Classification situations: Life-chances in the neoliberal era
Introduction
Academics often remind others that familiar categories are difficult to question, but they are hardly immune to the problem themselves. Consider the case of social class. In general, contemporary approaches see classes as rooted in production, specifically the employment relation. This view descends from Marx, who argued that the beginning of class is one’s relationship to the means of production. Notwithstanding the nuanced analysis of class relations in his political writings (e.g., in The 18th Brumaire and elsewhere), what stuck with sociologists was Marx and Engels’s insistence that class analysis is, at its core—or “in the last instance,” as people used to say—a matter of owning or not owning the means of production. Classes are defined antagonistically on that basis. Capitalists call the shots in the labor market and workers are forced to accept the terms on offer.
The core problem for later theorists has been to make sense of the rise of service and managerial occupations within this underlying relational structure. Scholars edged towards a Weberian view (Breen, 2005, Wright, 1985), eschewing a scheme of intrinsically antagonistic classes in favor of a more refined spectrum of class situations, or life chances, on various markets. People own (or do not own) different sorts of property, or they bring different skills to the market, or have different services to buy or sell.
In their efforts to build on Weber’s insights and to reconcile theory with data, contemporary formulations of class theory became more precise, and tableaux of class membership more complex. Sociology’s most influential statements on the subject, such as Wright, 1985, Erikson and Goldthorpe, 1993, and Grusky and Sørensen (1998), set out to operationalize the concept of class in a way that connected it to the process of socio-economic attainment. Largely framed by the methods and concerns of Anglo-American mobility research, the challenge was to develop a class-based analysis that could make sense of the elusive “middle” of the American occupational structure. But this meant that contemporary class analysis remained close to its origins in that it still began with an analysis of the structure of positions in occupations, firms, and labor markets. We shall argue that this has made it hard to connect these theories to processes of social stratification that originate outside the sphere of production, in settings such as consumer credit systems, education, health services, and housing.
Of course, research on inequality shows other forms of social division beside class structure shape people’s access to and experience of basic social institutions. Reliably, specific social groups—the poor, minorities, women, young people, and others, whether singularly or in various intersections and combinations—face a more restrictive set of choices, receive worse treatment, and experience worse outcomes than dominant groups in practically every institutional domain (Massey, 2008). The durability of these inequalities is explained, variously, by rational choices on the part of vendors trying to avoid catering to riskier individuals (Becker, 1971), the persistence of straightforward prejudice, or more subtle processes of symbolic violence, pragmatic disqualification, or systemic “über” discrimination (Reskin, 2012). In this view, modern markets reproduce inequalities that originate elsewhere in the social structure, in historical legacies, and in longstanding attitudes that differentiate between categories of people. The action of markets themselves does not contribute much to the formation of social hierarchies.
What if it did? What if we could make the recording, splitting and categorizing work done by markets and market technologies “good to think with” for the study of social inequality? The point is in some ways familiar. Occupational markets have long been structured by institutional devices such as licensing and credentialing systems, in addition to rules oriented to exclude certain kinds of people. But what makes the new market instruments so interesting is that they seem so much more democratic. Indeed, historically their appeal came, in part, from their purported ability to keep older forms of arbitrary or categorical discrimination at bay (Hyman, 2011, Poon, 2013). These new markets draw distinctions, too, but in a different way. Rather than protecting certain groups through the creation of rents and monopolies, they thrive on the market’s competitive logic, demanding that people be measured against one another, and then separating and recombining them into groups for efficiency and profit. As with class, the process of differentiation is endogenous to the market itself. But unlike class, the action happens on the consumption side of the economy, rather than on the production side.
In this article, we focus more particularly on how the emergence and expansion of methods of tracking and classifying consumer behavior affect stratification through the allocation of credit. On the supply side, scoring agencies slice consumers into behaviorally-defined risk groups, and price offerings to them accordingly. On the demand side, consumers find themselves more or less comfortably fitting into these categories—which, by design, are not constructed from standard demographic classifications such as race and gender. At the intersection of this supply and demand, the increasing sophistication of credit scoring generates what we call classification situations: positions in the credit market that are consequential for one’s life-chances, and that are associated with distinctive experiences of debt. These range from the exploitative to the dutiful, and from the dutiful to the almost liberating. Some feel weighed down or crushed by debt, others feel the pressure both to acquire and pay off certain sorts of loan, and still others embrace credit as a means of asset accumulation and mobility. These classification situations are not merely approximations to pre-existing social groups, though of course they may overlap substantially in specific cases. Rather, they are independently, even “artificially” generated classifications that can come to have distinctive and consequential class-like effects on life-chances and social identities.
