Social Studies of Finance

MacKenzie, Donald (2016). Social Studies of Finance. [Data Collection]. Colchester, Essex: Economic and Social Research Council. 10.5255/UKDA-SN-850032

Data description (abstract)

Financial markets might seem to be a subject matter appropriate only for economists, or perhaps also for behavioural finance specialists, who draw upon psychology to analyze matters such as investors alleged irrational biases. The proposed Fellowship, however, is intended to develop broader social-science, especially sociological, research on financial markets. Thus one research question to be addressed emerges from work in the social studies of science by Michel Callon and also the applicant. Has financial economics achieved its undoubted successes because it accurately described pre-existing realities? Or has it succeeded in part because it changed how markets were organized and how participants in them behaved? Has financial economics, in Callons terms, been performative? (A performative utterance is one that makes itself true, as when as absolute monarch designates someone an outlaw). A second area of work will be on the derivatives (eg options) exchanges that have emerged worldwide since the early 1970s. What accounts for international differences in the form they have taken and in their success? For example, are cultural matters important, for instance the contrast between Chicagos roughneck trading culture and the tradition of English gentlemanly capitalism? A third research question concerns possible instances in which finance theory has been counterperformative (ie in which its application may have undermined its empirical accuracy). The most prominent alleged such instance was the global stock market crash of 1987, which accordingly will be examined in detail. A fourth topic of research is arbitrage (trading that exploits price discrepancies), which is the key mechanism driving prices towards their theoretical values. Are there social aspects to arbitrage? For example, do arbitrageurs sometimes imitate each other, and, if so, with what consequences? A fifth research question is exploratory. Scandals such as Enron and WorldCom have shown that key market numbers such as corporate profits are not self-evident facts, but the outcome of complex processes of construction. To what extent can such processes of construction, the impact on them of the scandals and of regulatory and other changes, and similar matters be examined empirically? An important aspect of the Fellowship will be to encourage broader UK social-science on the financial markets. Several disciplines have much to contribute: for example, politics, with its emphasis on the governance of markets; anthropology, with its fine-grained ethnographic studies; human geography, with its emphasis on the continuing role of particular places in apparently globalized finance. A publicly-accessible database of existing UK work of this kind will be created, and leading scholars, newcomers, financial-market policy-makers and practitioners will be brought together in networking workshops

Data creators: