Interview with Bruce G. Carruthers. Brexit, Bitcoin, Big Data: How Historical Analysis Helps Shed Light on What the Future Holds
Interviewed by Mayya ShmidtCARRUTHERS, Bruce G. — John D. MacArthur Chair and Professor of Sociology at Northwestern University. Adress: 1810 Chicago Avenue Evanston, ILE-mail:b-carruthers@northwestern.edu
Abstract Bruce G. Carruthers, the John D. MacArthur Professor of Sociology at North-western University was interviewed by Mayya Shmidt, master’s student at Stock-holm University, during his visit to the Swedish Collegium for Advanced Study based in Uppsala. During the first part of the conversation, Bruce Carruthers reflects upon the struc-tural differences between European and North American academic settings and between sociological departments and business schools, considering graduate training and further ascending up the career ladder. He elaborates on his current research, a historical study of credit and credit decision-making in the United States in the nineteenth and twentieth centuries, but he also works on corporate social responsibility and taxation and the adoption of “business like” character-istics by US museums. Carruthers points out that working at a bunch of inter-sections between different branches of sociology allows him to be intellectually inclusive in his work. He shares his personal recipe for economic sociology. Ac-cording to him, a good economic sociologist has to be curious about the economy and willing to do additional work and go beyond his or her sociological training to become knowledgeable in economic phenomena. Taking advantage of com-munication with colleagues from other fields of knowledge may also contribute to a good practice of conducting an economic sociological study. Speculating about the future of credit relations, Carruthers suggests that dystopi-an sci-fi TV shows pose some relevant issues to credit scoring. The combination of how widely the information can circulate and what the individual scores are based on provoke governmentality fears about ratings and rankings. As he puts it, the developing Chinese social credit system, which involves almost no privacy in relation to the State, may be nerve-racking if it gets full expression—quite the opposite future Carruthers predicts for the peer-to-peer platforms that promised to challenge the financial market. Once the promotional hype is over, as he points out, big financial institutions will likely take over the successful platforms, and tech platforms could do the business of intermediation may pop up. With respect to promising topics in sociology, Carruthers recommends directing our attention toward the incorporation of big data into research and the expan-sion of big data analysis skills, as the future of economic sociological research lies therein.
Keywords: international academic settings, history of credit relations, trust and credit, credit ratings, crisis of 2008, historical institutional analysis, interdisciplinarity, p2p platforms, big data
—You’ve been fortunate to follow a long international academic path. Speaking of academia in the US compared to Germany, France, and now, Sweden, have you noticed any structural differences?
—I have started to learn about European universities (having some contact over my entire career) and began to get a lot of exposure around ten years ago. Currently, Northwestern University has a graduate exchange program with a number of European institutions. The program has been going on for almost ten years and, in the context of that, I really got to know how European universities work and how they train graduate students. I learned more about the organizational side and funding side of it. Of course, everyone’s heard of Oxford University, but few know a lot about how Oxford University operates, for example. So, this is an exchange network that currently links Northwestern University, Columbia University, Max Planck Institute in Cologne, Sciences Po in Paris, and the European University Institute in Florence; it is a graduate training network. Every summer, we get together, and one of the partners hosts a conference that focuses on graduate research. The graduate students we are all training have an opportunity to present their research in front of an interna-tional audience. That’s a very good professional experience for graduate students. And this is the vehicle that’s been operating for about ten years, and through which I’ve gotten to know the faculty who work at the partner institutions quite well. We have these conferences focused on graduate training, but, of course, in academia, we gossip; we talk about how our universities are working, what is going on. I received a very good informal education, and a couple of things have struck me. The very simplest contrast is about how graduate students are trained. As compared to Europe, in general, PhD students in the United States take longer and have more intensive training when it comes to quantitative and statistical methods. They don’t necessarily come to gradu-ate school with a PhD project, while the European students’ PhD funding is contingent on such a project. They have to design a project, and that is the one they execute, and they may have 3 years in which to do it. That is a very accelerated timeframe by American standards: most of our students take a good deal longer than 3 years to finish. Even if they already