Investigating the Ethical Turn in Finance: Symposium Report

On 17 September 2015, a one-day symposium was held in Leicester to discuss the “seeming ‘social’ and ‘ethical’ turn of finance in the context of the global economic crisis”. The symposium was a joint endeavour organised by academics at three universities, including PhD Student at De Montfort University, Robert Ogman, Middlesex University Lecturer in Sociology, Emma Dowling, and Senior Lecturer in Finance and Political Economy at the University of Leicester, David Harvie . Robert Ogman reports back on the day’s proceedings.

One peculiar outcome of the economic crisis and austerity policies of the last few years is the emergence of the “social investment market”. This “seeming ‘social’ and ‘ethical’ turn of finance in the context of the global economic crisis” was the topic of a recent symposium held in Leicester. The gathering was an opportunity to discuss the recent growth of financial products in “responsible” investing, and government efforts to increase private sector involvement in public provisioning, and to offset the resource gap arising from fiscal austerity measures.

Scholars from a host of academic disciplines and from a handful of European countries came to discuss together with practitioners from NGOs and trade unions, the development and implications of these new initiatives, as the programme stated, to “financialise the social”. A central aim was to discuss “the implications for the relationship between state, society, and (financial) markets, and for the users and front-line providers of services.”

Introducing the one-day workshop, the symposium’s co-convenor Emma Dowling, co-author with David Harvie of a recent paper on the nascent social investment market, framed a set of questions that participants were to discuss:

  • What new financial institutions, instruments and practices are being developed? By whom? How do they work? For example: what is the ‘social stock exchange’, what are ‘social investment financial intermediaries’, ‘social impact bonds’ or ‘development impact bonds’? What kinds of social projects are being promoted and developed? (For example, particular concerns include youth unemployment and the urban poor.). The United Kingdom, Australia and the United States along with other G8 member states are at the forefront of social investment, but is this a global phenomenon?
  • What new discourses are emerging to describe an apparent rupture with previous forms of finance, and the concern with making finance ‘work’ for society (as opposed to the other way around)? How have terms such as ‘social value’, ‘shared value’, ‘triple bottom line’ and ‘impact investing’ arisen and what do they seek to describe? To what extent is ‘social finance’ a response to criticisms of the vicissitudes of financial markets in light of the 2008 crisis?
  • More generally, to what extent is social finance a response to a perceived impasse of neoliberal capitalism? Does social finance represent a break with neoliberalism or a deepening and development of it? Will finance’s ‘ethical turn’ address capital’s legitimation crisis? Will social investment provide a source of capital accumulation and profitability? If market and financial logics are further penetrating social life, what are the implications for social relations and social discipline?
  • What is the role of the state in developing social finance and a social investment market? What are the implications for the welfare state, for public service provision and for social policy? Will public-service users – individuals and communities – really benefit? How will front-line providers – both waged and unwaged – be affected? What is the likely impact on civil-society organisations, charities and the third or voluntary sector more generally?
  • Finally, is there any alternative to social investment? How might radical social movements interpret, engage with or challenge and resist the development of social finance? What fault-lines can we detect? Does finance’s ‘social and ethical turn’ signify a point of its vulnerability, the outcome of a legitimacy crisis, and hence a space within which new opportunities may exist to advance critique from a social and ethical perspective?

The first panel opened with a presentation by Dexter Whitfield, from the University of Adelaide, and Director of the European Services Strategy Unit ( He focused on a central initiative of “impact investment market”, namely, the increasingly popular policy experiment by the name of “Social Impact Bonds”. He explained the structure and idea of SIBs, and also pointed to a host of weaknesses.

The Social Impact Bond claims to respond to public sector funding gaps (caused by public sector budget cuts) by incentivising private investment in public provisioning. They do so by offering financial rewards to investors when a specific social policy goal is achieved, by an organisation tasked, for example, with reducing prisoner reoffending, homelessness, or the number of children in care. This functions as a public-private partnership, involving a government commissioner which identifies a social policy target, and a non-governmental organisation acting as a project manager, an investor which lends money to a civil society organisation involved in meeting the agreed-upon policy goal. If this organisation hits the set target, so the theory goes, government have reduced expenditures in criminal justice or welfare costs, and these savings will be shared between public authorities and non-governmental investors. The idea is that the government will be “leveraging private capital for public goods”. In the aftermath of the global financial crisis of 2007/08, the G8’s Impact Investment Taskforce writes, that “impact investment” will “harness the power of entrepreneurship, innovation and capital for public good”. It is “the invisible heart to guide its invisible hand”.

This theory is being promoted on the national and international levels. As Whitfield writes in his paper, “Alternative to private finance of the welfare state: A Global Analysis of Social Impact Bond, Pay-for-Success and Development Impact Bond Projects”, “there are currently 54 operational social impact bond projects in 13 countries with at least a further 23 at the planning or procurement stage. The UK is the global leader with 32 operational projects with outcome payments valued at £91m, followed by the US with 9 projects.”

