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Mapping the culturalgrammar of reflexivity: thecase of the Enron scandal

Galit Ailon

Abstract

Theorists of political economy, institutional sociology and late modernity haverecently embraced ‘reflexivity’ as a pivotal concept in their accounts of change incapitalist society and institutions. Despite significant differences between them,these theorists jointly promote an image of reflexivity as a culturally unstructured ordisembedded reflection upon problematized conventions and beliefs. The paperturns this joint theoretical image into an empirical question. Focusing on thereflexive discourse sparked by the Enron scandal, it offers a grounded analysisof Enron-related articles published in the popular American BusinessWeek in1997�2007. The analysis examines the rise and fall of the Enron icon and thesense-making process that followed its bankruptcy which, at that time, was thebiggest in history. It shows that reflexivity had an underlying cultural grammar thatparalleled that pertaining to the management of money. Its four primary principleswere: minimizing ‘costs’ entailing loss of discursive status or persuasive effect;maximizing the use-value of a core truism; quantitatively cueing morality; andconducting discursive competitions. Capitalist reflexivity, the case study proposes, isbased on an underlying grammar cast in the shape of its own beliefs.

Keywords: reflexivity; Enron; capitalist culture; financial scandals.

If the vast literature on the development of capitalism has one theme in

common it is this: capitalism has a transformative sensitivity to its own crises

and failures. A variety of relatively recent streams of theorizing about political

economy (e.g. Leyshon, French, Thrift, Crewe & Webb, 2005; Thrift 2005),

institutional sociology (e.g. Berk & Schneiberg, 2005; Sabel & Zeitlin, 1997;

Galit Ailon, Department of Sociology and Anthropology, Bar-Ilan University, Ramat-Gan,

Israel. E-mail: ailonsg@mail.biu.ac.il

Copyright # 2011 Taylor & Francis

ISSN 0308-5147 print/1469-5766 online

DOI: 10.1080/03085147.2011.529331

Economy and Society Volume 40 Number 1 February 2011: 141�166

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Stark, 1996) and late-modernity (e.g. Beck, 1992; Giddens, 1994; Lash, 1994a)

have identified ‘reflexivity’ as pivotal in this regard, referring to it as a process

involving self-reflection upon problematized beliefs or knowledge limitations

and attempts to revise them. Despite significant differences between the

streams, they promote a joint theoretical image of reflexivity as a discourse1

that is culturally and institutionally unstructured, representing a look from an

abstract or disembedded ‘outside’ upon conventional ways of conceiving the

provisions and practices of the capitalist world.

The paper turns this joint theoretical image into an empirical question.

Using an interpretative approach, it offers a longitudinal analysis of a decade-

long reflexive sense-making process that unfolded in a popular American

business media outlet. Its findings indicate the existence of an underlying

cultural grammar of reflexivity: a group of principles structuring its unfolding

dynamics and standing at the basis of its logic. The case study thus suggests

that reflexivity does not represent a look from a disembedded cultural

‘outside’. Rather, it is premised upon a structured movement that is ‘capitalist’

in the deepest cultural sense of the word, managing beliefs with the same

underlying grammar pertaining to the management of money.

The reflexive discourse under analysis unfolded in the widely-read

American BusinessWeek magazine in relation to the Enron scandal. Once a

prime icon of ‘New Economy’ rigour and an exemplary prototype of post-

deregulation entrepreneurship, Enron was a fast-growing energy trading firm

that thrived alongside the American public faith in the free market. It collapsed

in 2001 after some of its accounting manoeuvres were revealed as questionable.

Its bankruptcy, then the largest in history, and first in a series of corporate

financial scandals, constituted a capitalist failing at a time of seeming triumph,

a failing in its own terms and by its own momentum. It gave rise to a long

discursive shock which drew attention to financial and business knowledge

limitations and contradictions. The Enron discourse thus offers an opportu-

nity to explore some of capitalism’s modes of self-reflecting upon truth failures

and problematized beliefs and of coping with and revising them.

Capitalist reflexivity from three theoretical angles

As claimed, different theorists of capitalism and capitalist society have placed

reflexivity under the spotlight. These theorists are jointly concerned with

explaining change, but they do so from distinct theoretical vantage points. In

what follows, I discuss both the theoretical role that the theorists ascribe to

‘reflexivity’ and the lacuna that jointly besets their conceptualizations.

The first group of theorists is concerned with the ‘new political economy’

and belongs to a stream of thinking that focuses on the constitutive role of

knowledge within modern economies (‘virtualism’; see Carrier & Miller, 1998).

According to such theorists, contemporary times mark the extension and

acceleration of a process identified by Polanyi (1957) as the abstract

142 Economy and Society

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disembedding of economic activities from other spheres of action (Carrier,

1998, p. 2). As a consequence of various developments, notably the growing

‘cultural circuit’ of capitalism (Thrift, 2005) and, within it, the critiques and

economic spectacles circulated by the media (e.g. Clark, Thrift & Tickell,

2004; Leyshon et al., 2005; Thrift, 2005), capitalism has become increasingly

caught in virtual webs of meaning that are constitutive of (rather than merely

reflective of) the economic world. In this sphere of ‘virtualism’, it continues its

historically unending process of resolving the contradictions that are intrinsic

to its culture (Miller, 1998, 190). Indeed, according to some researchers, this

process of resolving contradictions is to a great extent intensified in the current

era. Facing constant pressure of crises and unexpected events, capitalism’s

virtual phase is characterized by continuous self-reflections and revisions of

practical knowledge (e.g. Leyshon et al., 2005; Thrift, 2005).

These theorists thus view reflexivity as a mark of a growing cultural focus

on the ideational realm of abstraction. At the same time, some also promote an

image of it as involving an innate and intensified ability to ascend discursively

above this realm, to engage in what Thrift describes as ‘a process of continual

critique of capitalism, a feedback loop which is intended to keep capitalism

surfing along the edge of its own contradictions’ (2005, p. 6). Thus, while the

reflexive preoccupation with knowledge is taken to be culturally encouraged,

its essence is also seen to be somehow culturally detached, representing an

innate critical ability to stay reflectively on top of the cultural flow, constantly

to pull capitalism up above itself.

Institution-change theorists have also brought reflexivity into the limelight.

Working to further the understanding of how crises, failures or environmental

shifts lead to institutional change, several writers have presented reflexivity as

a missing link (e.g. Berk & Schneiberg, 2005; Sabel & Zeitlin 1997; Stark

1996). Reflexivity, they indicate, overcomes a divide between an economistic

theoretical focus upon agents’ calculations within constraints and a politico-

cultural focus upon the strategic enactment of taken-for-granted under-

standings. The concept contributes to institutional-change theory an

acknowledgement that agents who face unexpected circumstances have the

capacity ‘to reflect collectively on background conditions, discover and

experiment with alternatives, deliberate about their consequences, and then

revise those conditions’ (Berk & Schneiberg, 2005, p. 49). Change in capitalist

institutions is accordingly seen to result from a reflexivity born by and

expressed in relation to institutional heterogeneity, ambiguity and path

variety: a reflexivity residing in the space between institutionalized

alternatives. In other words, this conceptualization of reflexivity promotes a

theoretical image of it as a phenomenon that is creatively formulated by

agents in the interstices of institutions, leading to change through a thought

process that lacks a structured path or a preordained normative or

instrumental calculus.

Late-modernity theory is another stream of thinking to have placed

‘reflexivity’ under the limelight. Writers of this stream have argued that

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various developments in capitalism � namely, its victories and industrial

achievements (Beck 1992), its expansion and global interconnectedness

(Giddens 1994) and its increasing institutional ‘disorganization’ (Lash

1994b) � have given rise to ‘reflexive modernization’. This jointly embraced

term should not be confused with unitary theoretical meaning. For

Beck (1992), ‘reflexivity’ originates from a quasi-autonomous social self-

confrontation with the unintended risks of industrialization, one which makes

the limitations of traditional institutions and beliefs evident and thus ‘available’

for critique. For Giddens (e.g. 1990, 1994) ‘reflexivity’ is something that

advanced modernization enables (not forces) through its expert systems of

knowledge. In his account, these systems induce an intensified self-reflection

upon social conventions which functions to ‘detraditionalize’ them. And Lash

(1994a) links reflexivity to the new communication structure typical of

production and consumption contexts, as well as to the increased centrality

of cultural institutions such as the media (1994b, p. 208). Critical of Beck’s and

Giddens’s cognitive focus, he speaks of ‘aesthetic reflexivity’ and ‘hermeneutic

reflexivity’: the former is born by the flow of mimetic symbols and functions

incessantly to deconstruct social structures from a particularist and contingent

position empty of cultural depth. The latter is marked by an increased

tendency for self-interpretation of shared meanings and is issued from the

‘groundless ground’ of ‘reflexive communities’ (1994a, p. 168).

Theorists of late modernity thus posit reflexivity as the cultural mark and

the chief engine of the institutional movements that constitute late

modernity. The actual ‘substance’ of the critique and self-interpretation

that constitute it is nevertheless rendered institutionally liberated (Beck,

Giddens), empty of cultural depth (Lash) or resting upon a ‘groundless

ground’ (Lash). In all these ways, reflexivity is cast as a reflective

phenomenon which lacks a deeply ingrained cultural imprint; a reflective

phenomenon freely, contingently or groundlessly deconstructing contempor-

ary structures and conventions.

Thus, writers from three distinct theoretical streams have embraced

‘reflexivity’ as a core concept. Generally, their treatments of reflexivity share

two paradoxical commonalities. First, all of them are primarily concerned with

understanding the relationship between reflexivity and the culture and

institutions of capitalist society. Thus they pose reflexivity as a primary motor

of change, especially in contemporary times. Second, the theorists also

promote an image of reflexivity as a discourse that is somehow beyond culture

and institutions: a reflective process that is perhaps culturally encouraged but

also culturally unstructured, representing a detached, deconstructive observa-

tion upon the conventions and provisions of the capitalist world.

Theorists from all three streams have not actually put this image to an

empirical test. They illustrated reflexivity by assembling evidence for the

cultural jolts that constituted its points of origin (unexpected events, crises,

trends, etc.) and the knowledge revisions that constituted their end products.

Since reflexivity is defined by all theoretical streams as a process, accounts of its

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points of origin or end products cannot sustain the joint image of it as a

culturally unstructured or disembedded reflection. Given the theoretical

emphases on the contemporary importance of capitalist reflexivity, there seems

to be a need to undertake methodical inquiries into actual reflexive processes,

to explore their evolution as a means of examining their patterns and dynamics.

Undertaking such an inquiry, the study explores reflexivity within the

broader capitalist cultural field. As writers from both the ‘virtualism’ and the

‘late-modernity’ streams of thought have noted, the popular media (e.g. Lash

1994b), and especially their managerial and business outlets (e.g. Clark et al.,

2004; Thrift, 2005), play a central role in constructing and disseminating

capitalist beliefs and knowledge, thus constituting an optimal site in this regard.

Institutional-change theorists, too, offer justifications for choosing popular

media as a site of inquiry into the cultural underpinning of capitalist reflexivity.

Thus, theorists marked public discourse as a primary site for exploring

processes of embedding/re-embedding of market institutions (Somers & Block,

2005), and argued for the need to ‘take ideas and discourse seriously’ and

unravel the meta-level collective discursive logic which enables agents to reflect

critically upon their institutions (Schmidt, 2008, pp. 322, 310).

This research’s case study is the reflexive discourse sparked by the Enron

scandal in the leading American magazine BusinessWeek,2 a weekly trade

publication of McGraw-Hill. Distributed to a huge worldwide audience of

nearly five million,3 it is ‘arguably the most powerful business magazine in the

world’ (Salak, 2003, p. 67). With a large editorial staff located in its New York

headquarters and a majority of correspondents located in news bureaus across

the US,4 it represents a core segment of the American business-oriented

mainstream and its take on contemporary capitalism and the global markets.

Characterized by a broad economic focus, it offers business, managerial and

financial news and analyses. Its role in developing ‘New Economy’ thinking has

been especially prominent (Henwood, 2005, pp. 7, 32). BusinessWeek’s broad

economic focus, centrality, explicit capitalist commitment and week-by-week

coverage turn it into an optimal site within which to track an evolving and

popular stream of capitalist reflexivity. Future research will hopefully map

out other variants of reflexivity by examining other outlets and sites of reflection.

The Enron scandal

During the last decades of the twentieth century, the American public’s faith in

the market thrived. In contrast with the post-war belief in the need for

government to regulate market forces, markets were increasingly trusted as

self-regulating mechanisms that, if set free, were more capable of advancing

prosperity and wellbeing than any governmental apparatus. A set of neoliberal

principles designed to disembed business and exchange from public regulation

(‘deregulation’) progressively became accepted wisdom (e.g. Harvey, 2005;

Stiglitz, 2003). As the twentieth century approached its end, faith in the

Galit Ailon: The cultural grammar of reflexivity 145

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market grew increasingly optimistic and engulfed American culture writ large.

In the 1990s writers and reporters announced a ‘new economy’ and claimed

that advanced communication technologies were revolutionizing production

and democratizing the market, overcoming entrenched elite privileges and

promising creative new opportunities for making money (Frank, 2000;

Henwood, 2005; Thrift, 2001).

Enron was a celebrated emblem of this triumphant free-market faith.

Founded in 1985 as a natural-gas pipeline company, it evolved into an energy

trading firm that bought and sold not only gas but also electricity, that

ventured abroad to build power plants and utilities and that eventually became

a dot-com, trading commodities online. In 2000 its revenues reached $101

billion, making it the seventh-largest company in the US and an exemplary

specimen of ‘New Economy’ thinking throughout the world. ‘Like McDo-

naldization and Disneyfication, ‘‘Enronization’’ [was] at the center of the new

global economy’ (Boje, Rosile, Durant & Luhman, 2004, p. 766). During its

years of growth, the company spent millions on lobbying in order to receive

assistance for advancing projects abroad and furthering energy deregulation,

and its chairman, Kenneth Lay, was called upon to take part in policy task

forces (Fox, 2003; Stiglitz, 2003).

To help sustain its growth and prop up stock prices, the company hid losses

and shuffled debts through complex accounting procedures. Many of these

procedures, it should be noted, were within the wide, deregulated American

legal bounds, and actually quite standard in the 1990s (Stiglitz, 2003).

Additionally, the company was among the suppliers and traders involved in

California’s electricity crisis in 2000�1. The crisis, precipitated by the

deregulation of the state’s electricity market, involved overpriced power and

blackouts (see Fox, 2003; Stiglitz, 2003).

In the end of 2001, at the height of the Californian crisis, Enron’s stock price

tumbled and its financial manoeuvres were exposed. As the Securities and

Exchange Commission (SEC) began investigating the company’s records,

employees of ‘Arthur Andersen’, Enron’s auditor, shredded relevant documents.

The accounting firm was consequently indicted by the Justice Department and

collapsed. Enron went bankrupt in December 2001 and its bankruptcy was, then,

the largest in history. The years since the bankruptcy have involved a series of

trials and legal hearings, including those which eventually led to the criminal

conviction in 2006 of Enron’s former CEOs � Kenneth Lay and Jeffrey Skilling �on counts of fraud, conspiracy and related charges.

The revelations and legal dramas unfolded gradually, over the course of

years. It was a ‘megaspectacle’ (Boje et al., 2004); a long-lasting media

sensation that ‘rocked America’ (Stiglitz, 2003, p. xlii). ‘So much of the last

twenty years come together in the Enron story’, writes Henwood, ‘deregula-

tion, financialization, post materiality fantasies, the links between capital and

the state, the increased role of the stock market in the running of big

corporations, and professional corruption . . . Enron would be read as the

demise not just of one firm, but of an entire economic model’ (2005, p. 33).

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As the details of Enron story were revealed there was some space � there is

always some space � for determining what they mean, how they impinge upon

existing convictions, what lessons should be drawn from them. Since this was

not a ‘one-shot’ event but an ongoing spectacle, the reflexive sense-making

process was a gradual project, constantly checked against itself by the sequence

of discoveries and the stream of corporate scandals that followed Enron. What

were the elements of this process? What type of sense-making, criticisms and

reflections did they incite? What were the dynamics of reflexivity that the

Enron scandal set in motion?

The process of analysis

This study is based on an interpretative analysis. It seeks to unravel the

ordering principles of an evolving reflexive content. Since reflexivity concerns

a process of self-reflection and knowledge revision, the study applies a

longitudinal perspective and explores the discursive movement along a

primary trajectory of reflection across time (the Enron scandal).5 Data

includes all articles containing the word ‘Enron’ which were published by

BusinessWeek in January 1997�May 2007 and selected by a search engine from

electronic databases. Approximately one thousand articles, ranging from short

reports to cover stories, were thus selected by a search engine.6

Interpretation was premised upon an inductive logic and based on a process

of emergent coding. Originating from grounded theory (Glaser & Strauss,

1967), its methodological strategy was adapted to the research question at

hand, in accordance with the more contemporary approach of ‘emergent

methods’ (Hesse-Biber & Leavy, 2008). Primarily, the interpretative analysis

was based upon two major sets of codes, one characterizing the substantive

content and the other characterizing the evolution � the ‘flow’ � of the sense-

making process.

Specifically, the process of interpretation consisted of four stages. The first

included reading and substantive coding. In the second stage I summarized

each article, rechecked and elaborated the substantive codes and noted their

recurrence and centrality. Seeking to track the flow of meaning, I further coded

the discursive evolution both within the articles and between them, noting, for

example, a development of a previously introduced distinction, a moral flip in

the construction of managerial figures, a transition from doubt to certainty and

so on.

The third stage was marked by the move from the textual details to the

comprehensive interpretative outlook, whereby I eventually formulated the

four interpretative frames concerning the grammar of reflexivity. In this

stage I opened computer files for the major substantive codes, pasted into them

the relevant citations and undertook a classificatory analysis of their underlying

themes. Additionally, I mapped out the discursive evolution codes chron-

ologically. The twin focus on thematic characteristics and dynamics of flow

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enabled me to track down and compare the development of the different

themes across time, to identify repetitive tendencies and, thus, eventually, to

map out patterns in the evolution of the content.

Finally, once the four interpretative frames were formulated, I rescanned the

articles for each separately, searching for examples, counter-examples, nuance

and exceptions. Rescannings enabled the rechecking and developing of the

frames, in order to ensure precision in capturing intricacy.

In light of contemporary post-structuralist sensitivities, it is important to

stress that, as is always the case, research constitutes an interpretative reading

of data in relation to which more possibilities of meaning await. To help

evaluate my interpretation, the exposition of the findings will be accompanied

by a profusion of illustrations: every interpretative statement will be directly

illustrated and, as an aggregate, the illustrations will not only speak to distinct

interpretative statements but also to the interpretative framework as a

whole.

Findings

This section consists of two parts. The first traces the history of the ‘Enron’

icon: its initial fame and the events leading to its re-iconization as a symbol of

corruption and evil. This part is designed to contextualize the reflexive debate

that ensued from the bankruptcy onwards. Focusing on this debate, the second

part discusses the grammatical principles expressed through its evolution.

The Enron icon

In 1997�2000 BusinessWeek’s coverage of Enron posed the company as a ‘New

Economy’ icon. Starring in the journal’s best-lists (e.g. ‘The 50 best performers’

[27 March 2000]), Enron’s managers were posed as missionaries committed to

advancing deregulation and the free-market agenda (e.g. 9 June 1997),

exemplary incarnations of ‘New Economy’ entrepreneurial spirit (e.g. 10

January 2000) and pioneers of web technology ingenuity (e.g. 18 September

2000a). Enchantment with the ‘cutting-edge energy powerhouse’ (10 January

2000) was especially evident in 2000. It was stylistically expressed and bolstered

through glib phrases which included wordplay (‘Skilling has taken Enron’s skills

to the net’ (15 May 2000)), wittiness (‘By creating the financial tools . . . Skilling

has boosted Enron’s revenues tenfold . . . Plug in the Web, and the mixture

becomes, well, electric’ [24 July 2000]) and economic cliches (‘transforming

inspiration and new resources into gold’ [18 September 2000b]). Though not all

went smoothly for Enron during this time, criticism against it was usually cast as

doubtful: ‘Yet some question whether Enron is moving too fast to get it all right’,

stated for example an article titled ‘Enron electrified’ (24 July 2000) after six

enthusiastic paragraphs. Citing a competitor who claimed that Skilling’s

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projection about the US bandwidth market was exaggerated, the article

immediately stated: ‘That sounds sweetly familiar to Enron execs. When they

started trading electricity six years ago, naysayers warned it would never be

bought and sold like gas. Now it is’.

A slightly more critical stance was nevertheless adopted in relation to

persistent protests about overpriced power provided by Enron’s Dabhol plant in

India. Here, it was admitted that Enron was suffering from ‘a distinct whiff of

controversy’ and that it ‘may need to learn new lessons’ (24 May 1999), but

blame was generally attributed to an unstable Indian political system and

immature economy. When overpriced power struck the deregulated California

market, deregulation itself came under a public attack. Consumers’ rage

mounted a challenge to the core belief that unfettered markets work in the

best interest of both producers and consumers, as well as to deregulation plans in

other states (12 February 2001a). Now that the distinction between India and

‘us’ had collapsed, new distinctions were introduced to explain the problems

with deregulation. One distinction was between the short and long run, the

argument being that the problems are temporal and ‘deregulation ultimately

helps’ (28 August 2000). Another was between full and partial deregulation. The

problem with California was not that it deregulated, but that it did not

deregulate enough (e.g. 12 February 2001a) or did not deregulate carefully

enough (12 February 2001b): it was a problem with inept policy-makers, not

with deregulation.

Enron garnered ‘no . . . accolades from California’s great deregulation

experiment’: making huge profits during this time, consumers accused it of

‘profiteering and market manipulation’, a fact acknowledged in a BusinessWeek

cover story titled ‘Power play’ (12 February 2001a). Nevertheless, as it still

bore the numeric honorary tokens marking rises in the figures of success

(sales, stock prices, etc.), it was said to deserve ‘the benefit of the doubt’

(12 February 2001a).

Yet Enron’s trouble in California heightened throughout the summer of

2001 (Fox, 2003). With the Californian consumers’ anger on the rise, a pie was

thrown at Skilling; the Federal Energy Regulatory Commission imposed price

caps on electricity, forcing a price drop which apparently set off the sharp stock

fall that ensued; and Enron was cited for contempt by a California Senate

committee investigating possible price-gouging.

However, it was not until November that an ‘Enron Debacle’ was announced

in a BusinessWeek article bearing that name (12 November 2001). Though

briefly mentioned, this ‘debacle’ announcement did not focus on California, but

on two accounting events which occurred in October: Enron took a $1.2 billion

charge related to various write-offs, including ones concerned with off-balance-

sheet partnerships (‘LJM’) managed by its CFO Fastow; and the SEC began

investigating the company’s disclosure of partnerships. It should be noted

that charges relating to off-balance-sheet partnerships and a SEC probe

were perhaps problematic, but not unique: many companies managed such

partnerships and were under a probe. Alongside the focus on these events as a

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‘debacle’, attention shifted from California’s consumers’ anger to a new concept

of investors’ anger:

The deals were first revealed in a 1999 proxy, raising concerns from investors

and analysts. By this summer, when Enron’s stock was falling and its bets in

broadband were souring, complaints about LJM grew louder. So in June, Fastow

pulled out of the partnerships. When the write-offs came, Enron enraged

analysts and investors further by failing to disclose the hit to equity in its third-

quarter earnings press release. Instead, Lay mentioned it in a conference call

with analysts. (12 November 2001)

Retroactively narrated to construct a sense of intensification, investors’ anger

at the partnerships was posed as building momentum since 1999. Note that,

while the stock fall and the broadband failure were integrated into this anger

narrative, the Californian crisis was not. Anger was thus redirected to a new

path: one originating not from consumers but from investors and directed not

at the deregulated market but at a specific company. On this path, the gist of

BusinessWeek articles changed from defence to offence, from struggling to

explain the deregulation debacle to piecing together the elements of the Enron

debacle. Accordingly, that November article was marked by a turn to the

negative rhetoric visible thereafter.7 Enron’s once idealized operations were

now described as the ‘often Byzantine trading business’ or the ‘calamitous

foray into the water business’. Its star executives were portrayed as ‘aggressive,

even arrogant managers’ and its visions as ‘grandiose’.

Now on the offensive, BusinessWeek writers further broadened the targets of

attack to include not only Enron � the allegedly deviant market actor � but also

the financial professions that did not stop it. ‘How did one of the biggest

companies on the New York Stock Exchange manage to inflate its earnings by

20% . . .?’ asked an editorial titled ‘End the numbers game’ (26 November

2001). It answered: ‘In part, blame the breakdown of standardized accounting

rules and the anarchy that runs rampant in the financial statements of

Corporate America’. The notion of a ‘numbers game’ was already laid out in a

May cover-story (14 May 2001), but now that it was linked to the re-iconized

Enron it was about to give rise to what may be titled a full-blown hysteria. The

notion that numbers could be manoeuvred to look like other numbers � that

the economic ‘real’ itself can be produced and authorized by financial

professionals � challenged one of the most vital symbolic foundations of the

system as a whole. Thus we reach the point of bankruptcy.

The grammar of reflexivity

The post-bankruptcy discourse was a voluminous discourse which reflexively

examined topics such as accounting, corporate governance and financial

institutions. In what follows I explicate the four most salient grammatical

principles underlying its dynamic evolution.

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Minimizing discursive ‘costs’

The examined discourse seemed oriented, however unwittingly, to reducing

discursive ‘costs’, to minimizing the surrender of truths entailing loss in

discursive status or persuasive effect. The two most evident costs thus reduced

were market blame and reform concessions.

Minimizing the blame of the market The BusinessWeek articles were primarily

preoccupied with the task of assigning blame for the ‘Enron debacle’ to various

actors and institutions � executives, accountants, analysts, banks and others.

Indeed, blame attributions constituted one of their central thematic under-

pinnings (see Boje & Rosile, 2002).8 Nevertheless, underlying the stream of

blame attributions was a market-blame minimizing impulse: if the declaration of

an ‘Enron debacle’ directed anger away from deregulation and the free market

towards a single, supposedly deviant market actor, then reports of the

bankruptcy basically exonerated the market from any fault, blocking the neo-

liberal core from the reflexive process. The post-bankruptcy portrayal posed

Enron’s managers as deviants who ‘committed serious offenses against today’s

Information Economy’ (26 August 2002a). Thus, the economy was posed not as

a cause but as a casualty, a prime victim of Enron. The alleged lack of innocence

of the deviants (Enron’s managers and their professional accomplices) was used

to assert the innocence of the capitalist market. For example:

Capitalism works only when it is played on a level field. The essence of efficient

markets . . . is transparency . . . Enron management and its auditor, Arthur

Andersen, didn’t play by the rules that define a market economy. And they were

allowed to get away with it for years. The great tragedy is that if the system had

worked as it should have, Enron would still be in business . . . No one would

ever have noticed if the auditors, outside directors, and regulators had done the

right thing. It all would just have worked the way it was supposed to � and that

would have been the real tribute to capitalism.

(28 January 2002b)9

Note how the attributions of blame to specific wrongdoers and to general

professional oversight � to a specific player from inside the market and to the

guardians standing outside it � are used to exonerate the market itself from any

fault. With blame thus internally compressed and externally diffused, the

capitalist market and its idealizing apparatuses were made immune to reflexivity.

They were rendered a purity impaired, an innocence criminally assaulted.

While sustained throughout the period under analysis, the compression of

blame to the alleged corporate deviants was haunted by two tensions. First,

within the deregulated bounds of the 1990s, it lacked a decisive legal anchor.

The accounting techniques associated with Enron, it was generally realized,

conformed to the letter of the law. Enron’s execs ‘got approval from their

boards of directors and accountants for most of their actions’, and their

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‘financing and accounting techniques . . . may not rise to the level needed to

put the executives in jail’ (26 August 2002a).

The sense of criminality nevertheless withstood this lack of clear legal

culpability. It was sustained by two interrelated elements. One was the

tendency to pose the market not only as Enron’s ultimate victim, but also as

Enron’s ultimate judge, and to construe bankruptcy as its judgement. The

basic rationale was that Enron was ‘hyped’ (10 December 2001b) to appear

innocent and successful but the market was able to see and reveal its true

nature through the ‘lost faith’ (10 December 2001a) of investors and

customers. Since the outcome � bankruptcy � was seen to expose the truth

about Enron, all that made the company seem innocent and successful before,

including the apparent legality of its actions, was, according to this logic,

scandalously designed to hide the truth. Enron’s managers committed the sin

of ‘shamelessly promoting [Enron’s] image’ (18 March 2002). They hid the

company’s ‘true’ nature with sophisticated ‘accounting mirages’ (25 February

2002e). ‘In effect, there has to be an implicit moral contract to make the New

Economy work’, one article construed the meaning of the market-sentencing,

and Enron ‘violated’ that contract (20 May 2002). In other words, what

Enron’s managers did was perhaps technically legal but immoral, violating

some higher, retroactively defined law. They had ‘the most obsessive and

careful concern for the letter of the law’, but they ‘sacrificed the spirit’ (12

June 2006b). Backed by a notion of a clear market judgement, the sense of

criminality was sustained alongside the acknowledged legal ambiguities.

Additionally, the sense of criminality was sustained narratively. Several

textual elements gave rise to a sense of criminal plot. Most evident was the

characterization of Enron’s managers: for example, describing CFO Fastow, an

article claimed that ‘insiders saw him as sometimes volatile and vindictive’, that

he had a ‘screaming, table-pounding style’, that he ‘could also turn on the

charm’ and that ‘Fastow’s spokesman denies that he ever threatened bankers to

get them into Enron’s deals’ (4 February 2002c). Similarly, Kenneth Lay was

first compared to Mr Ponzi the ‘infamous financial schemer’ (e.g. 11 February

2002b), and later recast as ‘a weak, even spineless manager . . . [who] made no

real effort to control Skilling and his kamikaze minions as they gamed energy

markets and US accounting laws’ (6 February 2006). Such characterizations

were complemented with cynical public-shaming displays, such as a proposed

annual ‘Enron Award . . . nicknamed the ‘‘Kenny Boy’’’ (after Ken Lay) that

‘will go to the company whose actions did the most to undermine capitalism

and free markets in the preceding year’ (20 May 2002). And to complement

this sense of a criminal plot filled with crooks and a sense of justice-revealed-

after-all, there was also a helpless whistleblower who had seen it all in the

making, was powerless to make the bad guys stop, but would nevertheless be

called upon to make them pay:

One of the few heroes to emerge from this sordid case is Sherron Watkins, an

Enron finance executive who wrote a letter in August to Chairman and CEO

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Kenneth L. Lay that laid out in amazing detail the company’s accounting tricks.

Her letter, since made public, shows that Lay knew far more about misdeeds at

the company than he has admitted.

(28 January 2002a)

The compressed blame construct � narrowed down to the realm of a single

market actor � was haunted not only by a sense of legal inconclusiveness, but

also by a second tension: the fact that Enron was hardly the sole villain in the

market. Enron was far from last in a string of corporate scandals, and these

scandals threatened to undermine the sense of its deviancy. Until the WorldCom

scandal erupted in summer 2002, evolving into an even bigger bankruptcy

than Enron, the sense of Enron’s deviancy rested on the notion of its being a

‘scandal . . . unprecedented in scope’ (25 February 2002a). Additionally, there

was a tendency to pose Enron as the cause of the stock falls that occurred after its

bankruptcy: Enron was a source of an epidemic, sometimes titled ‘Enronitis’

(e.g. 11 February 2002a), expressed in the angst of investors who fled the market

because of doubts about the quality of corporate earnings.

By the time WorldCom fell, however, the sense of Enron’s ‘unprecedented

scope’ was shattered and the notion of unique deviance could no longer be

sustained. In his Fourth of July speech, President Bush spoke of a ‘few bad

apples’, and BusinessWeek reporters disagreed. ‘The scandal-a-day environ-

ment [is] rapidly turning those now infamous ‘‘few bad apples’’ into a full

orchard’, one of them, for example, stated (26 August 2002b).

Nevertheless, Fastow’s indictment the following fall resanctioned the notion

of a ‘few bad apples’, and the sense of Enron’s uniqueness was restored. Now,

however, it was broadened to include WorldCom as well. It ‘was the year

Enron set new lows in corporate ethics’, stated a January article, ‘while

WorldCom broke records for the size of its bankruptcy’ (13 January 2003).

With each indictment and trial that followed, the ‘bad apples’ paradoxically

seemed fewer: the lone deviants exonerated the system as a whole. After

Skilling and Lay were declared guilty by their juries, claims such as the

following were rendered sensible once again: ‘if there is one thing the

corporate scandals have shown us, it’s that bad behavior is actually pretty rare’

(12 June 2006a) Thus, while a source of much preoccupation, the tensions

haunting the compressed blame construct were discursively managed

throughout the period under analysis.

Minimizing reform concessions As claimed, the target of BusinessWeek’s criticism

concerned not only the ‘Enron debacle’, but also the ‘financial anarchy’.

Discussions of this ‘anarchy’ included many calls for reform. Nonetheless,

these calls were structured in a way which laid foundations for eventually

minimizing reforms by rationalizing reform reversals and withdrawals.

The structuring of the reform subdiscourses consisted of two basic

elements. First, calls for reform were explicitly not directed at the market.

The market, articles stated, was fixing itself much more efficiently than any

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potential reform. Readers were assured that there is ‘a sweeping and

preemptive move on the part of businesses to rethink their relationship with

auditors well ahead of any government action’ (8 April 2002). Or: ‘In America,

an enormous cleansing has already started . . . The market is recalibrating,

sending capital to companies with transparent, easy-to-understand financial

statements while causing the rest to tank’ (8 July 2002).

This should not imply that problems were not acknowledged. There was

talk of problems, most, as I discuss in the next section, in terms of ‘conflicts of

interests’. Nonetheless, articles promoting reform did not focus on fixing

the market but on fixing investors’ trust in the market (e.g. 10 June 2002).

‘Some 100 million investors’, an article declared, are ‘the new Investor Class

. . . Today, the Investor Class is angry and disillusioned because it feels

betrayed’ (25 February 2002c). ‘If investors lose their faith in stocks and pull

out in a big way’, another stated, ‘they could seriously hurt the economic

recovery’ (25 February 2002e). Reform was thus a price to pay for a ‘good’

short in supply and high in demand.

But how much reform was needed to achieve this trust? How was the reform

‘price’ determined? The second element in the structure of the reform sub-

discourse offers the answer: the reform price was determined through an

exchange construct consisting of a moving three-point scale. Three alternative

paths of action were presented on this scale, but one was deemed insufficient,

another too ‘tough’ and the third, in the middle, as just right: a ‘fair price’,

neither too cheap nor too expensive. There were variations to this scale, but

the most fundamental consisted of ‘no reform’, ‘regulatory action’ and

‘legislation’. In the following citation, the three are presented as options

held by ‘most economists’, Republicans and Democrats, respectively:

recovery times from earlier stock bubbles are sobering . . . [but m]ost

economists doubt that history will repeat itself so cruelly. After all the US

economy is in much better shape now . . . Still, that’s cold comfort for ordinary

investors . . . Shareholders are clamoring for more accountability . . . Despite

bipartisan tears for Enron’s victims, the parties are taking different approaches.

Democrats see Enron as justification for a strong assertion of government power

to outlaw conflicts of interest and even restore the ban on companies operating

in both the banking and securities industries . . . But in the GOP, proponents of

investor empowerment are more likely to prevail. Treasury Secretary O’Neill

. . . and SEC Chairman Harvey L. Pitt don’t think that Washington rulemakers

can anticipate ‘all the combinations and permutations of every business activity

in the world,’ as O’Neill puts it. Instead, they would cater to the Investor Class

with more transparency. On Feb. 13, the SEC took a large step in that direction

by announcing plans to impose far stiffer disclosure rules on companies . . .

(25 February 2002c)

Once under way, this ‘just right’ reform of stiffer SEC disclosure rules �neither too ‘light’ nor too ‘tough’ � was described as creating dramatic

changes, as constituting a high enough price. ‘The ground is shifting beneath

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the foundation of Corporate America’, it was thus declared two months later.

‘Fueled by investor resentment and driven by renewed activism by regulators,

a new age of reform is radically changing the rules of business in America’

(29 April 2002b).

Yet, as the stock market continued falling and more scandals erupted, the

reform price ‘rose’ along the scale. Articles next embraced the proposal noted

‘tougher’ before. Thus, an editorial titled ‘Accounting: stronger reform,

please’, stated: ‘we think the best bet for strong accounting and financial

reform is the legislation proposed by Senator Paul S. Sarbanes (D-Md.)’

(3 June 2002). Once this legislated reform was passed, BusinessWeek writers

announced that ‘a believable bottom line is back’: ‘Credibility in financial

numbers is quickly being restored. Investor confidence and the willingness to

risk buying stocks should soon follow’ (17 March 2003).

But once the stock market stabilized and the Enron trials were over there

was a backward motion on the three-point scale. As far as accounting was

concerned, the Sarbanes-Oxley Act supported earlier was claimed to entail too

high a price:

The intentions were good. But in the two years since its passing, the Sarbanes-

Oxley Act has collapsed into a glob of regulatory confusion costing U.S.

businesses billions of dollars a year in compliance costs. Now comes the mad

dash to fix the statute . . . On Nov. 30 a long-awaited report from a committee of

Wall Street VIPs gave its best idea: Let’s tinker. Rather than repealing SarbOx,

the committee recommended minor changes to the law, such as relief for small

companies and better guidance from regulators on how to apply the rule. The

act never got the vetting it deserved because of the race to approve it after the

Enron and WorldCom meltdowns, but the SEC . . . is hoping to make

improvements by spring.

(18 December 2006)

Thus the legislative reform was cast as too costly � a ‘pricey’ concession to be

legitimately reduced through the ‘tinkering’ of market actors and the

modifications of regulators. The same occurred with regard to other major

reform-issues which were ‘priced up’ until the sense of investors’ trust was

regained. Consider corporate governance:

Actually, too many [boards] are running scared. And while that may give some

governance groups a self-satisfied twinge of victory, a board in defensive mode is

bad for employees, companies, and the economy . . . hunkering down over

numbers and downside scenarios is just not what boards should be doing with all

their time.

(25 December 2006)

And consider corporate crime:

Yes, the system worked. In fact, the old system worked . . . Look, business isn’t

perfect, and it never will be as long as it is comprised of human beings. After all,

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we have laws galore, and people still drive above the speed limit, rob

convenience stores, and, of course, do far worse . . . we can’t let a small group

of companies rewrite reality and make businesspeople cower in shame and lose

their courage.

(12 June 2006a)

Thus, through most of the period calls for reform gave an impression of a

discourse transcending its bounds by embracing proposals of change deemed

too tough before. However, the goal of reform was defined in terms of fixing

trust in the market, not the market itself. Moreover, the discursive movement

was structured as a form of exchange with articles setting a changeable reform

‘price’ for investors’ trust. This ‘price’ was raised when trust seemed short in

supply and minimized when it seemed more abundant, marking a measured

movement never more ‘expensive’ than deemed necessary by the constructed

price-scale.

Maximizing the use-value of a core market truism

The articles maximized the use-value of the market ideology’s core truism

about human nature by applying it as a sole, fit-for-all explanation. The core

truism was that people are driven by ‘self-interests’, that this insatiable egoism

is the predominant inner force that directs them not only in the realm of

market exchange (where it is traditionally ‘expected’ and supposedly

monitored by an ‘invisible hand’), but in other contexts as well. Thus, in all

the professional contexts reflected upon, problems were attributed to

unmonitored ‘self-interests’, constructing them as a force so preponderant as

not to yield to and conflict with role interests that should transcend them (i.e.

‘conflicts of interest’). And solutions were defined in terms of monitored ‘self-

interests’, engineered through incentive or oversight programmes to be

‘checked and balanced’ against the professional interests. Applying ‘self-

interest’ to basically every problem in need of explaining, the articles turned the

failures of the professional foundations of the market economy into proof of the

correctness of this foundational truism of the market ideology.For example, in Enron ‘[s]elf-interested executives gorged with stock-option

wealth’ and ‘[m]any of the corporation’s outside professionals fell prey to greed

and self-interest as well’ (6 May 2002). Fastow had ‘a clear conflict of interest’,

as did other executives and Andersen’s accountants (17 December 2001).

Lawyers had ‘conflicts of interest’ (4 March 2002). Bankers had ‘conflicts

of interest’ (12 August 2002). ‘Conflicts of interest stopped Wall Street

analysts from pulling the plug on Enron’ (17 December 2001). Financial

conglomerates have ‘egregious conflicts of interests’ (9 September 2002).

The New York Stock Exchange is ‘another bundle of conflicts of interest’

(13 October 2003).

To solve these conflicts of interest, articles claimed, incentives and oversight

must be engineered to monitor self-interests. ‘Corporate America has . . . to

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restore the checks and balances that would allow capitalism to work as

effectively as it could’ (1 July 2002). ‘Checks and balances must be restored to

corporate governance’ (29 July 2002). Or: ‘It’s time to reinstitute checks and

balances inside the US financial system’ (9 September 2002).

‘Self-interest’ was thus presented as the single, fundamental source of

practically all choice and behaviour, its predominance and consequent conflict

with other interests as the source of all problems and its ‘checking’ and

‘balancing’ as the key to solutions. It was the origin and the horizon, the

question and the answer. The all-encompassing ‘self-interest’ was nonetheless

haunted by its opposite: the possibility of altruism and selflessness. ‘Was

Sherron Watkins really so selfless?’ (16 December 2002) asked an article

reporting ‘revisionist criticism’ about the whistleblower who was declared a

‘hero’ a year earlier. Discussing philanthropy, an article assured readers that

companies argue their funding causes are ‘completely within their self-interest’

(1 December 2003). And, referring to Bush’s State of the Union address, a

writer expressed disappointment that ‘even President Bush apparently

subscribes to the romantic notion that volunteering is somehow better for

society than working at a market wage’, and, citing Adam Smith, declared: ‘as

a general tendency, it is better if people operate from self-interest than from a

desire to serve the public good’ (25 February 2002d).

Thus, both the bad and the good were made up of ‘self-interests’. Problems

and solutions, too: ‘self-interests’. The point here is not ontological but econom-

ical: the discourse bolstered the use-value of its core truism by ‘selling’ it in every

heuristic corner. Every reported failure and success, every misdeed and deed

were used to further annihilate human motivations, perceptions and ambitions

by this single, unified abstraction standing at the core of the market ideology.

More-lizing

The third principle concerns the juxtapositioning of ‘more’ and ‘morality’,

quantity and ethics. The underlying premise, repetitively constituted, was that

the two always come together or go together. Thus, as shown, market justice

was seen to work by raising or hammering stocks.

This should not be taken to imply that ‘more’ and ‘morality’ were

constituted as identical. The two were distinguished. In accordance with the

self-interest truism, the underlying premise was that morality is too romantic a

notion to direct behaviour or bring about actual good. Impractical on its own,

it needs ‘more’ as its horizon and motivation. Accordingly, calls for ‘good

behaviour’ were couched in growth-evoking rationalizations, never completely

justifiable as ends in themselves. For example: ‘companies . . . with the most

transparency will be rewarded with higher stocks. And they’ll deserve it’

(4 February 2002a).

The juxtapositioning of ‘more’ and ‘morality’ further expressed itself in the

structuring of the discourse in terms of both the timing of the morally-charged

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dramatic turns and the dynamics of size. Regarding the former, articles took

their moral cues from quantitative shifts: they idealized Enron when it was

growing, renounced it as its stock was falling, reproached it as it went

bankrupt, criminalized it as the bankruptcy turned out to be the biggest in

history. Major turns in the moral narrative thus explicitly correlated with

quantitative signals. In other words, the moral plot was structured along the

contours of a stock-price graph or an income diagram.

Regarding the dynamics of size, the declared moral shocks were accom-

panied by rises in the volume of rhetoric. If two articles referring to Enron

were published in October 2001, the month before a ‘debacle’ was announced,

then thirteen were published in November and forty-three in the bankruptcy

month of December. The number further rose as more scandals erupted,

giving the impression of a rhetorical swell sustained by the flow of moral

shocks: the number peaked at eighty-one in February and averaged forty-seven

in the five months that followed. Then it gradually dropped and from April

2003 onward the average number of articles per month was seven. Thus, the

intertwining of ‘more’ and ‘morality’ expressed itself in both narrative

structure and shifts in volume.

Competing

The final structuring principle was expressed in the tendency of articles to

conjure up and sustain a sense of competitive rivalries and to secure a sense of

advantage within them. A major discursive competition of this sort concerned

the global status of American capitalism. Basically, articles sought to persuade

readers that despite Enron and other scandals American capitalism was still

‘number one’. Thus, while compliments were granted to specific foreign

CEOs or companies (e.g. the European BusinessWeek 50 list, 28 July 2003),

writers repeatedly reasserted the inferior status and achievements of foreign

markets. The strategies of persuasion diverged, and I will illustrate three. The

first was to cast Enron’s fall as a tribute to American capitalism. Consider the

following excerpt from a commentary titled ‘Why a few Enrons would do

Europe good’:

. . . Enron’s fall is a reminder of just why the American economy has been

performing so much better than its European rivals over the past two decades �and why it will probably continue to do so despite the pain of the current

recession. The speed at which Enron crashed is almost a textbook example of

Austrian-born economist Joseph A. Schumpeter’s celebrated description of

‘creative destruction’ at the heart of vibrant capitalism . . . Compare and contrast

that idea with the state of Europe’s industrial undead. (31 December 2001)

A second strategy was to acknowledge that Enron was causing trouble for

American capitalism, but nonetheless argue that foreign markets are facing

related or similar competitive setbacks. Discussing Europe, one article for

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example stated, ‘Make no mistake, though: Enronitis is having its effect’ there,

too (25 February 2002b). Another stated that ‘the Continent . . . is grappling

with severe economic shocks’, that it might have ‘Enron-scale time bombs’ and

that ‘European equities have imploded far more severely than stocks in the

US’ (31 March 2003).

A third strategy was to ascertain that American capitalism had proved its

superiority by the quality of its recuperation from the scandals. Consider the

following citation:

When it comes to US corporate scandals, the bad news never stops . . . Yet despite

their magnitude, these sins are of the venial rather than the mortal variety . . . The

fact is, CEOs in the US lack the power to drag down entire industries or the

economy as a whole . . . The imperial CEO . . . is much less pernicious than an

entrenched government bureaucracy, an economy dominated by a few large

families, or a single-party political system. Such roadblocks to growth are far more

common in Europe and Japan than they are in America . . . The ability to fix

problems when things go wrong is one of the great virtues of the US economic

system . . . That’s tough for other countries to match . . .

(4 April 2005)

Thus, rhetorically recasting Enron as a sign of strength, BusinessWeek reporters

used it to assert an advantage in a discursive competition over the international

‘first place’.

Conclusions

The analysis of Enron-related articles published during a decade in a central

business magazine was designed to explore some of the cultural attributes of

capitalist reflexivity. The analysis tracked the rise and fall of the ‘Enron’ icon: its

enactment as an enchanting emblem of the new economy and its transformation

into a symbol of corruption and evil. This transformation, I showed, occurred

in the context of the California deregulation crisis, but was primarily narrated in

terms of accounting irregularities. It caught momentum alongside the

company’s plunging stock. By the time of bankruptcy, Enron was already cast

as the New Economy’s number-one criminal, a single scandalous offender, albeit

with plenty of professional accomplices from all corners of the financial scene.

The sense-making that followed the bankruptcy tackled the contradictions

and failures made evident by Enron. The tackling of these failures, however,

always seemed on guard to protect the neo-liberal ethos, exonerating the market

by compressing blame into the realm of a supposedly deviant market actor and

diffusing it outside the market, to the professions charged with ensuring the

integrity of numbers. Minimizing the market’s blame was thus revealed as a

prominent structuring principle in a grammatical code of reflexivity which

included other principles as well: minimizing reform concessions, maximizing

the use-value of the core ‘self-interest’ truism, quantitatively cueing moral

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outrage and competing. To a great extent, then, the capitalist discourse under

analysis managed its beliefs like a capitalist manages money: it responsively

‘paid’ in discursive concessions � making knowledge revisions as it reappraised

superstar managers or acknowledged problems with the financial professions �but its underlying commitment was to cutting ‘costs’ and capitalizing on the

core discursive ‘asset’; it traded convictions but the exchange was conducted

with an eye open to supply and demand; it sanctified ‘more’ as ‘morality’; and it

craved competition and mobilized all the forces of construction to ‘winning’.

This, it should be stressed, is not a mere analogy. The reality statements

produced this way never saw themselves as a metaphor but as a truth; indeed, a

winning truth.

This paper is based on a single case study. Theorists that I reviewed in the

opening section have noted the importance of media discourse for under-

standing the workings of contemporary capitalism and capitalist institutions.

This study encompassed an influential, popular and mainstream media outlet,

but, since it is a single case study, it does not easily lend itself to generalization.

The core value of this study’s contributions lies in the sort of rethinking

and research that its empirically-grounded findings can incite. Its conclusions

should be read along these lines as propositions for future theoretical

development.

A first conclusion concerns the pervasiveness of the capitalist mindset. If

capitalism produces beliefs in the same way it produces money, if it approaches

both with the same impulses, than its materialism should be seen as pertaining

not only to what people think or value but also to how people think. With a

grammatical code that pertains not only to economic but also to ideational

production, capitalism appears to be ‘programmed’ to efficiency in the crafting

of discursive ‘products’, in the crafting of truths.

This grammatical code may explain the simultaneity of capitalism’s

transformation and resilience. Capitalist discourse, the analysis indicates,

does responsively surrender truths in the reflexive process, but the ‘price’ paid

in terms of surrendered content is reclaimed by the structure of the surrender:

by its cost-efficiency; by the value of the truism it objectifies in exchange; by

the way it recasts its loss as a competitive advantage. Even as reflexivity aims to

resolve contradictions by examining capitalism’s axioms, its impulses are

annihilated by these axioms, performing them through the process of critique.

Capitalist reflexivity thus seems to be a sense-making mechanism cast in the

shape of its own beliefs.

As such, reflexivity is neither above nor beyond capitalist culture.

Reflexivity, this case study indicates, is not conducted from some disembedded

‘outside’: a critical ‘edge’ (Thrift, 2005), a space between institutions (Berk &

Scheiberg, 2005), a liberated high ground of expertise (Giddens, 1994), a

‘groundless ground’ (Lash, 1994a) and so on. Rather, it appears as a structured

praxis that is deeply shaped by capitalist impulses, turning critical self-

reflection into a symbol of the potency and validity of the culture that is

reflected upon.

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What are the implications of these findings for theories of the new political-

economic ‘virtualism’, institutional change and late modernity? Regarding the

first, the findings indicate that as the virtual realm turns contradictions and

truth failures into objects of abstract reflection it transforms them from

structural threats to raw materials of a discursive production system set, like

any production system, on minimizing costs and securing profit. Thus, the

claim that reflexivity enables capitalism to ‘surf ’ along the ‘edge of its own

contradictions’ (Thrift, 2005, p. 6) tells only half the story: reflexivity also

turns the ‘surfing’ into an economical endeavour. As such, it re-embeds critical

reflection into the same culture it appears to distance itself from. The story

here is thus not merely one of the virtualization of the economy (e.g. Carrier &

Miller, 1998), but also one of the economization of the virtual realm. Far more

than being constitutive of economic practice (e.g. Carrier, 1998; Miller, 1998),

or even of staying close to economic practice (Thrift, 2005), reflexive thinking

is an economic practice. In order to understand what virtualism holds in store

for contemporary capitalism, there is a need to study it as such.

Regarding institutional change theory, the findings of this research indicate

that the process of deliberating alternatives or choosing paths may not only be

the mark of agents’ wits and pragmatic sensibilities (e.g. Berk & Schneiberg,

2005), but also of a culturally structured reflexivity that they conform to and

enact. It is thus problematic to take agents’ sense of reflective ingenuity at face

value. Though deliberation can and does evolve in new directions, the study

indicates that it is also conditioned by a grammatical system that patterns it

along particular, taken-for-granted routes, that filters deliberation and

mediates change. Reflexivity thus seems to be an ‘institution-modifying

institution’ of sorts. Change, it seems plausible to propose, is determined

through the interplay between this institution of reflection and the institutions

that are reflected upon, an interplay whereby discourse does not merely impact

on the structures that are reflected upon (Schmidt, 2008), but is also

structured by them itself, grammatically embodying the same rules and

conventions it observes. This finding indicates a much more intricate

institutional change dynamics than is currently acknowledged and points to

the need for further methodical research into the unfolding logic of reflection

and deliberation.

Regarding late modernity theorists, the findings of this study fit uncomfor-

tably with their various accounts. The reflexivity studied here did not appear

to be an unaware reflex gradually becoming cognizant, as Beck (1992)

maintains, or the mark of a liberated cognition, as Giddens (1990, 1994)

does. Even as existing beliefs were examined, the underlying structure of

reflexivity became neither cognizant nor liberated: reflexivity was thoroughly

captivated by the same capitalist beliefs it reflected upon, performing them (for

example, by structurally binding morality and growth, cutting costs or

maximizing value). The examined reflexive process also did not appear to be

born of the fashionable mimesis Lash (1994a) refers to by the term ‘aesthetic

reflexivity’ or of the self-mobilized, groundless hermeneutics he refers to by

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the term ‘hermeneutic reflexivity’. Rather, reflexivity appeared to turn beliefs

into belief-producing grammar in a loop that both shied away from the

visible surface and trapped interpretations inside themselves: discursively

self-interested, it found self-interest everywhere but in its own impulses;

discursively competitive, it found competition everywhere but in its own

beliefs; discursively consumed by questions of blame, it found blame

everywhere but in its own main constructs. Thus, reflexivity appeared to

have an inner structure which interpretatively grounded its unfolding

dynamics. Any account linking reflexivity to late modernity’s culture and

institutions must take into account a dialectical process which reaffirms the

same underlying logic it also reconsiders, deeply embodies the same culture it

also critically interprets and hides the taken-for-granted from view by the

process of observation itself.

Thus, this case study offers empirical evidence indicating that the

theoretical accounts advanced by all three streams offer too simplistic a view

of the actual workings of reflexivity. Theorists from all the streams have much

to gain by continuing this study’s effort of mapping out its cultural grammar.

Further analyses of other concrete processes of reflexivity would hopefully

contribute to our understanding of the mechanisms of economic self-reflection

and social critique, of the forces structuring our understanding of mistakes and

our inclination for change.

Acknowledgements

I thank Economy and Society’s anonymous reviewers for their comments. I also

thank Michael Shalev, Gideon Kunda and Daniella Arieli for their suggestions.

This research was supported by the Israel Science Foundation (grant no.

568/08).

Notes

1 By ‘discourse’ I refer to a particular way of defining, describing and narrating bothevents and knowledge about events. The concept of ‘culture’ is related to that of‘discourse’, although as they are used here the latter is more directly concerned with thecontent of meaning, the former with its underlying patterning and organization.2 This analysis includes content selected by an academic computerized search engine.Note that until 2005 BusinessWeek customized its domestic edition for Europe and Asia.Articles referenced by the search engine as belonging to these customized English-language editions are included in the analysis (less than 10 per cent of the total amountof articles, some of which were also published, often with slight changes, in thedomestic edition). The analysis does not cover BusinessWeek Online and the locallanguage editions that were published with regional partners since 2005.3 http://finance.google.com/finance?q�business�week&hl�en (22 June 2009).4 http://onlinepresrom.net/businessweek/ (25 June 2009).

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5 This study does not examine BusinessWeek itself, the way it functions or the way itsaudience receives it. Nor does it examine actual Enron events as existing outside theirmedia representation.6 Different search engines select slightly different numbers of articles in thisdate range. I began the analysis with one search engine and then updated thedataset according to the larger citations list (consisting of 1118 items) of LexisNexis.The difference was approximately eighty items. Note, that data did not include ‘readers’reports’. The databases used for referencing are Gale Academic Onefile and LexisNexis.7 The Californian crisis regained attention months later, when evidence was foundindicating that Enron (and other traders) manipulated its deregulated market. Thus thecrisis returned to centre stage as a means for augmenting the sense of Enron’s deviancy,after it was possible to use it as such.8 This discussion does not concern ‘actual’ blame but blame discourse. For example,when claiming that the articles repeatedly directed blame discussions away from themarket, I am not debating whether or not market blame existed, but pointing out thatthe discourse always tended to evolve this way.9 It is interesting to note that a rare pro-regulation article sustained this basic blameconstruct, sanctifying market ideals by posing Enron as an ‘assault on the very heart ofcapitalism’ (4 February 2002b).

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Galit Ailon is a lecturer at the Department of Sociology and Anthropology at

Bar-Ilan University. She received her PhD from the Department of Labor

Studies at Tel-Aviv University. She is author of Global ambitions and local

identities: An Israeli-American high-tech merger (Berghahn Books, 2007). Her

primary research interests currently concern multinational organizations and

global financial culture.

1 December 2003. The corporate donors. M. Conlin & J. Hempel with J. Tanzer &D. Polek, 3860, 92.4 April 2005. A few bad apples spoil . . . not much. M. J. Mandel, 3927, 38.6 February 2006. Ken Lay’s audacious ignorance. A. Bianco, 3970, 58.12 June 2006a. The real verdict on business. J. Welch & S. Welch, 3988, 100.12 June 2006b. The Skilling trap. M. Gimein, 3988, 31.18 December 2006. The jury is out. 4014, 106.

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