a critique of capitalism in general than of neoliberal governmentality in
particular (Foucault, 2004b). One exception is Boltanski and Chiapello‟s (1999) book, which examines
conditions of possibility that have allowed capitalism to endure, while changing, over time. Nonetheless, their
focus is not on the crucial role that sense-making surrounding financial crises play in reproduction processes.
7
Girard‟s most influential book (Girard, 1990) is referred to in more than one thousand articles in the Social
Sciences Citation Index (SSCI) database. To our knowledge, Girard has only been significantly used in one
accounting study, which examines auditor legitimacy in the aftermath of the Enron/Arthur Andersen collapse
(Guénin-Paracini & Gendron, 2010).
4
referent in times of turbulence, we examine how the media have interpreted the financial
crisis of 2007 to the present, our focus being on the legitimacy of actors and groups
specifically enlisted and discussed in the press, and the extent to which the concept of fraud is
mobilized in reducing or strengthening the legitimacy of the parties involved.
Having investigated fraud as a social referent in collective acts of sense-making
surrounding financial crises, we then examine how systems of expertise or disciplines exert
representational or discursive influence over the construction of crises as problems of fraud.
This relates to the discursive power of expertise, which can (more or less subtly) impact the
mind after subjects have for some time been exposed to a group of statements presented as
“expert” wisdom, which provides a language for talking about a particular topic (Vogler,
1998). Contemporary accusations of blame do not come out of the blue; as such, they develop
surrounded by a web of discourses and representations, a number of which are sustained by
systems of expertise. Experts are typically used across “modern” societies for a variety of
purposes, such as healing the body and the mind, providing advice on how to behave and
make decisions, and interpreting significant events taking place in daily life (Abbott, 1988;
Giddens, 1990). Various fields of expertise are deeply involved in elaborating and
implementing governmentality programs that aim to act upon citizens, customers and labour
(Foucault, 1991; Miller & Rose, 1990), including the programs of neoliberal governmentality
(Foucault, 2004a, b). Systems of expertise therefore cannot be conceived of as being neutral
bodies of knowledge and practices; on the contrary expertise is inescapably tied to power
(Foucault, 1975). That is, every system of expertise conveys a particular discourse which
claims to be true, and provides a set of ideas to make sense and talk about the world
(Rabinow, 1984).
Our focus is on a particular segment of accounting expertise, i.e. fraud examination,
specifically in its capacities to develop and disseminate an array of representations
surrounding the concept of fraud. Accounting is a highly influential domain of expertise in
society (Abbott, 1988), if only as manufacturer of ways of thinking regarding organizations‟
economic life, as well as what can and cannot be legitimately controlled and verified (Power,
1997). We are particularly interested in examining how the fraud examination discipline
sustains a general climate of suspicion, in which fraud is viewed as a central problem that
needs to be talked about in certain ways, and remedied in peculiar ways. Being widely
diffused in society across a variety of points of resonance, often in persuasive ways, the set of
representations which underlie fraud expertise matters. A number of people may come to
believe these representations as being true, and indeed more or less consciously use them as a
sense-making device (Hall, 1997b). Such “expert-made” representations can indeed play a
significant role as interpretive templates when financial crises emerge. We therefore draw on
a Foucauldian angle, focused on the interplay between discourse and expert knowledge (Hall,
1997b), to examine sets of representations developed within accountancy to make people
aware of the “problem” of fraud, why the problem is important, and how expertise can be
used to detect and prevent it. In so doing, the fraud examination discipline arguably sets the
stage for individualizing interpretations being influential during financial crises.
5
Accounting cannot be assimilated to a homogeneous field of expertise; various groups
of accountants, each conveying a set of more or less distinctive knowledge claims, are
involved in intertwined relations of competition and cooperation in trying to defend,
fragment, sustain and expand accountancy‟s jurisdiction (Suddaby, Cooper, & Greenwood,
2007). The set of representations that we emphasize in investigating the role of expertise in
construing fraud imageries is drawn from material issued by authors involved in the network
of the Association of Certified Fraud Examiners (ACFE) – an association which describes
itself (according to its website) as “the world‟s largest anti-fraud organization and premier
provider of anti-fraud training and education”. While we recognize that other discourses
relating to the notion of fraud abound within accountancy, our empirical base is nonetheless
sufficient for our purpose, namely, to examine how fraud is defined and represented from the
viewpoint of a prominent group of specialists, whose expertise is claimed to be essentially
focused on fraud detection and prevention.
Taking its cue from Girard‟s interpretation, this article will begin by showing that the
vision of fraud and fraudsters that has prominently emerged from the most recent significant
crisis of neoliberal capitalism – that which began as the subprime crisis but expanded in
significance subsequently to the collapse of Lehman Brothers in September 2008 – is the
result of a process of accusation characteristic of witch-hunting. The article will then examine
the role of expertise in promoting sets of representations that present individualistic acts of
fraud as a central problem, thereby setting the stage for the interpretation of financial crises
from individualizing lenses. While no determinism is involved, the repertoire of imageries
developed and promoted by and through expert communities contributes to establish and
secure conditions of possibility under which a peculiar conception of fraudulent acts may
tend to prevail as interpretive referent in times of crisis. To conclude, we present what we see
as the main contributions of our examination, not least in illuminating the relationship
between governmentality, fraud and expertise in a way which helps understand why
substantive change is infrequent following financial crises. Specifically, political interests and
influence are not alone in accounting for inertia (Moore, Tetlock, Tanlu, & Bazerman, 2006);
the reproduction of the structures of governmentality is also favoured by scapegoating
processes which tend to problematize crises as individualized acts of fraud, as highlighted
(but not imposed) by the broader discursive context, in which expert disciplines promote the
idea that fraud is important and can be detected and even prevented when one appropriately
relies on expert knowledge.
The approach adopted in this paper is exploratory. The paper needs to be seen as an
initial attempt to translate, adapt and combine the work of Girard on scapegoating and that of
Foucault on discourse and knowledge, in developing insights on a very complex but highly
significant topic, that of neoliberalism enduring despite crises. We develop a provocative
albeit plausible argument in the hope of promoting debate in the accounting literature (and
beyond hopefully) on significant though largely overlooked issues.
6
Sense-making of the 2007-201x financial crisis: the scapegoating of fraud and fraudsters
For some, the collapse of the global economy ensuing from the 2007-201x crisis and the
proliferation of frauds that it has uncovered leaves no possible doubt: neoliberalism is the
root cause of the recent trends. The rules of neoliberalism regulate nothing, serving only to
deregulate (or degenerate) economic mechanisms and business ethics. From this perspective,
the recent crisis needs to be viewed first and foremost as a crisis of the neoliberal model. For
instance, several scholars have taken the view that “neoliberalism [...] has been a trigger of
fraud and tax avoidance” (Altvater et al., 2008). Even Alan Greenspan, former chairperson of
the US Federal Reserve and an emblematic figure of neoliberal governmentality, admitted:
I made a mistake in presuming that the self-interest of organizations [...] were such
that they were best capable of protecting their own shareholders and their equity in the
firms. [...] [S]omething which looked to be a very solid edifice, and, indeed a critical
pillar to market competition and free markets, did break down. [...] I found a flaw [in
my ideology] [...], a flaw in the model that I perceived as the critical functioning
structure that defines how the world works. (Greenspan, 2008)
In other words, for Greenspan, Orléan and others, “[t]he crisis was not caused by the
fact that the rules of the game [...] were bypassed, but rather by the fact that they were
followed in the first place” (Orléan, 2009, p. 14). Yet this is not the thesis that has tended to
prevail in broader arenas of debate. A key distinguishing feature of neoliberalism is that,
since its establishment, systemic criticism has often (perhaps always) not prevailed. Public
opinion and most experts and politicians have rather tended to adopt the opposite view. It is
precisely the circumvention of the rules by “abnormal” actors that is usually seen as the root
of all economic problems.
We draw on René Girard‟s theorization to examine how the 2007-201x financial crisis
has been essentially problematized from an individualizing viewpoint centered on accusations
of fraud. Girard basically argues that crises may be followed by processes of collective
persecution – “acts of violence such as witch-hunting, which […] are [...] encouraged by an
overexcited public opinion” (Girard, 1982, p. 21). He maintains that such processes can be
divided into five stages, whose chronology is not inflexible though. In this section we
examine how the conception of fraud and fraudsters that has prevailed in the interpretive
aftermath of the financial crisis ensues from a process of accusation exemplifying each of the
five stages identified by Girard – a process, in other words, of “scapegoating”. Girard‟s
theorizing is helpful in appreciating the processes by which crises may be collectively
constructed as resulting from atypical and dysfunctional agency, thereby preventing systemic
issues from being widely raised and debated in the public arena. Anthropological theories –
such as that developed by Girard – can be valuable in providing us with a sense of how power
operates in the economy; in our case, regarding the reproduction of the neoliberal regime of
truth.
Specifically, press articles published since the summer of 2007 about the crisis and its
supposed causes, as well as a number of political addresses, provide the empirical basis of
7
our study. Some preliminary remarks are in order. Firstly, in view of the linguistic
competence of the authors, the analysis is limited to publications and speeches written in
French and English. Because of the weight of the two languages in the states under neoliberal
governmentality, this is deemed to be an acceptable limitation. Secondly, an analysis of the
entire range of relevant articles written in French and English is impossible in view of the
sheer volume of publications. However, an exhaustive analysis is not the purpose of the
study. Rather, its purpose is to determine whether, within the mass of articles published on
the subject, we can detect key patterns reflective of scapegoating. From this perspective, the
article focuses primarily (though not exclusively) on the content of a small number of
reputable newspapers with wide circulation and keen to disseminate the point of view of
renowned individuals, and liable to reflect and influence public opinion.8 In order to extract
the required material from the press articles selected as part of this research, the Factiva
database was used. Various requests were made to identify stages of persecution in the
relevant writings. For example, articles containing the words “crisis” and “guilty” were
identified. The articles with titles and first paragraphs deemed to be irrelevant were rejected;
all of the remaining articles were read, and the issue was raised as to whether a main culprit
was designated. The process of requests, selection and content analysis was conducted for
each of the Girardian stages. Of course, the transition from one stage to another was not
necessarily clear-cut – though for analytical purposes we present the stages distinctively.
Our Girardian analysis can be summarized as follows. A crisis erupts. Accusations of
fraud are quickly made. The alleged and/or proven cases of fraud are not deemed to have
been caused by the art of neoliberal governance, but are seen instead as the consequence of
the actions of some deeply dishonest actors. As such, the latter are not construed as an effect
of the system, but rather as the cause of its disruption. The fraudsters – who often belong to
specific minorities or distinguishable categories – are subject to public obloquy. Calls for
sanctions are made. The fight against fraud becomes the priority of priorities. As part of the
new priority, calls are made for more ethics, more governance and a strengthened regulatory
system. Yet order eventually returns and in the meantime, the dogma of the neoliberals has
largely escaped criticism and reform. In the end, the logic of neoliberalism prevails with still
greater force than before, and the targets of accusations – the fraudsters – are paradoxically
re-established, and even further consolidated, in their role as pillars of the economy. Table 1
provides a brief chronology of some of the main events enumerated in our analysis of the
crisis.
[Insert Table 1 here]
First stage: a crisis of undifferentiation
According to Girard, the crises that generate collective persecution are quite characteristic.
They generally emerge as a result of a sudden and unforeseen event, which causes
8
Le Monde, Libération, Le Figaro, Les Echos, La Tribune, L’Expansion, L’Express, Le Point, Le Nouvel
Observateur for France; Le Devoir for Québec; the Globe and Mail and the National Post for the rest of Canada;
the Financial Times and The Guardian for the United Kingdom; the Washington Post, the New York Times and
the Wall Street Journal for the United States. The list is not exhaustive. Articles published in other newspapers
or magazines were also considered (including those published online) if their content was deemed to be relevant.
