The Institutional Foundations of Capitalism

The Institutional Foundations of Capitalism

Northwestern University & the University of Chicago
Chicago - USA
July 10-12, 2014

Meet Gregory Jackson

An interview with Gregory Jackson, the new editor-in-chief of Socio-Economic Review

How did growing up in suburban California lead to a career across three continents?

I was born in St.Louis, Missouri. When I was 4 years old, my parents moved to Marin County, a suburban area of San Francisco, California. It was a culture shock for our Midwestern family, and I was always very aware of how California was different from the Midwest. Marin is a place that perhaps quintessentially represents the paradoxical pathways of the 1968 hippy generation, who later became wealthy IT specialists or investment bankers with a hedonistic love of organic foods, meditation and rock music. As a teenager, I felt like being in my very own “Brave New World.” Everyone was happy all the time, but behind the surface was polite anomie of upper-middle-class drug use and a high suicide rate—in short, a perfect place for an aspiring sociologist.

Later, I went on a high school exchange student to Freiburg, Germany. I was fascinated with the Cold War division of Germany, and the problems and prospects of “real existing socialism.” I studied German literature and sociology at the University of Wisconsin, Madison. There Wolfgang Streeck supervised my Bachelors thesis project on inequality in the new unified Germany. I was mostly interested in how the lifeworld of the East Germans would be colonized by the nihilism of capitalist consumerism. But Streeck suggested that I apply my energy to looking into the details of vocational training systems of East and West Germany to understand how stratification processes depend on the system of classifications given to skills in particular occupations. I got to visit Berlin, do summer fieldwork and even had 3,000 dollars scholarship money in my pocket thanks to UW. The scholarship was a great example of how small and intelligent research funding can generate excellent returns. This investment sparked my passion and eventually a career in doing internationally comparative social science research.

How did you later come to work in England and Japan?

After Wisconsin, I spent one year as research assistant to Ron Dore at LSE. He would come up with these ingenious statistical tables on Japan, and my job was to construct a similar comparative table for the UK, USA, and Germany. This led to a book-length tome of data and comparative institutional description for what was intended to be a book before the project was scooped by the arrival of Michel Albert’s Capitalism vs. Capitalism. Later during my PhD, I built on my familiarity with Japanese data for a project on the parallels and differences between Germany and Japan as nonliberal forms of capitalism combining high levels of growth with social equality. After that project, Masahiko Aoki of Stanford invited me to join the newly founded Research Institute of Economy, Trade and Industry in Tokyo. This institute was a social experiment in Japan, being an independent public policy think tank that was spun-off from the Ministry of Economy, Trade and Industry. By this time, the Japanese banking crisis was at its peak and our research themes had shifted from the comparative institutional advantages of Japan toward understanding whether or not Japan would or should converge on the US model of corporate governance.

When you began working on corporate governance, it was not a hot topic. Today, with all the scandals from Enron to Japan nuclear disaster to Executive high pay, it certainly is!  How did you get started in this field?

I was interested in stakeholder models of the firm, such as where the patient capital of Japanese banks and inter-firm groups became an important prerequisite for the development and stabilization of lifetime employment. As someone interested in labor and industrial relations, I realized that much of the action influencing employees does not just happen on the shop floor, but in the activities of the financial market and phenomenon such as hostile takeovers. I also fascinated with the idea that capitalist firms were governed in diverse ways, with distinct institutional logics, and even ultimately follow different sets of objectives. Over the 1990s, more researchers began to become interested in the complementarities or linkages between finance and labor. This agenda remains very relevant today in relation to debates over private equity and hedge funds, as well as the broader phenomenon of financialization and the current financial crisis.

How does corporate governance relate to the recent financial crisis?

The financial crisis is a long-term consequence of interdependent short-term actions. As investors and managers interact, action undergoes temporal calibration whereby each actor unilaterally shortens their time horizon in anticipation of the time horizon of the other. Breaking this vicious circle requires beneficial constraints that limit the options of actors by embedding rational and instrumental economic action within value-rational social relationships. Here we are at a core theme of economic sociology. What is new in the financial crisis is the degree to which debt and leveraged financial instruments allowed speculation to occur using “other people’s money” without bearing substantial liability for the risks or resulting losses. Corporate accountability is no longer just about how investors hold managers accountable to their financial interests, but how corporations themselves exist within our society. This debate is not limited to the boardroom, but is taking place on the streets occupied by new social movements. These questions are, in turn, for political economy.

