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Material Markets: How Economic Agents are Constructed
Financial markets, processes, and instruments are often difficult to fathom; and recent turbulence suggests they may be out of control in some respects. Donald Mackenzie is one of the most perceptive analysts of the workings of the financial world. In this book, MacKenzie argues that economic agents and markets need to be analyzed in their full materiality: their physicality, their corporeality, their technicality. Markets are populated not by disembodied, abstract agents, but by embodied human beings and technical systems. Concepts and systematic ways of thinking that simplify market processes and make them mentally tractable are essential to how markets function.
In putting forward this material sociology of markets, the book synthesizes and contributes to the new field of social studies of finance: the application to financial markets not just of economics but of wider social-science disciplines, in particular science and technology studies. The topics covered include hedge funds (the book contains the first social-science study of a hedge fund based on direct observation); the development of financial derivatives exchanges (non-existent in 1970, but now trading products equivalent to $13,000 for every human being on earth); arbitrage; how corporate profit figures are constructed; and the crucial new markets in carbon emissions.
The book will appeal to research students and academics across the social sciences, and the general reader will enjoy the book's explanations and analyses of some of the most important phenomena of today's turbulent markets.
240 pages, Hardcover
First published December 11, 2008
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About the author
Donald Angus MacKenzie
7 books18 followersDonald Angus MacKenzie FBA FRSE FAcSS (b.1950) is a Professor of Sociology at the University of Edinburgh, Scotland.
His work constitutes a crucial contribution to the field of science and technology studies. He has also developed research in the field of social studies of finance. He has undertaken widely cited work on the history of statistics, eugenics, nuclear weapons, computing and finance, among other things. Works
His work constitutes a crucial contribution to the field of science and technology studies. He has also developed research in the field of social studies of finance. He has undertaken widely cited work on the history of statistics, eugenics, nuclear weapons, computing and finance, among other things. Works
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Displaying 1 - 3 of 3 reviews
September 14, 2020
A groundbraking work on the materiality of finance and certain subsegments of the financial sphere, insightful and detailed but not too tedious.
Still, I can't completely get around that to me there is missing some kind of meta-analysis, of the power relations that are missing here. The case studies do not transmit a picture of why it is that things happen that way. The describing nature of ANT and STS falls short of that and merely focuses on the how which is, of course, an important aspect but to me it seems that the work should start with the results of MacKenzies studies, and not stop there.
Still, I can't completely get around that to me there is missing some kind of meta-analysis, of the power relations that are missing here. The case studies do not transmit a picture of why it is that things happen that way. The describing nature of ANT and STS falls short of that and merely focuses on the how which is, of course, an important aspect but to me it seems that the work should start with the results of MacKenzies studies, and not stop there.
January 24, 2024
I read this book as part of my project on financialisation of politics in the Middle East and it was a great analysis into the material production of finance; as MacKenzie puts it "a perspective rooted... in the materiality of markets: their physicality, corporeality, technicality."
The social study of finance is ever more important if politics is to become a financial market in the future. One point the author makes in the conclusion sets this book apart from most left-inspired social study of finance is that looking at "the markets" as a singular entity and positioning the debate from a pro-market or anti-market (or even a third-way in between these polars) is mistaken or impoverished at best. He explains: "of the many markets that are possible, which markets we have matters." What we have to pay attention to is not just the structure or the power relations a market creates/reproduces but also details of the market design, of the technological infrastructure that supports it, the way economic agents in them are constructed, the forms of knowledge the agents in the market deploys, phenomena that the agents pay attention to and others that they don't and ultimately how complexities are made simple enough for the agents to grasp. Therefore he thinks that the most significant contribution of social studies of finance to public sociology is to open the black boxes of the finance.
The book is an ethnographical study into finance using the actor network theory as a framework, whereby the actor is the man and machine (bodies and prostheses, tools, equipment, technical devices, algorithms) which have agency and the capacity for intentional action. Which is in contrast to Activity theories for meta-analysis, whereby activities are taken as the unit of analysis and considers isolated individuals as insufficient unit of analysis in analysing the cultural and technical aspects of human actions. As an outsider of the field of sociology I am not sure of the implications the choice of ANT here, it is a good framework for the micro-analysis he makes throughout the book, however one might argue that his proposition that an ‘economic model embodied in a system for pricing and risk management can have effects even if the users of the system don’t believe the model, don’t understand it, or don’t even know that it exists’ might have implication that activity could be a better unit of analysis in this study.