8
disorientation and a high level of uncertainty within the community. The social body is then
overwhelmed by panic and becomes an indistinct mass, a mob.9 Anarchy prevails, with the
people forming a stampede. Institutions are undermined, and when some collapse, public
panic is only heightened and increased. Alarmed, the actors involved attempt to identify the
cause of the disaster. The level of anger is considerable, the desire for retaliation exacerbated,
reciprocal accusations proliferate: in short, a war of all against all erupts. The number of
designated culprits therefore increases exponentially, and no one is beyond suspicion. At that
point, for individuals “the most vivid impression is [...] a sense [...] [of] the end of rules and
of the „differences‟ that define cultural orders” (Girard, 1982, p. 22). The reciprocity of
“insults, attacks, revenge and neurotic symptoms, [because it] standardizes conducts and [...]
results in a predominance of identical behaviour”, indeed confers “upon everything a
simultaneously monotonous and monstrous aspect” (Girard, 1982, p. 23). In this respect,
notes Girard (1982, p. 22), descriptions are invariably the same: to evoke the crisis of
undifferentiation ravaging society, the metaphor of natural disasters is often used, as well as
the term “chaos”.
The beginnings of the recent crisis are generally consistent with this characterization.
Whereas the practice of high-risk mortgage loans had already begun to raise some concerns, a
key event in June 2007 came as a bombshell: credit-rating agencies began to downgrade
structured products linked to what had until then always been considered as the highest
graded subprime mortgages, causing widespread amazement. As noted by Crouhy, Jarrow
and Turnbull (2008, p. 85): “No one was expecting […] a triple-A asset to be downgraded to
junk status within a few weeks or even a few days”. A deep sense of uncertainty then
prevailed. The grades attributed to all structured products, irrespective of whether they were
exposed to the subprime risk, were seriously questioned in the eyes of investors. In August
2007, the disappearance of established yardsticks and points of reference caused general
panic on the markets.10
In the same month, a new reliance on guaranteed safe and liquid instruments became
an almost universal obsession. So began a race for liquidity, resulting in more and more
difficulties to find liquidities on the market. The consequences were disastrous. Because of a
lack of liquidity, banks were forced to sell part of their assets, causing the value of those
assets to decline and weakening the balance sheets of financial actors. Accordingly, the
accounting rule of “fair value” only served to exacerbate the increasing fragility of financial
actors (Arnold, 2009), and new sales were therefore needed. Because credit was becoming
increasingly rare and the collapse of the stock markets had impoverished households, the real
economy was soon affected. In return, the recession made loan repayments harder, thereby
further weakening the banking sector. Entire sectors of activity were deeply affected, such as
9
The term “panic” comes from the Greek “pan”, meaning “all”. According to Girard, the state of panic is a
result of mimesis: afraid and confused, actors are guided by the emerging features of the totality (particularly to
determine the direction of flight), itself based on a large-scale process of imitation, with everyone copying
everyone else.
10
The wave of panic in August 2007 is widely reflected in the written press. Factiva indicates that between 1
January 2005 and 1 October 2010, a total of 25,463 English and French articles (all publications) containing the
terms “financial crisis” and “panic” were published. For 2005, the database generated 308 articles; in 2006, 353.
In 2007, the number of articles rose to 1,075, reaching a peak in August (334 articles) and September (277).
9
the US car industry. Unemployment rates soared and expropriations made the headlines on an
almost daily basis. From March 2008, the largest financial institutions in the US began to
falter, and were only able to survive because of state intervention. Two such institutions were
unable to weather the storm. In mid-September, Merrill Lynch was acquired by Bank of
America, while Lehman Brothers disappeared altogether, left to collapse. This collapse – the
biggest case of bankruptcy in the history of the USA, quickly followed by the near
breakdown of AIG – immediately caused an unprecedented wave of panic.11
Angry actors then began to search for those responsible for the crisis. A wide range of
“culprits” were pinpointed: banks, governments, regulators, the International Monetary Fund
(IMF), credit-rating agencies, large corporations, executives, brokers, traders, the principle of
fair value, shareholders, over-indebted households, capitalism, etc. Between mid-September
and mid-October 2008, the long list of culprits was widely disseminated in newspapers (see
for example Barre, 2008; Fiorentino, 2008; Vittori, 2008), becoming longer on a daily basis.
Every now and then, a journalist claimed to have uncovered a new suspect. On 18 September
2008, columnist Jim Cramer went so far as to claim on CNBC that the “short selling”
practices responsible for the fall in prices affecting large banks should not be attributed to US
speculators, but should rather be imputed to terrorists intent on destroying America.12 On 24
September 2008, the Wall Street Journal claimed that after opening more than 1,400
investigations into the practices of brokers, lenders, borrowers, and financial experts, the FBI
now intended to investigate the case of 26 companies suspected of malpractice (Perez,
2008a). In the same period, the Securities and Exchange Commission (SEC) carried out
dozens of investigations into alleged cases of market manipulation (with hedge funds serving
as the main target; see Scannel, 2008) and fraud (the Fannie Mae and Freddie Mac agencies
found themselves in the line of fire; see Perez, 2008b). Political leaders began to take an
active part in the process. On 25 September 2008, French President Nicolas Sarkozy
stigmatized a whole range of actors in a speech given in Toulon on the subject of the crisis,
adding: “the chain of responsibility must be established and those responsible for the
shipwreck must at least be sanctioned financially”. The very next day, Sarkozy himself was
targeted by his political opponents as one of the main culprits responsible for the crisis (AFP,
2008; Martin, 2008).
During the same period, public opinion was equally “generous” in its distribution of
responsibility. On 6 October 2008, the website of the Wall Street Journal published the
following comment (Murray, 2008):
The latest Journal/NBC News poll shows [...] [that] Americans are fuming mad – at
everyone [...]. Voters were asked who was to blame for the current financial crisis and
were given options like banks, the Bush Administration, homeowners who took out
11
The surge of panic caused by the collapse of Lehman Brothers in September 2008 is deeply reflected in the
press. As noted in the previous footnote, Factiva indicates that between 1 January 2005 and 1 October 2010, a
total of 25,463 articles in French and English containing the terms “financial crisis” and “panic” were published.
Nearly half (49%) of the articles were published in 2008 alone (12,578 articles), the vast majority of which were
published between September and December (11,223 articles), with a peak in October (6,257 articles, i.e. 25%
of the total number of articles published over the six years within the space of a single month).
12
www.cnbc.com/id/26778065/Stop_Trading_Financial_Terrorism
10
loans they couldn‟t afford, Congress and investment banks. Instead of choosing one of
those, most respondents [...] volunteered the answer that everyone was to blame.
In sum, everybody accused everybody else; indignation was widespread. This is well
illustrated by the turn of events at the end of September 2008, with the general mobilization
of Americans against the Wall Street rescue plan devised by the state. In the view of the
American people, bankers, brokers, traders – and more generally all financiers throughout the
world – were criminals, and by assisting them the government automatically became their
accomplice. Tens of thousands of Americans began to voice their discontent and anger
online. The Chicago Tribune stated that it had never “received as many comments on its
website since the attacks of 9/11” (Mascaro, 2008). Out on the streets, demonstrations
proliferated, often resembling carnivalesque parades with distinct insurrectional overtones.13
One correspondent of the French daily Libération provided a striking description of one such
event (Mascaro, 2008):
[On September 25, 2008], in front of the Charging Bull, symbol of the power of the
markets, on Broadway [...], a parody of the crisis was staged. A [man dressed up as] a
“pro-Bush billionaire”, squeezed into a tuxedo, holding a glass of champagne, and
smiling disdainfully, could be seen sauntering through the crowd of protesters. [...]
Onlookers in rags handed him fake 10,000 dollar bills that he quickly stashed into his
pockets. In response to people asking him what he was doing, [he replied] “I‟m
getting richer and richer, and you might as well get used to it”. Around them, one
thousand protestors could be heard singing in unison: “No rescue plan for the rich”.
The tendency clearly was for people to call for decapitation. Yet the crowds were
unsure as yet just who to target. In this period of mutual accusations, the crowd hesitated.
Everybody appeared to be responsible, and no one seemed altogether innocent. A collective
sense of anxiety was palpable in the blaming patterns we found in the press, which exploded
in the aftermath of the collapse of Lehman Brothers. Descriptions of the crisis then suddenly
began to draw from the lexical field of chaos, natural disasters and the end of the world.14
Second stage: a designated culprit accused of ―undifferentiating‖ crimes
Yet just as society appeared to engage in chaotic and unfocused blaming games, the war of
all against all virtually became a war of all against one. Girard argues that episodes of
collective persecution involve the designation of a unique culprit accused of crimes at the
peak of the crisis. Although such crimes may differ, they tend – as noted by Girard – to
13
“Carnivalesque” is used in the sense given to the term by Bakhtine (1982), i.e. a temporary reversal of
hierarchies and values, strikingly illustrated by carnivals.
14
Factiva indicates that between 1 January 2005 and 1 October 2010, a total of 10,646 articles were published
containing the term “financial crisis” and at least one of the following terms: “chaos”, “tsunami”, “apocalypse”,
“armageddon”, “end of the world” (except for articles containing the terms “Asia”, “Asian”, “Indonesia”,
“India”, “Thailand” and “Sri Lanka”, since the term “tsunami” was likely to refer to the tidal wave that
destroyed the Asian coasts on 26 December 2004). In 2005, just 203 articles with the same criteria were
published; in 2006, 304; in 2007, 261. In 2008, the number of articles increased to 4,108, increasing sharply in
September (780 articles) before reaching a peak in October (1,620 articles). The number of articles declined
slightly in 2009 (3,614 articles). From 1 January 2010 to 1 October 2010, 2,156 articles were found.
11
conform to an archetype. Classic examples include regicide, infanticide, incest, poisoning and
bewitchment (Girard, 1982, pp. 25-28). Such transgressions clearly constitute an attack on
“the very foundations of the cultural order, the family and hierarchical differences without
which there would be no social order” (Girard, 1982, p. 25): they are “undifferentiating”, and
are therefore likely to cause – in people‟s view – a crisis of undifferentiation. The persecutors
are convinced of this: crimes of such magnitude can only be the work of an immoral monster,
which has deliberately contaminated society. This is why the persecutors typically begin to
speak of the disaster affecting them as an “epidemic”, or as the spread of a devastating
“virus”.
Again, the flow of collective sense-making surrounding the most recent financial
crisis is largely consistent with the above characterization. The crisis reached its peak when,
among the culprits previously designated, a specific group of actors was singled out as the
main culprits responsible for the prevailing “chaos”. The actors singled out for blame were
the banks and the bankers. For many people, their culpability became evident when it was
revealed that a number of banks benefiting of bailout money from governments had the
intention of providing their top executives with generous compensation packages.
At the end of October 2008, the way in which banks and bankers used the subsidies
granted to them triggered strong reactions. In many countries, political figures came forward
to voice their shock and amazement (Barotte, 2008; van Duyn, 2008). The statements made at
the time by Barack Obama are particularly memorable. On 30 January 2009, he stated:
When I saw an article today indicating that Wall Street bankers had given themselves
$20-billion worth of bonuses, the same amount of bonuses as they gave themselves in
2004, at a time when most of these institutions were teetering on collapse and they are
asking for taxpayers to help sustain them and when taxpayers find themselves in the
difficult position that if they don‟t provide help that the entire system could come
down on top of our heads, that is the height of irresponsibility. It is shameful.15
The indignation caused by such “embezzlement” spread like brush fire. While
previously there had been a number of objects of scandal, now there was just one. The issue
of bonuses overshadowed and engulfed all of the other issues, and bankers suddenly came
under fire from all sides.
In the media, they became the chief focus of criticism. On television, an everincreasing number of acerbic comments were made that specifically targeted bankers. On The
Daily Show with Jon Stewart, a chief executive of a large bank was asked to explain why the
bonuses paid to bankers had been maintained: “a company needs to pay compensations to
attract and retain the best people”; “Good god, replied Stewart, so you‟re still claiming to be
the best? Your bank has lost 27 billion dollars! Are you living in a world called Weird or
what?” (Cypel, 2009). The tone adopted in the press became increasingly aggressive. In
February 2009, the covers of two well-known French magazines pointed the finger of blame
at bankers. L’Express went with the headline: “Why are bankers rubbish?”, while the Nouvel
15
blogs.lesechos.fr/article.php?id_article=2524.
