Precarious professional work entrepreneurialism, risk and economic compensation in the knowledge economy

That is, to use the term precarious professional work is by no means intended to trivialize or downplay the hardship encountering what the British sociologist Guy Standing calls “the Pr

PRECARIOUS PROFESSIONAL

Alexander Styhre Precarious

Professional Work Entrepreneurialism, Risk and Economic Compensation

in the Knowledge Economy

ISBN 978-3-319-59565-8 ISBN 978-3-319-59566-5 (eBook)

DOI 10.1007/978-3-319-59566-5

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School of Business, Economics, and Law

University of Gothenburg

Gothenburg, Sweden

A few years back I submitted a book proposal to a publishing house The theme of the book was to discuss professionals and their capacity to make judgment in their day-to-day work, a skill that is acquired over time and through intense socialization into a profession that is the hallmark of pro-fessionalism The editor who handled the submission was skeptical about the very term “profession” and suggested that the term was more or less antiquated Instead he proposed that the more suitable and contempo-rary term to denote this group would be “knowledge workers”—a con-cept being quite fashionable around the turn of the millennium I am still thankful to this editor for confirming the thesis that I had entertained for some time, that “profession” as a scholarly and managerial term is now being abandoned, and that new terms, more or less directly coproduced with the investor capitalism version of competitive capitalism, are now taking its place The classical view of the professions is that they constitute groups of elite workers, being sufficiently well organized and controlling forms of expertise, highly valued by society and individual employers, and that such conditions grant professional groups the authority to speak

on behalf of society and themselves about matters of joint concern In the era of investor capitalism, efficiency (operationalized as maximized shareholder returns) is the guiding star for all social and economic activi-ties In this mode of economic production, professional groups can no longer engage in societal activities but must commit all their efforts to the

Preface

participation in market-based activities In order to overcome inherited privileges and rights, negotiated or earned over decades or even centuries

of professional work, the very term profession is at stake The know-how

and expertise that professional groups control and provide are of course still highly valued and attractive to engage, but the professions can no longer be granted the right to maintain the independent role in between the state and the market (i.e., industry) they have had historically Thus, new terms and concepts are being introduced and catered

In addition, beyond the rhetorical strategies and new narratives of temporary capitalism, structural and institutional changes have in many ways affected the nature of professional work Slower economic growth, increased economic inequality, the globalization of the economy, and exogenous technological change are all part of the wider change of scen-ery where professionalism is constituted and operates New employment relations, increasingly high levels of household debt, and soaring costs for tertiary education are some factors that affect, e.g., the middle class, the traditional recruitment ground for professional workers In order to bridge and align a variety of conditions, changes, and factors into a coher-ent and hopefully meaningful model of contemporary professionalism,

con-this volume introduces the term precarious professional work The term

precariousness is commonly associated with the most vulnerable and least advantaged groups in the labor market, the unemployed, workers salaried

by the hour, people working part-time or on the basis of short-term tracts, etc., all operating at the lower levels of the income pyramid and

con-in many cases not becon-ing granted benefits such as health care provisions

or pension funds In this perspective, professional workers are still leged and enjoy many advantages over less educated or skilled workers Yet, many of the rights and benefits historically accruing to professional workers are today under erasure For instance, fewer professional work-ers can take advantage of secure and long-term employment as they to a lesser extent work in small- and medium-sized firms with less ability to cushion the ups and downs in the economy Moreover, professionals are increasingly compensated on the basis of their ability to participate in competitive games and to demonstrate enterprising qualities, i.e., they are less valued as experts and specialists and are increasingly incentivized to act entrepreneurially Expressed differently, professionals are increasingly exposed to market pricing, and that implies, it is argued, the introduction

privi-of an element privi-of precariousness within prprivi-ofessionalism That is, to use

the term precarious professional work is by no means intended to trivialize

or downplay the hardship encountering what the British sociologist Guy Standing calls “the Precariat,” but it is instead a term that points at the affinity between these least favored groups and the more historically suc-cessful professional groups inasmuch as they are both exposed to (albeit to

a varying degree affected by) the same socio- economic forces and changes

in contemporary competitive capitalism As the volume will hopefully demonstrate to its readers, these socio- economic forces and changes are not operating at the fringes of the economy but serve on a more deep- -seated level to transform the processes of economic value creation.Social scientists and management scholars, but also the wider public, are accustomed to think of the major public (i.e., listed) corporation as the principal site for economic value creation This image is most likely

to be of practical relevance for considerable time to come, but what

hap-pens inside this corporation is quite another matter, demonstrating the

presence of very dynamic and changeable practices and operations New employment relations, new collaborative efforts between firms and organi-zations, new performance-reward systems, and new ways to organize day- to- day work are only a few changes within the corporation that inform and shape professionalism In addition, the “externalization of managerial control” through the use of audits, credit ratings, stock market pricing of the firm’s shares and outstanding securities, and various forms of ratings, rankings, and accreditations adds to the complexity of in-house activities All these changes bring about a new situation where a professional career is

no longer the safe, comfortable, and perhaps a somewhat dull middle-class career choice that predictably follows the track from university graduation

to retirement Instead, the new precarious professional work presents new challenges for the coming generations of professional workers and for the middle class with whom professionals are commonly associated

Pollock and Bono (2013: 629) argue that scholars presenting research work are given two tasks: “answering interesting questions” and “telling the story.” This indicates that scholarly work should both address the matter

of joint concern and present it in ways that are literally and aesthetically appealing To merely access and present a reliable and intriguing data

is not sufficient, but the data needs to be structured into an intriguing plot and story-line, clad in a literary language Such declarative statement

makes sense to me, but the questions regarding “Interesting for who?” and “What story should be told” still linger on Ultimately, to determine

ex ante what is interesting to explore is a privilege bestowed upon the scholar; to make the assessment ex post regarding the degree of relevance,

etc., is up to the readers to determine At the same time, unless scholars

claim and realize their privilege to identity what they believe are of

inter-est, the community of readers cannot make their assessment Therefore, what gets written is dependent on scholars having the capacity to identify conditions, perceived problems, and puzzling phenomenon that attract their attention

In addition, what story to be told on the basis of a specific set of data

is another epistemological and ethical concern Scholarly writing is at times criticized for being parochial, overtly convoluted, preoccupied with minor theoretical controversies, and so forth While there is a fair share of truth in some of this critique, it is nevertheless based on the assumption that such declarative statement could be done from some neutral vantage point In fact, that is an untenable proposition The idea that, say, an anthropologist or physicist could be criticized for conduct-ing research that matters only for a small group of anthropologists and physicists is to succumb to common sense thinking, assuming that any research activity that is not immediately accessible for any possible reader, and regardless of their willingness to invest any time or effort to learn to understand this line of research in more detail, should be disqualified That is, unless, e.g., anthropologists or physicists are capable of explain-ing what they do and why upon request, they should lose their privilege

to conduct this line of research While such emotional responses to what may appear as secluded, even mystical, unpopular modes of knowing the world may be understandable, it still succumbs to the fallacy that all individuals have the same capacity to understand ongoing research activities As that is apparently not the case, all forms of expertise are at risk to be dismissed as undemocratic and thus to serve specific interests But to assume that anthropologists or physicists participating in their own idiosyncratic research activities of necessity are engaging in self- aggrandizement is simply untenable, at least not as a general proposition separated from context and local conditions What they do is given by disciplinary standards, norms, and boundaries, and they obey scholarly

standards for knowledge production This in turn implies that the tion “What stories should be told?” can be answered quite liberally as any

ques-story that the scholar who ex ante defines something as being worthy of

interest and attention, regards as being worth telling As it is the reader and the wider scholarly community that determines the quality and rel-evance of research work once it is published, there is no reason to get stuck already before the work has even started Pollock and Bono’s (2013) claims regarding scholarly knowledge production can thus be handled

by a combination of elite and market models The elite model asserts scholarly autonomy (the right to define research problems and to proceed accordingly), and the market model treats any scholarly publication as a contestant over limited attention and authority in scholarly fields and in the public sphere Therefore, the concept of precarious professional work, introduced and discussed in detail in this volume, should be understood

as a way to address structural and institutional changes in competitive capitalism, in its corporate system, in its market system, and in its regu-latory practices It is a story of joint concern worth telling, no matter whether anyone is willing to listen or not

Gothenburg Alexander Styhre

March 23, 2017

Reference

Pollock, T G., & Bono, J E (2013) Being Sheherazade: The importance of

storytelling in academic writing Academy of Management Journal, 56(3),

629–634.

