Description
This article examines the stratifying effects of economic classifications. We argue that in
the neoliberal era market institutions increasingly use actuarial techniques to split and sort
individuals into classification situations that shape life-chances. While this is a general and
increasingly pervasive process, our main empirical illustration comes from the transformation
of the credit market in the United States. This market works as both as a leveling force
and as a condenser of new forms of social difference. The U.S. banking and credit system
has greatly broadened its scope over the past twenty years to incorporate previously
excluded groups. We observe this leveling tendency in the expansion of credit amongst
lower-income households, the systematization of overdraft protections, and the unexpected
and rapid growth of the fringe banking sector. But while access to credit has democratized,
it has also differentiated. Scoring technologies classify and price people according
to credit risk. This has allowed multiple new distinctions to be made amongst the creditworthy,
as scores get attached to different interest rates and loan structures. Scores have
also expanded into markets beyond consumer credit, such as insurance, real estate,
employment, and elsewhere.
Classi?cation situations: Life-chances in the neoliberal era
Marion Fourcade
a,?
, Kieran Healy
b
a
Department of Sociology, University of California—Berkeley, Berkeley, CA 94720-1980, USA
b
Department of Sociology, Duke University, Durham, NC 27708, USA
a b s t r a c t
This article examines the stratifying effects of economic classi?cations. We argue that in
the neoliberal era market institutions increasingly use actuarial techniques to split and sort
individuals into classi?cation situations that shape life-chances. While this is a general and
increasingly pervasive process, our main empirical illustration comes from the transforma-
tion of the credit market in the United States. This market works as both as a leveling force
and as a condenser of new forms of social difference. The U.S. banking and credit system
has greatly broadened its scope over the past twenty years to incorporate previously
excluded groups. We observe this leveling tendency in the expansion of credit amongst
lower-income households, the systematization of overdraft protections, and the unex-
pected and rapid growth of the fringe banking sector. But while access to credit has democ-
ratized, it has also differentiated. Scoring technologies classify and price people according
to credit risk. This has allowed multiple new distinctions to be made amongst the credit-
worthy, as scores get attached to different interest rates and loan structures. Scores have
also expanded into markets beyond consumer credit, such as insurance, real estate,
employment, and elsewhere. The result is a cumulative pattern of advantage and disadvan-
tage with both objectively measured and subjectively experienced aspects. We argue these
private classi?catory tools are increasingly central to the generation of ‘‘market-situa-
tions’’, and thus an important and overlooked force that structures individual life-chances.
In short, classi?cation situations may have become the engine of modern class situations.
Ó 2013 Published by Elsevier Ltd.
Introduction
Academics often remind others that familiar categories
are dif?cult to question, but they are hardly immune to the
problem themselves. Consider the case of social class. In
general, contemporary approaches see classes as rooted
in production, speci?cally the employment relation. This
view descends from Marx, who argued that the beginning
of class is one’s relationship to the means of production.
Notwithstanding the nuanced analysis of class relations
in his political writings (e.g., in The 18th Brumaire and else-
where), what stuck with sociologists was Marx and Eng-
els’s insistence that class analysis is, at its core—or ‘‘in
the last instance,’’ as people used to say—a matter of own-
ing or not owning the means of production. Classes are de-
?ned antagonistically on that basis. Capitalists call the
shots in the labor market and workers are forced to accept
the terms on offer.
The core problem for later theorists has been to make
sense of the rise of service and managerial occupations
within this underlying relational structure. Scholars edged
towards a Weberian view (Breen, 2005; Wright, 1985),
eschewing a scheme of intrinsically antagonistic classes
in favor of a more re?ned spectrum of class situations, or
life chances, on various markets. People own (or do not
own) different sorts of property, or they bring different
skills to the market, or have different services to buy or
sell.
In their efforts to build on Weber’s insights and to rec-
oncile theory with data, contemporary formulations of
0361-3682/$ - see front matter Ó 2013 Published by Elsevier Ltd.http://dx.doi.org/10.1016/j.aos.2013.11.002
?
Corresponding author.
E-mail addresses: [email protected] (M. Fourcade), kjhealy@
soc.duke.edu (K. Healy).
Accounting, Organizations and Society 38 (2013) 559–572
Contents lists available at ScienceDirect
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class theory became more precise, and tableaux of class
membership more complex. Sociology’s most in?uential
statements on the subject, such as Wright (1985), Erikson
and Goldthorpe (1993), and Grusky and Sørensen (1998),
set out to operationalize the concept of class in a way that
connected it to the process of socio-economic attainment.
Largely framed by the methods and concerns of Anglo-
American mobility research, the challenge was to develop
a class-based analysis that could make sense of the elusive
‘‘middle’’ of the American occupational structure. But this
meant that contemporary class analysis remained close
to its origins in that it still began with an analysis of the
structure of positions in occupations, ?rms, and labor
markets. We shall argue that this has made it hard to con-
nect these theories to processes of social strati?cation that
originate outside the sphere of production, in settings such
as consumer credit systems, education, health services, and
housing.
Of course, research on inequality shows other forms of
social division beside class structure shape people’s access
to and experience of basic social institutions. Reliably, spe-
ci?c social groups—the poor, minorities, women, young
people, and others, whether singularly or in various inter-
sections and combinations—face a more restrictive set of
choices, receive worse treatment, and experience worse
outcomes than dominant groups in practically every insti-
tutional domain (Massey, 2008). The durability of these
inequalities is explained, variously, by rational choices on
the part of vendors trying to avoid catering to riskier indi-
viduals (Becker, 1971), the persistence of straightforward
prejudice, or more subtle processes of symbolic violence,
pragmatic disquali?cation, or systemic ‘‘über’’ discrimina-
tion (Reskin, 2012). In this view, modern markets repro-
duce inequalities that originate elsewhere in the social
structure, in historical legacies, and in longstanding atti-
tudes that differentiate between categories of people. The
action of markets themselves does not contribute much
to the formation of social hierarchies.
What if it did? What if we could make the recording,
splitting and categorizing work done by markets and mar-
ket technologies ‘‘good to think with’’ for the study of so-
cial inequality? The point is in some ways familiar.
Occupational markets have long been structured by insti-
tutional devices such as licensing and credentialing sys-
tems, in addition to rules oriented to exclude certain
kinds of people. But what makes the new market instru-
ments so interesting is that they seem so much more dem-
ocratic. Indeed, historically their appeal came, in part, from
their purported ability to keep older forms of arbitrary or
categorical discrimination at bay (Hyman, 2011; Poon,
2013). These new markets draw distinctions, too, but in a
different way. Rather than protecting certain groups
through the creation of rents and monopolies, they thrive
on the market’s competitive logic, demanding that people
be measured against one another, and then separating
and recombining them into groups for ef?ciency and pro?t.
As with class, the process of differentiation is endogenous
to the market itself. But unlike class, the action happens on
the consumption side of the economy, rather than on the
production side.
In this article, we focus more particularly on how the
emergence and expansion of methods of tracking and clas-
sifying consumer behavior affect strati?cation through the
allocation of credit. On the supply side, scoring agencies
slice consumers into behaviorally-de?ned risk groups,
and price offerings to them accordingly. On the demand
side, consumers ?nd themselves more or less comfortably
?tting into these categories—which, by design, are not con-
structed from standard demographic classi?cations such as
race and gender. At the intersection of this supply and de-
mand, the increasing sophistication of credit scoring gen-
erates what we call classi?cation situations: positions in
the credit market that are consequential for one’s life-
chances, and that are associated with distinctive experi-
ences of debt. These range from the exploitative to the
dutiful, and from the dutiful to the almost liberating. Some
feel weighed down or crushed by debt, others feel the pres-
sure both to acquire and pay off certain sorts of loan, and
still others embrace credit as a means of asset accumula-
tion and mobility. These classi?cation situations are not
merely approximations to pre-existing social groups,
though of course they may overlap substantially in speci?c
cases. Rather, they are independently, even ‘‘arti?cially’’
generated classi?cations that can come to have distinctive
and consequential class-like effects on life-chances and so-
cial identities.
The crucible of class
The standard view
We begin with Weber and his concept of life chances. It
is worth quoting his de?nition of ‘‘economic class’’ at
length:
We may speak of a ‘‘class’’ when (1) a number of people
have in common a speci?c causal component of their life
chances (. . .). This is ‘‘class situation.’’ (. . .) Property or
‘‘lack of property’’ [are] the basic categories of all class
situations. . . . Within these categories, however, class
situations are further differentiated: on the one hand,
according to the kind of property that is usable for returns;
and, on the other hand, according to the kinds of services
that can be offered in the market. Class situation is, in this
sense, ultimately market situation (Weber, 1978a, pp.
927–928, emphasis added).
Notoriously, Weber was not very speci?c about what he
meant by ‘‘chance in the market.’’ However, he does offer a
telling empirical illustration. Rather than pursuing the
more Marxist line of analysis he begins with (the distribu-
tion of material property and skills or ‘‘services offered’’),
Weber ends the passage on ‘‘economic classes’’ in Economy
and Society with a cryptic reference to the credit market:
The creditor-debtor relation becomes the basis of ‘‘class
situation’’ ?rst in the cities, where a ‘‘credit market’’,
however primitive, with rates of interest increasing
according to the extent of dearth and factual monopoli-
zation of lending in the hands of a plutocracy could
develop. (Weber, 1978a, p. 928)
560 M. Fourcade, K. Healy / Accounting, Organizations and Society 38 (2013) 559–572
This suggests that Weber’s view of class situation as life
chances in a market should be much more broadly applied
than it typically has been in the literature on class analysis.
(And, quite possibly, more broadly than Weber himself
envisioned—but our purposes here are not exegetical.)
Our claim is that many institutional settings may be ana-
lyzed as systems of market-situations, each with its own
dynamic of social strati?cation and its own claim on the
making of social class.
The standard picture in strati?cation research is that a
person’s life-chances are rooted in their position in the
occupational structure, and expressed in their pathway
through it. One’s occupation (or that of one’s parents)
may affect one’s health, the likelihood of arrest or prison,
the availability of educational opportunities, and so on. Of-
ten, the model is made more complex by the addition of
alternative bases of strati?cation, such as racial, ethnic,
gender, religion, age or family structure.
In Weber’s view what ultimately determines one’s life
chances—one’s speci?c market-situation—are individual
endowments of various kinds. We would now think of
these endowments as various sorts of capital. People
own (or do not own) different sorts of property, they
bring different skills (or no skills) to the market, they
buy and sell various services (or not). It is this individu-
alizing tendency in Weber’s theory of strati?cation—its
tendency to unravel class into a set of individual
locations on a spectrum—that has long been resisted by
his Marxian critics.
From class situation to classi?cation situation
What is missing from this view is the notion that allo-
cation to particular market-situations might depend on
some formal, institutionalized classi?cation procedures.
Weber recognizes the power and signi?cance of bureau-
cratic records and rules, but does not connect this to
his analysis of the market. In Weber’s time, insofar as
this organizational means was available at all, it was al-
most exclusively a tool of the state bureaucracy. Scholars
interested in the intersection of rationalized bureaucracy
and logics of classi?cation have thus looked primarily to
the state and its of?cial classi?cations, which are public
in nature and carry implications for government policy,
identity-formation, and collective action (Hacking, 1986;
Loveman, 2013; Schor, 2009; Starr, 1992; Steensland,
2010). But many important classi?catory systems are
now embedded in markets. They are by nature private,
even to the point of being trade secrets. They are ori-
ented toward the extraction of pro?t and often manufac-
tured and managed in a quasi-monopolistic manner. For
instance one company, FICO—originally Fair, Isaac and
Company—produces many variants of its FICO score,
which it claims are used in ninety percent of lending
decisions in the United States. Combining the ?ne-grain
of Weberian market-situations with rationalized organi-
zational methods, these forms of commensuration and
categorization have institutionalized and diffused rapidly.
As such, they have become powerful ‘‘market devices’’
whose broader social effects are still not well understood
(Carruthers, 2013; Muniesa, Millo, & Callon, 2007). To
emphasize our modi?cation of the Weberian framework,
we call the outcomes produced by these new technolo-
gies classi?cation situations, as distinct from class
situations.
The starting point for our analysis is thus the operation
of market institutions, not the a priori identi?cation of fun-
damental social categories. In that respect our perspective
contrasts not only with theories of inequality centered on
labor-markets, but also with approaches emphasizing the
intersectional consequences of cross-cutting memberships
in racial, class, and gender categories (Collins, 1990; Mas-
sey, 2008; Tilly, 1999). Second, by paying attention to ex-
plicit, ‘‘objective’’ classi?catory techniques rather than
implicit, ‘‘subjective’’ schemes of perception and action,
our approach also differs from Pierre Bourdieu’s analysis
of the relevance of classi?catory struggles to class analysis
in the last chapter of Distinction (1984). In our case, the
classi?catory mechanism is both more palpable (classi?ca-
tions are bought and sold) and less so (the mechanics of
classi?cation is impersonal, con?dential, and does not al-
low for individual interpretation).
Rather than seeing how basic social-categorical differ-
ences ‘‘play out’’, are ‘‘expressed in’’, or ‘‘distort’’ institu-
tions, we thus seek to identify, in a manner not unlike
Bowker and Star (2000), how institutions systematically
sort and slot people into new types of categories (which
we may call ‘‘market categories’’) with different economic
rewards or punishments attached to them. On this view,
the labor market is only one among many institutions that
structure life chances. Education, health-care, credit, and
commodity markets classify their participants too, in ways
that generate social inequalities rather than simply repro-
ducing them. We also expect con?gurations of classi?ca-
tory institutions in different societies to display
similarities and complementarities among themselves
(DiMaggio & Powell, 1983; Hall & Soskice, 2001). This
means we must attend to the systemic linkages between
classi?catory mechanisms, institutional development, and
the wider social environment.
We argue that dramatic changes in market organiza-
tion, triggered by the de-collectivization of social services
and risk in the neoliberal era (Hacker, 2008), have both ex-
panded the supply of services and increased the classifying
activities of institutions. Both credit and higher education,
for instance, provide good illustrations of these trends with
a rapid expansion of access (reversed only very recently)
and a subsequent internal diversi?cation of supply by price
and quality. In both cases, providers have learned to tailor
their products in speci?c ways in an effort to maximize
rents, transforming the sources and forms of inequality in
the process.
Substantively, the approach we advocate here has three
main implications. Comparatively, we should investigate
the role of actuarial technologies (Mikes, 2009; Power,
2011) in sorting people into a diversi?ed set of life trajec-
tories. In this article, we focus on the U.S. credit market as a
useful and important empirical site for studying how these
new, ‘‘classi?catory,’’ mechanisms of social strati?cation
operate. But it is worth emphasizing, again, that the point
applies much more broadly. These technologies may be
less salient or differently implemented in some countries,
M. Fourcade, K. Healy / Accounting, Organizations and Society 38 (2013) 559–572 561
and thus their effects on strati?cation may varym too. His-
torically, we should document how the neoliberal shift
transformed institutions—in our case, institutions devoted
to the provision of consumer credit—in ways that facili-
tated the action of classi?catory engines. Behind the longi-
tudinal inquiry is the argument that recent changes in the
organization of many markets have affected people’s lives
in ways that are often not well captured by traditional
analyses. And theoretically, we ought to re?ect on what
these changes mean for theories of strati?cation in the
neoliberal era.
Kinds of classi?cation situations
There have been two historical forces behind the
development of classi?cation situations. The ?rst is
technology, namely the growing availability of individual-
level data, on the one hand, and the development of
statistical models of risk on the other. The second is the
market economy. As representatives of the collective
good, states tend to be politically oriented toward univer-
sal mandates. Under state rule, risks were collectivized,
socialized, even though the management of such risks be-
came increasingly individualized over time, though not
necessarily more differentiated (Bauman, 2000; Burchell,
Gordon, & Miller, 1991). Private corporations, however,
are oriented to pro?t. In an earlier era, some of the risks
faced by private credit institutions might have been
socialized through cross-subsidization. Money lost admin-
istering small loans in poor neighborhoods, for instance,
might have been made up by high pro?ts on large loans
in richer neighborhoods. More often, however, banks
turned away from the most destitute places if they could,
leaving behind so-called ‘‘banking deserts’’ (Leyshon &
Thrift, 1995).