12
Observateur went with: “What the bankers aren‟t telling us”. Several books published,
republished, or written in 2009 also pilloried bankers. These include: Lords of Finance: The
Bankers who Broke the World (Ahamed, 2009), 13 Bankers: The Wall Street Takeover and
the Next Financial Meltdown (Johnson & Kwak, 2010), The Bankers: How the Banks
Brought Ireland to its Knees (Ross, 2010), The Monster: How a Gang of Predatory Lenders
and Wall Street Bankers Fleeced America – and spawned a global crisis (Hudson, 2010),
etc. The titles are self-explanatory. During the same period, Michael Moore released his
Capitalism: A Love Story, in which he could be seen wrapping yellow police tape marked
“crime scene” around the premises of a bank. Oliver Stone was also working on his Wall
Street sequel, a film showing business banking in a particularly negative light. Charles
Ferguson began work on his documentary Inside Job, an indictment of the banking sector. In
short, the movie industry had jumped on the bandwagon. In February 2009, a short and
highly entertaining video clip had enjoyed huge popularity online. Initially, the viewer is
made to believe that an Alcoholics Anonymous meeting is underway, before realizing that the
people attending the meeting are in fact bankers: “Who wants to go first? Charles? – Good
evening, my name‟s Charles and I haven‟t made any high-risk investments for over two
months – Well done Charles! [Applause]” (Abescat, 2009a). All sorts of jokes were made,
caricatures abounded, while T-shirts with sarcastic slogans were increasingly popular (Cypel,
2009): bankers were thus seen not merely as a cause of misery and woe, but also as a source
of laughter and amusement.
For public opinion, the cause was settled: the culprits responsible for the crisis had
been uncovered. At home and in the workplace, the “guilty banker” became a major topic of
conversation. By way of underlining the degree of popular discontent and exasperation, a
Financial Times reporter wrote in an article entitled “Shoot the bankers, nationalise the
banks” (Stephens, 2009) published on 20 January 2009:
For once, Gordon Brown is guilty of understatement. The other day the Prime
Minister remarked on the rising public anger at the behaviour of Britain‟s banks.
Unbridled rage would have been a more accurate description of the national mood. On
a recent visit to Washington I heard several people say that when the reckoning is
finally made some big Wall Street figures are going to end up in jail. My impression
is that many on this side of the Atlantic would like to see one or two British bankers
join them.
Stephens‟ impression was widely supported by opinion polls. According to a
Financial Times/Harris poll conducted in February 2009, a significant majority of Europeans
viewed bankers as being wholly or chiefly responsible for the crisis (Atkins, 2009a). Le
Solleu (2009) wrote shortly after in La Tribune: “The prevailing tendency is to hunt down
and kill those [i.e., bankers] viewed by 58% of the French population as being responsible for
the crisis (poll conducted on March 17 and 18 by TNS Sofres-Logica for France 2)”. In
disseminating the results of such surveys, pollsters not only provided information on people‟s
attitudes – they also participated in the expansion and consolidation of certain viewpoints.
13
Interestingly, the crimes that were attributed to the designated culprits are typical of
the mistakes traditionally imputed to the victims of collective persecutions: they are
undifferentiating – in that they destroy differences deemed to be fundamental to the wellbeing of society. From October 2008, bankers were for instance accused of ruining their most
humble clients (infanticide-type violence against the weak), of maintaining incestuous
relationships with the political sphere to benefit from preferential treatment and commit fraud
with impunity (incest uniting inadequately differentiated people), of acting as “sorcerer‟s
apprentices” without any concern for the consequences of their actions (sorcery erasing
boundaries between the possible and the impossible), and for contaminating the global
economy with toxic assets through the agency of securitization (poisoning secretly
transforming healthy products into deleterious ones).16 In other words, bankers were accused
of fraud, in the broadest sense of the term: they were accused of lies, deceit and concealment,
and were blamed for having designed diabolic financial setups, in order to unduly receive
lucrative commissions and fees from a diversity of honest corporations, institutions and
individuals.17
In the press, the wrongdoing of those financiers was largely attributed to their alleged
immorality. A plethora of articles published around the end of 2008 especially emphasized
their greed.18 Some even went so far as to accuse bankers of committing all seven of the
“deadly sins” (e.g., Masse-Stamberger, 2009). The term “bankster” (a contraction of banker
and gangster) reappeared, originally coined by Time Magazine in 1930 when “the demonising
of bankers and speculators was just as popular [...] as now” (Kellaway, 2008). In the eyes of
the majority, bankers were no better than gangsters. They were plague-stricken parasites
having sickened the economy to make money on the back of the people. The crisis having
often been described by journalists as a contagion is symptomatic: at that time, for many
individuals, bankers represented “the „strain‟ that […] [had] contaminated them all” (Girard,
1990, p. 125).
Third stage: the ―signs of victimization‖ of the accused
According to Girard (1982, pp. 28-36), the victims of collective persecutions commonly
differ from other members of the community: they possess “signs of victimization”. In
descriptions of scapegoats, their singularity is often underlined and sometimes exaggerated,
and is generally associated with an alleged lack of ethics.19 Their abnormality and immorality
are presented as the two sides of the same coin. In the eyes of the persecutors, such
individuals are monstrous, and deserve to be compared to hideous beasts or creatures. Once
again, these features characterize the case studied in this paper.
16
The emphasis in the press on the notion of contamination linked to “toxic assets” is clearly in evidence on
Factiva. Between 1 August 2007 and 1 October 2010, a total of 30,713 articles were published containing the
words “bankers” (or “banks”) and “toxic assets”. Of the 30,713 articles, 19,085 were published between October
2008 and April 2009.
17
Fraud is an undifferentiating crime insofar as it obliterates the difference between the truth and its opposite.
18
Factiva indicates that between October 2008 and April 2009, a total of 9,180 articles were published that
contained the terms “bankers” (or “banks”) and “greed”.
19
Their singularity may be religious, ethnic, physical, intellectual, psychological, socio-economic or other.
14
From October 2008, both online and in the press, commentators of the crisis began to
insist increasingly on what they perceived to be the uniqueness of the banking sector. For
some, the banking sector was under Jewish domination, which is viewed as “inculpatory
evidence”. Unfortunately, this was not a marginal opinion. The observation made by the
Anti-Defamation League (ADL) in late 2008 is worrying: on internet forums and „general
public‟ blogs, messages with racist connotations stigmatizing “Jewish” banks began to
proliferate. According to an opinion poll conducted in Europe, 41% thought that it was
“probably true” to hold that “Jews have too much power on the financial market”, while 31%
believed that “Jews are at least partly responsible for the economic crisis”.20
The most serious newspapers steered clear of such racist allegations. Instead they
criticized the ineptness of such allegations in order to stem their spread (Attali, 2008; Stoll,
2009). Some of the peculiarities of banks and bankers were nevertheless underlined to
support the thesis of immorality. For many journalists, banks and bankers form a “tribe” of
their own: a clan conducting esoteric activities and using an incomprehensible language,
thereby escaping external control and able to deceive outsiders; a brotherhood of “sorcerer‟s
apprentices” (a phrase often used), largely unconcerned about the consequences of their
actions, provided there is the prospect of a significant profit. Physical specificities are also
often referred to. Banks are immense, “too big to fail”, and are therefore bound to be saved
whatever they do (Booth, 2009, Madelaine, 2009). Bankers wear designer pinstripe suits,
usually associated with the mafia (Blevennec, 2010). The intellectual capacities of the
“geniuses of finance” are acknowledged only to be better decried: such individuals have been
“lulled [...] by the beautiful mathematical truth of their models [...] [and have not] wondered
enough [...] about the moral ends of their work – not unlike the nuclear physicists [...] of the
1940s” (Delhommais, 2009). Another angle of criticism is psychological. For many, bankers
“think they are gods” (Masse-Stamberger, 2009), and have an “overinflated ego” (Hieaux,
2009). Their “indecent bonuses” (Kerdellant, 2009b) are also frequently evoked in order to
denounce their unlimited greed.
The metaphors used to describe bankers also confirm these representations. Like most
of the scapegoats identified by Girard, bankers are often compared to a variety of creatures,
all equally hideous and ferocious. The traders employed by banks have often been portrayed
as “young wolves” (e.g. Andréani, 2009), while bankers are described as “sharks of finance”
(Le Figaro, 2008), “birds of prey” (Gherardi, 2009), and “fat cats” (Bolger, 2009). In many
Facebook groups, bankers are likened to “leeches” (Haddon, 2009). Some journalists view
them as “vampires” (Cohen, 2009). In a book published in 2008, the British historian Niall
Ferguson (2008) reminds us that bankers have long been viewed as “parasites” (see also
Garessus, 2008) and that Dante has a special place in hell reserved for bankers, alongside
forgers and sorcerers. For most people, such views make perfect sense: such hideous
monsters can only be guilty of causing the crisis and deserve to be severely punished.
20
Opinion poll carried out by ADL between 1 December 2008 and 13 January 2009 based on a sample of 3,500
adults from Germany, Austria, UK, Spain, France, Hungary, and Poland.
www.adl.org/Public%20ADL%20Anti-Semitism%20Presentation%20February%202009%20_3_.pdf
15
Fourth stage: the punishment of scapegoats
According to Girard, once they have been designated by the masses, scapegoats are given an
exemplary punishment – either sent into exile or executed, and sometimes forced into
“making amends”.21 The proceedings are carried out in full view of the public eye: everybody
may attend and take an active part in the chastisement. The result is the introduction of new
rules imposed on all (the purpose being to ensure that the crimes of which the scapegoats are
accused are not committed again). The treatment inflicted on banks and bankers since
October 2008 is distinctly reminiscent of such retributions.
Investors, politicians, journalists, citizens: the range of people taking part in the
“lynching” (Bonner, 2009; Fiorentino, 2009) of “those responsible for the crisis” was both
wide and varied. The “killing” of bankers, a theme widely publicized in the media, took many
forms. The markets played an active part in the process, as shown by two indices: the
“Standard & Poor‟s 500 Banks Index” for American banks, and the “Stoxx Europe 600
Banks” for their European counterparts (see Figure 1).22 While the negative slope in market
values began before the widespread and generalized “stoning” of the sector, markets played a
significant part in punishment.23
[Insert Figure 1 here]
For their part, a number of major bank executives were forced to resign.24 The terms
that were used in discussions of the issue are particularly significant. Executives were said to
be “banished” (Hay, 2009) and “hunted” (Rossier, 2009). One could read that their heads fell
and would “continue to fall” (Berny, 2009). As noted by Hughes (2008), political officials
were keen to “force them to return their ill-gotten gains”. There was even talk of a “great
clean-up” (Rossier, 2009; La Tribune, 2009).
In late 2008 and early 2009, the political authorities in the USA and in most European
powers also deprived bankers of part of their wages. 25 While the sanction hardly turned
bankers into paupers, for financiers constantly accused of excessive greed, such measures
were tantamount to torture (Lohr, 2009). Within the profession, there was talk of “meager
wages”, and the specter of a brain drain was evoked (Coste, 2009). “Good riddance”, was the
response of one reporter from L’Express (Kerdellant, 2009a): “if the little geniuses who
caused the disaster are replaced [...], who‟s going to complain?” (once again, an apparent call
21
Under the Ancien Régime, “making amends” was a sentence involving exile or deprivation of civil rights,
which involved forcing the “culprits” to publicly acknowledge their crimes and ask forgiveness.
22
The first index is available at Bloomberg.com: www.bloomberg.com/apps/quote?ticker=S5BANKX:IND; the
second index is available at Stoxx.com: www.stoxx.com/indices/index_information.html?symbol=SX7P. Both
websites provide index trends using interactive graphs.
23
In the USA, as in Europe, the collapse began in June 2007, and continued until the beginning of March 2009,
when (as we shall see) the punishment of banks and bankers finally came to an end.
24
Those affected included Maurice Lippens (Fortis), Axel Miller and Pierre Richard (Dexia), Tom McKillop,
Johnny Cameron and Fred Goodwin (Royal Bank of Scotland), Lord Stevenson and Andy Hornby (HBOS),
Charles Milhaud (Caisse d‟Épargne), Daniel Bouton (Société Générale), and Dominique Ferrero (Natixis).
25
In October 2008, G. Brown announced that British bankers in receipt of state subsidies would not be allowed
to receive bonuses (Milner, 2008). In February 2009, B. Obama put a $500,000 cap on bankers‟ salaries.