Acknowledgments

I would like to thank Liz Barlow, commissioning editor, Palgrave Macmillan, for providing me with a contract for this volume, and Lucy Kidwell, editorial assistant, Palgrave Macmillan, for the assistance during the publication process

In addition, I am grateful for the collaborate work that I have ducted with my colleagues at the School of Business, Economics, and Law, University of Gothenburg, over the last period I am particularly indebted to Maria Norbäck and Björn Remneland-Wikhamn

con-Finally, I would like to thank my family, my wife Sara and my two sons Simon and Max, for providing a refuge from academic work By 5 o’clock, it is time to go, thank God!

Contents

1 Introduction: The New World of Precarious Professional

2 Investor Capitalism and the Decline of the Public

Corporation and the Middle Class 43

3 The New Forms of Professional Work: Entrepreneurialism and Precarious Professional Work 109

4 Conducting and Managing Precarious Professional

Work: Hard and Soft Human Resource Management

5 The Future of Professionalism: How to Preserve and 

Justify Jurisdictional Discretion in Investor Capitalism 219

© The Author(s) 2017

A Styhre, Precarious Professional Work, DOI 10.1007/978-3-319-59566-5_1

1

Introduction: The New World

of Precarious Professional Work

Introduction

Writing in the years before World War I, the war that made the United States the leading economic and political power of the world as the his-torically dominant European states regressed into armed conflicts and the destruction of economic resources on a mass scale (Ahamed 2009), Thorstein Veblen, the quintessential academic outsider, yet “the most famous American economist” by the early twentieth century (Ebenstein

2015), addressed the change in competitive capitalism In Veblen’s (1916: 9) analysis, what he refers to as the “the captains of industry” of the mid- nineteenth century, “[a] cross between a business man and an industrial expert, and the industrial expert seem to have been the more valuable half in their composition,” were the indisputable authorities of their busi-nesses In contrast, Veblen (1916: 16) introduces a new actor or agent

on the scene, the new “financial captains of industry.” As opposed to the original entrepreneurs and owners, caring about the means of production and quality of the output, the new finance agent is more concerned about the financial performance of the firm, an interest that makes them, in Veblen’s (1916: 16) view, unsuitable for business leadership: “Addiction

to abstract and unremitting valuation of all things in terms of price and

profit leaves them [finance agents], by settled habit, unfit to appreciate those technological facts and values that can be formulated only in terms

of tangible mechanical performance.” In the new regime of competitive capitalism, the finance agents are the “experts in process and profits and financial manoeuvres,” and yet the “final discretion in all questions of industrial policy continues to rest in their hands” (Veblen 1916: 16) In Veblen’s account, the finance agents “have been long losing touch with the management of industrial processes,” at the same time as the man-agement of “corporate business” have been “shifting into the hands of a bureaucratic clerical staff” (Veblen 1916: 16)

In a publication appearing a few years later, The Vested Interests and the Common Man, Veblen ([1919] 1964) more explicitly addresses the changes in the ownership and managerial practice in the new economic regime In Veblen’s ([1919] 1964: 44) view, ownership no longer “carries its earlier duties and responsibilities” but rather resumes the “shape of an absentee ownership of anonymous corporate capital.” This means that

in the everyday management of the corporation, “the greater proportion

of the owners has no voice” (Veblen [1919] 1964: 44) This means that ownership becomes separated from day-to-day management, leading to the owners’ “claim on the earnings of the corporation” without being practically engaged in the business (Veblen [1919] 1964: 45) “The ordi-nary investor is, in effect, an anonymous pensioner on the enterprise,” Veblen ([1919] 1964: 45) says Veblen regards the rights of free contract-ing and security of property as the very foundation of the ideal of the liberal, democratic society, enshrined by the American constitution and endorsed elsewhere in the eighteenth century Yet, what Veblen ([1923]

1997) calls “absentee ownership,” the role of essentially passive finance capital investors, claiming the right to the economic value generated, still remains a concern in the capitalist system of the early twentieth century:

[T]he population of civilized countries now falls into two main classes: those who own wealth invested in large holdings and who therefore control the conditions of life for the rest; and those who do not own wealth in suf- ficient large holdings, and whose conditions of life are therefore controlled

by these others It is a division between those who own wealth enough

to make it count, and those who do not (Veblen [1919] 1964 : 160–161)

In addressing his concerns regarding the separation of ownership and control, Veblen anticipates the work of Adolf Berle and Gardiner Means,

The Modern Corporation & Private Property, published in the Great

Depression era in 1932, also examining the consequences of the tion between finance capital owners investing their capital in the firm and the operational management of the firm The work of Berle and Means (1991) would eventually be the foundation for agency theory and its principal policy argument that the shareholders are not only entitled

separa-to what agency theorists refer separa-to as the residual cash flow or free cash flow generated by the firm, but also—being a considerably more bold

statement—that the overall efficiency would benefit from such a transfer of capital from a variety of stakeholders to the owners of stock It is impor-tant to pay attention to how this idea of the ownership of the production capital has shifted from the early work of Thorstein Veblen to the con-temporary shareholder welfare model to fully recognize the irony in how Veblen’s early concern about the role of finance investors has been turned into the shareholder primacy doctrine, today almost hegemonic in corpo-rate governance theory (see, e.g., Pucheta-Martínez and Bel-Oms 2016)

To start, even though Veblen had a turbulent academic career and was known to be a difficult man, he was still highly regarded in the early decades of the twentieth century (Ebenstein 2015: 29) For instance, many of President Roosevelt’s key advisors, responsible for the national economic recovery program in the early 1930s—widely treated as the consequence of the collapse of the national finance system—had read Veblen’s work (Hawley 1966: 43–44; Ebenstein 2015: 29) The New Deal thus had Veblen’s thinking written into its policy document While Veblen, unlike most of the contemporary economists, was agnostic regard-ing the relationship between economic theory and policy—“science cre-ates nothing but theories It knows nothing of policy or utility, of better

or worse,” Veblen (1961: 19) argued—he was concerned about the mous growth of economic inequality in the land of plenty, in Veblen’s mind a process propelled by the finance industry and the legal rights promoting absentee ownership In contrast, we can compare this view of Veblen with a contemporary economist, the 1995 Nobel Memorial Prize

enor-in Economic Sciences laureate Robert E. Lucas, suggestenor-ing that “[o]f the tendencies that are harmful to sound economics, the most seductive, and

in my opinion the most poisonous, is to focus on distribution” (cited

in Wisman 2013: 939) For Lucas, studying inequality was “a tion from the core goal of sound economic analysis: studying economic growth,” Tomaskovic-Devey et  al (2015: 527–528) suggest “Income inequality,” Bezemer (2016: 1286) notices, “is a traditional heterodox concern.” Fair enough, Lucas may not share Veblen’s worries, but this declaration is indicative of how economists have learned to understand economic fundamentals different over time, as theories, doctrines, and ideologies modify and change (Offer and Söderberg 2016)

distrac-Veblen shared his concern for the role of the finance industry and the growth of economic inequality with many other leading intellectu-als and policymakers of the first decades of the twentieth century The liberal lawyer Louis D.  Brandeis, another actor being associated with the New Deal programs,1 was once such a public figure who addressed the growing importance of the finance industry in the years before the Great War Unlike Veblen, who criticized the finance industry more indirectly, Brandeis ([1914] 1967) was more to the point:

The dominant element in our financial oligarchy is the investment banker Associated banks, trust companies and insurance companies are his tools Controlled railroads, public service and industrial corporations financial are his subjects Though properly middleman, these bankers bestride as masters of America’s business world, so that practically no large enterprise can be undertaken successfully without their participation of approval (Brandeis [1914] 1967 : 3)

Brandeis ([1914] 1967: 43) argues that the sole objective of the “financial oligarchy of the investment bankers” is to generate substantial profits to

be distributed to the owners Against this objective he places other goals, including “industrial and political liberty,” now being “imperiled by the Money Trust.” Brandeis’s concern is that the finance industry has now entrenched an unprecedented power in the capitalist economy and that

it is virtually impossible to escape its influence:

The goose that lays golden eggs has been considered a most valuable session But even more profitable is the privilege of taking the golden eggs laid by somebody else’s goose The investment bankers and their associates

pos-now enjoy that privilege They control the people through the people’s own money If banker’s power were commensurate only with their wealth, they would have relatively little influence on American businesses The power and the growth of power of our financial oligarchs comes from wielding the savings and quick capital of others [T]he fetters which bind the people are forged from the people’s own gold (Brandeis [1914] 1967 : 12–13)

Finally, besides appropriating “other people’s money”—a phrase turned into a thinly worn cliché by generations of politicians of all flags and color—the finance industry is not really “leading” the capitalist expansion

as industry representatives are fond of claiming (and latter-day finance theorists too say, it should be added) but rather follow suit when all risks have already been discounted and carried by the state, Brandeis claims (see Mazzucato 2013b, for a more recent version of this argument):

J.P. Morgan & Co [i.e., finance industry representatives] declare that

‘practically all the railroads and industrial development of this country has taken place initially through the medium of the great banking houses.’ That statement is entirely unfounded in fact On the contrary, nearly every such contribution to our comfort and prosperity was ‘initiated’ without their aid The ‘great banking houses’ came into relation with these enter- prises, either after the success had been attained, or upon ‘reorganization’ after the possibility of success had been demonstrated, but the funds of the hardy pioneers, who had risked their all, were exhausted (Brandeis [1914]

1967 : 91–92)

Ultimately, Brandies implies, while still recognizing the role of functional capital markets for the transfer of capital between actors and industries and for the distribution of risks between actors with different levels of risk aversion and time horizons, the finance industry takes advantage of the work conducted elsewhere in the economy

What may here perhaps be referred to as the Veblen-Brandeis ment, which what today is referred to as the “financialization of the economy” (Styhre 2015; Van der Zwan 2014; Palley 2013; Goldstein

argu-2009; Epstein 2005; Krippner 2005; Stockhammer 2004), is a structural

feature of competitive capitalism This tendency to promote absentee

ownership is a challenge to handle within the institution of the firm,

a business charter granted by the state, just as it is for the aggregated contemporary economy The consequences of an unregulated and “self- monitoring” capitalist economy geared toward financial operations and financial engineering are above all, we now have learned, an increased level of economic instability and economic inequality as its foremost consequences (two issues are discussed in more detail in Chap 5) In the era before the Wall Street crash of 1929 and the Great Depression that followed and lasted well until the end of the 1930s in the United States, the period when Veblen and Brandeis were writing, the economic inequality had reached a peak (Duménil and Lévy 2004) After the Wall Street crash, Roosevelt’s New Deal program, and the reforms that domi-nated the essentially Keynesian welfare state era until the first half of the 1970s (the first oil crisis in 1973 is commonly treated as an endpoint

of the period), these economic instabilities and economic inequalities were mediated by the role of the active state, imposing progressive taxa-tion and serving as an investor during the downturns of the economic cycle After 1980, when the neoconservative, pro-business policy agenda pursued by President Ronald Reagan was implemented, the economic inequality started to rise sharply anew, representing a significant growth

of “the portion of assets held of the richest one percent of households,”

to around 40 percent of all assets (Duménil and Lévy 2004: 139), now being back at the levels observed in the late 1930s (Duménil and Lévy

2004: 139, Table 15.6) In this view, the Keynesian post-World War II era and the years of shared prosperity were relatively quickly deconstructed when new economic theories, doctrines, and ideologies gained a foothold

in policymaking quarters

This volume addresses how this “U-shaped” curve of the economic inequality over the period 1910–2016 (complemented by a “U-shaped” curve when it comes to economic instability) has wielded significant consequences not only for blue-collar jobs—the first causalities of the 1980s’ deindustrialization of the American economy, more or less the outcome from policymaking and accompanied by theories about “global shifts” in the world economy—but also for professional, white-collar work more broadly Before the question of professionalism and its most distinguishing feature, the claim to jurisdictional discretion and auton-

omy, will be discussed in more detail and positioned within the broader socioeconomic framework of the changes over 12 decades of advanced and increasingly differentiating competitive capitalism, the issue of eco-nomic inequality, being after all at the core of the argument, will be dis-cussed in some more detail.

The Social Contract of Competitive Capitalism

The Veblen ([1919] 1964: 160–161) distinction between “those who own wealth enough to make it count, and those who do not” is a key factor to consider when theorizing the use of absentee ownership (i.e., stock own-ership in listed companies) and the advancement of the finance industry There are reasons to believe that this apparently crude but polemically effective dichotomy is still useful and possible to substantiate empirically Hacker et al (2013: 24) claim, for instance, that what they call the “the implicit social contract of the mid-twentieth century,” including the com-bination of “longer-term employment, health and retirement security through a combination of public and private benefits, and broad union-ization of the workforce,” has been dissolved That is, in the new eco-nomic regime, many, if not most (at least in the United States, addressed

by Hacker et al 2013), of the risks once borne collectively through the establishment of public programs or “pooled private benefits” (such as traditional, defined-benefit pension funds) are now being shifted back to wage earners and families That is, what Americans speak of as “benefits” (e.g., health care insurance and retirement provisions) and what citizens

in European welfare states have been granted by state agencies are no longer taken for granted, nor included in the total economic compensa-tion packages offered by private corporations and employers This shift in risk bearing increases the vulnerability of the aggregated economic system

as individuals and families increase their risk aversion (with a technical term) as they are more susceptible to the economic shocks that the finan-cialized capitalist economic system undergoes on a regular, yet essentially unpredictable, basis This increased vulnerability of the individual wage earner or family household is conceptualized as a growth of perceived and

actual economic insecurity, a term defined accordingly:

We define economic insecurity as the psychologically mediated experience

of inadequate protection against hardship-causing economic risks We sume that households see themselves as insecure when perceived risks exceed their expected capacity to adjust to or otherwise buffer those risks in ways that do not cause hardship (Hacker et al 2013 : 25)

pre-In Hacker et al.’s (2013) study, this perceived and actual economic curity is not a predicament of only the uneducated or certain vulner-able groups, but today it cuts through the economic spectrum of the American society: “Neither income nor education is consistently posi-tively associated with lower levels of worries—and, indeed, with regard to retirement wealth, the richer and more educated are actually more wor-ried” (Hacker et al 2013: 36) In other words, the economic instability

inse-of the highly differentiated and financialized economic system inse-of petitive capitalism leads to increased economic inequality or a widespread concern for losing one’s already entrenched socioeconomic position in society This endemic middle-class anxiety is addressed by many students

com-of household debt, referred to by Barbara Ehrenreich (1989) as the “fear

of falling” already by the end of the Reagan era This in turn leads to an increased conservatism as, e.g., middle-class and working-class voters are concerned that the government would further reduce their income earn-ings and their benefits if they initiate new reforms (Volscho and Kelly

2012: 695; Redbird and Grusky 2016: 199)