What attracted you to becoming chief editor of Socio-Economic Review?

SER is the journal that I most like to read, and only one that I tend to read from cover to cover. The intellectual agenda of the journal touches on two of the most exciting and socially relevant strands of the social sciences—economic sociology and comparative political economy. Both fields have undergone tremendous theoretical development over the past years, and both fields utilize exciting new methodological tools that will contribute new knowledge and understanding. Taken together, we have a very rich terrain of investigation that highlights the links between micro and macro phenomenon, as well as among different domains of the economy and society. But perhaps most importantly, this tradition of scholarship has remained very strongly grounded in the ethical dilemmas that face our times. In SER, we can find scholars asking big questions and also linking these to vital empirical work. The journal has successfully eschewed the trends of ever more sophisticated attempts to study ever more obscure phenomenon. In short, the journal is interesting. I am honoured to be entrusted by SASE with this mission, and taking the journal forward in what remain turbulent environments.

What are your plans for SER?
SER is now entering its tenth year in publication. The journal has made a remarkable journey thanks to the excellent leadership of the past chief editors and editorial teams. SER must continue its path of incremental innovation based on a highly committed team of people involved, and seeking continuous improvements that build on the core strengths of the journal. But incremental innovation is not a static path. We have the courage to risk experiments or challenge our audience with radically new ideas. I hope to use introduce our annual Special Issues to introduce some themes and foci that have been overlooked in the past. The 2012 issue focused on corporate social responsibility, which is a core theme at the boundaries of business and society but has been underdeveloped within SASE. I am very proud of the result, and feel we achieved a unique slant on this topic that is far more grounded in politics and an understanding of transnational governance institutions than one finds in mainstream management journals. The 2013 issue will involve an energetic team of guest editors and bring Asia to the foreground of debates on comparative capitalism. Extending our comparative institutional knowledge beyond Europe and North America is a crucial challenge if we are to keep our field relevant in the future. Asia also poses huge opportunities to revisit and deepen our existing theories. Welcome the unexpected.

How do you judge the success of a journal such as SER?
We must recognize that SER inhabits a world where academic output is increasingly judged in terms of various external rankings and ratings. SER has been in the Social Science Citation Index for several years now, and will receive its first “impact factor” based on the number of citations later this year. We are poised to have a strong position among the excellent journals in both sociology and political science. As SER comes to be recognized as a top journal in the field by such metrics, I am very happy because young scholars publishing their best work in SER will increasingly receive appropriate peer recognition for these articles in tenure and promotion procedures. This is an important accomplishment for a journal that crosses traditional disciplinary boundaries. But as the saying goes: the proof is in the pudding. SER’s success will only come through good articles, whose quality we can recognize and name. But the quality of a journal or social science more generally can never be grasped through citation metrics or similar rankings. Reasoning based on these metrics can be highly misleading. As an editor, the only viable approach is to focus on supporting authors to publish articles that are interesting and grounded in excellent use of social science concepts and methods. The aim is not to be top ranked, but to be the best.

What role does Socio-Economic Review play in the fields of business and economics? Is SER read in business schools?
Certain types of economists have always been attracted to the institutionalist scholarship in SER. But whereas mainstream economics searches for optimal decisions under certain boundary conditions, much of the work in SER is really about those boundary conditions. Having worked for the last 8 years in business schools, teaching students interested in management, I have come to understand that the best business schools are places that bring together disciplinary based knowledge from social sciences and apply these to cross-disciplinary sets of problems. Business students often search for a quick fix or “right” decision, but management is really all about the art of solving unsolvable dilemmas where no answer is the right one. SER has a big contribution to make here because the journal shows how the most important economic questions are also social ones.

In your “spare time” apart from teaching business students, doing research, and editing SER, what are your favorite leisure activities or hobbies?
Lenin once said that to gain time is to gain everything. In those rare moments, I enjoy being with my family, playing in the Guitar Circle of Europe, umpiring Little League baseball games, visiting Berlin museums, and reading Weber or Simmel (in roughly that order).