16
for banishment). However symbolic it may be, deprivation appeared to be commensurate
with the expectations of the angry citizens.26
Bankers were also required to “make amends”. Given that they were widely believed
to have caused the crisis, a confession was needed and public apologies demanded. The
accused initially refused to satisfy popular demand, thereby further exacerbating public
discontent (Pernet, 2009). Eventually the bankers, however, were made to yield. The
resulting spectacle was widely discussed and variously described. On 10 and 11 February
2009, in the UK, “the bosses of Abbey, Royal Bank of Scotland (RBS), HSBC, HBOS,
Lloyds and Barclays [...] [were] summoned to explain their actions before the Commons
Finance Committee, over their alleged responsibility in the financial disaster” (Loët, 2009).
“Sitting in onion rows, [...] [they were] grilled [...] in an audition resembling a televised trial”
(Presse Océan, 2009). They “vied to come up with the best arguments to account for the
collapse of their bank [...] [and] admitted their mistakes” (Chaperon, 2009a). Andy Hornby,
former Chief Executive of HBOS, stated: “It is clear that the bonus system has been shown to
be defective in many banks throughout the world” (Presse Océan, 2009). Almost at the same
time, an identical story was unfolding on the other side of the Atlantic: “Sitting in the witness
box as defendants in the dock, eight bosses of American banks [...] were made to face [...] the
„anger‟ of taxpayers, mediated by parliamentarians before whom they [...] [endeavoured] to
make amends” (AFP, 2009). For their part, elected officials showed themselves to be
merciless: “You will be criticized, punished and pilloried in various ways”, warned for
instance the Republican Jeb Hensarling (AFP, 2009).
The confessions of bankers were heard. Their guilt was acknowledged, and it became
increasingly clear that banks in their current state needed to be neutralized. In mid-February
2009, a key priority began to be emphasized: to restore credit, what was needed was a “great
clean-up” (Michel, 2009) in the banking sector. A wide range of solutions were suggested,
and eventually one solution was settled upon. The solution involved “purging” the balance of
financial establishments of their toxic assets and confining such assets in structures referred
to as “bad banks”. The operation and the words used to describe it were suggestive of an
exorcism: banks were seen as being possessed by evil – one phrase often used by journalists
during this period was “zombie banks” – and the most urgent priority was to “purify” them
(Le Monde, 2009a). However, it was not enough merely to purify the banks. Calls were made
to reform the current banking model. As of March 2009, experts began to take an intense and
active interest in the matter. Some prominent figures advocated a return to the Glass-Steagall
Act, introduced in 1933 and repealed in 1999. 27 The idea was to reintroduce a strict
separation between commercial banks and investment banks (Les Echos, 2009). However,
other actors – including Adair Turner in the UK (chairman of the Financial Services
Authority) and many French experts and politicians – deemed this idea to be unrealistic
and/or largely irrelevant (Hamilton, 2009). In their view, in order to put an end to the era of
26
As noted by Kerdellant (2009a), the U.S. public, not usually prone to envy the rich, welcomed the decision
with delight.
27
These include Mervyn King, Nigel Lawson (former Chancellor of the Exchequer), John Wright (former chief
executive of the Clydesdale Bank in Scotland), and Paul Volcker (former chairman of the FED, appointed
chairman of the Economic Recovery Advisory Board by Barack Obama) (Hamilton, 2009).
17
“casino” banks and to “rein in the world of finance” (Dixon, 2009), the solution was to put
the field under “tight regulatory control”: to force banks to strengthen their equity and
liquidities, to compel them to practice better risk management, to force them to act
transparently, and to impose a more responsible payment policy. The measures outlined by
Dixon eventually prevailed, adopted (in principle) as they were at the G20 summit held in
London on 2 April 2009.
The spectacle offered to the world by the G20 summit constituted the final scene of
the punishment – its apotheosis. The images it generated were projected with rarely seen
force and intensity. To begin with, the summit generated striking protests and
demonstrations. 28 On March 28, 35,000 demonstrators (according to the police) marched
along the Thames in Hyde Park, in a curious procession of anti-capitalist activists and more
moderate citizens – all gathered to pour scorn on international finance. April 1 was a
particularly intense day of activism. 3,000 alter-globalization activists met in the heart of
London and 5,000 policemen were mobilized. Chaperon (2009b), who followed the
proceedings, provides the following description of the event:
As the City was targeted by demonstrators, the local shops and bank branches were
boarded up. Guards were stationed in front of office buildings. [...] At around midday,
four processions representing the horses of the Apocalypse converged noisily on the
headquarters of the Bank of England [...]. Grim reapers [...] represented the death of
capitalism, puppets wearing three-piece suits and bowler hats were hanged on
streetlights, and a dead canary [was exhibited] in reference to Canary Wharf [...]. One
member of the association [organizing the protest] commented: “We are protesting
against the millions of jobs lost as a result of the greed of bankers”.
The proceedings, akin to a sacrificial ritual, were widely broadcast on television. The
next day, the cameras of the world also broadcast the arrival of heads of state in the London
financial district, which they entered as generals in occupied territory. All that remained was
for the losers to be dealt the final blow. Although the public held its breath, the suspense was
short-lived, since it quickly became apparent that the operation was in fact a “success”. While
it was originally feared that those taking part would be unable to reach an agreement, it
appeared that they had in fact agreed on the most fundamental points. The majority of
reporters were in agreement that “the G20 summit […] [had] passed the ultimate test” (Le
Monde, 2009b). The “family photo” (Seux, 2009), with smiles all round, aimed to send out a
clear message to the world: the banksters responsible for the crisis had been rendered
harmless. A large number of press articles reiterated and emphasized the same outcome: the
“new rules of global capitalism” (Le Monde, 2009c) had been defined or at least outlined; “no
sector […] [would] escape supervision, including hedge funds and tax havens” (Le Monde,
2009d); credit-rating agencies would be no exception (Chatignoux & Grésillon, 2009). There
was talk of a “radical reform of globalization” (Barroso, 2009), while others spoke of the
entire structural reorganization of the international financial system (Leparmentier, Malingre,
28
The protests received widespread coverage in the written press, and were variously described. The description
provided here is based on Vanlerberghe (2009) and Chaperon (2009b).
18
& Michel, 2009). While some critical voices, including Joseph Stiglitz (2009), could be heard
denouncing the “cosmetic” nature of the reforms, they remained a minority. For the majority
of commentators, the “G20 leaders had decided on a complete program” (Le Monde, 2009d)
capable of “curbing the worst economic and financial crisis since 1945” (Le Monde, 2009b).
Fifth stage: the return of order and the re-legitimation of scapegoats
According to Girard, peace is restored in the group as a result of the punishment inflicted on
the accused and the new rules introduced following their sentence. The community has a
sense of living in a new world – a world built on greater solidarity, fairness and order, a
world synonymous with hope and optimism. A paradoxical relationship then develops with
the scapegoats. On the one hand, the persecutors continue to engage in demonization, making
their victims responsible for the difficulties involved in resolving the crisis. Yet the victims
are also gradually erected into pillars of the social order, into sacred objects of worship. Any
new development – whether good or bad – is imputed to the scapegoats. There is a
widespread belief that the destiny of the community is largely in their hands. Once the
community regains its former vitality, the image of the “public enemy number one” tends to
improve, and their alleged hideousness begins to recede into the background. Blame and
criticism are then transferred to other actors – substitute culprits or “second-degree
scapegoats”. Eventually, the status quo prevails: despite the critique of a small number, the
system is left largely intact. The period following the London G20 summit bears resemblance
to this process.
In the immediate aftermath of the G20 summit, many journalists could be heard
proclaiming that “a new world […] [had] emerged […] in London” (Le Monde, 2009e). The
agreement was seen as the product of an exemplary case of “global cooperation” (Le Monde,
2009e), marking the advent of a new era of solidarity. Whereas previously the markets had
imposed absolute rule, often to the detriment of citizens, their new function was said to serve
the interests of citizens (Le Monde, 2009d, Barroso, 2009). Whereas previously we had lived
in an era of financial anarchy, new rules seemed to have emerged (Le Monde, 2009b) and one
could read in Le Monde: “The age of unbridled capitalism is now […] over” (Le Monde,
2009e).
In short, there was a general mood of optimism and hope throughout the world. There
was also widespread agreement that recovery from the crisis would be a lengthy process
(Gatinois, 2009; Rodier & Tricornot, 2009; Abescat, 2009b). We were reminded that
unemployment continued to rise and that some key sectors remained fragile (Gatinois, 2009).
Yet most commentators were also keen to emphasize that the worst was now over (Roche,
2009; Atkins, 2009b). Throughout April, experts, politicians and journalists emphasized that
indications of a forthcoming upturn in the economy were clearly visible. 29 In France, the
29
We were told that the U.S. real estate market was picking up; that U.S. and European consumption was
increasing; that the refinancing rates of banks were declining; that Obama and Geithner were prophesying an
imminent resumption of credit; that a large number of banks were once again beginning to make a profit; that
French industrial production, which had been in free fall for months, was beginning to level out; that German
and Belgian entrepreneurs were less pessimistic; that growth in China was holding up better than expected; that
19
confidence index measured by the French survey institute BVA shortly after the G20 summit
(difference between the percentage of optimists and the percentage of pessimists) was shown
to exceed the February 2008 index by more than 20 points (Best, 2009).
The process of reconstruction was well and truly underway. Yet vigilance continued
to prevail. The banks were again heavily criticized when it was revealed in the summer of
2009 that huge bonuses were to be paid for 2009 and that speculation remained standard
practice (Dash, 2009). Many journalists expressed their indignation. In early August, the
editor of Libération wrote (Joffrin, 2009):
The social irresponsibility of the financial establishment is enough to make you feel
positively dizzy. Executives guilty of the excesses that caused the biggest recession
since the war had without compunction thrown hundreds of thousands of employees
out onto the street and caused abyssal state deficits in the most powerful countries.
With a few words of contrition to numb public opinion, bank executives are now back
to their old scandalous ways, as if the crisis had never even happened.
The political classes also continued to vent their anger (Briançon, 2009; Le Monde,
2009f). At the G20 summit in Pittsburgh on 24 and 25 September 2009, delegates agreed on a
more stringent and more precise version of the regulatory plans adopted at the London
summit, with a particular focus on bonus control, the consolidation of equity capital and the
creation of dynamic reserves (Maddens, 2009). In October, Obama announced that some of
the bankers rescued by the state would see their pay cut by half (Sallier, 2009). A significant
number of press articles published between October 2009 and January 2010 began to reemphasize the Glass-Steagall Act (in discussing how better to control banks) (Gatinois &
Roche, 2009). In early 2010, the chief executives of Goldman Sachs, JP Morgan, Morgan
Stanley and Bank of America were again summoned to appear before the US Congress. The
resulting spectacle was no less striking and memorable than the previous hearing (MasseStamberger, 2010).
According to an opinion poll conducted by IFOP (French Institute of Public Opinion)
in France and Britain between 6 and 12 January 2010 (quoted by Michel, 2010), 83% of
French people and 81% of Britons supported the idea of a tax on bonuses, 80% of French
people and 73% of Britons believed that bankers continued to engage in high-risk behaviours;
73% of French people and 52% of Britons considered that banks lent insufficient amounts of
credit to the economy; and 67% of French people and 70% of Britons believed that
governments had been right to rescue the banks from bankruptcy.
The two latter results merit particular attention. While during the G20 summit in
London (April 2009) demonstrators could be heard chanting: “Kill the banks” (Chaperon,
2009b), the discourse of protest had since evolved. While the public continued for the most
part to blame the banking sector, its perception of banking had become distinctly more
ambivalent. The sector (so it was now thought) had failed to grant sufficient levels of credit
exports to Asia were on the increase, etc. (Gatinois, 2009; Rodier & Tricornot, 2009, Billon, 2009; Abescat,
2009b, Hiault, 2009; Atkins, 2009b).
20
and had therefore prevented a resurgence in the economy. While this view was clearly a
reproach of sorts, it was also something more than mere blame, suggesting that there is no
way out of the crisis without the active cooperation of the banking sector. Banks were thus
given a central role in the economy: they were required to act as key pillars. In the eyes of
many, the destiny of the “community” was dependent on banks. While the latter were blamed
for the evil affecting society, it was inconceivable to let them fall. Although they had
previously been viewed as being purely harmful, the banks were now widely seen as the
necessary drivers of economic revival.