In this climate of economic instability and soaring economic ity, there is a thriving discourse on enterprising and entrepreneurship that actively discredit the previous regime of managerial capitalism, founded

inequal-on the presence of large and financially stable employers In many cases, those firms were located in the export-oriented manufacturing indus-try and were the vehicles for reforms in the post-World War II decades However, as Ross (2008: 36) notices, large corporations are today

“[s]corned by management gurus for their bureaucratic stagnancy, just

as their work rules, hierarchies and rituals were condemned for stifling initiative and creativity.” In contrast, for management gurus and pundits praising entrepreneurship (see, e.g., Pink 2001, for an exemplary case), Ross (2008: 36) continues, “the small, entrepreneurial start-up was hailed

as a superior species, likely to adapt quicker and evolve further in a

vola-tile business environment.” This novel praise for entrepreneurialism—a standing theme in American society and culture, Charles Wright Mills (1951) remarked long ago—actively conceals the decline of the major corporation and the stable employer’s ability to absorb some of the eco-nomic and financial risks that are endemic to competitive capitalism,

of necessity containing elements of speculation This in turn leads to a transfer of risks from the employer to the employee (Lin 2016; Cobb

2015; Bidwell 2013) Such a risk transfer is the effect of aggregated and long-term use of “subcontracting, outsourcing and other modes of flex-ploitation” (Ross 2008: 34) that have been enforced to maximize the value extraction from the corporate system In addition, it is primarily the capital owners who have been able to claim these benefits as many workers have either become jobless or have seen their total compensa-tion being substantially reduced “Post-industrial capitalism thrives on actively disorganizing employment and socio-economic life in general,

so that it can profit from vulnerability, instability and desperation,” Ross (2008: 44) summarizes In this view, the praise for entrepreneurialism

is a thinly veiled ideological declaration of allegiance to the virtues of a regime of competitive capitalism, wherein major corporations increas-ingly dissolve and become networks of activities (Davis 2016)

More specifically, when it comes to professionalism and professional groups, originally developed as a “third institution” in between the state and the market, and serving wider socioeconomic interests (Brint 1994), this traditionally favored group of “expert workers” is no longer guaran-teed any specific privileges vis-à-vis other salaried workers For instance, when the major public corporation with dispersed ownership is in decline,

an increasing share of professional workers are employed by smaller firms being thinly capitalized and thus having less ability to buffer the ups and downs in the economy Therefore, these professionals are increas-ingly exposed to the same risks as any category of other salaried workers

To their advantage, professional workers are by definition attractive to recruit and hire as they control highly specialized expertise and skills, at times being complicated to outsource or acquire on the open market Yet, the last three decades have still brought substantial changes in both how professional workers are employed and how they are perceived within the horizon of economic value production For instance, one of the most

immediate consequences is that the very term “professional” today may seem somewhat dated, unfashionable—almost archaic In contrast, the contemporary managerial vocabulary speaks of “knowledge workers,”

“experts,” and a variety of newfound terms (“brainworkers” being just one such quite unsettling term) to denote this category of salaried workers.This volume addresses how these popular management and management studies’ vocabularies are indicative, indeed being a form of symptom, of a more deep-seated change in competitive capitalism that not only serves to undermine job opportunities for blue-collar workers but now increasingly does the same thing for professional workers By using a variety of manage-rial tools (outsourcing and offshoring once again, but now to places such as India’s computer science and technology center Bangalore) and by renam-ing certain types of work, a new form of professional work, here referred

to as precarious professional work, is being developed and advocated as the

future of professionalism As has been argued elsewhere and previously, the

change from a regime of civic professionalism (Freidson 2001) or trustee fessionalism to expert professionalism (Brint 1994)—professional expertise subject to market pricing—and thereafter to precarious professionalism does by no means demonstrate a strictly linear and straightforward histori-cal trajectory For instance, certain traditional professions (e.g., medicine and juridical services) are still relatively sheltered from a downward pres-sure in compensation and a loss of jurisdictional authority (even though there are evidence of changes also here): Other types of professional work (e.g., engineering work and R&D more widely), historically seated within specialized functions and divisions within large-scale corporations, are now being located in small, allegedly more agile and entrepreneurial firms Moreover, there are novel professional groups that de facto did not exist (or were marginal phenomenon) before 1980s (e.g., video game develop-ers such as programmers, game writers, and 2D and 3D animators) or that have successfully been professionalized over the last decades (e.g., manage-ment consultants) In addition, over the last decades, the level of education has increased substantially, expanding the pool of professional workers and workers with professional expertise (i.e., with a tertiary education diploma and other credentials)

The principal argument of this volume is not that all of these fessional groups are participating in precarious professional work; the

pro-argument is instead that what was once regarded as a safe haven for a middle-class career and a relatively comfortable life style, more or less devoid of the concern regarding employment and faltering economic compensation, is today the privilege of a shrinking group of elite pro-fessionals, and not infrequently being employed in, or associated with, the finance industry (as in, e.g., law firms) As a consequence, all these economic changes, new policies, and the decline of “the implicit social contract” (Hacker et al 2013) have generated a new world of professional work that is in part entirely different from traditional professional work,

in part basically the same To address these changes in terms of being carious work (defined in more detail below) may be treated as an unneces- sarily polemical approach, but the increased levels of perceived economic

pre-instability, the sharp growth in household debt in also middle-class homes (the traditional recruitment ground for professional workers), and the significant growth in economic inequality, including a stagnant or even declining real wage growth for middle-class families, arguably justify the use of this label As will be demonstrated in this volume, precarious professional work is no longer only visible at the fringes of expert work but is now introduced on a broad basis, in many cases accompanied by entrepreneurship ideologies, serving to normalize or even romanticize the work in small-sized companies vulnerable to the volatility of the finan-cialized competitive capitalism and being unable to provide many of the benefits that historically have accrued to professional workers In this view, some issues addressed by Thorstein Veblen and Louis D. Brandeis

on the brink of World War I are still of high relevance for the situation a century later

Changes in the Economic System

of Competitive Capitalism

Western-style capitalism was not built in a day, but only slowly and after the formation of the national state and the institutionalization of cor-porate law and regulatory agencies has what today is referred to as “the economy” been established In fact, the very idea to speak about “the economy” as some free-standing, factual, and almost animated object is

of quite recent pedigree; Mitchell (2014: 481) says that not until the post-World War period, around 1948, “it became common in American political debate to talk about the economy.” References to this object

the economy were now used in a routine, repetitive way in government

reports and in newspapers, and the term was used without accompanying explanations It does not take a very long-term perspective to realize that Western-style capitalism is a specific historical accomplishment and that the more recent phase of competitive capitalism is part of the bourgeoi-sie revolution of the seventeenth and eighteenth centuries (McCloskey

2006; Cassis 1993) After many rivers had been crossed, it was the geoisie that created the economic system that we today have inherited and operate, rooted in an idiosyncratic blend of a risk-taking attitude and a close monitoring of resources, a mixture of piety, prudence, and appetite for venturing enabling economic expansion and the regulation

bour-of economic affairs

To cut a long story short, since the French Revolution of 1789, the start

of the modern period for many historians and the last of the three major revolutions of the 1688–1789 period (Wallerstein 2011: 144; Lefebvre 2001), capitalism as an economic system has constantly morphed and multiplied, ceaselessly adding new practices, institutions, and laws to

an increasingly complex network of economic, commercial, legal, and social relations At the same time, despite its own “Brownian motion,” the constant micro-level movements, the main precondition for capitalist

economies is stability; without stability, there are limited possibilities for

accurate predictions of, e.g., the interest rate, and with no possibilities for prediction, there are higher calculable risk and degrees of nonarithmetic risk, i.e., uncertainty Especially uncertainty is every capitalist’s demon

as it disturbs or undermines the ability to calculate rents and returns on

investment A corollary to the preference for stability is that trust is a

highly effective mechanism for creating stability Trust, Tilly (2004: 4) writes, can be thought of as “an attitude or as a relationship”: “Trust con-sists of placing valued outcomes at risk to others’ malfeasance Trust rela-tionships include those in which people regularly take such risks” (Tilly

2004: 4) In Niklas Luhmann’s (1979: 15) neofunctionalist sociology, trust is a mechanism required to operate with reasonable security within the horizon of the future, “characterized by more or less indeterminate

complexity.” In short, in Tilly’s (2004) and Luhmann’s (1979) use of the term trust, the continuation of social relations is dependent on mutual risk taking, wherein the agent is given the responsibility to handle the principal’s resources “A society is called capitalist if it entrusts its eco-nomic process to the guidance of the private businessman,” Schumpeter ([1928] 1991: 189) says, pointing at the direct connections between trust and competitive capitalism Competitive capitalism is dynamic and changing, but, seemingly paradoxically, this ceaseless change rests on stable social relations and the trust in abstract institutions such as legal contracts and regulatory practices.

