The Banks Did It: An Anatomy of the Financial Crisis

Neil D. Fligstein is the Class of 1939 Chancellor's Professor of Sociology and the Director of the Center for Culture, Organization, and Politics at the Institute for Research on Labor and Employment at the University of California, Berkeley. 

His main research interests lie in the fields of economic sociology, organizational theory, political sociology, and the sociology of work. He has been interested in developing and using a sociological view of how new social institutions emerge, remain stable, and are transformed to study a wide variety of seemingly disparate phenomena including the history of the large American corporation and the construction of a European legal and political system. 

He has used this framework to create a more general view of how markets and states are mutually constitutive and applied this framework to trying to make sense of how global markets work. In 2008, he published Euroclash: The EU, European Identity, and the future of Europe (Oxford, Eng.: Oxford University Press). The central theme of the book is to document how European integration in the past 20 years has created a partial integration of European societies along political, economic, but most importantly social lines. Europe has mostly brought managers, professionals, and other highly educated people into contact. It is this 13% or so of the population that is most European. 

But the remaining population is mostly wedded to conceptions of self that are distinctly national. His most recent work has focused on the financial crisis that began in 2007. He chronicles how investment, commercial, and savings and loans banks converged on a vertically integrated model of producing mortgages and securities and their lockstep move into the subprime market that ultimately set off the collapse. Using a quantitative data set, Fligstein shows that the main cause of the crisis was the purchase of American mortgage backed securities by banks in the developed world.

He focuses on how social relations shape and alter markets. His research of corporate governance, the emergence of a market for corporate control through stock markets, and the role of law and regulation in all of these shaped the agenda for economic sociology. Subsequent work on how culture and identities affect markets and economic organization more broadly laid the groundwork for Euro Clash (2008), a study of the history and social consequences of the (partial) integration of Europe in the era of the European Union. Winner of the American Sociology Association's Economic Sociology section best book award (2003) for Architecture of Markets.

Source: American Academy of Arts & Sciences