have a master’s degree, they still take longer. And they tend to shop around intellectually at first: a lot of times, they will come, and they will take classes, of course, in their areas of inter-est, but outside their areas of interest too, and that adds a certain intellectual mobility to what they do because they learn about other things. Sometimes they change their minds. I have also been struck by the fact that American sociology is very US-centric. It’s very much about American society and what is happening in the United States. The US is so big, and there are so many very good uni-versities. You can have a wonderful career and never leave the United States. You can give talks at Stanford, Harvard, and Yale, and that’s all very exciting and good, but it is quite different from Europe. I have been really impressed by the amount of cross-national collaboration that is now a characteristic of a lot European social scientists. Because there are people in Germany who are working with the Swedes, who are working with the French, people are travelling around a lot. The typical careers will be, you know, someone gets a PhD from Sciences Po, then they have a postdoc in Denmark, then another postdoc in Germany, and then they will get a permanent position somewhere else. All of this, I think, is quite characteristic. In the United States, most people who get American PhDs in sociology get jobs in sociology at American universities. They can stay and research American society. So, I think there is a comparative aspect to a lot European research that is harder to generate in the American context. They create some opportunities, but sometimes, it’s also a lot of work. In Europe, you don’t really have to explain to someone why it is interesting to compare Germany with France. But in the United States, if you did research on France, people would say: “why do you want to study France? Why should we learn about France?” And you would have to explain to them why it’s good to learn about France, what would be some analytical question that can be answered through a comparison between the United States and France. Most comparisons are much more natural in a European context.
200credit score is. But that wasn’t an assumption, the idea that you know what your own credit score is. You can worry: is it too high or too low—really, more people worry is it too low? That’s not even a possibility if you don’t know what your score is: whether other people will know your score. Maybe I know that I have a low credit rating; that’s one possibility, or it could be that no one knows I have a low credit rating. So, the ability of individual credit scores to enter into and shape widespread social interactions is highly contingent on how much this information circulates publicly and also what it’s based on. Different countries have different privacy rules in place, and privacy rules tend to be more stringent in Europe than in North America. You are certainly seeing that in the regulation, or attempted regulation, of tech firms like Google and Facebook. But when it comes to credit scoring, some countries allow credit scoring firms to gather positive and negative information, while some countries only allow the credit scoring industry to collect negative information. What that means is that, if you’re in Europe, in a country where only negative information is allowed, and let’s say you borrow money, and you repay the loan, nothing bad has happened. That fact cannot be tracked by anyone; they can’t gather that information. I can’t know that factored into a score. If you borrowed money and then defaulted on your debt, that’s negative information, and then, even in countries with stronger privacy laws, they can make note of that fact. They’re allowed to know that fact, and they’re allowed to use it to adjust your score. In the United States, both positive and negative information is all put together, so that the credit scoring agencies can know if you borrowed money, did you repay the loan or didn’t you? Both those things are material facts. If you’re constrained to only gather negative information, and you can only know about the bad things a debtor did, you can’t handle the loans they repaid successfully or properly serviced. So, the meaning of a credit score as a thing that’s attached to the individual, like in Black Mirror, or as reflected in some of sort of Foucauldian governmentality fear that people have about credit scores, depends on how widely that information can circulate and also what it’s based on. There is variation over time and across countries on both those issues. The Chinese social credit system is an interesting example, because in China, in relation to the state, there is no privacy. The state can gather all the information people have. And the social credit system they are building looks like credit scores on steroids. It looks like an even more dramatic extension into all kinds of realms—not just your credit behavior but also your online behavior, you know, what kind of social networks you are attached to, your social media presence. All of this stuff is being somehow pulled together and turned into a score that will be dramatically consequential if the system is rolled out and given full expression, because it’s clear that it’s going to affect not only access to credit but also access to employment, housing, and public transportation . It could be a singularly consequential number if the Chinese social credit system becomes as elaborate and as ubiquitous as is envisioned at this point. They haven’t finished. It’s a massive social regula-tory apparatus to build, so they’re not done yet. We don’t know if it will be fully realized, but the direction it’s headed in is certainly nerve-racking.