One way to build trust in an economic system is to establish routines and mechanisms for domains of jurisdiction Certain individuals holding specific licenses, education system degrees or diplomas, or other creden-tials, and thus signaling that they have passed the test and managed to live up to high standards, are thus given the right to serve specific social functions Such jurisdictional domains can be either tied to a specific organization form, as in the case of the Weberian bureaucracy, or tied to

a specific profession, independent of individual organizations but derived

from the organization of the profession per se While the concept of fession is, just like the term bureaucracy, part of a modernist vocabulary,

pro-where the former gained a foothold in the latter half of the nineteenth century, the concept of profession is closely related to the urban mer-chant class and bourgeoisie since medieval times

In Brint’s (1994: 26) seminal work, the “origin” of professionalism can be traced to the ancient or medieval periods, but in the seven-teenth century and the modernization of the European states, the idea of professional classes was further pronounced The swift differ-entiation of the economy and corporations in the last decades of the nineteenth century created a need for more professional expertise and competence, and the ambitious, career-oriented, and status-minded bourgeoisie class, praising and living in accordance to what Gay (2001: 192) calls “the Gospel of Work,” was naturally the primary recruitment base for the new occupational class of professionals Brint (1994) suggests that the professions were more than a mode of orga-nizing expertise and know-how into professional communities, capa-ble of acting as a unified body with shared interests and norms and

values, and managing to operate as an autonomous force in between the political system of the emerging democracies and capitalist mar-kets: “The professions, neither democratic nor capitalist, played an important role in efforts to shape and (at times) to constrain capitalist development in relation to standards of a broader social well-being” (Brint 1994: 16) Freidson (2001) argues in a similar vein that the professions represent a “third logic” in between the hierarchy (the organization) and the market The classic professions are of course the entrepreneurial professions running their own businesses, like the lawyer in his office or the medical doctor in his practice (they were all exclusively male for a long period of time), both serving society through their expertise, while at the same time being held account-able for their own economic performance.

However, with the increased differentiation of economic activities and society and the growing demand for more specific and special-ized know- how, the professions entered the state administration (e.g.,

as teachers and jurists) or the hierarchies of large-scale corporations emerging in the early twentieth century (in the case of engineers and scientists) While, e.g., medical doctors running their own practices could take a standpoint to promote, e.g., public health reforms and thus serve the third logic of professionalism, the state administration professionals of large corporations no longer operated in accordance with this logic; instead, they were widely regarded as being spokesper-sons for their employing organizations or industries Today, in the new millennium, the role of professions is again subject to the economic, social, and cultural changes of the contemporary period While the

belle epoque view of professionals emphasized the enterprising and

self-employing professional, the modern-era professional was hired by the state or a multinational corporation In the latter phase, the profes-sional was no longer directly encountering relentless market forces as major agencies and corporations wherein they served to cushion the ups and down in the economy Paired with the prestige and status derived from the degrees, licenses, and other credentials of professionalism, this category of work was privileged and attractive Not only did profession-als make legitimate jurisdictional claims and were relatively generously compensated for their work, they were also less exposed to market risks

in comparison to the white-collar worker community On the basis

of such privileges and responsibilities, professional work became the

middle-class occupation par préférence Perform well in school, enter

the university, earn a degree, and acquire a stable position in an agency

or corporation became the prescribed career route for middle-class dren for most of the twentieth century

chil-Today, things look different, at least for some of the professional groups and for certain professional workers The post-World War II period was characterized by economic growth and a close correlation between productivity growth and real wage growth for a large share of workers, accompanied by a Keynesian-style welfare state, financed by progressive taxes, but by the mid-1960s, the profit rate started to fall

in, e.g., the American manufacturing industry As predicted by mists such as Michal Kalecki in the 1960s, the decline of profits would disrupt the seemingly perfected Keynesian economic system In the 1970s, a series of political and economic crises added to an economic decline unseen since the depression era At the nadir of competitive capitalism in the mid-1970s, the business community started to mobi-lize to restore “economic freedom” and to reduce governmental regula-tion, a diverse process that led to the election of the neoconservative governor Ronald Reagan as president in 1980 in the United States and with the Tory Prime Minister Margaret Thatcher taking office in the

econo-UK the year before The new pro-business climate of the 1980s, ing head-on conflicts with trade unions on both side of the Atlantic and a high-interest rate policy to remedy soaring inflation, led to the loss of blue-collar work in both the United States and the UK. In the

includ-UK, job loss came from the political decision to no longer support, e.g., the state-owned mining industry, but in the United States, the economic changes were caused by monetary politics leading to high- interest rates and an overrated dollar, making American manufactur-ing industry less competitive vis-à-vis, e.g., Southeast Asian producers (Stein 2011) In addition, changes in corporate governance practices and the shift to a shareholder welfare policy encouraged the new gen-eration of CEOs and directors to downsize and offshore activities to cut down to increase after-tax profits, adding to the decline of blue-collar work

The Consequences of the Financialization

of the Economy

During changes of the 1980s, the white-collar community (including larger groups of managers and administrators, and not only the profes-sionals being the “elite” of the white-collar community) was not primar-ily affected, but by the early 1990s, as Newfield (2008: 81) says, “the American layoff machine stated to buzz through the white-collar cubi-cles” (see, e.g., Budros 1999; Datta et al 2010) Jung (2016) points out that long-term employment has “[d]rastically changed since the 1980s” (see also Bidwell 2013) and argues that downsizing is one of the key explanations for this more short-term-oriented labor market As down-sizing programs are negotiated between investors, workers, and top man-agement, the “full implementation” of downsizing programs are unlikely, Jung (2016: 348–349) argues Being essentially a political process, the outcome is oftentimes a compromise between profit maximization and maintained managerial authority, but frequently, the empirical data indi-cates, “at the cost of workers’ job security” (Jung 2016: 349) For instance, during the 1980s’ recessionary years, large-scale downsizing became prev-alent, and when the economic conditions improved by the end of the decade and in the 1990s, downsizing programs were still announced and were treated as being part of the new conventional wisdom In 1994, for instance, aggregated corporate profits rose by 11 percent, and yet “cor-porate America cut 516,069 jobs,” an amount of downsizing far greater than in the recession year of 1990, when 316,047 jobs were disappeared (Jung 2016: 349)

Examining a data set including 656 companies laying off people over the 1984–2005 period, Jung (2016: 359) presents three important find-

ings: (1) institutional investors, ex hypothesi assumed to favor shareholder

welfare governance practices, facilitate downsizing implementation (i.e., institutional investors prioritize short-term profits over long-term eco-nomic growth); (2) trade unions do play an active role in reducing the job loss from downsizing, a finding that supports previous studies indicat-ing that unions serve to advocate the interest of labor (both trade union members and other labor market participants) and thus counterbalance

the power of investors and managers; (3) CEO incentives (i.e., sation in terms of stock holdings and/or stock options, directly respon-sive to finance market evaluations of such assets) to downsize influence the magnitude of total downsizing Jung’s (2016) all three findings sug-gest that, as being a matter of corporate governance, the three catego-ries of investors, workers, and managers act on the basis of self-interest and in accordance with the short-term perspective, characteristic for the shareholder welfare governance model As institutional investors today assess their fund managers on the basis of their performance vis-à-vis competing funds and finance institutes (Rajan 2006: 501), leading to a short-term focus on corporate performance, and as CEO and other top managers are widely incentivized to cut down costs to boost stock market valuations, Jung (2016: 368) contends that “the future does not look promising for workers”:

compen-Powerful investors will continue to demand more drastic implementation

of downsizing, a demand that top managers oriented toward shareholder value actively embrace The impact is likely to be more severe for non- managerial workers, because the power of top managers provides some protection for middle managers Combined with rent generation at the top rent destruction by downsizing at the bottom can exacerbate eco- nomic inequality among workers (Jung 2016 : 368)

While unemployment was basically treated by policymaking as a short- term problem prior to 1980 (Wray and Pigeon 2000: 835), derived from the volatility of the economic cycle, the research of, e.g., Jung (2016)

indicates that the corporate system per se uses the supply of labor as a

mechanism to strategically manage profit levels in line with finance ket expectations (see, e.g., Coffee 2006: 83)

mar-Bidwell (2013: 1078) substantiates Jung’s (2016) findings and shows that “declining organizational tenure,” i.e., shorter and more unstable employment relations, is not explained on the basis of exogenous factors such as increased foreign competition or technological change, which

“had very little effect on either worker tenure or its changes over time.” Instead, Bidwell (2013: 1077) found that “[d]eclines in tenure have been strongly associated with changes in industry-level unionization:

including unionization in my analyses explained around one-half of the decline in tenure within large organizations between 1979 and 2008.” More specifically, the subsection of the population most likely to have stable, long-term employment relationships during the postwar period

of managerial capitalism, men aged 30–65, has gradually lost ment in large-scale corporations In 1979, the average tenure of men aged 30–65 was “92% higher in organizations with more than 1,000 employ-ees” than the average tenure in small organizations (Bidwell 2013: 1069)

employ-By 2008, that gap had “declined to just 22%.” This “marked decline”

in the length of employment relationships, especially in large-scale porations, represents “one of the most important changes in the nature

cor-of employment, careers, and organizations to have taken place over the last three decades” (Bidwell 2013: 1077) Tenure has declined by 30 per-cent among “prime-aged men” in large organizations, with “particular increases in the proportions of men with less than three years of tenure” (Bidwell 2013: 1077) In short, Bidwell’s data and results support Jung’s (2016) findings that labor is today treated as a mechanism being used to manage firm-level profit levels to better satisfy market expectations As

a primary consequence, the balance of power between capital and labor today greatly benefits the former

Lin (2016) stresses, just like Jung (2016) and Bidwell (2013) do, that unemployment rates have soared in the American economy during the last decades Lin connects this downward slope in employment, especially affecting the blue-collar worker community, with the entrenchment of the shareholder welfare governance model In this governance regime, fewer employees produce higher economic value, but the performance benefits primarily the owners of stock:

[Between 1982 and 2005] there was a 10% increase in the concentration

of revenue but a 15% decrease in the concentration of domestic ment in the largest U.S firms In absolute terms, in 2005 the largest U.S firms increased their gross revenue by more than $780 billion but hired 2.8 million fewer workers (Lin 2016 : 972)

employ-One widely used method to generate higher shareholder value is to increase the debt-to-assets ratio (in accounting terms, to manipulate the

return-in-equity measure, ROE), which serve to leverage the return on the equity invested in the firm Between the early 1980s and 1993, the debt ratio increased from 0.55 to 0.70, and by 2005, the ratio had sta-bilized at 0.67 Such measures indicate, Lin (2016: 977) proposes, that companies are “heavily depend[ent] on debt to fund their operations.” The foremost implication of this high-leverage strategy is that whenever there is an economic downturn or a cash flow problem, firms with higher levels of debt “[f]ace greater pressure to reduce labor costs under the threat of bankruptcy” (Lin 2016: 977) That is, the shareholder welfare governance model translates into higher return-on-equity for the own-ers of stock, but it is the employees who buffer against shareholder loss during economic downturns When firms channel their finance capital into financial activities, rather than reinvesting them in productive activi-ties, this in turn weakens employment growth (Lin 2016: 975); financial instabilities shrink the supply of employment Lin (2016: 977) provides empirical data that reveals a trade-off between financial investment and a long-run total employment, especially for blue-collar work, which suffers

“a devastative effect.” Lin summarizes the three empirical findings:

First, increasing operation in financial activities not only substitutes for investment in production but also reduces resources available for the work- force Second, increasing dependence on debt as a main source of capital generates a constant pressure to meet interest obligations and constrains firms’ ability to expand employment Third, the increasing pressure to reward shareholders expands the outflow of firms’ resources and compels managers to replace the retain and reinvest cycle with a downsize-and- distribute spiral, in which labor expense becomes a primary target of cost- cutting strategies (Lin 2016 : 984)

In other words, the financialization of the firm, dominated by the holder welfare model and its emphasis on “efficiency” and production

share-of short-term free cash flow, is the primary explanation for the decline

of employment in the United States (Lin 2016: 973) That is, tional and managerial factors, rather than technological development or

organiza-broader macroeconomic and political changes (i.e., the “globalization”

of the world economy), explain a substantial share of what Lin (2016:

985) addresses as “the polarization of the labor market and growing inequality.” In this view, a national economy can choose between higher shareholder welfare or employment, but to combine these two objectives seems more difficult.

The combination of shareholder value creation policies—favoring short-term cost-cutting programs rather than long-term risk taking to increase market shares and to produce new innovations (Lazonick 2013; Goldstein 2012; Brockman et al 2007)—the offshoring and outsourcing

of administrative and expert functions (e.g., R&D), and the ization of work (Fligstein and Shin 2007) contributed to the job loss also

computer-in the white-collar community and among professionals In the new

mil-lennium, increasingly characterized by what has been called the ization of the economy (e.g., Epstein 2005), blue-collar manufacturing work has been by and large substituted by less well-compensated service work, including less benefits and less stable employment relations, but white-collar work is also less safe and predictable In addition, the middle class, once being assured a relatively secure and comfortable career in industry or state or municipality administration on the basis of earned university degrees, can no longer take for granted a close-knit causality between “human capital investment” and a career and a reliable bottom- line life income In Newfield’s (2008: 2–3) account, the middle class “is shorthand for ‘college educated,’” and this middle class is today being reduced in size and “losing its non-colleague educated members to stag-nating or declining wages.” In this new economic regime, yet another transformation of the capitalist system, there are reasons to critically rethink what professionalism means and what it stands for

The Concept of Precariousness

The British sociologist Guy Standing (2011) popularized the concept

of the precariat, denoting the social class that is offered little more than

short-term work contracts and earning relatively less money than the traditional blue-collar worker community did Kalleberg (2009: 2) uses the term “precarious work” to describe employment that is “uncertain, unpredictable, and risky from the point of view of the worker.” Gill and

Pratt (2008: 2) define precariousness (in relation to work) as “all forms

of insecure, contingent, flexible work—from illegalized, casualized and temporary employment, to homeworking, piecework and freelancing.” Following this definition, much professional work is today certainly filled with uncertainty and unpredictable events, and while the risks may not

be a matter of health and well-being, there are still risks involved in the work that threatens the possibilities to maintain a traditional middle- class life style As the underlying capitalist economic system, based on market pricing and competition, is dynamic and thus inherently fluid and changeable, any concept of precarity, precariousness, and precarious work of necessity accommodate “flexible,” i.e., unstable labor relations.Neilson and Rossiter (2008: 63) argue that precarity is “not an empiri-cal object that can be presupposed as stable and contained.” Instead, it might better be “understood as an experience,” they propose, “[s]ince unearthing the tonalities of experience requires an approach that does not place an either/or between conceptual and empirical approaches to the world” (Neilson and Rossiter 2008: 63) De Peuter (2011: 421) sug-gests that the concept of precarity should be regarded “a linguistic device for illuminating working conditions generally obscured in dominant dis-courses.” This “linguistic device” in turn shifts the focus toward the “lab-oratory of labor politics,” which many professional workers are subjected

to in the contemporary economy (De Peuter 2011); precarious work is thus ultimately the consequence of policies and underlying theories that justify changes in labor market policy

Gill and Pratt (2008: 2) stress how “[c]hanging modes of political and economic governance” over the last decades “have produced an appar-ently novel situation in which increasing numbers of workers in affluent societies are engaged in insecure, casualized or irregular labour.” In this new world of work (Beck 2000), notions such as “creative labour, net-work labour, cognitive labour, affective labour and immaterial labour”—Gill and Pratt (2008: 12) even speak about “brainworkers,” members of a

“cognitariat”—are flourishing and widely circulated, even made able (Gill and Pratt 2008: 2) At the same time, concepts such as “immate-rial labour” or “affective labour,” being at the very core of the discourse on postindustrial economic value production, remains “[r]ather ill-defined and not sharp enough to see the ways in which cultural work is both like

fashion-and not like other work,” Gill fashion-and Pratt (2008: 20) claim An alternative route would be to pay less attention to discerning the intellectual and cognitive content of this line of work and to more explicitly discuss pre-carity and precarious work as a function of the sharing of the economic value generated As the cognitive and embodied capacities involved in postindustrial economic value production are of necessity for most part escaping the representative devices used by scholars, a more fruitful and

“doable” approach would be to see how individuals participating in this line of work are actually sharing the economic gains from the productiv-ity growth reported over the last centuries—measured in terms of, e.g., real wage growth, social security benefits, stable and long-term labor con-tracts If not sharing such gains and benefits, these individuals are likely to participate in precarious work, that is, work that is not sufficiently com-pensated in comparison to the benefits accruing to other stakeholders

Consequences: The Enterprising Ethos of Precarious Groups

As has been demonstrated in the scholarly literature, the spread of the enterprising and neoentrepreneurialist ethos being at the core of the world of precarious work and in the present regime of investor capital-ism is at times embraced and enacted by unexpected groups who appear

to have little to do with the Schumpeterian concept of the entrepreneur

as a debtor expanding his or her business Monahan and Fisher (2015) examine how individuals being unsuccessful in competing in the US labor market secure income and indeed a “career” through participation

in the clinical trials conducted by pharmaceutical companies The work conducted is thus to provide one’s body as a material substratum in phar-maceutical development project:

Drug development as we know it could not happen without these viduals allowing their bodies to be used to test drug toxicity and side effects, generating data that are transformed into intellectual property for pharma- ceutical companies and are used to make decisions about which products

indi-to pursue (Monahan and Fisher 2015 : 551)

Moreover, in order to pursue this line of work, these workers cultivate entrepreneurial identities “both within and beyond the clinics” to make sense out of their work life experience (Monahan and Fisher 2015: 546)

In some cases, the participation in clinical trials is a way to raise money for planned entrepreneurial activities such as “start-up companies, real- estate ventures or artistic endeavours” (Monahan and Fisher 2015: 546) However, out of 178 interview subjects, nearly a third of the participants were unemployed and thus participated in the clinical trial as a means

to make money to support themselves and their families (Monahan and Fisher 2015: 551) Therefore, Monahan and Fisher (2015: 548) suggest,

“[t]hese work conditions for healthy volunteers [are] similar to other carious labour in that it encourages creative or entrepreneurial responses

pre-to those conditions while responsibilizing individuals for contending with their employment insecurity.” At the same time as the participants were part of a precarious labor market, they still maintained an enterpris-ing attitude and an entrepreneurial ethos and engaged in detailed self- monitoring to secure their “employability”:

[P]articipants develop sophisticated regimens for staying healthy and ing their lab results within acceptable ranges They work out regularly between studies, but taper off right before screening so that their liver enzymes will not be elevated, which would lead to them failing the screen- ing They eat blueberries, arugula, spinach, kale, salmon, yogurt, raw gar- lic, and other expensive health foods to maintain measurable health They develop nutritional and medical expertise, observing their lab results and adjusting behaviour accordingly (Monahan and Fisher 2015 : 559)

keep-In other words, rather than being “passive volunteers,” the participants are “actively trying to shape the opportunities they have for income in an unpredictable market” (Monahan and Fisher 2015: 561) Monahan and Fisher continue: “An entrepreneurial ethos allows them to view personal sacrifice and exposure to potentially dangerous drugs as smart invest-ments, as stepping-stones to more financially stable and fulfilling lives.”

In the US labor market and economy, the virtues of enterprising skills and an entrepreneurial ethos have thus penetrated and trickled down to also social groups that are quite far from being professional elites and

professional groups endowed with jurisdictional discretion—groups ditionally in need for such beliefs and norms Today, also unemployed individuals manage their own “employability” on the basis of such beliefs.

The Question of Economic Extraction: Who

Does the Job and Who Makes the Money?

In the post-World War II era, the period of managerial capitalism (Marris

1964; Chandler 1977), the middle class, traditionally being self-employed

or conducting professional work in, e.g., state agencies, was transformed into organization men and, eventually, women, salaried white-collar workers who conducted various forms of professional administrative and expert work in large-scale divisionalized corporations (Whyte 1956; Mills

1951) As will be discussed in Chap 2 in this volume, the large, sionalized, at times multinational corporation provided an institutional structure that greatly rewarded blue-collar and white-collar workers’ work ethic and loyalty, translating the productivity growth in the operations into real wage growth and stable, predictable employment Until at least the end of the 1960s, the expansion of Western competitive capitalism endorsed these corporativist and oligarchic tendencies (Galbraith 1971), making economic prosperity a matter of sharing the fruits of institutional reform through the bargaining between organizational stakeholders

divi-In the 1970s and 1980s, characterized by economic decline and increased levels of industrial conflicts, unseen since the depression era times, this peace treaty between capital owners and labor was undermined

As free-market ideologies gained a foothold in the general defense of industry’s autonomy vis-à-vis government regulation and control, grow-ing in importance in e.g., the United States in the 1960s and 1970s (Akard 1992: 601; Vogel 1983: 27), shareholder value ideologies were popularly advanced in free-market quarters as one way to increase the effi-ciency of economic activities and, indirectly and unofficially, to curb the trade unions’ (widely understood by free-market protagonists as a threat

to economic freedom, market efficiency, and other virtues held in esteem) claims to increased economic compensation More generally, free-market proponents represented a very negative view of the trade unions and the

labor movement, treating these organizations not so much as business partners and legitimate discussants but as being corrupt and prone to claim unreasonable economic compensation and the authority to influ-ence business decisions (Jacobs and Myers 2014; Horwitz 1986) “What

is not generally recognized is that the real exploiters in our present society are not egoistic capitalists or entrepreneurs, and in fact not separated individuals, but organizations which derive their power from the moral support of collective action and the feeling of group loyalty,” Friedrich von Hayek (1979a: 96) declared Elsewhere, Hayek’s (1949: 117) anti-unionism is even more conspicuous:

If there are any hope to return to a free economy, the question on how to the powers of trade-unions can be appropriately delimited in law as well in fact is one of the most important of all the questions to which we [free- market proponents] must give our attention (Hayek 1949 : 117)

As detailed by Mizruchi (2013), this new attitude toward trade unions represented a shift in the US business community but was also an idio-syncratic American phenomenon, unparalleled elsewhere (Vogel 1983: 24–25)

After the mid-1960s, productivity growth and real wages started to diverge (Wolff 2003), and the economic value created in the new free- market regime increasingly benefitted capital owners, the firm’s financiers (e.g., bond-holders), and owners of stock Worse still, in the new era of the financialized economy of investor capitalism, professionals and middle- class workers are to a larger extent employed by small- and medium-sized companies, and in many cases, innovation work is frequently conducted

in companies that still not have a positive cash flow Such thinly ized companies do not always have the resources to buffer the ebbs and floods during the economic cycle, making the risk of layoffs a more sub-stantial concern also for professional workers In venture capital-backed companies, the future of the company is in many cases uncertain, and

capital-it demands some precaution on the part of the coworkers to handle the risks of lost employment and income On average, the restructuring of the economy from large-scale corporations, with their own internal labor market and their own financial capital to allocate over the business cycle,

to small companies, vulnerable to changes in the supply of capital in the market, has significant implications for professional work In one way or another, in the regime of managerial capitalism, structuring industries into oligarchies characterized by close collaboration between the state, industry, and trade unions, there was a correlation between the size of the firm, the economic value generated, and job growth and job security (Bidwell et al 2013) In the contemporary economy, there is a less linear relationship between, e.g., economic value and firm size, and firms that generate large economic value may employ a relatively limited number

of coworkers (Davis 2009), and their employment contracts do generally not give coworkers the right to proportional compensation on the basis

of the value generated In the new regime of capitalist accumulation, new conditions prevail

Lazonick and Mazzucato (2013: 1094) define innovation formally as

“[t]he generation of higher quality products at lower unit cost at ing factor prices.” New innovations generate by definition higher returns

prevail-on investment, everything else equal, but the growth of innovatiprevail-on does not of necessity reduce economic inequality On the contrary, the oppo-site seems to be the case, contrary to what, e.g., politicians and policy-makers claim or hope for: “[o]ne of the decades in which growth was the

‘smartest’ (innovation led)—the 1990s—was a decade in which ity continued to rise,” Lazonick and Mazzucato (2013: 1094) argue For instance, Wray and Pigeon (2000: 826) show that less than 2 percent of the jobs created in the 1990s benefitted half of the American population without a college degree Therefore, a better understanding of the rela-tionship between finance, innovation, economic growth, and economic equality is needed, preferably, as Mazzucato (2013a: 852) says, begin-ning with an analysis of the deeply “uncertain” character of innovation Innovation work is always uncertain, being a bet on the future, and while many people may benefit indirectly from a successful innovation, the economic value generated tends to benefit a relatively limited number

inequal-of stakeholders Lazonick and Mazzucato (2013: 1094) thus call for a more detailed study of the “tensions” between “how value is created and how value is extracted in modern-day capitalism.” That is, the coworkers that generate economic value may not be the ones that directly benefit

from this capital accumulation, neither directly through, e.g., contractual ownership rights and dividends and stock options, nor indirectly as the firm accumulates economic resources that create other benefits such as job security or fringe benefits as part of the employees’ compensation package.

More explicitly, Lazonick and Mazzucato (2013: 1094) advance the hypothesis that “[t]here has been an increasing separation between those economic actors who take the risks of investing in innovation and those who reap the rewards from innovation.” This change has not occurred overnight but is part of the general tendency to deregulate and deinstitutionalize competitive capitalism “A set of socially devised institutions related to corporate governance, stock markets, and income taxation have permitted this concentration of value extraction in a few hands,” Lazonick and Mazzucato (2013: 1108) propose For instance,

as will be examined in Chap 2 of this volume, the dominance of holder welfare ideology in corporate governance (Jensen 1986, 1993,

share-2002), based on the discrediting of executives and board of directors

as qualified decision- makers, and the advancement of finance market actors as the most efficient mechanism to reduce agency costs (i.e., the cost to monitor the executives’ work so they act in line with the owners and other principals’ interests), leads to also large companies as being bound up with finance market-based forms of control (Bratton and Wachter 2010; Daily et al 2003; Davis and Stout 1992) Organizations thus distribute their free cash flow and increase their debt to become capital efficient, and the ups and downs in the economic cycles are handled through layoffs rather than through the buffering of aggre-gated financial capital

In the case of venture-backed companies, such as life science ventures, there is not yet any free cash flow to distribute, but here it is the venture capital investors that contract for the economic value to materialize in the future In both cases, professional workers live and work face-to-face with finance markets, and must learn to endure the specific form of finance market control that has been widely instituted in society The question is then to what extent the finance market worldview has penetrated all eco-nomic activities, even potentially to the point where the sacred figure of

the entrepreneur, the redeemer and life-blood of competitive capitalism,

is subsumed by the interests of finance market actor, Mazzucato (2013a) asks:

The problem is not one of the big bad banks and dodgy financial tions (e.g., hedge funds and credit default swaps) versus the (potentially) innovative ‘real economy’—restraining the former and liberating the latter The key problem is how to de-financialize real economy companies, and

institu-to find ways that value creation activities (in both the financial sector and real economy) are rewarded over value extraction activities (Mazzucato

2013a : 863)

Bryan and Raffery (2014: 891) address the dominance of finance market actors in similar terms, suggesting that the “substantial meaning of finan-cialization” is not only a matter of the finance industry growing in size and importance (as it has proved to do; Deutschmann 2011: 353) but precisely how finance market calculative practices become more “socially pervasive.”

In summary, in the era of investor capitalism, where economic value

is increasingly created in small- and medium-sized companies, frequently located in networks of firms, universities, and agencies, professionals are likely to benefit less from the participation in entrepreneurial and value- creating activities In such cases, it may be that professionals are not given more secure employment contracts, nor do they hold con-tracts granting them the right to the economic value generated in and through their work This is the new precarious professional work, a form

of winner- takes- it-all economy (in Hacker and Pierson’s 2010, tion), where only those who contract for the residual cash flow benefits from the success The compulsory chatter about the value and merits of, e.g., entrepreneurship (see, e.g., Pink 2001), otherwise pervading policy debates and political discussions, is thus poorly aligned with less flatter-ing views of professional enterprising, where actual legal contracts grant-ing the few the right to the economic value generated undermine the very incentive structure of the entrepreneurial function of competitive capitalism What remains is an empty praise of enterprising individu-als, at times not even attempting to veil the free-market ideology that

formula-apparently benefits finance market actors over entrepreneurs, ultimately making speculation more financially attractive than enterprise (Wray

2009: 810) The entrepreneurship ideology is therefore little more than

a sparkle of escapism and mythology in the otherwise instrumental and calculative reason of the finance industry, a dream of creating amazing new economic wonders firmly rooted in the narrative structure of the folktale (see, e.g., Propp 1968)

Expressed differently, the ethos of entrepreneurialism, the willingness

to work hard, take risks, to challenge inherited beliefs, etc., is still held in esteem as fine, productive middle-class and professional virtues, but the entrepreneur as an initial debtor, eventually claiming the right to the eco-nomic value from his or her diligence and ingenuity, is less appealing in this new economic regime On the contrary, the contractual elements of enterprising are aligned with the wider logic of investor capitalism, which the cynic may summarize as what has been referred to as “the Golden Rule of Wall Street,” stating that “[h]e who has the gold makes the rules” (Peck 2010: 251) In the revised version of the entrepreneurial function

of investor capitalism, entrepreneurship work is thus a form of salaried work and little else; it is no longer a “life style” or a specific “mode of thinking” but quite strictly the insecure work to produce innovations

under the influence of uncertainty If few rather than many reap the

eco-nomic benefits from joint team production innovation work, innovations

per se no longer create economic growth or iron out economic inequality,

but on the contrary add to such socioeconomic imbalances Those are the new conditions of investor capitalism that Lazonick and Mazzucato (2013) and Mazzucato (2013a) want to examine in greater detail

Research Question and Outline of the Book

This volume examines how professional work has been affected by the free-market advocacy and its accompanying policy reform and insti-tutional changes occurring over the last four decades Using the term

“precarious professional work,” a term that contains its own polemics as professional work has traditionally been portrayed as the very antithesis

of precarious employment, it is suggested that changes in the