Research project: ‘The Social Legitimacy of Financial Profits’

BMBF Logo klein2 Project Duration: 01.10.2015 - 31.01.2019
Funded by the Federal Ministry of Education and Research (Bundesministerium für Bildung und Forschung) as part of the funding program ‘Financial system and Society’ (Finanzsystem und Gesellschaft.)
The concluding international conference took place from the 29th – 31st January 2019 at the Hamburg Institute for Social Research. Flyer Conference 'The Legitimacy of Financial Profits'.

Final report (German language only): Download here

Short summary:

Since the 2008 financial crisis, the rise of global financial capitalism has been in the focus of public attention all over Europe. This goes along with an intensification and expansion of critical debates about capitalism in politics and civil society, with particular regard to the correct relationship between democratic regulation and free financial markets.
For this reason, the three-and-a-half-year research project "The Social Legitimacy of Financial Profits" has analyzed the cultural differences, historical prerequisites, and history of thought about the social legitimacy of financial markets and financial profits. How do different societies define which financial profits are legitimate and which are illegitimate? How does this relate to the deeper cultural understandings of legitimate profit making in different European societies? It was also about the consequences of these moral debates for the formation of financial market rules, leading to an empirical research of public criticism of the economy and its effects on politics. In the project, we approached the answer to these questions with very different research methods. We addressed the social legitimacy of economic orders from (1) historical, (2) comparative, (3) actor-oriented and (4) institutional perspectives, with a special focus on the fundamental question of the socio-cultural meaning of profit in capitalist societies.
In the first phase of the project, we conducted a series of of historical-comparative case analyses of Germany and Britain from 1880 until today. This included content analyses of historical archive material and political pamphlets by financial organizations, state agencies and public media, as well as a quantitative analysis of the topical structure of parliamentary debates (topic modeling) in both countries. In the second phase, we conducted, coded and analyzed 88 semi-structured expert interviews with representatives of civil society organizations in Germany, Great Britain, France and Spain with regard to their critical perspectives on finance and their national and trans-national protest efforts after the crisis of 2008. The following five key results were achieved:

  • 1. The financial regimes in Great Britain and Germany are embedded in culture-specific patterns of legitimation of the ‘morally acceptable’ financial market (integrating vs. segmenting financial regimes as the moral side of varieties of capitalism).
  • 2. The culture-specific historical criteria of rationality of the 19th century financial market regulation shape legitimation debates about financial profits well into the period after the crisis of 2008.
  • 3. Different historical trajectories and ideas, national institutional contexts and organizational structures of financial critique within civil-societies of contemporary European countries provide an obstacle to trans-national financial critique.
  • 4. The inseparability of financial and production profits is a central problem of coherence for any criticism of financial capitalism.
  • 5. When public criticism of profit distribution through financial markets is injected into the political sphere, the normative focus of the critique shifts from distributive to regulatory aspects.