—In one of the interviews, Thomas Piketty [2016], the French economist, argues that ignorance of his-tory is the main limitation of economic research and, if we want to understand the basic social facts that we observe, we need a “total” approach—economic, political, social, and cultural at the same time. Your studies have a particular historical angle: you’re working at the intersection of economic sociology and economic history. Do you consider your approach to be “total”?—So, I wouldn’t call it total because total suggests you’ve got everything. I certainly share Piketty’s criticism of economics. I think it’s not inclusive enough, and I think that intellectual inclusivity is the way to go. And you’re right in terms of my own work—I do work at the intersection of sociology and historical sociology, and the sociology of law and economic sociology, and, you know, I work at a bunch of intersections. All of this means that, when I study some phenomenon, I’m trying to figure out, what’s its legal aspect, what’s its organizational aspect, what’s the political aspect, what’s the historical context. So, I try to be very inclusive. I
201don’t know if I’m becoming total about everything in my approach because everything sounds like a lot. So, I don’t know if I ever reached total, but I move in that direction, and I would certainly be in the same spirit as Piketty in that regard. I think what makes that hard to do is, especially, when you get into the granularity of history and culture and law, you just need to know a lot of stuff. You know, you can’t just sort of say: “Okay, I’ve done this analysis of the Paris stock exchange in 1803, and now I’m done. I’ve learned something interest-ing.” If you’re going to embrace the Piketty total approach, you probably also have to know something about French political history and what’s going on in Paris. You have to learn a lot of granular details about context to help make sense. You can’t just sort of bracket all that out and say: “I’m going to ignore all that stuff. I’m just going to analyze this data here.” And that takes a lot of work. It means we must learn what was that thing called the French Revolution and was it Louis the 14th, the 16th, the 18th, or I can’t remember? You have to sort out a bunch of stuff. And in terms of being a good researcher, it takes a lot of time. You have to invest a lot in learning before you can deploy that total approach. You not only have to do all that work, you have to want to do it. You have to be curious about the history, and the context, and the politics, and the culture. You have to want to know about that to then go off and learn it, then enrich and properly contextualize whatever specific phenomenon you’re interested in, and that takes a while. If you are looking for quick articles, in six months, you can get some data, download it from the Internet, analyze it, do some robustness checks, and then you can publish your article. That sort of quick and dirty is really hard to do if you have also to say: “Okay, now you worry about the historical context. Oh my gosh, you’ve got to learn about the French Revolution or tell me about slavery in America or the Civil War.” All these big events take a lot of work to learn about, to properly understand. That’s the background work you have to do before you can say something useful and put it in a proper context. I might not use the same language as Piketty, because total sounds too absolute to me.—Too economic...—Well, I don’t know if it’s too economic, but it is too absolute in the sense that total means you’ve got 100 percent of everything; you’ve got it all. And I think we need more. I don’t know if we will ever get to the point of having it all, because maybe there’s something you could not even think about on this list. I don’t know if he thought: “okay, you need to know history; you need to know politics; you need to know culture, or what else?” Well, why stop there? Maybe you need to learn about the world ecosystem. We’re at a point where some of our topics intersect with issues of climate change, then you have to start thinking about meteorology and global climate change and geology, and that’s sort of the longue durée of human society-ecosystem interactions. To ignore that means you’re missing something. I don’t know, but that would be even more total than what Piketty was talking about. But you can’t do that forever, because at some point you have to stop. Otherwise, you’ll just spend your life working on one project and finding deeper, richer, and more grandiose contexts in which to put it. So, there has to be some stopping point to that.—Last year, Mark Granovetter published his long-awaited book on the diverse ways in which society and economy are intertwined, further developing the embeddedness argument [Granovetter 2017]. In the book review, you mentioned that we receive “a valuable conceptual tool kit with which to do economic sociology” [Carruthers 2018:30]. In your opinion, how should one do economic sociology? How does one think like an economic sociologist? —Well, first of all, in my opinion, there is no single recipe.—So, what is yours?—My personal recipe was akin to going into the lab and doing lots of experiments. Lots of things are discov-ered by accident. So, I’ve had lots of accidents in my academic life. I think the first thing we must have is a curiosity about things economic , rather than having economic or financial matters be a topic that makes you
