1st Edition

Wages, Bonuses and Appropriation of Profit in the Financial Industry The working rich

By Olivier Godechot Copyright 2017
    258 Pages 7 B/W Illustrations
    by Routledge

    258 Pages 7 B/W Illustrations
    by Routledge

    The 2008 financial crisis led the whole world to ask questions of the financial industry. Why are wages in the financial industry so high? Are bonuses responsible for the financial crisis? Where do bonuses come from? Politicians and others urged people to believe that the crisis was the price of Wall Street’s greed and blamed the "bonus culture" prevalent in the financial industry. However, despite widespread condemnation and the threat of tighter regulation, bonuses in the industry have proven remarkably resilient.

    Wages, Bonuses and Appropriation of Profit in the Financial Industry provides an in-depth inquiry into the bonus system. Drawing on examples from France, the City and Wall Street, it explains how and why workers in the financial industry can receive such large bonuses. The book examines issues around incentives, morality and wealth-sharing among employees, including the rise of "the working rich" – those who have benefited the most from the high wages and large bonuses on offer to some employees. These people have achieved wealth through their work thanks to new forms of exploitation in our ever-more dematerialised economy. This book shows how the most mobile employees holding the most mobile assets can exploit the most immobile stakeholders. In a world where inequalities are rising sharply, this book is therefore an important study of one of the key contemporary issues.

    It will be of vital interest to those studying finance, banking or political economy.


    Foreword Understanding Before Regulating

    Introduction Finance as a Working Rich Observatory

    Part I Bonus Practices

    Chapter 1 The Size of Bonuses

    Chapter 2 The Distribution of Bonuses

    Part II Property Rights and Power

    Chapter 3 Property Rights in the Firm

    Chapter 4 The Sense of Ownership of Profit

    Chapter 5 Assets and Power

    Part III Hold-Up and Labour Market

    Chapter 6 A Hold-Up Case

    Chapter 7 Towards a Model of Hold-Up

    Chapter 8 The Labour Market as Asset Transfer

    Chapter 9 What Do Heads of Trading Rooms Do?

    Conclusion Value Creation for Wage Earners?


    Olivier Godechot is codirector of MaxPo, Sociology Professor at Sciences Po and Research Professor at CNRS, France.

    "It is a first-rate piece of economic sociology, and its publication should hopefully bring the work of this creative and methodologically versatile scholar to a wider English-reading audience. I suspect it will become a mainstay on sociology of finance syllabi, as well as as an important reference on organizational dimensions of inequality. (...) Empirically, The Working Rich presents a comprehensive multi-method analysis of the production and distribution of bonuses in French banking firms. One of the great virtues of the study is its meso-level approach. Godechot goes beyond aggregate statistics and axiomatic “winner-take-all” theories to examine the underlying organizational mechanisms by which bankers are able to capture such outsized compensation. Godechot marshals a truly formidable amount of original data collected over eighteen years [1997-2015]."

    - Adam Goldstein, European Journal of Sociology