Several case studies he takes up in the book are the hedge funds, derivatives market, arbitrage, accounting, and market building as in the example of emissions markets. The central concepts/precepts to his analysis are facticity (fact-generation matters), agencement (actors are embodied in social networks and equipped with technology), distributed cognition, finitism (in relation to classification and rule-following), non-linear innovation ("technologies are shaped to fit their contexts and contexts are often deliberately reshaped to fit technologies"), importance of market design.
Distributed cognition meant for MacKenzie that "irrational exuberance" argument about market behaviour may be unfounded, as he argues "That individual traders are affected by their colleagues and managers, that their culture is reflexive, and cognition and action are distributed across people and technical systems may have the effect of making the economic actor more like the fully rational agent posited by orthodox finance theory."
As someone from the finance sector broadly, this book made me realise and pay attention, and in that sense "materialized", the finance sector for me, from the choice of landline phones used, to the choice of location for institution premises, to economic experiments. With this early contribution to the social study of finance, MacKenzie has succeeded in writing a very accessible book that opens up several of the black boxes of finance and made it easier to analyse phenomena like financialisation of politics today, 15 years after the publication of this work.
The social study of finance is ever more important if politics is to become a financial market in the future. One point the author makes in the conclusion sets this book apart from most left-inspired social study of finance is that looking at "the markets" as a singular entity and positioning the debate from a pro-market or anti-market (or even a third-way in between these polars) is mistaken or impoverished at best. He explains: "of the many markets that are possible, which markets we have matters." What we have to pay attention to is not just the structure or the power relations a market creates/reproduces but also details of the market design, of the technological infrastructure that supports it, the way economic agents in them are constructed, the forms of knowledge the agents in the market deploys, phenomena that the agents pay attention to and others that they don't and ultimately how complexities are made simple enough for the agents to grasp. Therefore he thinks that the most significant contribution of social studies of finance to public sociology is to open the black boxes of the finance.
The book is an ethnographical study into finance using the actor network theory as a framework, whereby the actor is the man and machine (bodies and prostheses, tools, equipment, technical devices, algorithms) which have agency and the capacity for intentional action. Which is in contrast to Activity theories for meta-analysis, whereby activities are taken as the unit of analysis and considers isolated individuals as insufficient unit of analysis in analysing the cultural and technical aspects of human actions. As an outsider of the field of sociology I am not sure of the implications the choice of ANT here, it is a good framework for the micro-analysis he makes throughout the book, however one might argue that his proposition that an ‘economic model embodied in a system for pricing and risk management can have effects even if the users of the system don’t believe the model, don’t understand it, or don’t even know that it exists’ might have implication that activity could be a better unit of analysis in this study.
Several case studies he takes up in the book are the hedge funds, derivatives market, arbitrage, accounting, and market building as in the example of emissions markets. The central concepts/precepts to his analysis are facticity (fact-generation matters), agencement (actors are embodied in social networks and equipped with technology), distributed cognition, finitism (in relation to classification and rule-following), non-linear innovation ("technologies are shaped to fit their contexts and contexts are often deliberately reshaped to fit technologies"), importance of market design.
Distributed cognition meant for MacKenzie that "irrational exuberance" argument about market behaviour may be unfounded, as he argues "That individual traders are affected by their colleagues and managers, that their culture is reflexive, and cognition and action are distributed across people and technical systems may have the effect of making the economic actor more like the fully rational agent posited by orthodox finance theory."
As someone from the finance sector broadly, this book made me realise and pay attention, and in that sense "materialized", the finance sector for me, from the choice of landline phones used, to the choice of location for institution premises, to economic experiments. With this early contribution to the social study of finance, MacKenzie has succeeded in writing a very accessible book that opens up several of the black boxes of finance and made it easier to analyse phenomena like financialisation of politics today, 15 years after the publication of this work.
April 3, 2010
Very excellent book about the sociology of markets. It just proves that nothing is unbiased or completely objective and that our environments shape our behavior as much as we shape our environments.
Displaying 1 - 3 of 3 reviews