202fall asleep, or that you want to ignore, or think it’s too complicated, which is the reaction of some of my col-leagues. I don’t mean my departmental colleagues, but I think there are lots of topics that sociologists regard as boring and uninteresting or not worth the bother. And if you’re going to do economic sociology well, you can’t afford to do that. You have to be curious about things that are normally ceded to the economists when it comes to analysis. So, you have to be curious, and you have to be willing to do more work. This builds on my answer to that Piketty question: you have to learn stuff about the economy, and if you are trained in sociology, and you start being a sociology major as an undergraduate, and then you went to graduate school in sociology, you probably haven’t had a lot of courses in economics, where you had an opportunity to learn much about what economies do. And that’s a big investment you will have to make. That’s part of your own intellectual context that you’ll have to attend to. So, you have to be curious. You have to be prepared to do additional work. You can’t just rely on your sociological training. In economic sociology right now, a lot of the interesting work takes advantages of various intersections. There are certainly interfaces or intersections between economic sociology and, for example, historical sociology, or the sociology of culture, or science and technology studies, or people in the sociology of inequality. I think those are the interfaces where a lot of interesting work is happening. So, a good recipe for economic sociol-ogy is to mix ingredients. You’ve got economic sociology, but if you add some sociology of gender, you can do some really interesting stuff on women in labor markets , or if you add some sociology of inequality and look at this growing disparity in incomes and wealth, you can do some interesting work there, and you’re go-ing to be engaging a very traditional topic in sociology. In the case of cultural sociology, if you start to think about consumerism and how much the world of consumer goods is about bearers of meaning, and that that’s what we’re buying when we buy a commodity. We’re not only getting an object that’s useful; we’re getting something that bears cultural significance, and that’s why we buy it. How can you understand cultural signifi-cance? Well, that’s where your colleagues who do cultural sociology can be really, really helpful. It’s good for you to talk to them, to see if I understand how I can make sense of these meanings, and why do these objects gain such traction in my life, or in my family or my social status, that I want to pay for them, even though, materially, they are no different from a bunch of other objects? So, a good example would be, a T-shirt, a very simple garment that might cost, I don’t know, five dollars, right? Very, very cheap, made in China. It’s a total commodity. If you put a Nike swoosh on that same T-shirt, suddenly it costs five times as much, and it has cultural meaning—it’s been branded. Why does the addition of this little swoosh to the T-shirt make it much more valuable, such that I’m willing to pay you extra money, and everyone else is willing to pay extra money for the swoosh, but otherwise, it’s exactly the same as the other T-shirt , also made in China? Thinking about why we operate in the world of goods, where cultural signification matters, is an opportunity for the economic sociologists to talk to the cultural sociologists, then similarly, people who take the historical approach, and this is very much my own kind of the interface in which I operate . The current operation and institutional setting of a modern economy did not just appear by magic; it’s not an eternal situation. It’s some-thing that has evolved and is subject to contingency and historical accident. So, the tools of historical sociol-ogy are really helpful for figuring out how things came to be this way. Again, that’s a place where it would be great to have a conversation between the economic sociologists and the historical sociologists. Back to how to do economic sociology. I think, curiosity and willingness to learn things that you didn’t learn in graduate school because they weren’t part of your training and a willingness to talk to your colleagues and other specialties are all good ways to do economic sociology. And then, when it comes to what Granovetter presents in his book, he lays out a bunch of questions and things you might want to pay attention to—those are some more specific things . But, I think, in terms of building up Granovetter’s book, the three items I just articulated would be where I would say: “Okay, take Granovetter’s book.” It gives you some clues, but add to it the following things, and you can probably do some interesting economic sociology. The other thing that’s