Section snippets
The standard view
We begin with Weber and his concept of life chances. It is worth quoting his definition of “economic class” at length:
We may speak of a “class” when (1) a number of people have in common a specific causal component of their life chances (…). This is “class situation.” (…) Property or “lack of property” [are] the basic categories of all class situations. … Within these categories, however, class situations are further differentiated: on the one hand, according to the kind of property that is
Kinds of classification situations
There have been two historical forces behind the development of classification situations. The first is technology, namely the growing availability of individual-level data, on the one hand, and the development of statistical models of risk on the other. The second is the market economy. As representatives of the collective good, states tend to be politically oriented toward universal mandates. Under state rule, risks were collectivized, socialized, even though the management of such risks
The three worlds of credit in America
As is clear from the examples and data we have discussed so far, the institutional machinery for generating classification situations is to be found in its most developed form in the United States. The way the credit-scoring process erases circumstance seems an extraordinary irony in a country where people rely extensively on credit to compensate for the cover over holes in the welfare system (Prasad, 2013). A 2009 Federal Deposit Insurance Corporation survey of underbanked
Conclusion
“It is easy to understand how the power of the norm functions within a system of formal equality, since within a homogeneity that is the rule, the norm introduces … all the shading of individual differences.” (Foucault, 2012, p. 184)
Much of the theoretical debate on stratification in the twentieth century orbited around three attractors: big classes grounded in exploitative labor relations, individual returns to human capital or skill in the market, and occupational-level social closure, often
Acknowledgements
We thank Steven Barley, Irene Bloemraad, Bruce Carruthers, David Cooper, Eve Chiapello, Matthew Desmond, Marie-Laure Djelic, Derek Hoff, Andreas Kalyvas, Daniel Kluttz, Jeanne Lazarus, Roi Livne, Bruno Palier, Alex Roehrkasse, Matthias Thiemann, Loïc Wacquant, Erik Olin Wright, Valery Yakubovich, two anonymous AOS reviewers for helpful comments on an earlier version of this article or insights about its subject. This work was presented at the annual conferences of the American Sociological
References (110)
Framing financial responsibility: An analysis of the limitations of accounting
Critical Perspectives on Accounting
(2011)- et al.
The value of corporate accounting reports: Arguments for a political economy of accounting
Accounting, Organizations and Society
(1984) Risk management and calculative cultures
Management Accounting Research
(2009)- et al.
Accounting and the construction of the governable person
Accounting, Organizations and Society
(1987) From new deal institutions to capital markets: Commercial consumer risk scores and the making of subprime mortgage finance
Accounting, Organizations and Society
(2009)Experts, ideas, and policy change: The Russell Sage Foundation and small loan reform, 1909–1941
Theory and Society
(2008)Liquid modernity
(2000)The economics of discrimination
(1971)The cultural contradictions of capitalism
(1996)- et al.
Information disclosure, cognitive biases, and payday borrowing
Journal of Finance
(2011)
Distinction: A social critique of the judgement of taste
The social structures of the economy
La Banque et sa clientèle
Sorting things out: Classification and its consequences
The poor pay more: Consumer practices of low-income families
From uncertainty toward risk: The case of credit ratings
Socio-Economic Review
Noter le crédit: Classification et Cognition aux Etats-Unis
Genèses
Bringing “honest capital” to poor borrowers: The passage of the U.S. Uniform Small Loan Law, 1907–1930
Journal of Interdisciplinary History
Fringe banking: Check-cashing outlets, pawnshops, and the poor
Credit card redlining
Review of Economics and Statistics
Black feminist thought: Knowledge, consciousness and the politics of empowerment
Eviction and the reproduction of urban poverty
American Journal of Sociology
The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields
American Sociological Review
The constant flux: A study of class mobility in industrial societies
Rankings and reactivity. How public measures recreate social worlds
American Journal of Sociology
Commensuration as a social process
Annual Review of Sociology
Discipline and punish: The birth of the prison
Colored property: State policy and white racial politics in suburban America
From rats to riches: Game playing and the production of the capitalist self
Qualitative Sociology
Debt: The first 5,000 years
Landscapes of predation, landscapes of neglect: A location analysis of payday lenders and banks
The Professional Geographer
Can class analysis be salvaged?
American Journal of Sociology
Uncertainty, risk, and trust: Russian and American credit card markets compared
American Sociological Review
Varieties of capitalism: The institutional foundations of comparative advantage
Cited by (301)
Digital technologies and accounting quantification: The emergence of two divergent knowledge templates
2024, Critical Perspectives on AccountingThe COVID-19 crisis and massive public debts: What should we expect?
2024, Critical Perspectives on AccountingThe assetization of baseball players: Instrumentalizing promise with signing bonuses and human capital contracts
2023, Accounting, Organizations and SocietyLeveraging uncertainty, market-power, and fiscal opacity: The growth of financial security states
2024, Archives Europeennes de SociologieCredit in Society and in Sociology: On "the Bank and Its Customers" (Bourdieu, Boltanski, Chamboredon, 1963)
2023, Archives Europeennes de SociologieDo Predictive Analytics Dream of Risk-Free Education? The Politics of Risk Mitigation
2024, Postdigital Science and Education