Also, more complex views of the ethics of banking progressively emerged. Their
image improved in parallel with the upturn in the economy. Until March 2009, the focus had
entirely been on the “seven deadly sins” committed by the banks. From April, an increasing
emphasis began to be laid on signs of positive change in the banking world. In the immediate
aftermath of the G20 summit in London, the French daily Les Echos could be seen observing:
The improvement of financial regulations is at the heart of the summits attended by
heads of state. […] The ambition to improve the regulatory system, made necessary
by the sheer scale of the damage caused by the erring ways of the financial world, has
not been contested by the banks. Behind the scenes, some banking executives have
even begun to make their own contribution to the debate. (Vidal, 2009)
Their work “behind the scenes” could easily have been interpreted as an attempt by
the banks to influence the impending reforms in their favour. Yet it tended instead to be
construed as an indication of good will. In late January 2010, Alistair Darling issued the
following statement at the end of the 40th World Economic Forum in Davos: “The banks have
changed their attitude; they have realized that they were living in the same world as us.
Therefore they have accepted the need for changes in ways of regulating the financial
system” (quoted by Bourbon, 2009). Though still criticized by public opinion (see the IFOP
poll referred to above), the banks were then viewed in a more positive light. An IFOP opinion
poll conducted from 20-28 May 2010 showed that the banks in general were seen positively
by 52% of French people.30 In short, while the banking profession remained stigmatized, it
was beginning to regain part of its legitimacy. The banking sector was no longer the purely
evil and harmful entity it had previously been. People began to look forward to the day when
the banking sector would reinvigorate the economy through restorative credit.
According to Girard, the persecutors are not aware of what they are doing when they
promote their scapegoats to a sacred status and seek for substitute “culprits”. In such
circumstances, an individual member of the minority initially castigated by the persecutors is
often made to fit the bill. The mistake of the persecutors was (so it is assumed) to have
applied the specific features of the individual member to the minority as a whole. In July
2009, Goldman Sachs began to be singled out and demarcated from the other banks. The first
stone thrown against this bank (inasmuch as it possible to identify one) was an article by the
30
The opinion poll is available online:
www.fbf.fr/web/Internet2010/Content.nsf/DocumentsByIDWeb/88LDSM/$File/IFOP_enquete_image_et_prati
que_bancaire_aout_2010.pdf.
21
journalist Matt Taibbi. On 22 July 2009, Taibbi published a paper entitled “The Great
American Bubble” in Rolling Stone. The first lines of the article immediately set the tone:
The first thing you need to know about Goldman Sachs is that it‟s everywhere. The
world‟s most powerful investment bank is a great vampire squid wrapped around the
face of humanity, relentlessly jamming its blood funnel into anything that smells like
money. In fact, the history of the recent financial crisis, which doubles as a history of
the rapid decline and fall of the suddenly swindled dry American empire, reads like a
Who‟s Who of Goldman Sachs graduates.
Taibbi‟s thesis was simple: he accused Goldman Sachs of having orchestrated all of
the speculative bubbles since the 1929 crisis and of maintaining an incestuous relationship
with Washington in pursuit of its own interests. Taibbi‟s article generated a significant
following in the most serious papers. Just a few days later, Bowley and Anderson (2009) lent
their support in a paper published in the New York Times. They emphasized that Goldman
Sachs was both “revered and reviled” on Wall Street (thereby reflecting, once again, one of
the chief characteristics of scapegoats) and that its employees were sometimes compared to
“Orcs” (the warlike creatures of Middle Earth in Tolkien‟s The Lord of the Rings). Bowley
and Anderson insisted above all that Goldman Sachs represented a unique case, and
emphasized how bad an example it had set to other organizations within the sector:
Goldman is not the only bank that appears to be returning to health. […] But to a
degree among its peers, Goldman has turned the crisis to its advantage. Its perennial
rival, Morgan Stanley, has refused to gamble in the markets and, as a result, is
expected to post a humbling quarterly loss.
In November 2009, Robert (2009) observed that “never […] had the name Goldman
Sachs been so tarnished” and that “the bank […] [was] doing its best to resist the assaults of
the press and public opinion by multiplying excuses” (again, making amends). The image
problems of the bank were compounded and accentuated by the Greek crisis.
When Papandreou succeeded Caramanlis as Prime Minister of Greece on 4 October
2009, the public deficit of Greece was estimated at around 6% of the GDP (Colliopoulou,
2009). Roughly two weeks later, the new government issued a reassessment of the public
deficit, now estimated at 12.5% (Kefalas, 2009). How could such a difference be accounted
for? The answer was not long coming: the previous government had cheated by falsifying the
public finances (Kefalas, 2009). The ensuing events unfolded with remarkable speed: creditrating agencies downgraded Greece, speculators began to bet on the collapse of the Greek
economy and other countries deemed to be fragile, the euro was severely hurt, and the
European stock markets began to sink. Turmoil spread throughout Europe, and (as ever),
people began looking for culprits. Although the finger of blame was pointed at the banking
sector, the banks and bankers as a group were no longer the focus of blame. Instead,
Goldman Sachs was targeted, though other actors also began to be stigmatized in a process
that resulted ultimately in the consolidation of neoliberalism.
22
Who could possibly have helped Greece to cook their accounts? And who were the
unscrupulous speculators betting on the collapse of the Greek state and threatening the Euro
zone? Both questions, continually emphasized in the press since October 2009, were
eventually given a common answer in mid-February 2010: Goldman Sachs. Many press
articles began to spread the word, with most papers reflecting similar views. Discussing the
issue of Greek public finances, Pechberty (2010) penned an article entitled “Goldman Sachs,
the devil of finance”:
The American bank is at the heart of the Greek public finances scandal. Is Goldman
Sachs at the root of all evils? The idea certainly appears to have been in wide
circulation over the past several months. The scandal of Greece‟s cooked accounts has
only served to reinforce this feeling. […] In concrete terms, according to the German
and American press, Goldman Sachs allegedly helped Athens to conceal 1 billion
euros of debt in 2001 by resorting to credit default swaps. […] According to the New
York Times, Goldman Sachs yet again offered its services to Greece last November,
promising this time round to defer the cost of the national healthcare system into the
distant future. […] The god of finance appears to have metamorphosed into a devil.
The bank was particularly blamed for having speculated “against its client by
investing massively in credit default swaps (CDS) on Greek government bonds at a time
when these were relatively cheap” (Buron, 2010). Goldman Sachs was not, however, the only
culprit deemed to be responsible for the Greek crisis. The finger of blame was also pointed at
the Greek people in general and at their leaders in particular. Racialist stigmatization of
Greece began on 22 February 2010, when the cover of the German-language magazine Focus
showed the Venus of Milo adorned with the Greek flag and giving the finger to European
taxpayers. As time went on, the Greek state was made increasingly to resemble a corrupt
body living beyond its means, while the caricature of the Greek thief, a lazy cheat, became an
increasingly widespread image in the international press. On 7 May, Pearlstein (2010) wrote
in the Washington Post: “There is little doubt that Greece‟s debt crisis is of its own making,
the result of corruption and tax avoidance and that seductive Mediterranean coupling of high
living and low productivity”.
Greece was not the only state to be lambasted, since the other PIGS (Portugal, Ireland,
Greece and Spain) were also eventually targeted (Venard, 2010). More generally, many
countries (at least in Europe) were accused of generating abyssal deficits and of falsifying
public finances in order to conceal them. On 22 October 2010, Stephens (2010) provided an
eloquent summary of the blame-shifting process. Between late 2008 and the point of writing,
“some of us thought the banks were to blame for the economic mess. Now we are told that
spendthrift government has been the road to ruin”. In short, the responsibility for the crisis
had shifted to an altogether different camp. Accusations of fraud, irresponsibility and
immorality were now levelled against states. While they had previously been active accusers,
national governments now found themselves among the main accused; and while they had
previously been in a position to regulate global finance, there was then increasing talk of
putting governments under close surveillance (Kerdellant, 2010).
23
At the G20 summit in Toronto on 26 and 27 June 2010, the first priority set by
national governments was to reduce their public deficit within three years (Hiault, 2010)
since it was clear that no significant progress had been made on the banking regulation front
(AWP Swiss News, 2010). The Dodd-Frank act on financial regulation adopted by the US
Senate on 15 July 2010 confirmed that the power was no longer in the hands of the public
authorities (if it ever had been). As noted by Robert (2010), “in the end the big banks will be
largely unaffected” by the reform, which will take at any rate “several years to enforce”. In
short, following the accusations of fraud and immorality levelled against banks and bankers,
the atmosphere surrounding the G20 summit in London (April 2009) was on regulating and
monitoring the banking sector and the markets, on ushering in a return of state power, on
prophesying the end of neoliberalism, and on announcing the dawn of a new era. Following
the G20 summit in Toronto (June 2010), governments were then widely accused of financial
irresponsibility and moral failure, and were deemed to have restored banks to their former
(and indeed cardinal) roles. National states were also subject henceforth to market
surveillance. In short, the world was back at square one. Milton Freidman, from the beyond,
and his neoliberal partisans are surely smiling at this paradox.
Discussion
Our Girardian analysis provides insight into the abilities of neoliberal governmentality to
endure and reproduce in spite of important financial crises. Focusing on the great crisis of
“2007 to the present”, the accusations of fraud against a primary scapegoat (investment
banks) played a key role in the process – not only in providing a template that conveniently
helped audiences and stakeholders to make sense of the turmoil surrounding them, but also
and especially in individualizing their problematization of the crisis. Deeply-rooted patterns
of causality collectively developed between the immorality of a specific stigmatized group
and the turbulence associated with the crisis. In so doing, and this is central to our argument,
the audiences did not tend to interpret the crisis from a systemic viewpoint. In their eyes, the
crisis resulted from the malevolent and fraudulent behaviour of specific actors. Once the
latter were identified and punished, the audiences were happy to find that order had returned
– thereby confirming the scapegoat‟s guiltiness but also (and paradoxically) the power of the
scapegoat over society. The lesson is that order ensues when the scapegoat behaves
appropriately. Some changes were then made to the disciplinary apparatus surrounding the
political economy in order to signal that it would be more difficult for similar fraudulent acts
to occur in the future. Yet the system certainly did not need to be reformed. In so doing, the
authority of neoliberal governmentality was re-established in the aftermath of the crisis.
It is important to reiterate that the key episode examined for the purposes of the
analysis – an episode involving accusations of fraud as observed during the most recent
economic and financial crisis – is by no means an isolated case. The crises of neoliberal
capitalism have been repeatedly followed by similar processes akin to the collective
persecutions examined by Girard (1982, 1990). Of course, the designated fraudsters may vary
– the accusations fuelled by the Enron scandal and other similar scandals were levelled
against auditors rather than bankers (Guénin-Paracini & Gendron, 2010) – but in most cases
actors exhibiting key signs of victimization are eventually accused of fraud. Their lack of
24
morals is seen as the root of their alleged crimes, which are deemed in turn to account for the
malfunctioning of the system. Yet once they have been punished, the culprits largely tend to
regain their legitimacy and the system is by no means seriously questioned.
The legal arena is not centrally involved in the persecution processes that we studied.
In particular, the ways in which the notion of fraud is mobilized in these processes are
certainly not constrained to the realm of formal definitions excerpted from law books.
Instead, the accusations which are collectively produced in the aftermath of crises are more in
line with a broader conception of fraud, for instance as “a dishonest trick or stratagem”
(Canadian Oxford Dictionary, 2001) – that is to say as a premeditated act perpetrated by a
given party driven by some immoral purpose. While legalistic templates may exert some
influence in the public debate, problematization and diabolization are shown to be highly
emotional, being driven by a collective and quite chaotic quest for vengeance and retaliation.
The rationalistic society is far from being obvious in such turbulent times.
Given that Girard‟s theorizing relates to crises in general, we surmise that our
observations are not circumscribed to neoliberal governmentality per se – but apply, at least
on paper, to any type of economic governmentality regime (Keynesian, social democracy,
etc.) being confronted to a climate of crisis. Yet, importantly for our argument, some features
of neoliberalism arguably reinforce people‟s tendencies to individualize crises, to see them as
resulting from specific acts of immorality attributed to a particular individual or group. We
maintain that neoliberalism, through a discourse which celebrates the primacy of
individualism in society, engenders and sustains a context which is favourable to
individualistic explanations of crises.
Foucault (2004b, pp. 135-136) insisted that neoliberalism is not a mere
aggiornamento of the old doctrine of laissez-faire. Far from espousing the 18th and 19th
century traditions of classical liberal thought, neoliberal economists tend to reject the
“naturalist naivety” of classical liberalism, which involves seeing competition in what is
merely a natural phenomenon. For neoliberals, competition is not a primitive datum but
rather a formal structure that needs to be developed and constructed, a mechanism that is only
able to produce its effects once it has been instituted in its pure form. Further, competition
must regulate the full range of human activities (healthcare, education, justice, etc.). This is
the key objective of neoliberalism, and its realization requires “active governmentality”
(Foucault, 2004b, p. 125). The state needs to avoid laissez-faire. Instead, it must intervene,
not to regulate the effects of the market, but to regulate society itself (Foucault, 2004b, p.
125) – i.e. to incite subjects to conduct themselves as entrepreneurs in all areas of life and “to
construct a social fabric in which business and enterprise serve as a model for the basic units
of society” (p. 154). It is precisely “the dissemination of the „business‟ or „enterprise‟ form
throughout the social body that is […] the key objective of neoliberal politics” (Foucault,
2004b, p. 154).
More specifically, neoliberalism is sustained through discourses which construct the
individual as the focal point of centre stage. Formal systems of knowledge support neoliberal
governmentality, such as agency theory which promotes the view that self-interested
25
behaviour in almost any sphere of social life is normal and typical (Cohen & Holder-Webb,
2006). Accounting is also involved, in creating spheres of individual autonomy and
responsibility (Arnold, 1998). Quite commonly, the individual is seen as a chief source of
innovation, which should not be stifled by tight bureaucracies. Being frequently exposed to
such rhetoric, a number of individuals across society may internalize its assumptions (Berger
& Luckman, 1966). Their interpretive schemes are then likely to favour individualizing lines
of interpretation when trying to make sense of important events in the flow of their lives,
including financial crises. In short, the individualization of crises is strengthened in
communities in which the neoliberal discourse prevails. Below we argue that a peculiar
system of expertise is significantly involved in sustaining individualizing interpretations
during times of financial crisis, namely, accounting-based expertise in fraud examination.
Representing fraud through knowledge claims
Representation plays a fundamental role in processes by which meaning is constructed (Hall,
1997a). In particular, representations can impact people‟s subjectivity in creating a sense of
normality and abnormality (Foucault, 1975; 2004a). Today, expertise is closely related to the
production of influential representations which claim the status of truth (Rabinow, 1984).
Expert representations are powerful; people increasingly assume that they should rely on
expert knowledge and pronouncements in their daily endeavours (Knorr Cetina, 1999).
Journalists and individuals are educated and socialized in ways in which expert knowledge is
a central referent. Our argument is that expert representations exert significant influence in
“setting the stage” for the individualization of financial crises. The sets of representations
which underlie claims to expertise can, through a variety of subtle and not-so-subtle
influences (Foucault, 1975; 1988), become inculcated in people‟s interpretive schemes. In
particular, we maintain that systems of expertise having fraud as their object of intervention
convey a set of representations which promote a sense of causality between individual
fraudulent acts and financial turmoil. We are particularly interested in examining how expert
discourse propagates a sense of suspicion towards individuals, how it constructs fraud as a
central problem, and how it advocates the use of certain technologies to control fraud.
Fraud has been central to the development, professionalization and expansion of
accounting. As mentioned in a fraud examination textbook:
As the number of frauds and the amounts of fraud losses increase, so do the
opportunities for successful careers in fraud-fighting. In fact, just recently, U.S. News
and World Report identified fraud examination as one of the fastest growing and most
financially rewarding careers. The American Institute of Certified Public Accountants
recently touted fraud examination/fraud as one of the six fastest growing and most
profitable opportunities for accountants. (Albrecht & Albrecht, 2004, pp. 13-14)
Resonating with Albrecht and Albrecht (2004), public opinion and various streams of
professional and academic literature assume that fraud is a central problem in our society, and
that it basically makes sense to devote ample financial means to sustain professions which
claim to have the expertise to address the matter effectively and efficiently. Yet in our paper
26
we seek to go beyond the level of superficiality which characterizes such a functionalist
explanation pertaining to the institutionalization of fraud expertise. Instead we maintain that
the fraud examination discipline sustains a set of representations which associates economic
turbulence to the occurrence of individualistic acts of fraud – an association which plays a
key role in the professionalization process of accountants. In other words, expert discourse
partakes in the creation and maintenance of a general climate favouring individualized lines
of interpretations. Although no determinism is involved between context and agency, the
power of dominant discourses and representations in shaping individual subjectivity should
not be under-stressed (Foucault, 1980, 2001). Our research also seeks to comprehend some of
the processes by which fraud comes to be perceived as rooted in individuals (and not as an
effect of neoliberalism) and as a key problem in our place and moment.
To study how expert discourse promotes certain representations surrounding the
notion of fraud, we rely especially on two books issued by authors hovering around the
ACFE, namely, Albrecht and Albrecht (2004) as well as Wells (1997). These books are
aimed at a practitioner audience, specifically in teaching practitioners “how to reduce fraud
losses – and how to effectively work to eliminate future frauds” (Albrecht & Albrecht, 2004,
outside back cover). As formal depositories of professional knowledge pertaining to fraud
examination, these books allow us to analyze representations and underlying assumptions
made in specifying what fraud is and how one can legitimately intervene in the area.
The definition of problems to deal with is a central stake in professionalization
processes (Abbott, 1988). Definitions construct territories in which one is entitled to
intervene or not. Albrecht and Albrecht (2004, p. 5) define fraud in a way which puts the
analytical gaze on specific individuals being involved in deceptive acts:
Fraud is a generic term, and embraces all the multifarious means which human
ingenuity can devise, which are resorted to by one individual, to get an advantage
over another by false representations. No definite and invariable rule can be laid down
as a general proposition in defining fraud, as it includes surprise, trickery, cunning
and unfair ways by which another is cheated. The only boundaries defining it are
those which limit human knavery.
One of the most striking features of this definition is the use of derogative and
persecutory language in qualifying fraudulent acts. In representing the jurisdictional domain
in which fraud specialists are entitled to intervene, boundaries of exclusion are mobilized –
not only towards those who commit fraud but also towards those who belong to social groups
“typically” involved in fraudulent acts:
The cases we have seen on the preceeding [sic] pages were, by and large, on the
extreme edge of abusive conduct by employees. In short, this data is merely the tip of
the iceberg. How deep and massive that iceberg is varies from one organization to
another, depending on a complex set of business and human factors. […] Obviously
the more rules within the organization, the more employees are likely to run afoul of
them. […] Tom R. Tyler, in his book Why People Obey the Law concluded
27
overwhelmingly that individuals obey only laws they believe in. If a rule makes no
sense to the employees, they will make their own. (Wells, 1997, p. 511)
Wells relies on a series of persuasive tactics in arguing that fraud constitutes a
massive organizational problem, which is often tied to unruly employees. In particular, the
metaphor of the iceberg is of interest since it surrounds fraud with vastness and uncertainty,
thereby securing a jurisdictional area of involvement for fraud specialists (Abbott, 1988). The
clear-cut tone used by the author is also remarkable: employees undoubtedly will break rules
if they have the opportunity to do it. This uncompromising affirmation is authoritatively
supported through a reference to a book written by an academic (Tyler, 2006) specialized in
psychology and law. The incisive tone is a striking contrast with the careful statements which
professional accountants typically use in their reports.
A battery of knowledge-legitimizing mechanisms is enrolled in these two books in
order to strengthen a sense of urgency towards the fraud problem, and to represent fraud
specialists as possessing substantive knowledge to act on it. Wells (1997) begins his book by
presenting fraud specialization as being grounded in criminological knowledge – specifically
through a school of thought which assumes that crime is learned:
Much of the current literature is based upon the early works of Edwin H. Sutherland
(1883-1950), a criminologist at Indiana University. […] For the non-initiated,
Sutherland is to the world of white-collar criminality what Freud is to psychology.
Indeed, it was Sutherland who coined the term white-collar crime in 1939. […] The
theory‟s basic tenet is that crime is learned, much like we learn math, English, or
guitar playing. Sutherland believed this learning of criminal behavior occurred with
other persons in a process of communication. […] Sutherland further theorized that
the learning of criminal activity usually occurred within intimate personal groups.
This explains, in his view, how a dysfunctional parent is more likely to produce
dysfunctional offspring. (Wells, 1997, pp. 8-9)
Sutherland‟s theorizing is predicated on an individualistic stance, in that to “explain”
crime one has to look at the specifics which surround one‟s daily life – not the general
context. This individualizing epistemological stance is reinforced in what is presented as one
of the cornerstones of criminological thought, namely, the fraud triangle as originally
conceived by one of Sutherland‟s doctoral students, Donald R. Cressey:
Trusted persons become violators when they conceive of themselves as having a
financial problem which is nonsharable [pressure], are aware this problem can be
secretly resolved by violation of the position of financial trust [opportunity], and are
able to apply to their own conduct in that situation verbalizations which enable them
to adjust their conceptions of themselves as trusted persons with their conceptions of
themselves as users of the entrusted funds or property [rationalization]. (Cressey –
cited in Wells, 1997, p. 10)
As such, the triangle provides fraud specialists with an investigative template which
individualizes fraud and renders futile systemic questioning. Once again, fraud is
28
circumscribed to the realm of the specifics: the individual in the course of her/his life realizes
that s/he is confronted to a non-sharable problem (e.g., gambling debt); s/he is in a position to
commit fraud; and the person is somehow able to rationalize the act. The fraud triangle is so
influential in the domain of accounting thought that it is even specifically mentioned in
standards of financial reporting (e.g., paragraph A1 of 2010 International Standard on
Auditing 240 – The auditor‟s responsibilities relating to fraud in an audit of financial
statements). It is relevant to note that a range of academic work is devoted to analyzing
elements of the triangle (Hogan, Rezaee, Riley, & Velury, 2008), and proposes ways to
extend it (e.g., Dorminey, Fleming, Kranacher, & Riley, 2010), geometrically speaking:
A missing ingredient [to the fraud triangle] is managerial hubris, fed by fawning
media and analysts, which ignites and accelerates the fraud triangle. Hubris is
characterized by exaggerated self-confidence, arrogance and oblivion to reality.
(Magnan, Cormier, & Lapointe-Antunes, 2009)
The fraud triangle is also emphasized in Albrecht and Albrecht (2004, p. 21), who
specify that fraud specialists typically concentrate their activities on the opportunity corner:
Because fraud-fighters generally believe that opportunities can be eliminated by
having good internal controls, they focus all or most of their preventive efforts on
implementing controls and ensuring adherence to them. Rarely do they focus on the
pressures motivating fraud or on the rationalizations of perpetrators.
Thus, not only is the logic underlying the triangle individualizing, but also how fraud
specialists tend to use the template – in that focusing only on one leg of the triangle
reinforces individualization.
Other means in our two reference books are used to ensure that fraud specialization is
seen as being grounded in a body of knowledge – which again represents the fraud problem
from an individualizing angle. In particular, significant energies are devoted to categorizing
fraudsters and their acts along various dimensions. Wells (1997) mobilizes the results of a
large-scale survey of certified fraud examiners (CFEs), who were asked to provide
information on actual fraud cases. A series of graphs is presented (chapter 1), which
collectively associate the imagery of the fraudster to the profile of a married male for
instance. Predictive abilities are emphasized in the text, through statements such as: “One of
the most meaningful trends of the survey is the direct and linear correlation between age and
median loss” (Wells, 1997, p. 38). In so doing, the author speaks with authority, being
affirmative about the phenomenon for which fraud specialists claim jurisdiction.
Furthermore, by peppering the text with survey results, Wells shows that the fraud
examination domain is committed to the construction of a knowledge base predicated on
abstract and generalized knowledge (as opposed to the production of knowledge focused on
contextualizing), which is increasingly appealing given the emphasis on generality, mobility,
comparability and standardization in today‟s society (Porter, 1995; Reed, 1996).
While from a practitioner perspective profiling ensures that pragmatic and generalized
knowledge is grounded in an analysis of common features which characterize actual instances
29
of fraudulent behaviour, from a sociological perspective moral judgment often underlies the
categorizing of perpetrators of fraud. In particular, patterns of normality emerge from the
abnormality and amorality which are perceived to surround fraudulent acts. Yet these patterns
of normality inevitably stigmatize, in that they associate certain groups of individuals to
specific categories of risks (Said, 1979). For instance, the text provides a sense that it is
normal to expect that male employees commonly cause “median losses four times those of
female employees” (Wells, 1997, p. 37). In so doing, the body of knowledge which underlies
fraud specialization reflects in some ways Girard‟s persecuting stages; this is not surprising
given that professional practices do not originate from the blue but instead emerge and
develop from the historical ebb and flow of social relationships. Importantly for our purpose,
the individualizing patterns of normality sustained through the regime of expert
representations may – and even are likely to – impact people‟s interpretive schemes,
especially in a world where it is “normal” to take expert claims into account. The fear of
being considered abnormal may be conducive to people being favourably inclined towards
expert knowledge. Expert representations may therefore be significantly mobilized when
people seek to make sense of turmoil around them, thereby participating in the construction
of financial crises as episodes of witch-hunting, in which the analytical gaze is focused on
identifying who committed fraud and behaved amorally.
Wells (1997) is particularly keen on utilizing short cases in order to demonstrate the
linkages between certain behavioural patterns and fraud. For instance:
Few crimes can match the devious nature of the embezzlement scheme that former
United Way of American president William Aramony undertook in the early 1990s.
Aramony stooped so low as to snatch more than $1.2 million from the charity
organization. […] Aramony, a 67-year-old man who had headed United Way for more
than 22 years before stepping down in 1992, was an extravagant leader even before he
was under any legal suspicions. Earning more than $463,000 a year in salary and
benefits, Aramony had a reputation for enjoying a lavish lifestyle and was also known
to be quite a womanizer. […] The president used $1.2 million in United Way funds to
maintain apartments […] for himself and his 17-year-old girlfriend. (p. 59)
The point is that these short cases individualize and are not conducive to systemic
examinations. The audiences which read and assimilate Wells‟ teachings are not encouraged
to question the institutions and environments in which they live. In addition, Wells‟ teaching
style points to certain morality standards being used in analyzing fraudulent cases. This
encourages an order of things in which people develop the expectation that turmoil is the
outcome of individualized and amoral acts, thereby setting the stage for what Girard tells us
about the identification of scapegoats predicated on victimizing signs. These signs do not
originate from heavens – but instead are constantly mentioned and emphasized through
expert discourse. The practice of background checks, actively promoted in Wells (1997),
singles out a category of individuals as problematic hires:
The news that the hospital had unknowingly hired a convicted felon distressed [the
director of internal auditing in charge of investigating the case of an employee who
30
regularly overstated the number of hours on his time sheets]. He discovered that the
hospital‟s ability to conduct thorough background checks on prospective employees
was restricted by money and accessibility to records. […] Harkanell [e.g., the person
who defrauded the hospital] remained at large for several months. But luck was on the
hospital‟s side. Or, perhaps more accurately, stupidity was on Harkanell‟s. Just as he
had done with his time-sheet fraud, he left a clue behind, this time concerning his
whereabouts. (Wells, 1997, p. 263)
This excerpt associates fraud, former prisoners and stupidity – the overarching
“lesson” being that organizations should be reluctant to hire people having a criminal record,
no matter the circumstances in which they were convicted. The impression that emerges from
books such as that of Wells (1997) is that fraud specialists are involved in a chivalrous quest
to protect society‟s morality – morality being defined along a conservative viewpoint, though.
Albrecht and Albrecht‟s (2004) book is especially apt at representing the work of fraud
specialists as guardians of morality – through clear-cut statements:
If someone will steal from his six-year-old child or sneak out of a hospital still
bleeding from an operation to feed his addiction, he will certainly steal from his
employer or commit other types of fraud. The number of embezzlers who trace their
motivation for embezzlement to alcohol, gambling, and expensive extramarital
relationships is high. However, the number who steal for drugs may even be higher.
Consider these confessions of former drug users: […]. Someone who will slip a piece
of heroin under a newborn baby‟s tongue or burglarize homes to support her habit will
surely look for ways to embezzle from employers or commit other types of fraud.
(Albrecht & Albrecht, 2004, p. 25)
No compassion is expressed towards those individuals and their life trajectories. The
jurisdiction of fraud examination is circumscribed to the technical realm of detection and
prevention – prevention being understood from a restricted angle, that of the organization
trying to establish and improve control systems. The angle is certainly not that of society. The
latter is beyond the reach of the fraud specialist – as a matter of fact s/he is not
professionalized in approaching problems from systemic angles. Throughout their education
accountants and other control specialists typically learn to trust numbers while downplaying
the realities and dramas which often lie behind them (McPhail, 1999). The specialist is then
exposed and re-exposed to the view that professionalized machineries of knowledge should
be targeted on means – not ends (Chua, 1986).
Further, through the cases presented in Wells (1997), the reader is provided with a
sense that fraud specialists possess the technological skills, for instance regarding background
checks, which are conducive to effectiveness in terms of fraud detection and prevention.
Much practice, at least as reflected in the texts, is centred on the ability of examiners to
recognize the “symptoms” of fraud – also called red flags:
To detect fraud, managers, auditors, employees, and examiners must learn to
recognize symptoms and pursue them until they are satisfied that fraud has or has not
31
been committed. Unfortunately, many symptoms of fraud go unnoticed, or the
symptoms are recognized but not vigorously pursued. Many frauds would be detected
earlier if symptoms were routinely investigated. (Albrecht & Albrecht, 2004, p. 84)
Through this excerpt we are confronted with the art of fraud examination – an art
which is nonetheless methodologically surrounded with guidelines and decision protocols.
Significant energies are devoted – not only in the field but also conceptually – to the
development of formal lists of symptoms and other tools that help recognize fraud. Diverse
categories of symptoms have been elaborated – not only by practitioners but also by a range
of academics (e.g., Pincus, 1989): accounting anomalies, extravagant lifestyles, tips, and a
psychologically-predicated category, namely, unusual behaviours:
Research in psychology indicates that when people (especially first-time offenders, as
many fraud perpetrators are) commit a crime, they are overwhelmed by fear and guilt.
These emotions express themselves in an extremely unpleasant physical response
called stress. Individuals then exhibit unusual and recognizable coping mechanisms.
[…] People who are normally nice become intimidating and belligerent. People who
are normally belligerent suddenly become nice. (Albrecht & Albrecht, 2004, p. 99)
Coping mechanisms include insomnia, unusual irritability, inability to relax, inability
to look people in the eyes, defensiveness, sweating and increased smoking (p. 100). In so
doing, fraud investigators are encouraged to be alert to any behavioural changes surrounding
them. Fraud can be everywhere. As a result, every “abnormal” gesture or word may be
construed as a symptom of fraud. Yet the art of the skilled investigator is to separate the
wheat from the chaff, which is challenging given the impact of unwarranted investigations on
people‟s reputation. Following the example of financial auditing (Power, 1994) but perhaps
in a more pronounced way, the fraud expertise discipline engenders a climate of suspicion
and distrust. In order to secure their jurisdiction, fraud specialists fundamentally have to
remind audiences of the threat of fraud being constantly present in one‟s surroundings.
Moreover, the categorizing schemes institutionalized in the discipline emphasize the threat of
actors lacking in morality: former prisoners; drug users, gamblers, etc. Distrust is therefore
especially targeted towards certain categories of individuals. Not only do systems of expertise
encourage people to think in certain ways about fraud – but they also reflect some deeplyingrained beliefs that have stigmatized for long certain groups in society. The general
impression that emerges from the books we analyzed is one of generalized fear – in that every
employee, citizen or corporation might harbour amorality and sinfulness. In this sense, the
medical connotation of the term “symptom” is not fortuitous; it propagates the view that it is
normal to find in organizations contaminated elements which specifically need to be
eradicated. Again, the epistemological apparatus that sustains the discipline of fraud
examination encourages turmoil and crises to be interpreted from an individualizing angle
focused on the perpetration of fraudulent acts.
While fraud specialists are skilled in promoting the indispensability of their
knowledge, they are also strategically cautious in downplaying the practical expectations
ensuing from their work. The language they use is often affirmative and authoritative. For
32
example, in the body of formal representations they sustain, fraud specialists remain
inflexible agents of Justice. Truth is inescapable and unambiguously on their side. Fraudsters
should not be condoned; they need to be rigorously punished:
Ernie‟s brief era of good feelings had ended. He has used the proceeds from his
finagling for a lavish family vacation, a new car, a new computer, and improvements
on the house […], but in the fallout of his dismissal Ernie‟s house went into
foreclosure. He was charged around the same time with Driving Under the Influence.
The CPA board revoked his license and fined him for ethics violations. He made no
defense at his civil trial, where a judgment was rendered against him for the $109,000
he took plus treble damages. While he was out on bail for the criminal charges against
him, Ernie took his family and fled. […] “For $109,000 he fouled up his life, and his
family.” (Wells, 1997, p. 189)
Further, in order to promote the need for fraud expertise, organizations which are
passive in terms of implementing specialized approaches and recipes aimed at controlling the
risk of fraud are criticized through the voice of hindsight and wisdom:
If there is a lesson to be learned here, it is that audit functions are in place for a reason
and should never be overlooked. Unfortunately for the [defrauded] charitable
organization, they were reminded of this lesson the hard way. (Wells, 1997, p. 156)
In this way fraud specialists promote the obviousness of their expertise, which is
presented as making a difference in dealing with the hidden part of the iceberg. Indeed just
the magnitude of the network surrounding the ACFE provides a reassuring signal that
appropriate expertise is available for entities wishing to deal seriously with the fraud
problem. Thousands of members belong to the Association, which publishes a plethora of
books and other writings. Yet some insurance against the unknown (Latour, 1987)
characterizes the specialists‟ discourse. Dealing with the hidden part of the iceberg is a
challenging endeavour; hence the audiences are mentioned not to set their expectations too
high:
Those searching for a “magic bullet” to detect these offenses are doubtlessly still
looking. Indeed, the dream of many in the accounting community is to develop “new”
audit techniques which will quickly and easily point the finger of suspicion. To those
innocent souls, good luck. Regardless of the ability of computers to automate a great
deal of drudgery, there are no new audit techniques, and there haven‟t been any for
the last several centuries. (Wells, 1997, p. 526)
The key point to retain, though, is that by presenting a credible knowledge claim,
fraud specialists legitimize and diffuse a broader discourse which resonates and encourages
the individualization of crises.
In sum, the fraud examination discipline constitutes a comprehensive body of
knowledge and practices, which is allegedly able to establish control procedures that
effectively prevent fraud, able to identify and detect fraud, and able to help Justice in
33
ensuring the reign of Truth. This rhetoric is sustained through a network of legitimizing
devices: educational cases, websites, formal books, professional designation, etc. Not only do
these devices reflect in certain ways the persecuting practices that Girard theorizes, but they
also (and this is central to our argument) institute and reinforce individualizing lines of
interpretations being used to make sense of financial turbulence and crisis. This is where
Girard and Foucault overlap and complement each other in their respective analyses:
individualizing persecution is not accomplished haphazardly. Girard argues that victims of
persecution are often characterized with victimizing signs – yet he does not elaborate much
on why people tend to be sensitive to certain signs. Conditions of possibility are needed in
this respect – not least knowledge bases which make it obvious that fraud is a common and
important problem. In this respect, Foucault provides a deeper sense of how people‟s
subjectivity can be discursively influenced by regimes of expertise which convey sets of
disciplinary representations conducive to the individualization of crises. The power of
expertise ensues from the power of the norm, in relying and promoting senses of normality
and abnormality. In constructing knowledge, that is to say in elaborating processes of
classification, codification, calibration and intervention, disciplines participate to the
establishment and legitimacy of certain ways of thinking regarding the normal and the
abnormal (Townley, 1994). In our case, the representations which underlie fraud expertise
promote patterns of normality which celebrate the search for individualized lines of
explanation, in which the risk constituted by certain categories of individuals is highlighted.
Further, these representations draw their influence from today‟s widely held assertion that it
is “normal” to trust and rely on legitimate expertise (Giddens, 1990). Normality fuels another
level of normality, in a sense.