Whitfield provided a list of “30 financial and public policy flaws” in SIBs, arguing that, contrary to the purportedly innovative qualities of SIBs, that they are deeply path-dependent, calling them a “mutation of privatisation”. He criticised the increasing role of market ideas and private sector actors in the design, implementation, and evaluation of social and welfare policy, and the further commodification of state welfare functions. SIBs “extend markets and market forces further into the welfare state that could ultimately threaten social rights.”

Going beyond a critique of SIBs, Whitfield also sketched an “alternative vision of public services”, taking up some of the central themes of the SIB policy experiment, such as “early intervention and prevention” and “new public service management”, but placing them in a strongly public framework that limits market forces. This, he argued, would involve the “democratisation of public services”, “social justice and reducing inequalities”, “public ownership and investment”, “progressive taxation”, and “good quality jobs”, which he discusses in his paper.

Turning the focus to an earlier wave of “ethical finance” initiatives, Mareike Beck of the University of Sussex, provided a look at microfinance. Her presentation focused on the supply-side of these trends, looking at the case of German banks in “expanding the provision of ‘poor appropriate’ financial products into the Global South”. She provided a look at the Deutsche Bank in particular. She argued that microfinance cannot be understood simply as a response to the failures of Structural Adjustment Programmes in the 1990s, but also reflect the efforts of these institutional actors to become international investment banks, and of German finance to address legitimacy problems at home.

Claire Parfitt of the University of Sydney contrasted the new wave of “responsible investment” initiatives of the World Economic Forum and the United Nations with earlier, often faith-based, divestment or “ethical investment” campaigns that pressured firms to halt business practices considered to be unacceptable or unethical. She also discussed the role of pension funds within responsible investment portfolios, and the tensions this creates within trade unions by the “worker-investors” who take on “dual subjectivities.”

Norbert Wohlfahrt and Monika Burmester, from the University of Applied Sciences in Bochum, Germany, focused on changes in welfare from provision to “impact”, and from aftercare to preventative care, and the shift from public to private hands, organised around a business model. Their presentation showed how this strategy is connected to the E.U. “human capital” strategy, which, “equates optimal prevention strategies with the active valorisation of labour power as a commodity”. The result is that “the political ideas of supply-side economic and social policy are imposed on social work”.

Allison Roche, of the public services trade union, UNISON, provided a labour perspective of the “social finance” turn. Her comments focused on the growth of social enterprises known as “public mutuals”, which are increasingly taking over the delivery of public services and dismantling the public sector and welfare institutions. She challenged this blending of public and private values in these developments, as well as the informalisation of labour standards as employees shift from the public to private sector.

Robert Ogman’s talk focused on the resonance of “social finance” initiatives, pointing to their success in framing a purported “social neoliberal compromise” in response to austerity’s legitimacy crisis. He argued that SIBs implicitly legitimate the argument of austerity critics by acknowledging social crises. Yet, while they see the funding gap for social provisioning as having to do with a resource imbalance between public and private hands, they reject a redistributive approach, instead pursuing a plan of private investment, which has had mixed results and contains significant risks. SIBs too respond to critics’ objection to neoliberalism that warn of its socially destructive capacity (most recently seen in the financial meltdown of 2007/08). Yet they reject re-regulation, instead calling for the incentivisation of “ethical” investment. Thirdly, SIBs acknowledge the persistent fiscal crises of the state, yet, rather than increasing revenue through progressive taxation, they suggest that governments can replace social expenditures with private capital investment in social provisioning. Hence, SIBs acknowledge a set of arguments advanced by austerity opponents, yet channel these into the expansion of market-centred “public responsibility” initiatives. This is a contradictory process which austerity opponents could intervene in and point out the limits and dangers to, and by doing so, also advance a real paradigm shift.

Additional presentations included: Davide Caselli’s (University of Turin, Italy) paper on the “Financialisation and the Restructuring of the Italian Welfare State”, Marco Andreu from the University of Warwick on “Impact Investing and the Contingency of Market Ethics”, Julian Müller  from the Centre for Research on Multinational Corporations on “Harnessing Private Finance for Public Policy Goals”, and Jane Lethbridge (University of Greenwich) on “The Role of the State in Developing Social Finance and a Social Investment Market”. External discussants, Chris Clarke (University of Kent), Donatella Alessandrini, (University of Warwick), Adrienne Roberts  (University of Manchester), and Ekaterina Svetlova (University of Leicester) moderated and provided important outside perspectives to the discussions.

The meeting provided a rare opportunity to present critical perspectives on the emerging paradigm, which is mostly dominated by the think tanks and advocacy groups of the social finance policy network spanning the state, market, and non-governmental organisations.

The session closed with discussions about future research collaborations and public outputs. To contact the organisers, please contact Robert Ogman (

Robert Ogman is a PhD candidate at the Department of Politics and Public Policy at De Montfort University, as well as a core member our team at CURA

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