Cover of Normalized Financial Wrongdoing by Harland Prechel
Normalized Financial Wrongdoing
How Re-regulating Markets Created Risks and Fostered Inequality
Harland Prechel

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November 2020
368 pages.
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Hardcover ISBN: 9781503602380
Paperback ISBN: 9781503614451

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Reviews

Widespread wrongdoing produced the 2008 financial crisis and undermined the "bad apples" theory of corporate malfeasance. In its place arose new explanations, centered on the breakdown of corporate ethics. But relatively little has been written about the organizational, political, and legal arrangements that permitted these behaviors to emerge in the first place. In Normalized Financial Wrongdoing, Harland Prechel examines how social structural arrangements that extended corporate property rights and increased managerial control opened the door for misconduct that contributed to high levels of inequality. Beginning his analysis with the financialization of the home-mortgage market in the 1930s, Prechel shows how pervasive these arrangements had become by the end of the century, when the bank and energy sectors developed strategies to participate in financial markets. His account adopts a multi-level approach that considers the political and legal landscapes in which corporations are embedded to answer two questions: First, how did banks and financial firms transition from being providers of capital to financial market actors in their own right? Second, how did new organizational structures cause market participants to engage in high-risk activities? After demonstrating that the roots of inequality lay in social structural conditions, Prechel considers societal pre-conditions to change.

About the author

Harland Prechel is Professor of Sociology and Liberal Arts Cornerstone Fellow and Energy Institute Fellow at Texas A&M University. He is the author of Big Business and the State (2000).

"This book offers a theoretically sophisticated and empirically rich explanation of how financialization was politically created in the United States beginning in the 1980s, and how it has increased inequality. Prechel takes us inside corporations to see how financial capitalists leveraged control over organizations to enhance their power or government and thereby enrich themselves at the expense of everyone else including other fractions of capital."

—Richard Lachmann, University at Albany, State University of New York

"A must-read for anyone wishing to understand the foundations of contemporary capitalism. It draws on quantitative analysis, in-depth case studies, and trenchant historical analysis to uncover the class conflicts and structural dynamics that have given rise to the modern financial system, which to so many people's dismay has proven prone to periodic crisis."

—-Donald Palmer, University of California, Davis

"This important study looks inside the corporation to find the origins of corporate malfeasance. As corporations layered up more complex ownership structures, opportunities opened for behavior that precipitated the Great Financial Crisis. Prechel grounds his analysis in larger changes in U.S. society that have contributed to disastrous social inequality."

—-Terrence McDonough, National University of Ireland Galway