1
The new actuarial technologies have changed all that,
allowing capitalist ?rms to systematically make individual
assessments of risk, and to turn those assessments into
economic opportunities through sharply differentiated
pricing strategies. No wonder, then, that classi?cation situ-
ations are especially well-developed in liberal market
economies (Hall & Soskice, 2001), where private markets,
rather than states, are the main providers of access to pri-
mary goods and services such as healthcare, money, insur-
ance or the law, and education.
Seeing like a market
Weberian sociologists and Chicago-school economists
alike argue that markets are blind to differences in social
status. In the former case, the market ‘‘knows nothing of
honor’’ (Weber, 1978b, p. 936); in the latter, it is an unbi-
ased engine of preference aggregation. We suggest instead
that markets see social differences very well, and thrive on
them. Like states, market technologies make societies more
‘‘legible’’, to use Scott’s (1999) phrase. Contemporary mar-
ket institutions, in particular, are inveterate classi?ers.
They count, rank, measure, tag, and score on various
metrics of varying degrees of sophistication, automation,
and opacity. The data collected in these procedures be-
comes grist for analytical machines devoted to further
re?ning the classi?cation system itself, and the engine for
allocating individuals to some tier or group on the basis
of that classi?cation.
Fueled by the growing availability of demographic and
non-demographic data over the last 30 years or so, classi?-
catory efforts by corporations have concentrated on the
production of increasingly ?ne-grained knowledge about
populations of would-be customers. This data is some-
times provided by states (demographic data), sometimes
bought from market intermediaries (e.g. purchasing histo-
ries, employment and medical data, records of online
behavior, credit scores), or generated by specialists (vari-
ous forms of market research). This knowledge is incorpo-
rated into all kinds of actions, from decisions about the
location of shopping outlets to product segmentation to
marketing tactics to pricing strategies. Social scientists
have been keen to notice the new forms of calculability,
governmentality and moral regulation embedded in these
techniques. But they have stopped short of examining their
broader social implications.
Boundary classi?cations
Market institutions produce two main kinds of classi?-
cation situations. The ?rst distinguishes people who are
‘‘in’’ from those who are ‘‘out.’’ For instance, people may
be quali?ed to open a bank account—or be denied the abil-
ity to do so; buy health or car insurance—or not; have ac-
cess to credit—or not. Let us refer to this type of
situation, quite simply, as ‘‘exclusion’’ or boundary classi?-
cation. In much of the world, simple lack of access to goods
and services, whether provided by the state or the market,
is of course the dominant form of consumption-based clas-
si?cation. It is most obvious where supporting institutions
are absent or substandard, as they often are in the develop-
ing world.
Boundary classi?cations can be collective or individual.
A good example of collective boundary classi?cations is
the once widespread practice of redlining. Redlining ex-
cludes entire neighborhoods from services on the basis
of some undesirable social characteristic, usually race.
Such collective forms of exclusion, obviously structured
by long histories of institutionally-supported racial segre-
gation,
2
are now formally outlawed as discriminatory.
3
But
their effects are still being felt in the form of reversed pat-
terns of geographical location of bank branches and ‘‘pred-
atory’’ lenders in white and black neighborhoods (Graves,
2003), in African-Americans’ weaker personal ties to main-
stream ?nancial institutions, and in the persistence of more
1
This prompted legislation, in 1977, to oblige banks to have a presence
in poor communities (Community Reinvestment Act).
2
The Federal Housing Authority aggressively promoted the use of racial
categories in mortgage ?nance and home building from its inception up
until the 1970s (Freund, 2010).
3
In the United States, for instance, redlining on the basis race, color,
religion, national origin, sex, handicap, or familial status has been illegal in
housing since 1968 (Fair Housing Act), credit lending since 1974 (Equal
Credit Opportunity Act), and banking since 1977 (Community Reinvest-
ment Act). It arguably survives in insurance.
562 M. Fourcade, K. Healy / Accounting, Organizations and Society 38 (2013) 559–572
insidious, but pervasive, forms of reluctance to lend to
African-American individuals and communities (Oliver &
Shapiro, 2006).
Modern boundaries tend to be drawn individually, for
legal as well as technological reasons. For economists,
institutions classifying at the boundary address the prob-
lem of adverse selection. In a situation of uncertain infor-
mation, they separate cases that are ‘‘presumed good’’
from those that are ‘‘presumed bad’’—the smart from
the dull, healthy from unhealthy, lazy from hardworking,
prudent from spendthrift. These categories may sound
clean and clear-cut, but sorting people is a messy busi-
ness in practice. In earlier times, the bank or retail ?nance
of?cers who carried out the work of assessing the credit-
worthiness of individuals relied primarily on personal
judgment. They met potential clients in person, and eval-
uated them based partly on their physical appearance,
their demeanor, and their conversation. They encouraged
and listened to local gossip. And thus lending decisions
were typically grounded in the agents’ opinions and their
practical experience with various ‘‘social types’’ and the
assumed personal morality of various classes of custom-
ers. With the growth of these businesses and the accumu-
lation of payment records by companies, the process
became more quantitative. The ?rst credit reporting com-
panies had emerged in the 19th century, collecting rough
information about companies (and then individuals), and
using it to place borrowers within a standardized, ordinal
classi?cation scheme for the convenience of lenders (Car-
ruthers & Cohen, 2010; Ruef & Patterson, 2009). By the
1950s, credit rating moved to probabilistic predictions
based on statistical analyses of historical population data.
But large quantities of non-?nancial personal information
continued to be incorporated, such as marriages, promo-
tions, and arrests (Furletti, 2002). In the 1970s, with
?nancial institutions and retailers now routinely report-
ing their lending activities, U.S. government institutions
endorsed credit scoring—the numerical evaluation of a
person’s reliability and integrity based on his or her indi-
vidual credit ?le—as a neutral, objective way of assessing
creditworthiness that would promote fairness in credit
markets and eliminate race-based discrimination (Marron,
2009). The new forms of classi?cation were thus based on
data about individual rather than group credit histories;
they included provisions that made the collection and
use of certain demographic data illegal; and they were
impersonally administered.
4
Market classi?cations are part of a general movement
toward the institutionalization of ‘‘mechanized objectiv-
ity’’ (Porter, 1995). Because they increase trust (Guseva
& Rona-Tas, 2001) and ef?ciency, there is ample evidence
that these new techniques have increased equality ex ante
by broadening formal access to the ?nancial system and
shrinking the percentage of people excluded from
services.
5
Carefully graded assessments could now balance
heightened risk with higher prices, and so the new classi?-
cation technologies fueled a huge expansion of products
speci?cally marketed to traditionally disadvantaged (and
excluded) categories of people.
6
The shifting boundary: the expansion of credit in the United
States
The rise of credit scoring systems can also be seen as
part of a long trend towards the expansion of access to for-
mal credit and the ?nancial system more generally. As
Cooper and Sherer put it, ‘‘any accounting contains a repre-
sentation of a speci?c social and political context’’ (1984, p.
208). In the twentieth century, American policy elites gen-
erally regarded market exclusion, or lack of access to con-
ventional market institutions, as both unfair and
inef?cient. Since the Progressive period, reformers of all
stripes in the United States saw the expansion of main-
stream credit access as a requirement of a well-functioning
economic democracy. They also supported the moral argu-
ment that people ought to be protected from exploitative
?nancial dealings. During the interwar period, for instance,
experts from the Russell Sage Foundation actively and suc-
cessfully mobilized to reform and develop the small loan
industry (Anderson, 2008; Carruthers, Guinnane, & Lee,
2012). They reasoned that raising legal interest rates just
slightly above usury law levels would attract mainstream
lenders to the small loans business and drive out illegal
predatory lenders. By the late 1930s, most states had fol-
lowed their recommendation.
7
In addition to these private efforts, federal agencies also
endorsed the ‘‘democratization’’ of credit. Expanding ac-
cess became an explicit policy goal toward the end of the
Great Depression, and from then on successive generations
of policy makers embraced it as a means to accelerate so-
cial mobility, and, increasingly, generate economic growth
(Quinn, 2011). One of the most signi?cant factors in the
more recent development of the US credit market was a
1978 Supreme Court decision (Marquette National Bank of
Minneapolis v. First of Omaha Service Corporation) ruling
that state anti-usury laws regulating interest rates cannot
be enforced against nationally-chartered banks based in
other states. The Marquette decision caused national banks
to relocate to states with the most lenient usury laws. This
4
The Equal Credit Opportunity Act of 1974 makes it unlawful to
discriminate applicants on the basis of the following categories: age,
marital status, race, color, religion, national origin, receipt of public
assistance, and good faith exercise of any Consumer Credit Protection Act
right (Hsia, 1978). In spite of these legal precautions, practices that are on
face value-neutral may still have a disparate impact across populations
because the characteristics recorded by scoring systems are not evenly
distributed across subpopulations (Cohen-Cole, 2011; FRB, 2007).
5
Nevertheless, scoring has been shown to result in signi?cant disad-
vantages for certain categories of the population. Minorities are more likely
to be excluded from credit altogether, or to receive worse treatment than
their white counterparts, net of other differences (FRB, 2007). As Marron
(2007, p. 111) puts it, ‘‘scoring undercuts the coherent identity of being
‘‘female’’ or ‘‘black’’ within which oppression or marginalization is expe-
rienced, displacing credit decisions onto an array of discrete characteristics
or attributes seemingly innocent within themselves and seemingly indi-
vidually predictive of repayment performance, independent of subjective
will.’’
6
See Mian and Su? (2009) on the mortgage market. They ?nd consid-
erable evidence that mortgages were actively marketed in subprime ZIP
codes between 2002 and 2005, despite sharply declining relative income
growth in those areas. See also Fligstein and Goldstein (2010).
7
Note that a very similar logic played out to legitimize micro-lending in
the developing world. See, e.g., Roy (2010).
M. Fourcade, K. Healy / Accounting, Organizations and Society 38 (2013) 559–572 563
fueled a competitive race among states to attract banking
business, which resulted in a weakening of usury regula-
tion and surveillance across the country (Langley, 2009,
p. 145; Sherman, 2009). Further deregulation in the
1980s (such as the phasing out of Regulation Q) again in-
creased competition among ?nancial institutions, contrib-
uting to the Savings & Loan collapse, and to a wave of
mergers and consolidation in the banking sector (Krippner,
2012).
What effects did these changes have on the relationship
of households to the banking system? The data for this per-
iod is complex, and at times contradictory, but two trends
are clear. Since the late 1980s there has been increased
inclusion at the boundary, and increased segmentation
within the market. The percentage of U.S. households with
a transaction account has increased signi?cantly over the
last three decades, particularly among the most socially
disadvantaged categories of households (from 85% to 92%
of all households between 1989 and 2007, but from 56%
to 75% of households in the bottom quintile of the income
distribution).
8
Having a checking account is hardly equiva-
lent to the democratization of access to credit, of course.
In fact, the new banking inclusion notwithstanding, the per-
centage of people who report having dif?culty accessing reg-
ular credit has also grown since the mid-1980s in practically
every social category except the most privileged.
So how was the unful?lled desire for credit met? Fram-
ing the problem as if everyday borrowing had ‘‘a clear and
unambiguous inclusive side, on the one hand, and an ex-
cluded outside, on the other’’ misses a big part of the pic-
ture (Langley, 2009, p. 168). Instead of the inclusive
expansion of credit for the poor envisaged by early credit
reformers, a new landscape has developed at the bottom
end of the income scale, which is marked by a blurring of
boundaries between mainstream and fringe lenders. In
particular, access to formal banking has set the stage for
the rapid growth of payday lending (a form of salary ad-
vance), which—unlike earlier forms of marginal credit,
such as pawning—requires the borrower have a bank ac-
count (Caskey, 1994).
The rapid and largely unfettered expansion of payday
lending, of other expensive small scale credit providers,
and of high fee credit services offered by banks did not take
place in a political vacuum. It re?ects, in part, the growing
reliance of American political authorities on individual
responsibility against top-down regulation in moralizing
markets. In the consumers’ republic that ?ourished in the
postwar period, protecting people from abuses by fettering
markets ex ante was perceived as political and economic
suicide, given prevailing ideologies and the fact that
domestic consumption drove over two-thirds of the na-
tional economic machine.
9
Instead, better information and
disclosure rules, as laid out in the Fair Credit Reporting Act
of 1970 or in the Equal Credit Opportunity Act of 1974, were
trusted to guard presumably rational consumers against the
deceptive and high cost business practices that inevitably
arose in this expanding market. These policies gained the
upper hand in spite of numerous studies and repeated con-
gressional hearings documenting the low levels of ?nancial
literacy among the US population, particularly the poor
and minorities (Lusardi & Tufano, 2009).
10
Unsurprisingly,
the effect of these changes on equality has been much more
questionable than promised. Inequities in the market are
thus now ‘‘less a matter of access to credit and abandon-
ment, and more a matter of the differential interest rates
that borrowers pay to lenders across both mainstream and
alternative networks of borrowing’’ (Langley, 2009, p. 168).
By enabling and facilitating the differential pricing of people,
scoring has expanded the reach of the market while opening
the door to new forms of classi?cation with powerful strat-
ifying effects. The market expands at the boundary and then
differentiates internally. We now turn to the latter process.
Within-market classi?cations
‘‘Individuals viewed through statistics no longer need to
be classi?ed as either ‘in’ or ‘out’ of the market. Armed
with a gradated sliding scale, people all along a spec-
trum of risk can be offered specially designed products
at alternative terms and prices’’ (Poon, 2009, p. 167).
These new forms are within-market classi?cations.
Rather than dividing people into two mutually exclusive
groups, the new devices position them in a categorical
framework or on a continuous scale, the latter usually hav-
ing key cut-points or thresholds. Categories and thresholds
restrict access to certain goods and services, specify their
price, or both. Within-market classi?cations are very wide-
spread, reaching ever more broadly across spheres of life
and ever deeper into population segments. Companies
keep records on their customers’ purchasing behavior (or
buy these from other ?rms), thus enhancing the pertinence
and power of marketing and data collection. From an eco-
nomic point of view this is the problem of managing moral
hazard. The classifying institutions are meant to be perfor-
mative. They steer behavior toward some desirable goal,
and encourage people to stay on top of their commitments.
There are incentives for compliance, material or symbolic
rewards for success, and sanctions for failure. Rewards
and punishments are often themselves acts of reclassi?ca-
tion. Punitive reclassi?cation, for instance, may entail
higher premiums, loss of privileges, poorer service, or high-
er interest rates.
Much of the regulation in neoliberal, and, importantly,
post-segregation markets must come from within, from
self-monitoring subjects: its accounting infrastructure is
oriented to the responsible and ef?cient functioning of
‘‘calculating selves’’ (Cooper & Sherer, 1984, p. 208;
Hopwood, 1994; Miller, 1992; Miller & O’Leary, 1987).
Credit scores in particular have a moral aspect, tracking
a person’s consumption choices dynamically, and re?ect-
ing on his or her evolving moral self. In this world,
8
Federal Reserve Board, Survey of Consumer Finances, 1989–2010.
9
Data from the World Bank (Household consumption as a percentage of
GDP).
10
Even face-to-face ?nancial advice meant to teach consumers about the
relative risks and bene?ts of different products is fraught with social
tensions. See the very interesting work by Vargha (2011) on Hungary and
by Lazarus (2012) on France.
564 M. Fourcade, K. Healy / Accounting, Organizations and Society 38 (2013) 559–572
redemption for those who have failed is always available
in principle. Only proper self-management is required.
This sorting and scoring of people is disciplinary and pro-
ductive. Its underlying structure and effects are subjec-
tively incorporated. Both the scored and the score-users
orient themselves to these measures and strategize about
them, in a ‘‘reactive’’ effort to gain control (Espeland &
Sauder, 2007). For instance, fraudulent companies may
send a ?urry of unnecessary credit inquiries right before
negotiating a loan with a customer, because they know
an inquiry without a subsequent loan will affect this per-
son’s credit score negatively and thus boost the interest
rate they can charge. For individuals, there is an advice
industry that teaches how to manage (or game) one’s
credit score, or how to keep fees and premiums low. This
knowledge is offered freely or packaged as a product by
advocates online and in newspaper articles; by banks,
debt consolidation companies, bankruptcy lawyers, con-
sultants, and ?rms marketing ‘‘FICO security toolkits’’.
Other sources of knowledge include government agencies,
nonpro?t organizations, academics concerned with ?nan-
cial literacy, and more.
Self-monitoring within the system of credit classi?ca-
tion has its limits. At the bottom end of the scoring scale
are those who either do not have a score (because they
do not use the mainstream credit system) or whose score
is so low that it only serves to permanently maintain
them outside of the system (and is thus less likely give
rise to a form of deliberate management). The exclusion-
ary boundary still cuts through the inclusive world of
credit scoring in the form of a stubborn stratum of unsc-
orable, unscored, and underscored individuals—a Lumpen-
scoretariat composed mostly of poor people. In the
National Financial Capability Study (FINRA, 2009), 56%
of the people surveyed with incomes above $75,000
had obtained a credit report, as compared with 18% of
those with incomes below $25,000. Economists typically
explain this discrepancy in self-surveillance in terms of
disparities in ‘‘economic literacy’’ or, worse, sheer behav-
ioral irrationality (e.g. Bertrand & Morse, 2011). But what
this difference captures, fundamentally, is the objective
and subjective marginalization of the less privileged from
the world of mainstream credit. Because credit behavior
is recorded and interpreted as a sequence of individual
choices, the vagaries of harsh circumstance, the power
of differentiated markets, and the pressure of social com-
petition—all of which powerfully structure how, where
and when people borrow and repay—magically disappear
from view.
The three worlds of credit in America
As is clear from the examples and data we have dis-
cussed so far, the institutional machinery for generating
classi?cation situations is to be found in its most devel-
oped form in the United States. The way the credit-scoring
process erases circumstance seems an extraordinary irony
in a country where people rely extensively on credit to
compensate for the cover over holes in the welfare system
(Prasad, 2013). A 2009 Federal Deposit Insurance
Corporation survey of underbanked
11
consumers in the
United States found that 38% of them relied on highly
exploitative ‘‘fringe’’ lenders (payday, for instance) to cover
basic expenses, and a further 19% used them to cover med-
ical expenses, child care expenses, and lost income (FDIC,
2009b, p. 42). For African-Americans especially, the inci-
dence of these services increased markedly with the number
of children in the household.
12
It is the combination of weak social welfare provision
and the abundance of variably-priced credit that makes
classi?cation situations consequential in liberal market
economies. As Prasad (2013, pp. 234–235) remarks, ‘‘there
is a relationship between credit and the welfare state, such
that where we see greater growth in credit we see less
growth in the welfare state since the 1980s.’’ Furthermore,
‘‘regulation suppresses credit in less well-developed wel-
fare states, while deregulation allows the credit-?nanced
consumption of goods and services that would be provided
by the welfare state elsewhere.’’
Credit scores of the sort calculated by the U.S. credit bu-
reaus are much less common in countries with more devel-
oped welfare states. Many have no private credit reporting
organizations at all. The information recorded by their
public credit registries is extremely limited, and generally
con?ned to identifying seriously delinquent accounts
(Miller, 2003). Against the American view of credit as an
instrument of individual empowerment, public authorities
in France and Germany perceive loans to be threatening
and dangerous (Trumbull, 2012). Consequently, interest
rate caps and levels of personal indebtedness are much
lower, as is the market penetration of credit cards. About
nine million personal credit cards circulate in France
(about 0.17 per adult), compared to about 75 million in
the United Kingdom (about 1.4 per adult) and close to
1.2 billion in the United States (about 5.2 cards per
adult).
13
In the United States, credit has long been seen as a
‘‘welfare-enhancing right’’ (Trumbull, 2012). Earlier mod-
els of popular credit had a strong solidaristic basis. The ?rst
thrifts were ‘‘highly personal nonpro?t associations’’ of
‘‘small groups of individuals [cooperating through struc-
tured savings] to achieve the common goal of home own-
ership’’ (Haveman & Rao, 1997, pp. 1616–1617). The
bureaucratization of thrift in the early part of the twentieth
century eroded the culture of personal relations and struc-
tured discipline by stressing to voluntary savings schemes.
Still, mutual ideologies persisted through the development
of credit unions, mutual savings banks, and community
development banks. Since the 1970s, however, the norma-
tive basis of the case for credit has shifted. While the total
number of customers served by mutualistic organizations
did not decline substantially, its underlying organization
11
In contrast with ‘‘unbanked’’ consumers, who do not have a bank
account, the ‘‘underbanked’’ (as de?ned by the FDIC) have a bank account
but rely also on fringe lending to meet their day-to-day credit needs.
12
The incidence of having used a payday lender in the past year, for
instance, varied from 7% for African-American households with one child to
14% for households with four children (FDIC, 2009a).
13
Source: US Census Bureau, 2012 projections. This is down from a peak
of close to 1.5 billion in 2006. Seehttp://www.census.gov/compendia/
statab/2012/tables/12s1188.pdf.
M. Fourcade, K. Healy / Accounting, Organizations and Society 38 (2013) 559–572 565
changed. The older patchwork of local ?nancial institutions
disappeared. Credit unions gradually consolidated. Mutual
savings banks were converted to a stock-ownership model.
As the institutional form changed, and as lenders started
reaching into new categories of previously excluded peo-
ple, the moral life of credit changed, too. The idea that
the poor ought to qualify for more favorable terms because
they were poor was gradually replaced by the idea—now al-
most completely taken-for-granted—that the terms of
credit ought to depend solely on one’s prior credit-related
behavior, as recorded in an increasingly mechanized
reporting system.
14
Credit scores quantify individual performance, deter-
mining which services can be obtained, in terms of type
(home equity, credit card, or payday loans), volume (how
much credit is extended), and price (the interest rate, re-
quired origination or balloon payments, and other fees).
15
For instance, here is a crude but honest recommendation
from the British industry publication The Banker: ‘‘Stop try-
ing to lend at low margin to accountants, lawyers and civil
servants who are reliable but earn the bank peanuts. Instead,
?nd the customers who used to be turned away; by using
modern techniques, in credit scoring and securitization, they
can be transformed into pro?table business’’ (Langley, 2009,
p. 473). The modern credit enterprise relies on the system-
atic measurement and exploitation of social differences, by
way of scoring systems. The ?ipside of market inclusion
has been an acceleration of market segmentation. Popula-
tions have been incorporated and then matched to tailored
industries and products. As a result, credit functions differ-
ently and is experienced differently across positions in the
social structure.
The perils of exploitation: weighed down by necessity
The normalization of high-interest credit products is
one of the distinctive features of the relatively weakly reg-
ulated American credit economy that the United States
represent. Fueled by the post-Marquette regulatory envi-
ronment at the national level and the gutting of usury laws
at the state level, the widespread diffusion of ‘‘subprime’’
loans and the ?ourishing of the so-called ‘‘fringe’’ banking
economy transformed the credit environment among bor-
rowers with low to moderate credit scores. The discrep-
ancy between the interest rates paid by high credit-score
borrowers and low credit-score borrowers has enormously
increased since the late 1980s across all major product
types, such as mortgages, car loans, and consumer loans
(Grow & Epstein, 2007).
This trend was facilitated by the increased visibility of
those on the low end of the social scale. They became bet-
ter incorporated into the banking system but remained
poorly served by it, with high barriers of entry into savings
and investment products (Schneider & Tufano, 2007) and
continued dif?culties in securing credit. The implied mar-
ket opportunity was not lost on the most dynamic parts
of the fringe-banking industry. As states relaxed laws
against high-cost, short-term borrowing, reputable, profes-
sional, rationalized market actors replaced the loan sharks
of yesteryear. So-called ‘‘alternative ?nancial services’’
(AFS) have grown rapidly in the United States and other
liberal market economies, expanding and diversifying the
supply of legitimate credit for previously excluded catego-
ries of people while also increasing its cost. For instance,
the number of payday loan storefronts in the United States
rose by an order of magnitude between 1996 and 2007,
from 2000 stores to 23,600.
16
Lending in anticipation of
tax refunds, which grew out of the tax preparation business,
has also ?ourished. The Jackson Hewitt Corporation, which
pioneered these expensive short-term loans in advance of
expected tax refunds, saw business grow from about 900
storefronts in 1993 to 6,000 in 2011. Not unlike the loan
sharks they replaced, lenders of this kind remain relatively
vulnerable to shifting political moods. In the midst of the
recession, AFS services have become easy targets of legisla-
tive and popular anger—see for instance changes in IRS reg-
ulations,
17
or recent state and federal actions against payday
lenders, which have resulted in a sharp decline in the num-
ber of stores since the 2007 peak.
18
But this decline masks a
shift toward online lending and more mainstream ?nancial
services. Indeed, payday lending’s business model has been
so successful that banks (whose action was initially con?ned
to bankrolling the AFS industry) have adopted it, too. Many
now offer ‘‘bank payday’’ services, as well as other fee-
loaded services marketed under the label of consumer
convenience.
19
The eighteen percent of the US population the FDIC
(2009a) de?nes as ‘‘underbanked’’ are banked in the main-
stream but loaned to in the fringe. What critics call eco-
nomic predation is routine at the low end of the credit-
scoring scale. This overlaps greatly, though not perfectly,
with the bottom end of the income scale, and even more
with the racially or ethnically dominated segments of the
social structure.
20
Loans from payday lenders typically carry
annualized interest rates above 400%, and up in the 700%
range in some locations, and rollovers (which extend the
fees generated by the initial loan) are not only extremely
common but an essential component of the industry’s busi-
ness model.
21
At ?rst glance, this situation seems to vindi-
cate Marx’s grim assessment of usury in Volume III of
Capital. There he critiques high-interest lending as a ‘‘subor-
dinate’’ (i.e. derivative) form of exploitation ‘‘which runs
parallel to the primary exploitation taking place in the pro-
duction process itself.’’ As part of the ?nancial system, usury
14
We are grateful to Eve Chiappello for helping us articulate this point.
15
For details on scoring technologies see Leyshon and Thrift (1999),
Marron (2007) and Poon (2007).
16
For comparison, there were approximately 11,000 Starbucks coffee
shops and 14,000 McDonalds restaurants in the United States at the end of
2007.
17
RALs (refund anticipation loans) are a by-product of an IRS decision to
release to ?nancial companies a ‘‘debt indicator’’ ?agging loan applicants
owing back taxes. The IRS release was suspended in 1994 (but reinstated
shortly thereafter), and again in 2011, effectively condemning the industry.
18
In 2007, a federal law capped lending to military personnel to 36% APR.
19
Automatic overdraft protections are an example.
20
The proportion of Americans who resort to alternative ?nancial
services at least once a year is highest (24%) for people making less than
$50,000/year.
21
In the United States, rollovers of payday loans are actively encouraged
by lenders. Their bottom line often depends on chronic borrowing
(Stegman & Faris, 2003).
566 M. Fourcade, K. Healy / Accounting, Organizations and Society 38 (2013) 559–572
preys on productive labor in a parasitic fashion: ‘‘Usury, just
like trade, exploits a given mode of production, but does not
create it; both relate to the mode of production from out-
side’’ (Marx, 1981, p. 745). But—focused as he was on the
intersection of money lending and capital accumulation—
Marx also believed that usury was not particularly discrim-
inating. It ruined rich estate owners and small producers
alike, dissolving all forms of property and productive capital
in the acid-bath of debt.
Marx was too optimistic. He did not anticipate how a
modern, credit-driven, consumer economy could weigh
so heavily on workers’ incomes. Nor could he have pre-
dicted how the analytical tools of credit scoring would
come to differentiate the form and price of credit so
effectively, even for those at the bottom of the market.
The net result, as Harvey (2007) has argued, is that the
consumer credit industry is characterized at the bot-
tom-end by forms of material dispossession and subjec-
tive alienation similar to those Marx described in the
world of production. Soederberg (2012, p. 495) describes
this form of accumulation, where ‘‘a maximum amount
of workers take on the greatest amount of debt at the
highest interest rates and fees possible to extract ever
higher rates of revenue streams’’, as ‘‘cannibalistic
capitalism.’’
Those who are offered rotten terms in the market be-
cause they are riskier prospects are more likely to remain
so when the terms on offer are rotten to begin with. Econ-
omists have shown that the use of fringe banking services
traps people into cycles of debt, leading to higher rates of
bankruptcy and foreclosure (Melzer, 2011; Skiba & Tobac-
man, 2009). These cycles also exact a high personal and so-
cial toll, leading to higher rates of anxiety, divorce, or
forced geographical mobility.
For those individuals and households, the new regime
does not so much teach ?nancial self-control as resign
them to the seemingly inevitable. People who live pay-
check-to-paycheck—or without a paycheck—are rarely in
a position to plan systematically (Conley, 1999). Per-
versely, means-tested social programs may ‘‘actively dis-
courage low-income families from accumulating cash in
bank accounts . . . lest they lose access to needed pro-
grams’’ (Newman & Chen, 2007, p. 210). The lesson re-
peated over and over is that the extremely harsh
economic conditions they face are a kind of natural market
law. After all, the interest rates on their small loans—on the
order of thirty percent per month—are objectively and
legitimately tailored ‘‘for them’’ (Marron, 2009, p. 151).
In the United States, large differences by race and ethnicity
(but also income) in the probability of denied and discour-
aged applications still persist, so minorities are simply
much more likely to not apply for credit for fear of being
rejected (Weller, 2009). As Sudhir Venkatesh’s ethno-
graphic material vividly illustrates, the ‘‘prevailing wisdom
[among African Americans] is that loan applications will be
rejected. K.C., the co-owner of a Laundromat, puts it suc-
cinctly when he says, ‘We all try, time to time, to get to a
bank, but a dog just don’t want to go back if all they do
is get beat. I guess we need a year or so to forget that last
beating, and then maybe we’ll go back. But most of us can’t
get no money. Shit, I wouldn’t lend myself no money,
knowing what kind of credit I got and how much I owe’’’
(Venkatesh, 2008, p. 121). In other words, the exploitative
credit regime is successful precisely because it is subjec-
tively made sense of and incorporated, to some extent, as
‘‘normal.’’
Race features prominently in this moral compact. In
focus group interviews conducted by the Center for
Responsible Lending in 2010,
22
African-American users of
fringe banking services generally expressed broader sup-
port for a system that, they said, is there for them when
no one else is: it is ‘‘just so hard to get anything from
the banks.’’ Some even expressed sympathy for lenders
who, after all, ‘‘are a business and [are] out to make
money.’’ One interviewee remarked: ‘‘I do think [payday
lending] is fair because you go in there knowing. You know
what you need; you know what you’re going to pay.
They’re taking a risk. They’re not doing credit checks.’’ Pay-
day lenders were often preferred to banks for their comfort,
the convenience of their hours of operation and location,
and the accommodating stance of their staff (bank employ-
ees, by contrast, could be ‘‘straight rude’’).
Racial differences in attitudes toward payday lending
must be read against the long history of African-American
exclusion and exploitation by lenders of all types. The
objective experience of being rebuffed by mainstream
credit providers, the expectation of paying more for similar
services, and patterns of geographical proximity and dis-
tance all may sustain a set of speci?c subjective disposi-
tions—in particular, greater mistrust toward banks, and a
more benign attitude toward alternative ?nancial provid-
ers. As Pierre Bourdieu (1984, p. 372) pointed out in a dif-
ferent context, ‘‘necessity imposes a taste for necessity
which implies a form of adaptation to and consequently
an acceptance of the necessary, a resignation to the inevi-
table, a deep-seated disposition which is in no way incom-
patible with a revolutionary intention. . .’’ Thus, while
ambivalence towards an exploitative institution was not
absent (‘‘[payday loans] can cripple you’’), Blacks were
more likely to see payday lending as a necessary and so-
cially useful evil, affording them more dignity than other
types of ?nancial help, such as relying on charity or wel-
fare. Financial exclusion tended to foster the conditions
of its own acceptance.
Meanwhile, in the same study, White interviewees—
whose access to mainstream credit has long been objec-
tively better and subjectively much more self-evident—
saw their own reliance on fringe services, which often re-
sulted from the closing of alternative mainstream possibil-
ities, as an unfair downfall into a deeply repugnant system
not made for them. They expressed a much greater rejec-
tion of the business, talking about ‘‘loans from hell’’, and
likening the practice of borrowing from payday lenders
to ‘‘selling blood’’ and to ‘‘slavery.’’ But of course they were
also more likely to have an easier time ?nding alternative
sources of credit.
22
Cited with permission from the Center for Responsible Lending. Focus
group interviews were broken down by race/ethnicity: Spanish language,
Anglo and African-American.
M. Fourcade, K. Healy / Accounting, Organizations and Society 38 (2013) 559–572 567
The dif?culty of measuring up: economic goodwill and
suffering
The disciplining effect of credit scores is perhaps most
evident in the middle sections of the social scale. It is there
that we ?nd the most articulated forms of what, para-
phrasing Bourdieu’s (2005) analysis of the middle-class
lifestyle, we can call economic ‘‘goodwill’’. This is a distinc-
tive combination of striving and straitening, desire and
self-denial, hedonism and frustration. Here credit use ex-
pands and diversi?es. The number of credit cards in a
household, for instance, rises continuously with income.
Borrowers—often heeding the advice of popular ?nancial
gurus—use borrowing as an active strategy for asset-build-
ing. And it is here, too, that credit scores matter the most.
At the bottom, scores are often a blind spot, or a lost cause.
At the very top, they are a natural gift, an afterthought, or a
taken-for-granted personal quality.
At the bottom of the middle class, the story is one of
‘‘middle class squeeze’’ (Wolff, 2010) fueled by the admix-
ture of oversupplied credit and stagnant real incomes. This
market segment is where one ?nds the riskiest mortgage
products, as grand aspirations and limited means are bro-
kered into an unhealthy marriage. In the United States,
these products are targeted towards non-white popula-
tions, as well as to the least educated. The foreclosed upon,
who had to be wealthy enough to obtain a mortgage, and
the bankrupt, for whom mortgages were a major cause of
bankruptcy, largely come from there.
23
Thus in their 1983
survey, Sullivan, Westbrook and Warren (1999, p.331) found
that personal bankruptcy is, by and large, an ‘‘ordinary story
of middle-class people drowning in debt’’.
24
But it is worth
noting that the upper reaches of the middle class are drown-
ing in debt, too. The exponential wealth accumulation and
income gains among the top quintile drove an endless com-
petition over lifestyle and a rapid increase in the price of as-
sets. Those lower down in the income distribution did not do
nearly so well. In the fourth quintile of the income distribu-
tion, income gains since the late 1970s were essentially nil.
Those in the third quintile saw their incomes decline in real
terms. Consumers in these segments borrowed more at less
pro?table terms, and leveraged their assets aggressively—
usually with home equity loans—trying to keep up. It is in
these sections of American society that one ?nds the highest
debt/net worth and debt/income ratios (Wolff, 2012,
2010).
25
In his analysis of the mortgage market, Bourdieu de-
scribes the middle-class experience of credit as an example
of ‘‘petit-bourgeois suffering’’. ‘‘By embarking upon pro-
jects that are often too large for them, because they are
measured against their aspirations rather than their possi-
bilities, [the middle classes] lock themselves into impossi-
ble constraints, with no option but to cope with the
consequences of their decisions, at an extraordinary cost
in tensions, and, at the same time, to strive to content them-
selves, as the expression goes, with the judgment reality
has passed on their expectations’’ (Bourdieu, 2005, p.
186). We prefer the term ‘‘middle class’’ to the more archa-
ic ‘‘petite bourgeoisie.’’ But Bourdieu puts his ?nger on the
speci?c structural constraints faced by this group, which
are at the root of its contradictory ethos of discipline and
self-grati?cation. The middle class is squeezed between
the ‘‘morality of saving’’ and the ‘‘morality of credit’’ (Bour-
dieu, Boltanski, & Chamboredon, 1963). Meanwhile, Daniel
Bell (1996) also saw the unstable fusion of hedonistic
indulgence with agonized but morally consistent middle-
class Protestant striving as the central cultural tension in
modern American capitalism.
26
This contradiction is per-
haps nowhere as clearer than in credit institutions and per-
sonal bankruptcy laws that are at once punitive and
redemptive (Skeel, 2001).
In a world of scores rather than classes, economic tech-
nologies transform this dilemma. On the one hand, they
objectify the material constraint by expanding consumer
aspirations and the possibility of ‘‘keeping up with the Jon-
eses’’, albeit at differentiated prices and levels of vulnera-
bility. But they also reinforce the practice of self-
surveillance. People can, in principle, take the measure of
their constantly changing position on the FICO scale. First,
the old-fashioned face-to-face interaction between bank
of?cers and clients—what Lazarus (2012) calls the test, or
the trial, of credit (l’épreuve du crédit)—is now routinized,
invisible and depersonalized, but also multiplied and re-
peated with every credit check. Second, with behavioral
scoring, one’s credit possibilities are a constantly moving
target, readjusted with every activity. One’s credit identity
thus becomes a dynamic project to be managed through an
‘‘ethic of improvement’’ (Marron, 2009, p. 193), and in a
manner all the more insatiable because good credit is
seemingly within everyone’s reach. Hence the multiplica-
tion of ?nancial education programs (often state-spon-
sored), TV shows and pedagogical devices, in the US as
elsewhere (Bay, 2011; Fridman, 2010). No wonder, then,
that this is also where activity around the score intensi?es
rapidly. Our analysis of FINRA data shows that the likeli-
hood of checking one’s credit score or obtaining a credit re-
port rises sharply with income and education, and only
tapers off for households with incomes above $150,000
per annum, and for people with advanced degrees (see FIN-
RA, 2009).
The bene?ts of appreciation: virtue and privilege at the top
The top of the credit scoring scale overlaps in part with
the top of the income and net worth scales, but even more
closely with the top of the education scale (Lusardi, 2011).
The main virtue of the very high earners, from the point of
23
Almost 40% of the foreclosed upon and seriously delinquent mortgages
come from borrowers whose income is well above the median income of
the area (Gruenstein Bocian, Li, Reid, & Quercia, 2012).
24
However, the incidence of bankruptcy has moved noticeably down the
income scale since then. See Sullivan, Warren, and Westbrook (2006).
25
Over the last 20 years in the United States, debt-to income ratios have
been highest in the third and fourth quintile of the income distribution
(Source: Federal Reserve Board, Survey of Consumer Finances). In 2007,
these ratios reached respectively 155.4% for the fourth quintile and 130.7%
for the third quintile. In the same year the debt-to-income ratios of the
bottom 40% households were ‘‘well below 100%’’ (Weller, 2012).
26
In a phrase that now sounds even more archaic than ‘‘petite bourgeoi-
sie’’, Daniel Bell called this the problem of demanding that people be
‘‘straight by day and swingers by night’’ (Bell, 1996, p. xxv).
568 M. Fourcade, K. Healy / Accounting, Organizations and Society 38 (2013) 559–572
view of algorithms, is that they are just less likely to over-
burden themselves with debt, or have dif?culty managing
payments. But the most ‘‘responsible’’ consumers also tend
to be highly educated. They are best equipped with the cul-
tural capital to navigate the business of credit and credit
scoring. ‘‘Over all, those with the highest scores keep low
revolving balances relative to their available credit; they
don’t ‘‘max out’’ their credit cards; and they consistently
make payments on time, even if it’s just the minimum re-
quired amount’’ (Carrns, 2012). And thus credit providers
compete ?ercely to attract those people who borrow large
in absolute terms but repay in a predictable and controlled
way—mostly because they have the means to do so. And so
additional bene?ts pile up, too, implicitly subsidized by the
structure below.
Whether it is earned or a byproduct of abundance, eco-
nomic virtue generally brings material rewards. But the
multipliers effects of an excellent score kick in even more
strongly in the higher income and wealth brackets. Those
who ?nd themselves in this position can leverage their as-
sets via the credit system to accumulate more at a cheaper
cost. This is especially true when the value of those assets
rises quickly, as it did during the 1990s and most of the
2000s. Through the ?nancial system, they can also invest,
make money work for them through stock ownership, ren-
tal properties or home ownership in desirable locations,
and perhaps even live ‘‘by collecting interest’’ (Graeber,
2010, p. 388).
There are symbolic rewards, too. Those who think that
market institutions are inevitably erase distinctions should
attend to the astonishing prevalence of ‘‘private,’’ ‘‘exclu-
sive,’’ or ‘‘elite’’ categories of membership across consumer
markets of all kinds. Consumers who belong to the right
categories—customers who are silver, gold, or platinum-
plated—get special treatment, better service, and all kinds
of side material bene?ts.
27
Their position appreciates, so
to speak, because the system appreciates their position.
Far from eliminating exclusionary status distinctions, mar-
ket society proliferates them. The key difference is that these
honors and rewards are not bestowed by accident of birth or
via some sumptuary law. Instead, bureaucratic systems
track behaviors, record progress through the classi?cation
system, and rationally assess when particular cases will be
elevated—or downgraded—to a new status.
In this social stratum, the intertwining of material and
symbolic bene?ts not only creates a sense of comfort
around credit, it also fosters a sense of privilege, and
encourages a proactive attitude toward providers. In our
analysis of FINRA data, we ?nd that these are the people
who shop around, re?nance, rebalance their accounts fre-
quently, and pay back their loans in advance. In periods
of tight money, when the competition for customers with
good credit intensi?es, they are also the ones who bene?t
the most from government actions designed to ease the
crunch. Thus a Wall Street Journal article reported that cash
injections by the Federal Reserve in the aftermath of the
2008 credit crunch have almost exclusively bene?ted the
most creditworthy, because banks would only lend to peo-
ple in the higher-scoring brackets (e.g., above 700): ‘‘‘even
though we have the greatest monetary policy stimulus in
the history of the Fed, we really have not managed to lower
the funding costs for a large swath of people,’ said David
Zervos, a bond strategist with Jefferies Inc., a Wall Street
investment bank. He called Fed efforts ‘monetary policy
for rich people’’’ (Hilsenrath, 2012).
Conclusion
‘‘It is easy to understand how the power of the norm
functions within a system of formal equality, since
within a homogeneity that is the rule, the norm intro-
duces . . . all the shading of individual differences.’’ (Fou-
cault, 2012, p. 184)
Much of the theoretical debate on strati?cation in the
twentieth century orbited around three attractors: big
classes grounded in exploitative labor relations, individual
returns to human capital or skill in the market, and occu-
pational-level social closure, often built on some categori-
cal identity. We propose to revisit class analysis in the light
of techno-social changes generated by the advent of novel
market devices. These devices segment, score, classify and
target concrete individuals in increasingly precise ways, in a
world where pro?ts depend on exploiting these techniques
effectively. We argue that understanding how classi?ca-
tion situations are produced through the operation of scor-
ing, segmenting and marketing instruments is essential to
understanding the structure of new class situations, when
class is conceived as the social distribution of life chances
in markets.
Credit scores commensurate people, classify and rank
them (Espeland & Stevens, 1998). Scores are attached to
variable economic rewards (such as different interest
rates), and are part of the process by which shared mar-
ket-situations are generated. This process is strengthened
the more credit scores are routinely incorporated as
assessment and screening devices in other markets, such
as insurance, employment, real-estate—even dating (FTC,
2007; Silver-Greenberg, 2012; Wacquant, 2009, p. 139).
Credit scores facilitate differential pricing and terms of ac-
cess to goods and services across a wide range of domains.
They are an active, independent force that structures peo-
ple’s life-chances via their ?nancial position—all the more
in a society where the median household debt is about
double the median annual income—and which, once estab-
lished, percolates to every aspect of people’s lives.
28
27
For instance, various forms of insurance for their purchases. Or take the
singling out of elite customers at the airport: ?rst to enter and leave the
plane, they have access to special areas (lounges, gates, parking spaces), and
their names magically appear on the ‘‘cleared list’’ while the hoi polloi are
rebooked.
28
Of course what is true of credit scores is true of other types of
behavioral records, like criminal records or eviction records, which also
have a deep effect in structuring life trajectories (Pager, 2007; Desmond,
2012). In a more benign manner, tracked purchase records with stores have
transformed the political economy of marketing and selling, with high
purchase levels being routinely rewarded with larger discounts and better
services.
M. Fourcade, K. Healy / Accounting, Organizations and Society 38 (2013) 559–572 569
It is important to remember that while these scoring
systems grew up in a social context already highly struc-
tured by established inequalities in occupational attain-
ment, education, income, and racial strati?cation, they do
not simply reproduce the status quo ante. Accurately
tracked measures of credit-related behavior are far better
predictors of outcomes than broad measures of educa-
tional attainment or racial classi?cation. (Fourcade &
Healy, 2013) That is one of the reasons lenders use them.
Social scientists would use them, too, were they not trade
secrets. Their analytical use and active application in mar-
kets does more than simply ‘‘freeze a certain state of the
power relations.’’ (Bourdieu, 1984, p. 482) It recreates
these relations anew. If social class is the distribution of
bundles of life-chances expressed as market situations,
then we need to rethink class analysis through the prism
of credit scores and similar devices.
In the 1960s, there was a debate centered on the notion
that ‘‘the poor pay more’’ (Caplovitz, 1963). With the Great
Society and the expansion of welfare programs, it waned.
But its main idea—that being poor costs money, that ?rms
looking to do business with the poor know this, and sys-
tematically exploit it—is worth retooling for a neoliberal
era. Debt has become more accessible, but also a lot more
expensive at the bottom end of the social scale. And now it
is not simply the ‘poor’ that pay more, but much more spe-
ci?c categories of people, measured and targeted by moral-
ized market instruments and differentiated market
institutions. Classi?cation situations may have become
the engine of modern class situations.
Acknowledgements
We thank Steven Barley, Irene Bloemraad, Bruce Carru-
thers, David Cooper, Eve Chiapello, Matthew Desmond,
Marie-Laure Djelic, Derek Hoff, Andreas Kalyvas, Daniel
Kluttz, Jeanne Lazarus, Roi Livne, Bruno Palier, Alex Roe-
hrkasse, Matthias Thiemann, Loïc Wacquant, Erik Olin
Wright, Valery Yakubovich, two anonymous AOS reviewers
for helpful comments on an earlier version of this article or
insights about its subject. This work was presented at the
annual conferences of the American Sociological Associa-
tion (2011), the Social Science and History Association
(2011), the Society for the Advancement of Socio-Econom-
ics (2011), the Interdisciplinary Perspectives on Account-
ing Conference (2012), the ‘‘Politics of Markets’’
conference (Berkeley 2009), the conference on ‘‘Economic
Modernity in the 21st century’’ (Barcelona 2012) and the
Max-Planck-Sciences Po Center inaugural conference (Paris
2012), as well as in talks at Duke University, ESSEC Busi-
ness School, Harvard University, Princeton University, Sci-
ences-Po, the University of California Berkeley, the
University of Chicago, and the University of Pennsylvania.
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doc_883515975.pdf
This article examines the stratifying effects of economic classifications. We argue that in
the neoliberal era market institutions increasingly use actuarial techniques to split and sort
individuals into classification situations that shape life-chances. While this is a general and
increasingly pervasive process, our main empirical illustration comes from the transformation
of the credit market in the United States. This market works as both as a leveling force
and as a condenser of new forms of social difference. The U.S. banking and credit system
has greatly broadened its scope over the past twenty years to incorporate previously
excluded groups. We observe this leveling tendency in the expansion of credit amongst
lower-income households, the systematization of overdraft protections, and the unexpected
and rapid growth of the fringe banking sector. But while access to credit has democratized,
it has also differentiated. Scoring technologies classify and price people according
to credit risk. This has allowed multiple new distinctions to be made amongst the creditworthy,
as scores get attached to different interest rates and loan structures. Scores have
also expanded into markets beyond consumer credit, such as insurance, real estate,
employment, and elsewhere.
Classi?cation situations: Life-chances in the neoliberal era
Marion Fourcade
a,?
, Kieran Healy
b
a
Department of Sociology, University of California—Berkeley, Berkeley, CA 94720-1980, USA
b
Department of Sociology, Duke University, Durham, NC 27708, USA
a b s t r a c t
This article examines the stratifying effects of economic classi?cations. We argue that in
the neoliberal era market institutions increasingly use actuarial techniques to split and sort
individuals into classi?cation situations that shape life-chances. While this is a general and
increasingly pervasive process, our main empirical illustration comes from the transforma-
tion of the credit market in the United States. This market works as both as a leveling force
and as a condenser of new forms of social difference. The U.S. banking and credit system
has greatly broadened its scope over the past twenty years to incorporate previously
excluded groups. We observe this leveling tendency in the expansion of credit amongst
lower-income households, the systematization of overdraft protections, and the unex-
pected and rapid growth of the fringe banking sector. But while access to credit has democ-
ratized, it has also differentiated. Scoring technologies classify and price people according
to credit risk. This has allowed multiple new distinctions to be made amongst the credit-
worthy, as scores get attached to different interest rates and loan structures. Scores have
also expanded into markets beyond consumer credit, such as insurance, real estate,
employment, and elsewhere. The result is a cumulative pattern of advantage and disadvan-
tage with both objectively measured and subjectively experienced aspects. We argue these
private classi?catory tools are increasingly central to the generation of ‘‘market-situa-
tions’’, and thus an important and overlooked force that structures individual life-chances.
In short, classi?cation situations may have become the engine of modern class situations.
Ó 2013 Published by Elsevier Ltd.
Introduction
Academics often remind others that familiar categories
are dif?cult to question, but they are hardly immune to the
problem themselves. Consider the case of social class. In
general, contemporary approaches see classes as rooted
in production, speci?cally the employment relation. This
view descends from Marx, who argued that the beginning
of class is one’s relationship to the means of production.
Notwithstanding the nuanced analysis of class relations
in his political writings (e.g., in The 18th Brumaire and else-
where), what stuck with sociologists was Marx and Eng-
els’s insistence that class analysis is, at its core—or ‘‘in
the last instance,’’ as people used to say—a matter of own-
ing or not owning the means of production. Classes are de-
?ned antagonistically on that basis. Capitalists call the
shots in the labor market and workers are forced to accept
the terms on offer.
The core problem for later theorists has been to make
sense of the rise of service and managerial occupations
within this underlying relational structure. Scholars edged
towards a Weberian view (Breen, 2005; Wright, 1985),
eschewing a scheme of intrinsically antagonistic classes
in favor of a more re?ned spectrum of class situations, or
life chances, on various markets. People own (or do not
own) different sorts of property, or they bring different
skills to the market, or have different services to buy or
sell.
In their efforts to build on Weber’s insights and to rec-
oncile theory with data, contemporary formulations of
0361-3682/$ - see front matter Ó 2013 Published by Elsevier Ltd.http://dx.doi.org/10.1016/j.aos.2013.11.002
?
Corresponding author.
E-mail addresses: [email protected] (M. Fourcade), kjhealy@
soc.duke.edu (K. Healy).
Accounting, Organizations and Society 38 (2013) 559–572
Contents lists available at ScienceDirect
Accounting, Organizations and Society
j our nal homepage: www. el sevi er. com/ l ocat e/ aos
class theory became more precise, and tableaux of class
membership more complex. Sociology’s most in?uential
statements on the subject, such as Wright (1985), Erikson
and Goldthorpe (1993), and Grusky and Sørensen (1998),
set out to operationalize the concept of class in a way that
connected it to the process of socio-economic attainment.
Largely framed by the methods and concerns of Anglo-
American mobility research, the challenge was to develop
a class-based analysis that could make sense of the elusive
‘‘middle’’ of the American occupational structure. But this
meant that contemporary class analysis remained close
to its origins in that it still began with an analysis of the
structure of positions in occupations, ?rms, and labor
markets. We shall argue that this has made it hard to con-
nect these theories to processes of social strati?cation that
originate outside the sphere of production, in settings such
as consumer credit systems, education, health services, and
housing.
Of course, research on inequality shows other forms of
social division beside class structure shape people’s access
to and experience of basic social institutions. Reliably, spe-
ci?c social groups—the poor, minorities, women, young
people, and others, whether singularly or in various inter-
sections and combinations—face a more restrictive set of
choices, receive worse treatment, and experience worse
outcomes than dominant groups in practically every insti-
tutional domain (Massey, 2008). The durability of these
inequalities is explained, variously, by rational choices on
the part of vendors trying to avoid catering to riskier indi-
viduals (Becker, 1971), the persistence of straightforward
prejudice, or more subtle processes of symbolic violence,
pragmatic disquali?cation, or systemic ‘‘über’’ discrimina-
tion (Reskin, 2012). In this view, modern markets repro-
duce inequalities that originate elsewhere in the social
structure, in historical legacies, and in longstanding atti-
tudes that differentiate between categories of people. The
action of markets themselves does not contribute much
to the formation of social hierarchies.
What if it did? What if we could make the recording,
splitting and categorizing work done by markets and mar-
ket technologies ‘‘good to think with’’ for the study of so-
cial inequality? The point is in some ways familiar.
Occupational markets have long been structured by insti-
tutional devices such as licensing and credentialing sys-
tems, in addition to rules oriented to exclude certain
kinds of people. But what makes the new market instru-
ments so interesting is that they seem so much more dem-
ocratic. Indeed, historically their appeal came, in part, from
their purported ability to keep older forms of arbitrary or
categorical discrimination at bay (Hyman, 2011; Poon,
2013). These new markets draw distinctions, too, but in a
different way. Rather than protecting certain groups
through the creation of rents and monopolies, they thrive
on the market’s competitive logic, demanding that people
be measured against one another, and then separating
and recombining them into groups for ef?ciency and pro?t.
As with class, the process of differentiation is endogenous
to the market itself. But unlike class, the action happens on
the consumption side of the economy, rather than on the
production side.
In this article, we focus more particularly on how the
emergence and expansion of methods of tracking and clas-
sifying consumer behavior affect strati?cation through the
allocation of credit. On the supply side, scoring agencies
slice consumers into behaviorally-de?ned risk groups,
and price offerings to them accordingly. On the demand
side, consumers ?nd themselves more or less comfortably
?tting into these categories—which, by design, are not con-
structed from standard demographic classi?cations such as
race and gender. At the intersection of this supply and de-
mand, the increasing sophistication of credit scoring gen-
erates what we call classi?cation situations: positions in
the credit market that are consequential for one’s life-
chances, and that are associated with distinctive experi-
ences of debt. These range from the exploitative to the
dutiful, and from the dutiful to the almost liberating. Some
feel weighed down or crushed by debt, others feel the pres-
sure both to acquire and pay off certain sorts of loan, and
still others embrace credit as a means of asset accumula-
tion and mobility. These classi?cation situations are not
merely approximations to pre-existing social groups,
though of course they may overlap substantially in speci?c
cases. Rather, they are independently, even ‘‘arti?cially’’
generated classi?cations that can come to have distinctive
and consequential class-like effects on life-chances and so-
cial identities.
The crucible of class
The standard view
We begin with Weber and his concept of life chances. It
is worth quoting his de?nition of ‘‘economic class’’ at
length:
We may speak of a ‘‘class’’ when (1) a number of people
have in common a speci?c causal component of their life
chances (. . .). This is ‘‘class situation.’’ (. . .) Property or
‘‘lack of property’’ [are] the basic categories of all class
situations. . . . Within these categories, however, class
situations are further differentiated: on the one hand,
according to the kind of property that is usable for returns;
and, on the other hand, according to the kinds of services
that can be offered in the market. Class situation is, in this
sense, ultimately market situation (Weber, 1978a, pp.
927–928, emphasis added).
Notoriously, Weber was not very speci?c about what he
meant by ‘‘chance in the market.’’ However, he does offer a
telling empirical illustration. Rather than pursuing the
more Marxist line of analysis he begins with (the distribu-
tion of material property and skills or ‘‘services offered’’),
Weber ends the passage on ‘‘economic classes’’ in Economy
and Society with a cryptic reference to the credit market:
The creditor-debtor relation becomes the basis of ‘‘class
situation’’ ?rst in the cities, where a ‘‘credit market’’,
however primitive, with rates of interest increasing
according to the extent of dearth and factual monopoli-
zation of lending in the hands of a plutocracy could
develop. (Weber, 1978a, p. 928)
560 M. Fourcade, K. Healy / Accounting, Organizations and Society 38 (2013) 559–572
This suggests that Weber’s view of class situation as life
chances in a market should be much more broadly applied
than it typically has been in the literature on class analysis.
(And, quite possibly, more broadly than Weber himself
envisioned—but our purposes here are not exegetical.)
Our claim is that many institutional settings may be ana-
lyzed as systems of market-situations, each with its own
dynamic of social strati?cation and its own claim on the
making of social class.
The standard picture in strati?cation research is that a
person’s life-chances are rooted in their position in the
occupational structure, and expressed in their pathway
through it. One’s occupation (or that of one’s parents)
may affect one’s health, the likelihood of arrest or prison,
the availability of educational opportunities, and so on. Of-
ten, the model is made more complex by the addition of
alternative bases of strati?cation, such as racial, ethnic,
gender, religion, age or family structure.
In Weber’s view what ultimately determines one’s life
chances—one’s speci?c market-situation—are individual
endowments of various kinds. We would now think of
these endowments as various sorts of capital. People
own (or do not own) different sorts of property, they
bring different skills (or no skills) to the market, they
buy and sell various services (or not). It is this individu-
alizing tendency in Weber’s theory of strati?cation—its
tendency to unravel class into a set of individual
locations on a spectrum—that has long been resisted by
his Marxian critics.
From class situation to classi?cation situation
What is missing from this view is the notion that allo-
cation to particular market-situations might depend on
some formal, institutionalized classi?cation procedures.
Weber recognizes the power and signi?cance of bureau-
cratic records and rules, but does not connect this to
his analysis of the market. In Weber’s time, insofar as
this organizational means was available at all, it was al-
most exclusively a tool of the state bureaucracy. Scholars
interested in the intersection of rationalized bureaucracy
and logics of classi?cation have thus looked primarily to
the state and its of?cial classi?cations, which are public
in nature and carry implications for government policy,
identity-formation, and collective action (Hacking, 1986;
Loveman, 2013; Schor, 2009; Starr, 1992; Steensland,
2010). But many important classi?catory systems are
now embedded in markets. They are by nature private,
even to the point of being trade secrets. They are ori-
ented toward the extraction of pro?t and often manufac-
tured and managed in a quasi-monopolistic manner. For
instance one company, FICO—originally Fair, Isaac and
Company—produces many variants of its FICO score,
which it claims are used in ninety percent of lending
decisions in the United States. Combining the ?ne-grain
of Weberian market-situations with rationalized organi-
zational methods, these forms of commensuration and
categorization have institutionalized and diffused rapidly.
As such, they have become powerful ‘‘market devices’’
whose broader social effects are still not well understood
(Carruthers, 2013; Muniesa, Millo, & Callon, 2007). To
emphasize our modi?cation of the Weberian framework,
we call the outcomes produced by these new technolo-
gies classi?cation situations, as distinct from class
situations.
The starting point for our analysis is thus the operation
of market institutions, not the a priori identi?cation of fun-
damental social categories. In that respect our perspective
contrasts not only with theories of inequality centered on
labor-markets, but also with approaches emphasizing the
intersectional consequences of cross-cutting memberships
in racial, class, and gender categories (Collins, 1990; Mas-
sey, 2008; Tilly, 1999). Second, by paying attention to ex-
plicit, ‘‘objective’’ classi?catory techniques rather than
implicit, ‘‘subjective’’ schemes of perception and action,
our approach also differs from Pierre Bourdieu’s analysis
of the relevance of classi?catory struggles to class analysis
in the last chapter of Distinction (1984). In our case, the
classi?catory mechanism is both more palpable (classi?ca-
tions are bought and sold) and less so (the mechanics of
classi?cation is impersonal, con?dential, and does not al-
low for individual interpretation).
Rather than seeing how basic social-categorical differ-
ences ‘‘play out’’, are ‘‘expressed in’’, or ‘‘distort’’ institu-
tions, we thus seek to identify, in a manner not unlike
Bowker and Star (2000), how institutions systematically
sort and slot people into new types of categories (which
we may call ‘‘market categories’’) with different economic
rewards or punishments attached to them. On this view,
the labor market is only one among many institutions that
structure life chances. Education, health-care, credit, and
commodity markets classify their participants too, in ways
that generate social inequalities rather than simply repro-
ducing them. We also expect con?gurations of classi?ca-
tory institutions in different societies to display
similarities and complementarities among themselves
(DiMaggio & Powell, 1983; Hall & Soskice, 2001). This
means we must attend to the systemic linkages between
classi?catory mechanisms, institutional development, and
the wider social environment.
We argue that dramatic changes in market organiza-
tion, triggered by the de-collectivization of social services
and risk in the neoliberal era (Hacker, 2008), have both ex-
panded the supply of services and increased the classifying
activities of institutions. Both credit and higher education,
for instance, provide good illustrations of these trends with
a rapid expansion of access (reversed only very recently)
and a subsequent internal diversi?cation of supply by price
and quality. In both cases, providers have learned to tailor
their products in speci?c ways in an effort to maximize
rents, transforming the sources and forms of inequality in
the process.
Substantively, the approach we advocate here has three
main implications. Comparatively, we should investigate
the role of actuarial technologies (Mikes, 2009; Power,
2011) in sorting people into a diversi?ed set of life trajec-
tories. In this article, we focus on the U.S. credit market as a
useful and important empirical site for studying how these
new, ‘‘classi?catory,’’ mechanisms of social strati?cation
operate. But it is worth emphasizing, again, that the point
applies much more broadly. These technologies may be
less salient or differently implemented in some countries,
M. Fourcade, K. Healy / Accounting, Organizations and Society 38 (2013) 559–572 561
and thus their effects on strati?cation may varym too. His-
torically, we should document how the neoliberal shift
transformed institutions—in our case, institutions devoted
to the provision of consumer credit—in ways that facili-
tated the action of classi?catory engines. Behind the longi-
tudinal inquiry is the argument that recent changes in the
organization of many markets have affected people’s lives
in ways that are often not well captured by traditional
analyses. And theoretically, we ought to re?ect on what
these changes mean for theories of strati?cation in the
neoliberal era.
Kinds of classi?cation situations
There have been two historical forces behind the
development of classi?cation situations. The ?rst is
technology, namely the growing availability of individual-
level data, on the one hand, and the development of
statistical models of risk on the other. The second is the
market economy. As representatives of the collective
good, states tend to be politically oriented toward univer-
sal mandates. Under state rule, risks were collectivized,
socialized, even though the management of such risks be-
came increasingly individualized over time, though not
necessarily more differentiated (Bauman, 2000; Burchell,
Gordon, & Miller, 1991). Private corporations, however,
are oriented to pro?t. In an earlier era, some of the risks
faced by private credit institutions might have been
socialized through cross-subsidization. Money lost admin-
istering small loans in poor neighborhoods, for instance,
might have been made up by high pro?ts on large loans
in richer neighborhoods. More often, however, banks
turned away from the most destitute places if they could,
leaving behind so-called ‘‘banking deserts’’ (Leyshon &
Thrift, 1995).
1
The new actuarial technologies have changed all that,
allowing capitalist ?rms to systematically make individual
assessments of risk, and to turn those assessments into
economic opportunities through sharply differentiated
pricing strategies. No wonder, then, that classi?cation situ-
ations are especially well-developed in liberal market
economies (Hall & Soskice, 2001), where private markets,
rather than states, are the main providers of access to pri-
mary goods and services such as healthcare, money, insur-
ance or the law, and education.
Seeing like a market
Weberian sociologists and Chicago-school economists
alike argue that markets are blind to differences in social
status. In the former case, the market ‘‘knows nothing of
honor’’ (Weber, 1978b, p. 936); in the latter, it is an unbi-
ased engine of preference aggregation. We suggest instead
that markets see social differences very well, and thrive on
them. Like states, market technologies make societies more
‘‘legible’’, to use Scott’s (1999) phrase. Contemporary mar-
ket institutions, in particular, are inveterate classi?ers.
They count, rank, measure, tag, and score on various
metrics of varying degrees of sophistication, automation,
and opacity. The data collected in these procedures be-
comes grist for analytical machines devoted to further
re?ning the classi?cation system itself, and the engine for
allocating individuals to some tier or group on the basis
of that classi?cation.
Fueled by the growing availability of demographic and
non-demographic data over the last 30 years or so, classi?-
catory efforts by corporations have concentrated on the
production of increasingly ?ne-grained knowledge about
populations of would-be customers. This data is some-
times provided by states (demographic data), sometimes
bought from market intermediaries (e.g. purchasing histo-
ries, employment and medical data, records of online
behavior, credit scores), or generated by specialists (vari-
ous forms of market research). This knowledge is incorpo-
rated into all kinds of actions, from decisions about the
location of shopping outlets to product segmentation to
marketing tactics to pricing strategies. Social scientists
have been keen to notice the new forms of calculability,
governmentality and moral regulation embedded in these
techniques. But they have stopped short of examining their
broader social implications.
Boundary classi?cations
Market institutions produce two main kinds of classi?-
cation situations. The ?rst distinguishes people who are
‘‘in’’ from those who are ‘‘out.’’ For instance, people may
be quali?ed to open a bank account—or be denied the abil-
ity to do so; buy health or car insurance—or not; have ac-
cess to credit—or not. Let us refer to this type of
situation, quite simply, as ‘‘exclusion’’ or boundary classi?-
cation. In much of the world, simple lack of access to goods
and services, whether provided by the state or the market,
is of course the dominant form of consumption-based clas-
si?cation. It is most obvious where supporting institutions
are absent or substandard, as they often are in the develop-
ing world.
Boundary classi?cations can be collective or individual.
A good example of collective boundary classi?cations is
the once widespread practice of redlining. Redlining ex-
cludes entire neighborhoods from services on the basis
of some undesirable social characteristic, usually race.
Such collective forms of exclusion, obviously structured
by long histories of institutionally-supported racial segre-
gation,
2
are now formally outlawed as discriminatory.
3
But
their effects are still being felt in the form of reversed pat-
terns of geographical location of bank branches and ‘‘pred-
atory’’ lenders in white and black neighborhoods (Graves,
2003), in African-Americans’ weaker personal ties to main-
stream ?nancial institutions, and in the persistence of more
1
This prompted legislation, in 1977, to oblige banks to have a presence
in poor communities (Community Reinvestment Act).
2
The Federal Housing Authority aggressively promoted the use of racial
categories in mortgage ?nance and home building from its inception up
until the 1970s (Freund, 2010).
3
In the United States, for instance, redlining on the basis race, color,
religion, national origin, sex, handicap, or familial status has been illegal in
housing since 1968 (Fair Housing Act), credit lending since 1974 (Equal
Credit Opportunity Act), and banking since 1977 (Community Reinvest-
ment Act). It arguably survives in insurance.
562 M. Fourcade, K. Healy / Accounting, Organizations and Society 38 (2013) 559–572
insidious, but pervasive, forms of reluctance to lend to
African-American individuals and communities (Oliver &
Shapiro, 2006).
Modern boundaries tend to be drawn individually, for
legal as well as technological reasons. For economists,
institutions classifying at the boundary address the prob-
lem of adverse selection. In a situation of uncertain infor-
mation, they separate cases that are ‘‘presumed good’’
from those that are ‘‘presumed bad’’—the smart from
the dull, healthy from unhealthy, lazy from hardworking,
prudent from spendthrift. These categories may sound
clean and clear-cut, but sorting people is a messy busi-
ness in practice. In earlier times, the bank or retail ?nance
of?cers who carried out the work of assessing the credit-
worthiness of individuals relied primarily on personal
judgment. They met potential clients in person, and eval-
uated them based partly on their physical appearance,
their demeanor, and their conversation. They encouraged
and listened to local gossip. And thus lending decisions
were typically grounded in the agents’ opinions and their
practical experience with various ‘‘social types’’ and the
assumed personal morality of various classes of custom-
ers. With the growth of these businesses and the accumu-
lation of payment records by companies, the process
became more quantitative. The ?rst credit reporting com-
panies had emerged in the 19th century, collecting rough
information about companies (and then individuals), and
using it to place borrowers within a standardized, ordinal
classi?cation scheme for the convenience of lenders (Car-
ruthers & Cohen, 2010; Ruef & Patterson, 2009). By the
1950s, credit rating moved to probabilistic predictions
based on statistical analyses of historical population data.
But large quantities of non-?nancial personal information
continued to be incorporated, such as marriages, promo-
tions, and arrests (Furletti, 2002). In the 1970s, with
?nancial institutions and retailers now routinely report-
ing their lending activities, U.S. government institutions
endorsed credit scoring—the numerical evaluation of a
person’s reliability and integrity based on his or her indi-
vidual credit ?le—as a neutral, objective way of assessing
creditworthiness that would promote fairness in credit
markets and eliminate race-based discrimination (Marron,
2009). The new forms of classi?cation were thus based on
data about individual rather than group credit histories;
they included provisions that made the collection and
use of certain demographic data illegal; and they were
impersonally administered.
4
Market classi?cations are part of a general movement
toward the institutionalization of ‘‘mechanized objectiv-
ity’’ (Porter, 1995). Because they increase trust (Guseva
& Rona-Tas, 2001) and ef?ciency, there is ample evidence
that these new techniques have increased equality ex ante
by broadening formal access to the ?nancial system and
shrinking the percentage of people excluded from
services.
5
Carefully graded assessments could now balance
heightened risk with higher prices, and so the new classi?-
cation technologies fueled a huge expansion of products
speci?cally marketed to traditionally disadvantaged (and
excluded) categories of people.
6
The shifting boundary: the expansion of credit in the United
States
The rise of credit scoring systems can also be seen as
part of a long trend towards the expansion of access to for-
mal credit and the ?nancial system more generally. As
Cooper and Sherer put it, ‘‘any accounting contains a repre-
sentation of a speci?c social and political context’’ (1984, p.
208). In the twentieth century, American policy elites gen-
erally regarded market exclusion, or lack of access to con-
ventional market institutions, as both unfair and
inef?cient. Since the Progressive period, reformers of all
stripes in the United States saw the expansion of main-
stream credit access as a requirement of a well-functioning
economic democracy. They also supported the moral argu-
ment that people ought to be protected from exploitative
?nancial dealings. During the interwar period, for instance,
experts from the Russell Sage Foundation actively and suc-
cessfully mobilized to reform and develop the small loan
industry (Anderson, 2008; Carruthers, Guinnane, & Lee,
2012). They reasoned that raising legal interest rates just
slightly above usury law levels would attract mainstream
lenders to the small loans business and drive out illegal
predatory lenders. By the late 1930s, most states had fol-
lowed their recommendation.
7
In addition to these private efforts, federal agencies also
endorsed the ‘‘democratization’’ of credit. Expanding ac-
cess became an explicit policy goal toward the end of the
Great Depression, and from then on successive generations
of policy makers embraced it as a means to accelerate so-
cial mobility, and, increasingly, generate economic growth
(Quinn, 2011). One of the most signi?cant factors in the
more recent development of the US credit market was a
1978 Supreme Court decision (Marquette National Bank of
Minneapolis v. First of Omaha Service Corporation) ruling
that state anti-usury laws regulating interest rates cannot
be enforced against nationally-chartered banks based in
other states. The Marquette decision caused national banks
to relocate to states with the most lenient usury laws. This
4
The Equal Credit Opportunity Act of 1974 makes it unlawful to
discriminate applicants on the basis of the following categories: age,
marital status, race, color, religion, national origin, receipt of public
assistance, and good faith exercise of any Consumer Credit Protection Act
right (Hsia, 1978). In spite of these legal precautions, practices that are on
face value-neutral may still have a disparate impact across populations
because the characteristics recorded by scoring systems are not evenly
distributed across subpopulations (Cohen-Cole, 2011; FRB, 2007).
5
Nevertheless, scoring has been shown to result in signi?cant disad-
vantages for certain categories of the population. Minorities are more likely
to be excluded from credit altogether, or to receive worse treatment than
their white counterparts, net of other differences (FRB, 2007). As Marron
(2007, p. 111) puts it, ‘‘scoring undercuts the coherent identity of being
‘‘female’’ or ‘‘black’’ within which oppression or marginalization is expe-
rienced, displacing credit decisions onto an array of discrete characteristics
or attributes seemingly innocent within themselves and seemingly indi-
vidually predictive of repayment performance, independent of subjective
will.’’
6
See Mian and Su? (2009) on the mortgage market. They ?nd consid-
erable evidence that mortgages were actively marketed in subprime ZIP
codes between 2002 and 2005, despite sharply declining relative income
growth in those areas. See also Fligstein and Goldstein (2010).
7
Note that a very similar logic played out to legitimize micro-lending in
the developing world. See, e.g., Roy (2010).
M. Fourcade, K. Healy / Accounting, Organizations and Society 38 (2013) 559–572 563
fueled a competitive race among states to attract banking
business, which resulted in a weakening of usury regula-
tion and surveillance across the country (Langley, 2009,
p. 145; Sherman, 2009). Further deregulation in the
1980s (such as the phasing out of Regulation Q) again in-
creased competition among ?nancial institutions, contrib-
uting to the Savings & Loan collapse, and to a wave of
mergers and consolidation in the banking sector (Krippner,
2012).
What effects did these changes have on the relationship
of households to the banking system? The data for this per-
iod is complex, and at times contradictory, but two trends
are clear. Since the late 1980s there has been increased
inclusion at the boundary, and increased segmentation
within the market. The percentage of U.S. households with
a transaction account has increased signi?cantly over the
last three decades, particularly among the most socially
disadvantaged categories of households (from 85% to 92%
of all households between 1989 and 2007, but from 56%
to 75% of households in the bottom quintile of the income
distribution).
8
Having a checking account is hardly equiva-
lent to the democratization of access to credit, of course.
In fact, the new banking inclusion notwithstanding, the per-
centage of people who report having dif?culty accessing reg-
ular credit has also grown since the mid-1980s in practically
every social category except the most privileged.
So how was the unful?lled desire for credit met? Fram-
ing the problem as if everyday borrowing had ‘‘a clear and
unambiguous inclusive side, on the one hand, and an ex-
cluded outside, on the other’’ misses a big part of the pic-
ture (Langley, 2009, p. 168). Instead of the inclusive
expansion of credit for the poor envisaged by early credit
reformers, a new landscape has developed at the bottom
end of the income scale, which is marked by a blurring of
boundaries between mainstream and fringe lenders. In
particular, access to formal banking has set the stage for
the rapid growth of payday lending (a form of salary ad-
vance), which—unlike earlier forms of marginal credit,
such as pawning—requires the borrower have a bank ac-
count (Caskey, 1994).
The rapid and largely unfettered expansion of payday
lending, of other expensive small scale credit providers,
and of high fee credit services offered by banks did not take
place in a political vacuum. It re?ects, in part, the growing
reliance of American political authorities on individual
responsibility against top-down regulation in moralizing
markets. In the consumers’ republic that ?ourished in the
postwar period, protecting people from abuses by fettering
markets ex ante was perceived as political and economic
suicide, given prevailing ideologies and the fact that
domestic consumption drove over two-thirds of the na-
tional economic machine.
9
Instead, better information and
disclosure rules, as laid out in the Fair Credit Reporting Act
of 1970 or in the Equal Credit Opportunity Act of 1974, were
trusted to guard presumably rational consumers against the
deceptive and high cost business practices that inevitably
arose in this expanding market. These policies gained the
upper hand in spite of numerous studies and repeated con-
gressional hearings documenting the low levels of ?nancial
literacy among the US population, particularly the poor
and minorities (Lusardi & Tufano, 2009).
10
Unsurprisingly,
the effect of these changes on equality has been much more
questionable than promised. Inequities in the market are
thus now ‘‘less a matter of access to credit and abandon-
ment, and more a matter of the differential interest rates
that borrowers pay to lenders across both mainstream and
alternative networks of borrowing’’ (Langley, 2009, p. 168).
By enabling and facilitating the differential pricing of people,
scoring has expanded the reach of the market while opening
the door to new forms of classi?cation with powerful strat-
ifying effects. The market expands at the boundary and then
differentiates internally. We now turn to the latter process.
Within-market classi?cations
‘‘Individuals viewed through statistics no longer need to
be classi?ed as either ‘in’ or ‘out’ of the market. Armed
with a gradated sliding scale, people all along a spec-
trum of risk can be offered specially designed products
at alternative terms and prices’’ (Poon, 2009, p. 167).
These new forms are within-market classi?cations.
Rather than dividing people into two mutually exclusive
groups, the new devices position them in a categorical
framework or on a continuous scale, the latter usually hav-
ing key cut-points or thresholds. Categories and thresholds
restrict access to certain goods and services, specify their
price, or both. Within-market classi?cations are very wide-
spread, reaching ever more broadly across spheres of life
and ever deeper into population segments. Companies
keep records on their customers’ purchasing behavior (or
buy these from other ?rms), thus enhancing the pertinence
and power of marketing and data collection. From an eco-
nomic point of view this is the problem of managing moral
hazard. The classifying institutions are meant to be perfor-
mative. They steer behavior toward some desirable goal,
and encourage people to stay on top of their commitments.
There are incentives for compliance, material or symbolic
rewards for success, and sanctions for failure. Rewards
and punishments are often themselves acts of reclassi?ca-
tion. Punitive reclassi?cation, for instance, may entail
higher premiums, loss of privileges, poorer service, or high-
er interest rates.
Much of the regulation in neoliberal, and, importantly,
post-segregation markets must come from within, from
self-monitoring subjects: its accounting infrastructure is
oriented to the responsible and ef?cient functioning of
‘‘calculating selves’’ (Cooper & Sherer, 1984, p. 208;
Hopwood, 1994; Miller, 1992; Miller & O’Leary, 1987).
Credit scores in particular have a moral aspect, tracking
a person’s consumption choices dynamically, and re?ect-
ing on his or her evolving moral self. In this world,
8
Federal Reserve Board, Survey of Consumer Finances, 1989–2010.
9
Data from the World Bank (Household consumption as a percentage of
GDP).
10
Even face-to-face ?nancial advice meant to teach consumers about the
relative risks and bene?ts of different products is fraught with social
tensions. See the very interesting work by Vargha (2011) on Hungary and
by Lazarus (2012) on France.
564 M. Fourcade, K. Healy / Accounting, Organizations and Society 38 (2013) 559–572
redemption for those who have failed is always available
in principle. Only proper self-management is required.
This sorting and scoring of people is disciplinary and pro-
ductive. Its underlying structure and effects are subjec-
tively incorporated. Both the scored and the score-users
orient themselves to these measures and strategize about
them, in a ‘‘reactive’’ effort to gain control (Espeland &
Sauder, 2007). For instance, fraudulent companies may
send a ?urry of unnecessary credit inquiries right before
negotiating a loan with a customer, because they know
an inquiry without a subsequent loan will affect this per-
son’s credit score negatively and thus boost the interest
rate they can charge. For individuals, there is an advice
industry that teaches how to manage (or game) one’s
credit score, or how to keep fees and premiums low. This
knowledge is offered freely or packaged as a product by
advocates online and in newspaper articles; by banks,
debt consolidation companies, bankruptcy lawyers, con-
sultants, and ?rms marketing ‘‘FICO security toolkits’’.
Other sources of knowledge include government agencies,
nonpro?t organizations, academics concerned with ?nan-
cial literacy, and more.
Self-monitoring within the system of credit classi?ca-
tion has its limits. At the bottom end of the scoring scale
are those who either do not have a score (because they
do not use the mainstream credit system) or whose score
is so low that it only serves to permanently maintain
them outside of the system (and is thus less likely give
rise to a form of deliberate management). The exclusion-
ary boundary still cuts through the inclusive world of
credit scoring in the form of a stubborn stratum of unsc-
orable, unscored, and underscored individuals—a Lumpen-
scoretariat composed mostly of poor people. In the
National Financial Capability Study (FINRA, 2009), 56%
of the people surveyed with incomes above $75,000
had obtained a credit report, as compared with 18% of
those with incomes below $25,000. Economists typically
explain this discrepancy in self-surveillance in terms of
disparities in ‘‘economic literacy’’ or, worse, sheer behav-
ioral irrationality (e.g. Bertrand & Morse, 2011). But what
this difference captures, fundamentally, is the objective
and subjective marginalization of the less privileged from
the world of mainstream credit. Because credit behavior
is recorded and interpreted as a sequence of individual
choices, the vagaries of harsh circumstance, the power
of differentiated markets, and the pressure of social com-
petition—all of which powerfully structure how, where
and when people borrow and repay—magically disappear
from view.
The three worlds of credit in America
As is clear from the examples and data we have dis-
cussed so far, the institutional machinery for generating
classi?cation situations is to be found in its most devel-
oped form in the United States. The way the credit-scoring
process erases circumstance seems an extraordinary irony
in a country where people rely extensively on credit to
compensate for the cover over holes in the welfare system
(Prasad, 2013). A 2009 Federal Deposit Insurance
Corporation survey of underbanked
11
consumers in the
United States found that 38% of them relied on highly
exploitative ‘‘fringe’’ lenders (payday, for instance) to cover
basic expenses, and a further 19% used them to cover med-
ical expenses, child care expenses, and lost income (FDIC,
2009b, p. 42). For African-Americans especially, the inci-
dence of these services increased markedly with the number
of children in the household.
12
It is the combination of weak social welfare provision
and the abundance of variably-priced credit that makes
classi?cation situations consequential in liberal market
economies. As Prasad (2013, pp. 234–235) remarks, ‘‘there
is a relationship between credit and the welfare state, such
that where we see greater growth in credit we see less
growth in the welfare state since the 1980s.’’ Furthermore,
‘‘regulation suppresses credit in less well-developed wel-
fare states, while deregulation allows the credit-?nanced
consumption of goods and services that would be provided
by the welfare state elsewhere.’’
Credit scores of the sort calculated by the U.S. credit bu-
reaus are much less common in countries with more devel-
oped welfare states. Many have no private credit reporting
organizations at all. The information recorded by their
public credit registries is extremely limited, and generally
con?ned to identifying seriously delinquent accounts
(Miller, 2003). Against the American view of credit as an
instrument of individual empowerment, public authorities
in France and Germany perceive loans to be threatening
and dangerous (Trumbull, 2012). Consequently, interest
rate caps and levels of personal indebtedness are much
lower, as is the market penetration of credit cards. About
nine million personal credit cards circulate in France
(about 0.17 per adult), compared to about 75 million in
the United Kingdom (about 1.4 per adult) and close to
1.2 billion in the United States (about 5.2 cards per
adult).
13
In the United States, credit has long been seen as a
‘‘welfare-enhancing right’’ (Trumbull, 2012). Earlier mod-
els of popular credit had a strong solidaristic basis. The ?rst
thrifts were ‘‘highly personal nonpro?t associations’’ of
‘‘small groups of individuals [cooperating through struc-
tured savings] to achieve the common goal of home own-
ership’’ (Haveman & Rao, 1997, pp. 1616–1617). The
bureaucratization of thrift in the early part of the twentieth
century eroded the culture of personal relations and struc-
tured discipline by stressing to voluntary savings schemes.
Still, mutual ideologies persisted through the development
of credit unions, mutual savings banks, and community
development banks. Since the 1970s, however, the norma-
tive basis of the case for credit has shifted. While the total
number of customers served by mutualistic organizations
did not decline substantially, its underlying organization
11
In contrast with ‘‘unbanked’’ consumers, who do not have a bank
account, the ‘‘underbanked’’ (as de?ned by the FDIC) have a bank account
but rely also on fringe lending to meet their day-to-day credit needs.
12
The incidence of having used a payday lender in the past year, for
instance, varied from 7% for African-American households with one child to
14% for households with four children (FDIC, 2009a).
13
Source: US Census Bureau, 2012 projections. This is down from a peak
of close to 1.5 billion in 2006. Seehttp://www.census.gov/compendia/
statab/2012/tables/12s1188.pdf.
M. Fourcade, K. Healy / Accounting, Organizations and Society 38 (2013) 559–572 565
changed. The older patchwork of local ?nancial institutions
disappeared. Credit unions gradually consolidated. Mutual
savings banks were converted to a stock-ownership model.
As the institutional form changed, and as lenders started
reaching into new categories of previously excluded peo-
ple, the moral life of credit changed, too. The idea that
the poor ought to qualify for more favorable terms because
they were poor was gradually replaced by the idea—now al-
most completely taken-for-granted—that the terms of
credit ought to depend solely on one’s prior credit-related
behavior, as recorded in an increasingly mechanized
reporting system.
14
Credit scores quantify individual performance, deter-
mining which services can be obtained, in terms of type
(home equity, credit card, or payday loans), volume (how
much credit is extended), and price (the interest rate, re-
quired origination or balloon payments, and other fees).
15
For instance, here is a crude but honest recommendation
from the British industry publication The Banker: ‘‘Stop try-
ing to lend at low margin to accountants, lawyers and civil
servants who are reliable but earn the bank peanuts. Instead,
?nd the customers who used to be turned away; by using
modern techniques, in credit scoring and securitization, they
can be transformed into pro?table business’’ (Langley, 2009,
p. 473). The modern credit enterprise relies on the system-
atic measurement and exploitation of social differences, by
way of scoring systems. The ?ipside of market inclusion
has been an acceleration of market segmentation. Popula-
tions have been incorporated and then matched to tailored
industries and products. As a result, credit functions differ-
ently and is experienced differently across positions in the
social structure.
The perils of exploitation: weighed down by necessity
The normalization of high-interest credit products is
one of the distinctive features of the relatively weakly reg-
ulated American credit economy that the United States
represent. Fueled by the post-Marquette regulatory envi-
ronment at the national level and the gutting of usury laws
at the state level, the widespread diffusion of ‘‘subprime’’
loans and the ?ourishing of the so-called ‘‘fringe’’ banking
economy transformed the credit environment among bor-
rowers with low to moderate credit scores. The discrep-
ancy between the interest rates paid by high credit-score
borrowers and low credit-score borrowers has enormously
increased since the late 1980s across all major product
types, such as mortgages, car loans, and consumer loans
(Grow & Epstein, 2007).
This trend was facilitated by the increased visibility of
those on the low end of the social scale. They became bet-
ter incorporated into the banking system but remained
poorly served by it, with high barriers of entry into savings
and investment products (Schneider & Tufano, 2007) and
continued dif?culties in securing credit. The implied mar-
ket opportunity was not lost on the most dynamic parts
of the fringe-banking industry. As states relaxed laws
against high-cost, short-term borrowing, reputable, profes-
sional, rationalized market actors replaced the loan sharks
of yesteryear. So-called ‘‘alternative ?nancial services’’
(AFS) have grown rapidly in the United States and other
liberal market economies, expanding and diversifying the
supply of legitimate credit for previously excluded catego-
ries of people while also increasing its cost. For instance,
the number of payday loan storefronts in the United States
rose by an order of magnitude between 1996 and 2007,
from 2000 stores to 23,600.
16
Lending in anticipation of
tax refunds, which grew out of the tax preparation business,
has also ?ourished. The Jackson Hewitt Corporation, which
pioneered these expensive short-term loans in advance of
expected tax refunds, saw business grow from about 900
storefronts in 1993 to 6,000 in 2011. Not unlike the loan
sharks they replaced, lenders of this kind remain relatively
vulnerable to shifting political moods. In the midst of the
recession, AFS services have become easy targets of legisla-
tive and popular anger—see for instance changes in IRS reg-
ulations,
17
or recent state and federal actions against payday
lenders, which have resulted in a sharp decline in the num-
ber of stores since the 2007 peak.
18
But this decline masks a
shift toward online lending and more mainstream ?nancial
services. Indeed, payday lending’s business model has been
so successful that banks (whose action was initially con?ned
to bankrolling the AFS industry) have adopted it, too. Many
now offer ‘‘bank payday’’ services, as well as other fee-
loaded services marketed under the label of consumer
convenience.
19
The eighteen percent of the US population the FDIC
(2009a) de?nes as ‘‘underbanked’’ are banked in the main-
stream but loaned to in the fringe. What critics call eco-
nomic predation is routine at the low end of the credit-
scoring scale. This overlaps greatly, though not perfectly,
with the bottom end of the income scale, and even more
with the racially or ethnically dominated segments of the
social structure.
20
Loans from payday lenders typically carry
annualized interest rates above 400%, and up in the 700%
range in some locations, and rollovers (which extend the
fees generated by the initial loan) are not only extremely
common but an essential component of the industry’s busi-
ness model.
21
At ?rst glance, this situation seems to vindi-
cate Marx’s grim assessment of usury in Volume III of
Capital. There he critiques high-interest lending as a ‘‘subor-
dinate’’ (i.e. derivative) form of exploitation ‘‘which runs
parallel to the primary exploitation taking place in the pro-
duction process itself.’’ As part of the ?nancial system, usury
14
We are grateful to Eve Chiappello for helping us articulate this point.
15
For details on scoring technologies see Leyshon and Thrift (1999),
Marron (2007) and Poon (2007).
16
For comparison, there were approximately 11,000 Starbucks coffee
shops and 14,000 McDonalds restaurants in the United States at the end of
2007.
17
RALs (refund anticipation loans) are a by-product of an IRS decision to
release to ?nancial companies a ‘‘debt indicator’’ ?agging loan applicants
owing back taxes. The IRS release was suspended in 1994 (but reinstated
shortly thereafter), and again in 2011, effectively condemning the industry.
18
In 2007, a federal law capped lending to military personnel to 36% APR.
19
Automatic overdraft protections are an example.
20
The proportion of Americans who resort to alternative ?nancial
services at least once a year is highest (24%) for people making less than
$50,000/year.
21
In the United States, rollovers of payday loans are actively encouraged
by lenders. Their bottom line often depends on chronic borrowing
(Stegman & Faris, 2003).
566 M. Fourcade, K. Healy / Accounting, Organizations and Society 38 (2013) 559–572
preys on productive labor in a parasitic fashion: ‘‘Usury, just
like trade, exploits a given mode of production, but does not
create it; both relate to the mode of production from out-
side’’ (Marx, 1981, p. 745). But—focused as he was on the
intersection of money lending and capital accumulation—
Marx also believed that usury was not particularly discrim-
inating. It ruined rich estate owners and small producers
alike, dissolving all forms of property and productive capital
in the acid-bath of debt.
Marx was too optimistic. He did not anticipate how a
modern, credit-driven, consumer economy could weigh
so heavily on workers’ incomes. Nor could he have pre-
dicted how the analytical tools of credit scoring would
come to differentiate the form and price of credit so
effectively, even for those at the bottom of the market.
The net result, as Harvey (2007) has argued, is that the
consumer credit industry is characterized at the bot-
tom-end by forms of material dispossession and subjec-
tive alienation similar to those Marx described in the
world of production. Soederberg (2012, p. 495) describes
this form of accumulation, where ‘‘a maximum amount
of workers take on the greatest amount of debt at the
highest interest rates and fees possible to extract ever
higher rates of revenue streams’’, as ‘‘cannibalistic
capitalism.’’
Those who are offered rotten terms in the market be-
cause they are riskier prospects are more likely to remain
so when the terms on offer are rotten to begin with. Econ-
omists have shown that the use of fringe banking services
traps people into cycles of debt, leading to higher rates of
bankruptcy and foreclosure (Melzer, 2011; Skiba & Tobac-
man, 2009). These cycles also exact a high personal and so-
cial toll, leading to higher rates of anxiety, divorce, or
forced geographical mobility.
For those individuals and households, the new regime
does not so much teach ?nancial self-control as resign
them to the seemingly inevitable. People who live pay-
check-to-paycheck—or without a paycheck—are rarely in
a position to plan systematically (Conley, 1999). Per-
versely, means-tested social programs may ‘‘actively dis-
courage low-income families from accumulating cash in
bank accounts . . . lest they lose access to needed pro-
grams’’ (Newman & Chen, 2007, p. 210). The lesson re-
peated over and over is that the extremely harsh
economic conditions they face are a kind of natural market
law. After all, the interest rates on their small loans—on the
order of thirty percent per month—are objectively and
legitimately tailored ‘‘for them’’ (Marron, 2009, p. 151).
In the United States, large differences by race and ethnicity
(but also income) in the probability of denied and discour-
aged applications still persist, so minorities are simply
much more likely to not apply for credit for fear of being
rejected (Weller, 2009). As Sudhir Venkatesh’s ethno-
graphic material vividly illustrates, the ‘‘prevailing wisdom
[among African Americans] is that loan applications will be
rejected. K.C., the co-owner of a Laundromat, puts it suc-
cinctly when he says, ‘We all try, time to time, to get to a
bank, but a dog just don’t want to go back if all they do
is get beat. I guess we need a year or so to forget that last
beating, and then maybe we’ll go back. But most of us can’t
get no money. Shit, I wouldn’t lend myself no money,
knowing what kind of credit I got and how much I owe’’’
(Venkatesh, 2008, p. 121). In other words, the exploitative
credit regime is successful precisely because it is subjec-
tively made sense of and incorporated, to some extent, as
‘‘normal.’’
Race features prominently in this moral compact. In
focus group interviews conducted by the Center for
Responsible Lending in 2010,
22
African-American users of
fringe banking services generally expressed broader sup-
port for a system that, they said, is there for them when
no one else is: it is ‘‘just so hard to get anything from
the banks.’’ Some even expressed sympathy for lenders
who, after all, ‘‘are a business and [are] out to make
money.’’ One interviewee remarked: ‘‘I do think [payday
lending] is fair because you go in there knowing. You know
what you need; you know what you’re going to pay.
They’re taking a risk. They’re not doing credit checks.’’ Pay-
day lenders were often preferred to banks for their comfort,
the convenience of their hours of operation and location,
and the accommodating stance of their staff (bank employ-
ees, by contrast, could be ‘‘straight rude’’).
Racial differences in attitudes toward payday lending
must be read against the long history of African-American
exclusion and exploitation by lenders of all types. The
objective experience of being rebuffed by mainstream
credit providers, the expectation of paying more for similar
services, and patterns of geographical proximity and dis-
tance all may sustain a set of speci?c subjective disposi-
tions—in particular, greater mistrust toward banks, and a
more benign attitude toward alternative ?nancial provid-
ers. As Pierre Bourdieu (1984, p. 372) pointed out in a dif-
ferent context, ‘‘necessity imposes a taste for necessity
which implies a form of adaptation to and consequently
an acceptance of the necessary, a resignation to the inevi-
table, a deep-seated disposition which is in no way incom-
patible with a revolutionary intention. . .’’ Thus, while
ambivalence towards an exploitative institution was not
absent (‘‘[payday loans] can cripple you’’), Blacks were
more likely to see payday lending as a necessary and so-
cially useful evil, affording them more dignity than other
types of ?nancial help, such as relying on charity or wel-
fare. Financial exclusion tended to foster the conditions
of its own acceptance.
Meanwhile, in the same study, White interviewees—
whose access to mainstream credit has long been objec-
tively better and subjectively much more self-evident—
saw their own reliance on fringe services, which often re-
sulted from the closing of alternative mainstream possibil-
ities, as an unfair downfall into a deeply repugnant system
not made for them. They expressed a much greater rejec-
tion of the business, talking about ‘‘loans from hell’’, and
likening the practice of borrowing from payday lenders
to ‘‘selling blood’’ and to ‘‘slavery.’’ But of course they were
also more likely to have an easier time ?nding alternative
sources of credit.
22
Cited with permission from the Center for Responsible Lending. Focus
group interviews were broken down by race/ethnicity: Spanish language,
Anglo and African-American.
M. Fourcade, K. Healy / Accounting, Organizations and Society 38 (2013) 559–572 567
The dif?culty of measuring up: economic goodwill and
suffering
The disciplining effect of credit scores is perhaps most
evident in the middle sections of the social scale. It is there
that we ?nd the most articulated forms of what, para-
phrasing Bourdieu’s (2005) analysis of the middle-class
lifestyle, we can call economic ‘‘goodwill’’. This is a distinc-
tive combination of striving and straitening, desire and
self-denial, hedonism and frustration. Here credit use ex-
pands and diversi?es. The number of credit cards in a
household, for instance, rises continuously with income.
Borrowers—often heeding the advice of popular ?nancial
gurus—use borrowing as an active strategy for asset-build-
ing. And it is here, too, that credit scores matter the most.
At the bottom, scores are often a blind spot, or a lost cause.
At the very top, they are a natural gift, an afterthought, or a
taken-for-granted personal quality.
At the bottom of the middle class, the story is one of
‘‘middle class squeeze’’ (Wolff, 2010) fueled by the admix-
ture of oversupplied credit and stagnant real incomes. This
market segment is where one ?nds the riskiest mortgage
products, as grand aspirations and limited means are bro-
kered into an unhealthy marriage. In the United States,
these products are targeted towards non-white popula-
tions, as well as to the least educated. The foreclosed upon,
who had to be wealthy enough to obtain a mortgage, and
the bankrupt, for whom mortgages were a major cause of
bankruptcy, largely come from there.
23
Thus in their 1983
survey, Sullivan, Westbrook and Warren (1999, p.331) found
that personal bankruptcy is, by and large, an ‘‘ordinary story
of middle-class people drowning in debt’’.
24
But it is worth
noting that the upper reaches of the middle class are drown-
ing in debt, too. The exponential wealth accumulation and
income gains among the top quintile drove an endless com-
petition over lifestyle and a rapid increase in the price of as-
sets. Those lower down in the income distribution did not do
nearly so well. In the fourth quintile of the income distribu-
tion, income gains since the late 1970s were essentially nil.
Those in the third quintile saw their incomes decline in real
terms. Consumers in these segments borrowed more at less
pro?table terms, and leveraged their assets aggressively—
usually with home equity loans—trying to keep up. It is in
these sections of American society that one ?nds the highest
debt/net worth and debt/income ratios (Wolff, 2012,
2010).
25
In his analysis of the mortgage market, Bourdieu de-
scribes the middle-class experience of credit as an example
of ‘‘petit-bourgeois suffering’’. ‘‘By embarking upon pro-
jects that are often too large for them, because they are
measured against their aspirations rather than their possi-
bilities, [the middle classes] lock themselves into impossi-
ble constraints, with no option but to cope with the
consequences of their decisions, at an extraordinary cost
in tensions, and, at the same time, to strive to content them-
selves, as the expression goes, with the judgment reality
has passed on their expectations’’ (Bourdieu, 2005, p.
186). We prefer the term ‘‘middle class’’ to the more archa-
ic ‘‘petite bourgeoisie.’’ But Bourdieu puts his ?nger on the
speci?c structural constraints faced by this group, which
are at the root of its contradictory ethos of discipline and
self-grati?cation. The middle class is squeezed between
the ‘‘morality of saving’’ and the ‘‘morality of credit’’ (Bour-
dieu, Boltanski, & Chamboredon, 1963). Meanwhile, Daniel
Bell (1996) also saw the unstable fusion of hedonistic
indulgence with agonized but morally consistent middle-
class Protestant striving as the central cultural tension in
modern American capitalism.
26
This contradiction is per-
haps nowhere as clearer than in credit institutions and per-
sonal bankruptcy laws that are at once punitive and
redemptive (Skeel, 2001).
In a world of scores rather than classes, economic tech-
nologies transform this dilemma. On the one hand, they
objectify the material constraint by expanding consumer
aspirations and the possibility of ‘‘keeping up with the Jon-
eses’’, albeit at differentiated prices and levels of vulnera-
bility. But they also reinforce the practice of self-
surveillance. People can, in principle, take the measure of
their constantly changing position on the FICO scale. First,
the old-fashioned face-to-face interaction between bank
of?cers and clients—what Lazarus (2012) calls the test, or
the trial, of credit (l’épreuve du crédit)—is now routinized,
invisible and depersonalized, but also multiplied and re-
peated with every credit check. Second, with behavioral
scoring, one’s credit possibilities are a constantly moving
target, readjusted with every activity. One’s credit identity
thus becomes a dynamic project to be managed through an
‘‘ethic of improvement’’ (Marron, 2009, p. 193), and in a
manner all the more insatiable because good credit is
seemingly within everyone’s reach. Hence the multiplica-
tion of ?nancial education programs (often state-spon-
sored), TV shows and pedagogical devices, in the US as
elsewhere (Bay, 2011; Fridman, 2010). No wonder, then,
that this is also where activity around the score intensi?es
rapidly. Our analysis of FINRA data shows that the likeli-
hood of checking one’s credit score or obtaining a credit re-
port rises sharply with income and education, and only
tapers off for households with incomes above $150,000
per annum, and for people with advanced degrees (see FIN-
RA, 2009).
The bene?ts of appreciation: virtue and privilege at the top
The top of the credit scoring scale overlaps in part with
the top of the income and net worth scales, but even more
closely with the top of the education scale (Lusardi, 2011).
The main virtue of the very high earners, from the point of
23
Almost 40% of the foreclosed upon and seriously delinquent mortgages
come from borrowers whose income is well above the median income of
the area (Gruenstein Bocian, Li, Reid, & Quercia, 2012).
24
However, the incidence of bankruptcy has moved noticeably down the
income scale since then. See Sullivan, Warren, and Westbrook (2006).
25
Over the last 20 years in the United States, debt-to income ratios have
been highest in the third and fourth quintile of the income distribution
(Source: Federal Reserve Board, Survey of Consumer Finances). In 2007,
these ratios reached respectively 155.4% for the fourth quintile and 130.7%
for the third quintile. In the same year the debt-to-income ratios of the
bottom 40% households were ‘‘well below 100%’’ (Weller, 2012).
26
In a phrase that now sounds even more archaic than ‘‘petite bourgeoi-
sie’’, Daniel Bell called this the problem of demanding that people be
‘‘straight by day and swingers by night’’ (Bell, 1996, p. xxv).
568 M. Fourcade, K. Healy / Accounting, Organizations and Society 38 (2013) 559–572
view of algorithms, is that they are just less likely to over-
burden themselves with debt, or have dif?culty managing
payments. But the most ‘‘responsible’’ consumers also tend
to be highly educated. They are best equipped with the cul-
tural capital to navigate the business of credit and credit
scoring. ‘‘Over all, those with the highest scores keep low
revolving balances relative to their available credit; they
don’t ‘‘max out’’ their credit cards; and they consistently
make payments on time, even if it’s just the minimum re-
quired amount’’ (Carrns, 2012). And thus credit providers
compete ?ercely to attract those people who borrow large
in absolute terms but repay in a predictable and controlled
way—mostly because they have the means to do so. And so
additional bene?ts pile up, too, implicitly subsidized by the
structure below.
Whether it is earned or a byproduct of abundance, eco-
nomic virtue generally brings material rewards. But the
multipliers effects of an excellent score kick in even more
strongly in the higher income and wealth brackets. Those
who ?nd themselves in this position can leverage their as-
sets via the credit system to accumulate more at a cheaper
cost. This is especially true when the value of those assets
rises quickly, as it did during the 1990s and most of the
2000s. Through the ?nancial system, they can also invest,
make money work for them through stock ownership, ren-
tal properties or home ownership in desirable locations,
and perhaps even live ‘‘by collecting interest’’ (Graeber,
2010, p. 388).
There are symbolic rewards, too. Those who think that
market institutions are inevitably erase distinctions should
attend to the astonishing prevalence of ‘‘private,’’ ‘‘exclu-
sive,’’ or ‘‘elite’’ categories of membership across consumer
markets of all kinds. Consumers who belong to the right
categories—customers who are silver, gold, or platinum-
plated—get special treatment, better service, and all kinds
of side material bene?ts.
27
Their position appreciates, so
to speak, because the system appreciates their position.
Far from eliminating exclusionary status distinctions, mar-
ket society proliferates them. The key difference is that these
honors and rewards are not bestowed by accident of birth or
via some sumptuary law. Instead, bureaucratic systems
track behaviors, record progress through the classi?cation
system, and rationally assess when particular cases will be
elevated—or downgraded—to a new status.
In this social stratum, the intertwining of material and
symbolic bene?ts not only creates a sense of comfort
around credit, it also fosters a sense of privilege, and
encourages a proactive attitude toward providers. In our
analysis of FINRA data, we ?nd that these are the people
who shop around, re?nance, rebalance their accounts fre-
quently, and pay back their loans in advance. In periods
of tight money, when the competition for customers with
good credit intensi?es, they are also the ones who bene?t
the most from government actions designed to ease the
crunch. Thus a Wall Street Journal article reported that cash
injections by the Federal Reserve in the aftermath of the
2008 credit crunch have almost exclusively bene?ted the
most creditworthy, because banks would only lend to peo-
ple in the higher-scoring brackets (e.g., above 700): ‘‘‘even
though we have the greatest monetary policy stimulus in
the history of the Fed, we really have not managed to lower
the funding costs for a large swath of people,’ said David
Zervos, a bond strategist with Jefferies Inc., a Wall Street
investment bank. He called Fed efforts ‘monetary policy
for rich people’’’ (Hilsenrath, 2012).
Conclusion
‘‘It is easy to understand how the power of the norm
functions within a system of formal equality, since
within a homogeneity that is the rule, the norm intro-
duces . . . all the shading of individual differences.’’ (Fou-
cault, 2012, p. 184)
Much of the theoretical debate on strati?cation in the
twentieth century orbited around three attractors: big
classes grounded in exploitative labor relations, individual
returns to human capital or skill in the market, and occu-
pational-level social closure, often built on some categori-
cal identity. We propose to revisit class analysis in the light
of techno-social changes generated by the advent of novel
market devices. These devices segment, score, classify and
target concrete individuals in increasingly precise ways, in a
world where pro?ts depend on exploiting these techniques
effectively. We argue that understanding how classi?ca-
tion situations are produced through the operation of scor-
ing, segmenting and marketing instruments is essential to
understanding the structure of new class situations, when
class is conceived as the social distribution of life chances
in markets.
Credit scores commensurate people, classify and rank
them (Espeland & Stevens, 1998). Scores are attached to
variable economic rewards (such as different interest
rates), and are part of the process by which shared mar-
ket-situations are generated. This process is strengthened
the more credit scores are routinely incorporated as
assessment and screening devices in other markets, such
as insurance, employment, real-estate—even dating (FTC,
2007; Silver-Greenberg, 2012; Wacquant, 2009, p. 139).
Credit scores facilitate differential pricing and terms of ac-
cess to goods and services across a wide range of domains.
They are an active, independent force that structures peo-
ple’s life-chances via their ?nancial position—all the more
in a society where the median household debt is about
double the median annual income—and which, once estab-
lished, percolates to every aspect of people’s lives.
28
27
For instance, various forms of insurance for their purchases. Or take the
singling out of elite customers at the airport: ?rst to enter and leave the
plane, they have access to special areas (lounges, gates, parking spaces), and
their names magically appear on the ‘‘cleared list’’ while the hoi polloi are
rebooked.
28
Of course what is true of credit scores is true of other types of
behavioral records, like criminal records or eviction records, which also
have a deep effect in structuring life trajectories (Pager, 2007; Desmond,
2012). In a more benign manner, tracked purchase records with stores have
transformed the political economy of marketing and selling, with high
purchase levels being routinely rewarded with larger discounts and better
services.
M. Fourcade, K. Healy / Accounting, Organizations and Society 38 (2013) 559–572 569
It is important to remember that while these scoring
systems grew up in a social context already highly struc-
tured by established inequalities in occupational attain-
ment, education, income, and racial strati?cation, they do
not simply reproduce the status quo ante. Accurately
tracked measures of credit-related behavior are far better
predictors of outcomes than broad measures of educa-
tional attainment or racial classi?cation. (Fourcade &
Healy, 2013) That is one of the reasons lenders use them.
Social scientists would use them, too, were they not trade
secrets. Their analytical use and active application in mar-
kets does more than simply ‘‘freeze a certain state of the
power relations.’’ (Bourdieu, 1984, p. 482) It recreates
these relations anew. If social class is the distribution of
bundles of life-chances expressed as market situations,
then we need to rethink class analysis through the prism
of credit scores and similar devices.
In the 1960s, there was a debate centered on the notion
that ‘‘the poor pay more’’ (Caplovitz, 1963). With the Great
Society and the expansion of welfare programs, it waned.
But its main idea—that being poor costs money, that ?rms
looking to do business with the poor know this, and sys-
tematically exploit it—is worth retooling for a neoliberal
era. Debt has become more accessible, but also a lot more
expensive at the bottom end of the social scale. And now it
is not simply the ‘poor’ that pay more, but much more spe-
ci?c categories of people, measured and targeted by moral-
ized market instruments and differentiated market
institutions. Classi?cation situations may have become
the engine of modern class situations.
Acknowledgements
We thank Steven Barley, Irene Bloemraad, Bruce Carru-
thers, David Cooper, Eve Chiapello, Matthew Desmond,
Marie-Laure Djelic, Derek Hoff, Andreas Kalyvas, Daniel
Kluttz, Jeanne Lazarus, Roi Livne, Bruno Palier, Alex Roe-
hrkasse, Matthias Thiemann, Loïc Wacquant, Erik Olin
Wright, Valery Yakubovich, two anonymous AOS reviewers
for helpful comments on an earlier version of this article or
insights about its subject. This work was presented at the
annual conferences of the American Sociological Associa-
tion (2011), the Social Science and History Association
(2011), the Society for the Advancement of Socio-Econom-
ics (2011), the Interdisciplinary Perspectives on Account-
ing Conference (2012), the ‘‘Politics of Markets’’
conference (Berkeley 2009), the conference on ‘‘Economic
Modernity in the 21st century’’ (Barcelona 2012) and the
Max-Planck-Sciences Po Center inaugural conference (Paris
2012), as well as in talks at Duke University, ESSEC Busi-
ness School, Harvard University, Princeton University, Sci-
ences-Po, the University of California Berkeley, the
University of Chicago, and the University of Pennsylvania.
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