We are therefore surrounded with regimes of expertise, characterized with auras of
professionalism and legitimacy, which make us inclined to individualize crises along lines of
interpretation centred on the problem of fraud. The discursive representations sustained by
the ACFE network are constitutive of one such regime – yet it is far from being alone in
promoting such lines of interpretations. Other individualizing discourses sustained through a
range of expert voices abound on the notion of fraud. For instance, the largest public
accounting firms devote important resources to carry out fraud surveys, on a regular basis, in
different countries. In addition to establish the legitimacy of the Big Four in the fraud
jurisdiction, these surveys convey a set of representations which promote a climate of
suspicion towards one‟s colleagues and neighbours. A network of large institutional actors
(IMF, World Bank, etc.) is also actively involved in constructing the problem of corruption
(Everett, Neu & Rahaman, 2007, p. 519) in a way which individualizes blame: “the
consequences of corruption are believed to be numerous and widespread, and […] most of
these consequences can be traced back to the holders of public office, or in some cases other
actors, such as foreign businesses”. The fashion surrounding whistle-blowing mechanisms,
which are even mandated by law through the Sarbanes-Oxley Act of 2002 and the DoddFrank Wall Street Reform and Consumer Protection Act, contributes in the same way to the
establishment of a general climate conducive to a quest for individualized lines of
interpretation during economic turmoil. Whose specific individual or group engendered
chaos? Even psychiatry partakes in the process, claiming that a number of fraudsters can be
34
characterized as “industrial psychopaths”, affected by a mental pathology which makes them
obsessed with material possession and adamant in using others to reach selfish personal goals
(Ramamoorti, 2008). Expert discourse may be even more powerful when it is issued and
sanctified by the sciences of the human. In this respect, one of the main arguments developed
by Foucault (1975) relates to the role played by the human sciences in subjugating bodies and
souls to the gaze of others (e.g., managers, teachers, physicians) through a range of
objectifying mechanisms that allow the individual to be visualized, apprehended and
measured. In so doing, each individual is conceived of as a distinct entity which can be
known and measured, and whose abnormalities can be treated in certain ways. In the light of
all this, it can confidently be argued that individualizing constitutes a key social force in
today‟s society – what Foucault calls the “government of individualization” (Foucault, 1983).
Neoliberalism escapes reform through collective persecuting behaviour which tends
to relate chaos to the perpetration of some fraudulent act by some immoral agent. Yet such
collective behaviour is not dictated from heavens. In particular, it relates to a regime of
representations, sustained through a plethora of claims to expertise, which seek to influence
us in normalizing, or internalizing, the constitution of blame through individualizing lenses.
Conclusion
The inspiration for our paper ensues from the empirical observation that neoliberal
governmentality reproduces, and perhaps even extends its ascendancy over the political
economy and society, in spite of significant financial crises. Drawing on the work of Girard,
we first argue that the resilience of neoliberalism ensues from the way in which the crises of
neoliberal capitalism have tended to be interpreted and analyzed in society, through a
collective focus, almost on the verge of obsession, on the detection of fraudulent acts and the
punishment of fraudsters. Our argument is illustrated through the case of the financial crisis
“of 2007 to the present”. As such, the investigation brings to the fore the extent of violence
surrounding the collective designation of scapegoats, the persuasiveness of punishment in
satisfying the community‟s need for retribution, and a peculiar reversal in that the legitimacy
of scapegoats is often re-established (partially or completely) once social order is reinstituted.
Yet we sought to go beyond Girard‟s theorizing in constituting a conceptual bridge with
another theoretical template, excerpted from Foucault, which considers the role of modern
forms of expertise in shaping conditions of possibility favourable to the individualization of
crises through blame being put on fraudsters. In other words, central to our argument is the
role of discourses of expertise in propagating sets of representations which promote a sense
of causality between economic turmoil and the occurrence of individualized acts of fraud.
Our paper therefore explores and brings forth tenuous linkages between governmentality
regimes, sense-making, expertise and the notion of fraud – all under the gaze of a significant
social force, namely, individualization.
Recognizing that general statements describing the main “contributions” of a study
are inherently reductionist yet almost inevitable given today‟s “normal” way of writing in
academia, we claim that our paper contributes to literature in several respects. The extent to
which Girard‟s theorizing can be meaningfully applied to the events surrounding the most
35
recent financial crisis, reminds us that processes of sense-making in contemporary society are
not deeply removed from those prevailing in past eras. Being incessantly promoted through
various claims of rationality and technological progress, the present is often claimed as being
tied to the past in ways which allow learning to develop and establish its benefits in
communities; as a result the past is apprehended condescendingly (see Macintosh 2009 for a
sophisticate argument on the matter). In contrast, our article solidifies an emerging view in
accounting literature (e.g., Durocher & Gendron, 2011), in that contemporary society is not
too far distant from “primitive” tribes of humans – which today are often denigrated as being
nothing more than a world permeated with violent conflict, charlatanism and irrationality.
Girard makes us aware that some deeply-ingrained social processes tend to persist over time.
It can even be surmised that the neoliberal governmentality promotes primitiveness, not least
through a political agenda which favours a reduction in the role of the state, in order to ensure
that individual entrepreneurship and the flow of economic and technological “progress” it
engenders are unconstrained. Thus neoliberal societies are not remote from “primitive” ones,
where state structures were, at best, embryonic.
The power of the Factiva database in concretizing sophisticate discursive analyses
should also be underlined. Through Factiva we were able to easily determine the number of
times certain words appear in a plethora of newspaper articles in specific months. This was
especially helpful in following over time the extent to which certain terms indicative of
violence were conveyed in the press. A vast area of empirical investigations opens up through
this technology, allowing researchers to better understand, for instance, how professionals
and their work are represented, interpreted, translated and transformed in the eyes of the
audiences to which their claims to expertise are targeted.
As well, our investigation underlines the significant presence of opinion pollsters in
accounts of the recent financial crisis as constructed by journalists. As power-knowledge
mechanisms, polls are far from providing an unbiased picture of the situations under study.
They play an active role in constructing reality, in channelling violence (to some extent) in
times of crisis, and in providing interpretations which may eventually mitigate the extent of
fury against scapegoats. It seems that certain parties have much at stake in the political
economy, given the extent of resources devoted at the establishment and maintenance of
technologies of surveillance targeted at the perceptions of “ordinary people” towards
economic governance. Yet serious doubt can be cast on the pragmatic usefulness of the
knowledge generated through such technologies, given the extent of unpredictability
characterizing collective violence in times of crisis. This line of thought can even be relied
upon to question the notion of crisis management. A vast army of consultants and knowledge
manufacturers are involved in developing practices and technologies to be used in providing
advice on how organizations and states should manage crises (Pearson, Roux-Dufort, &
Clair, 2007). Yet the recipes or optimistic dreams sold to anxious boards of directors and
governments by a plethora of consultants alleged to be experts in crisis management are
predicated on very frail assumptions. Indeed the idea of “managing” in times of crisis is
antithetical to: a) the extent of chaos taking place in the field during persecution times, and b)
the frameworks of power which underlie the works of Foucault and Girard.
36
Our manuscript also makes us aware of the key role played by individualization in
processes by which financial crises are collectively interpreted. Our thesis is that the capacity
of neoliberalism to endure in spite of important financial crises ensues, at least partially but
significantly, from the ways in which crises tend to be interpreted in the community,
specifically through lenses that associate turmoil with individualized fraudulent acts.
Although the relationship is indirect, these lenses are certainly nurtured through the diverse
sets of representations conveyed through expert discourse, including that of the fraud
examination discipline. As a result of the individualizing forces at work during episodes of
collective sense-making surrounding crises, systemic issues tend to be overlooked and status
quo reproduces – although some structural changes, relatively minor in scope, may be
formally instituted in order to secure individuals in their fundamental faith in historical
progress. Our paper therefore contributes to a body of accounting research which brings to
the fore and problematizes the tendencies of society to interpret financial turbulence from
individualizing lenses (Humphrey, Moizer, & Turley, 1992; Power, 1997).
Collective sense-making in times of crisis basically prevents governmentality regimes
from being seriously questioned. By and large, the collective gaze is brought to bear on
specific acts of immorality which, when being detected and punished, provide people with a
sense of relief and contentment. In such a context, it is reasonable to surmise that it will be
relatively difficult to find financial crises translating into substantive change. A strong
indication with regard to the most recent crisis is found in the scope of activities which are
still carried out in the political economy by investment banks, including the notorious
Goldman Sachs. Another indication resides in the ironic situation of seeing national
governments having to further engage in new public management, reducing their deficits and
the scope of their services, as a result of having supported a neoliberal economy apparently
on the verge of collapsing. It appears that as society, we are characterized with a proclivity
towards social reproduction, sustained through a discursive context which assumes causality
between turmoil and individualistic fraudulent acts. Considerable challenges are therefore
involved in overcoming the interrelated forces of individualization and resilience in
communities. Yet substantive change is possible, as demonstrated by the transition towards
Keynesian ideas in the 1930s, and towards neoliberalism around the end of the 1970s. As
argued by Foucault (see Rabinow, 1984, pp. 5-6), much has to be learned on the nature of
power and how it operates, especially in light of the dialectic between reproduction and social
change. For instance, it would be highly relevant to compare sense-making in the press in the
aftermath of the Great Depression versus that surrounding the recent financial crisis, in order
to better understand processes conducive to substantive change.
Our paper also provides insights into power mechanisms that contribute to the
edification of boundaries of exclusion within society. Discourses of expertise are deeply
involved in such processes. Previous research has shown that accounting is implicated in
erecting boundaries of differentiation around certain groups (Anderson-Gough, Grey, &
Robson, 2005; Annisette, 2003). In particular, the literature indicates that accounting often
exerts subtle influence in terms of gendering and racializing people. Yet our analysis of fraud
examination discourse shows a form of accounting expertise being openly involved in
37
marginalizing endeavours, as if the securing of jurisdiction depends on making it clear that
the discipline is predicated on persuasive categorizing schemes, even when the latter translate
into sweeping and oversimplifying generalizations.
Given the potentially important influence of current prevailing forms of accounting in
strengthening ways of thinking which encourage society‟s proclivities in problematizing
crises through the gaze of individualism and the frenzied quest for identifying fraudsters
(instead of systemic questioning), can we conceive of other forms of accounting and
accountability which are more likely to be conducive to endeavours which question the
ascendancy of governmentality regimes over the political economy? Can accounting
regulation and accounting research play a role in this respect? To address these questions the
imagination of practitioners and accounting researchers will have to be significantly
mobilized. However, this undertaking is likely to be especially challenging for accounting
researchers since a number of them (indeed perhaps the majority of them) are not necessarily
accustomed to carry out research that matters – socially speaking (Flyvbjerg, 2001; Panozzo,
1997). Roberts‟ (1991) ideas regarding socializing forms of accountability are promising in
this respect – although it should be recognized that the range of imaginative possibilities is, to
a large extent, uncharted.
As maintained by Power (2009, p. 849), to address the roots of financial crises we
need to “shift the blame and analysis from the usual human suspects […] and consider much
harder questions of knowledge”, which ultimately relate to entire systems of thought. This is
the challenge that we, as accounting researchers, educators and practitioners, need to engage
with. Meeting this challenge will undeniably engender a plethora of conflict – yet we need to
keep in mind that conflict, anxiety, power and violence permeate the totality of society.
38
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43
Figure 1
Five-year interactive chart of Standard & Poor‟s 500 Banks Index
44
Table 1
Chronology of main events enumerated in our analysis
Date
June 2007
September 2008
October 2008
End of 2008 /
Beginning of 2009
April 2009
September 2009
Beginning of 2010
June 2010
Description of event
Credit-rating agencies begin to downgrade financial products linked
to subprime mortgages
Acquisition of Merrill Lynch by Bank of America;
Collapse of Lehman Brothers
Trying to avoid other collapses, the U.S. government announces
investment of public money in fragile investment banks
Collective persecution of investment banks and bankers
G20 summit in London;
Peak of persecution against investment banks
G20 summit in Pittsburgh
Search for secondary scapegoats surrounding the Greek crisis:
Goldman Sachs, Greek people, the other PIGS
G20 summit in Toronto
First priority of governments is to reduce their respective public
deficits
45