204I think there are some interesting regulatory questions that will have to get asked. A lot of banking, a lot of financial regulation is what they call entity based. It’s really a bank regulator who looks at the bank and says: “how is this bank behaving?” And is this bank solvent? The kinds of vulnerabilities that traditional banks have may not be the same as the kind of vulnerabilities you might get in a peer-to-peer system. In a peer-to-peer system, I would say, when the money gets big, it will be interesting to see how to mitigate the problem of in-formation in that setting, so that the lenders don’t feel that they’ve been misled, that they were lied to, and that somebody borrowed money from them and misrepresented their situation. I think it will be a very interesting puzzle when fraud is something that’s subject to regulation in lots of different settings, including finance. It will be interesting to see how the regulators interpret the danger of fraud in peer-to-peer settings. We’ll just have to see, but the regulators are playing catchup here, because this is a new kind of thing, especially if it succeeds, not only the incumbents, who will want to appropriate that success, but also the regulators will have to decide what to do with this thing.So, another good example: Uber is a very similar kind of platform technology. It sounds like a very successful thing, and it sounds very disruptive. Uber is insisting that they are an IT company, they’re simply a platform, and that the drivers don’t work for them. But there are increasing numbers of regulators and judges who are saying that, actually, those drivers work for Uber. They say: “We’ve made a determination that that’s the role: it’s not that you are a platform neutrally bringing two parties together; you are actually acting like you’re an employer, and the drivers work for you, and they provide a service to your customers, and that’s a very dif-ferent model.” There are regulations that apply to that old model, and once those regulations get applied, the cost advantage of Uber may disappear. It won’t look like such a good deal in comparison to old-fashioned taxi cabs and such. The regulators are still trying to figure out what is this thing? Uber made a claim on behalf of themselves that they are a tech company, but that doesn’t mean that the regulators have to accept that claim, because that’s obviously a deeply self-interested claim. That’s part of the promotional hype, like, you know, “we’re doing something really different or being very disruptive here,” but maybe they’re just doing regula-tory arbitrage or something like that.—To my knowledge, there is growing debate about the regulation of such platforms that exist in a kind of legal vacuum.—One of the entry points into that is that the rhetoric of sharing economy is incredibly positive and benign. Boy, that sounds great! It’s like I’ve just shared coffee with you. That seems like such a kind of win-win, you know, horizontal egalitarian activity working to share things. As a regulator, you should be just a skeptical person. You should not, of course, accept that rhetoric, but you should understand it’s an attempt to frame this in a particular way. It’s a deeply self-interested framing. It’s a framing with an agenda. And you would, prob-ably, want to ask what exactly goes on in the so-called sharing economies.—My last two questions. Could you share your plans for the future research with the readers? Which topics do you consider to be most promising for you personally and for future studies in economic soci-ology?—In terms of me personally, like I said, my new book project is my old book project. Finishing that is really my priority, but I have just started a project with one of my colleagues at Kellogg, in the business school. It’s a project on the relationship between corporate social responsibility and corporate taxation, and the prompting question for that research is (it’s based on the American context): why do ordinary notions of the social respon-sibility of business, or firms, or corporations, why do those ordinary understandings apparently not include the obligation to pay taxes and fund public goods that benefit corporations? There are some very clear examples of very prominent firms who appear to be socially progressive in many nice ways. Apple is a great employer. They recognize and support the diversity of their employees in various
205ways. They were very early to provide benefits to same-sex partners. An employer in the United States will often offer health and pension and all kinds of benefits to the employees but also to their families. Same-sex marriage is relatively recent in the United States, but even before it became a legal possibility, Apple was basically saying: “if you’re a man who works for Apple, and your partner is another man, well, we will offer our benefits to you, even though you’re not really married, even though there’s no legal recognition of your relationship.” People think that is really progressive, and in terms of their employment practices, they would be so socially responsible. And, you know, Apple is also very green; they recycle everything, and they are wor-ried about their carbon footprint—again, on environmental issues, they seem very progressive. Then Apple is well-known for being absolutely ruthless about minimizing its payment of taxes. And apparently, the people who run Apple don’t think it’s their responsibility to pay taxes. So, that’s just one example. What my coauthors and I have done is we’ve gathered a bunch of data on a bunch of big, publicly traded American firms, and we’ve merged financial data and then different measures of corporate social responsibil-ity. We’re curious to know, not for a single example like Apple, but for the big sample, what is the relationship between effective tax rates and performance on various indicators of corporate social responsibility? So, I’m going to focus on my book, but I hope we will make some progress on that topic this year as well. Certainly, it’s sort of the next thing I’m going to move on to. I have another project with a former student that looks at nonprofit organizations, and how they have incorporated business features, how they’ve adopted the ethos and some of the institutional structures of for-profit organizations to become more businesslike and so on. This person and I, we’ve gathered a big dataset of American museums, and we track that population over time to see when they adopted certain key indicators of becoming a more businesslike organization, even though they’re all nonprofits, and they’re not there to make money, they’re there to house beautiful art and make it available to the public. That’s what museums do. But every once in a while a museum might do something like “let’s create an office; let’s hire somebody who’s like a chief financial officer.” Old-style museums never had anyone who worked for them called the chief financial officer. That’s a very businesslike position, and it’s a powerful one. And when a museum adopts or creates that position and then puts someone into it, in our think-ing, that’s something significant— that’s a museum that’s decided to signal to the outside world that they’re becoming more businesslike. They’re not just some fuzzy-wuzzy nonprofit, but they’re real, hard-nosed, and bottom-line oriented, and having a chief financial officer is a good way to signal that. That’s obviously just an example. So, we’re looking across many museums and a big chunk of time and, for a variety of indicators, we’re busy trying to see what are the influences that encouraged, that drove American museums to adopt more and more of these features and to look as if they were more like businesses to the outside world. So, I think those are my two projects in terms of future topics. One of the great opportunities for economic sociology, but also for sociology in general, is the world of big data: developing tools and deciding how we want to analyze big data, and what sort of opportunities does it offer? I think, that’s something that economic sociology wants to think seriously about. It’s particularly in-cumbent on economic sociology because one of the things that is very characteristic of markets and economic activity is it begets data on its own; markets are very numerically populated places. There are a lot of numbers and a lot of measures hiding in markets. And if you could appropriate them and analyze them, you learn how to do that on a scale that is unlike how I was trained. When I was in graduate school, if somebody was going do a big survey, a national survey of opinion, you might have a sample of fifteen hundred people. That was a big sample. And putting a survey on that scale, that seemed like a very big deal. Of course, a sample size of fifteen hundred in the world of big data, that’s nothing. It’s more like fifteen million or one point five billion, right? That kind of sample size. So, what is big? As it’s gotten bigger, especially in economic sociology, there’s an opportunity there because of the ability to analyze, to gather and analyze data on that scale. It’s now a reality. It’s not just something for people who have access to supercomputers , but you can have access to your desk-top and the cloud, and we can start to put your arms around data sets that big and attached to the economy. And that’s not so much a particular topic, but a set of methods that, I think, it would be very good for us to think
206more about and to exploit. And then, you know, the skill set to do that is pretty rare in sociology still. A lot of people don’t get trained to analyze big data, or they don’t really know what to do. But that skill is spreading, and, I think, it would be a good idea for us to incorporate some of that in our own body of research.Mayya Shmidt, November 21, 2018, Uppsala, Sweden
ReferencesCarruthers B.G. (1999) City of Capital: Politics and Markets in the English Financial Revolution. Princeton: Princeton University Press.Carruthers B.G. (2018) How to Think like an Economic Sociologist. Contemporary Sociology, vol. 47, no 1, pp. 26–30.Carruthers B.G., Ariovich, L. (2010) Money and Credit: A Sociological Approach. Cambridge: Polity Press.Graeber D. (2011) Debt: The First 5000 Years. New York: Melville House Publishing.Granovetter M. (2017) Society and Economy: Framework and Principles. Cambridge, MA: Harvard Univer-sity Press.Piketty T. (2016) Interview with Thomas Piketty: One can Push History Out but It Immediately Comes in through the Window. Journal of Economic Sociology = Ekonomicheskaya sotsiologiya, vol. 17, no 1, pp. 13–21. Received: November 21, 2018Citation: Interview with Bruce G. Carruthers (2019). Brexit, Bitcoin, Big Data: How Historical Analysis Helps Shed Light on What the Future Holds. Journal of Economic Sociology = Ekonomicheskaya sotsiologi-ya, vol. 20, no 1, pp. 194–206. doi: 10.17323/1726-3247-2019-2-194-206
