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mackenzie seminar – why should economic sociologists care about performativity?

Brayden

I presented a paper in an interesting ASA session a couple of years ago with several people who did qualitative studies of financial markets. I was the lone quantitative oddball. The discussion that followed our presentations drifted to the topic of performativity. As someone who was relatively unfamiliar with the concept, I was intrigued to hear someone in the audience confidently declare that “economic sociology would soon be the study of performativity.” I took the statement as hyperbole but also as a warning that I needed to pay more attention to the work of people like Callon and MacKenzie. If there was going to be a sea change in economic sociology, I wanted to be aware of it.

Perhaps it was due to this moment of (re)definition at the ASA meetings that made me so surprised to read MacKenzie’s own lukewarm ambitions in changing economic sociology. MacKenzie claims in An Engine, Not a Camera that economic sociology is not the target of his scholarship. He makes a point of differentiating his research on financial markets from what is typically done in economic sociology.

This book is plainly not economics…Nor is it economic sociology, at least as traditionally conceived….Economic sociology, for example, has been strong on its emphases on matters such as the embedding of markets in cultures, in politics, and in networks of personal interconnections. It has traditionally been less concerned with the systematic forms of knowledge deployed in markets or with their technological infrastructures…(pg. 25).

This statement seemed strange to me at first reading. If we don’t study the systematic forms of knowledge deployed in markets, then what do economic sociologists study? This has been, in my mind, the point of much economic sociology since Weber. But after taking a few deep breaths, I began to see the purpose behind the comment. It’s not that economic sociology isn’t concerned with various forms of market knowledge (see for example the work of Mitchel Abolafia). Rather, MacKenzie is just trying to orient his topic to a broader audience, who might include but would not be limited to economic sociologists. His broader audience inclues anyone interested in the sociology of science. Thus, limiting the implications to economic sociology is far too narrow.
Still, I felt like MacKenzie downplays the contributions this book makes to economic sociology. If performativity truly will be the organizing concept of economic sociology in the future, then this book will play a pivotal framing role. Let me point out a few ways in which MacKenzie’s work contributes to important discussions occuring elsewhere in our subfield.


First, MacKenzie contributes to a vast literature that explores the ways in which knowledge is embedded in and sustains markets. This research goes all the way back to Weber, whose thesis of rationalization proposed that a social infrastructure undergirded the development of Western capitalism. While we mainly teach the Protestant ethic story in our classrooms, Weber’s thesis was much more complex. As Randall Collins has summarized, Weber demonstrated that the emergence of capitalism was in part due to the development of more sophisticated record-keeping and accounting practices, such as double-entry bookkeeping, which made trade and profit-making more calculable and predictable. Contemporary sociologists in this tradition examine how social and cultural infrastructure make possible the development of modern markets (see, for example, the work of Bruce Carruthers). The idea that knowledge undergirds the operation and maintenance of markets is central to this tradition.

Of course, this work tends to be much broader than what performativity describes. Sociologists of markets explain that a great deal of cultural work makes possible the functioning of markets that approximate the neoclassical ideal. For example, Ezra Zuckerman has demonstrated that market categories facilitate valuation of assets by filtering and funneling the attention of key audiences like securities analysts. The formation of industry categories and other forms of knowledge coordinate market activity and allow them to behave more ideally. Performativity seems to me like an important subset of these rationalizing forms of knowledge.

Second, I think MacKenzie’s work and his concept of performativity make an important contribution to the study of the political nature of markets. Neil Fligstein and others have persuasively argued that markets are not natural phenomena behaving according to natural laws. Rather, markets are political constructs. Power relations underlie their creation. Although MacKenzie does not play this part up, power is an important dynamic in his story of the development of financial markets. Theories and models of the market were not discussed in objective, neutral forums. Self-interested actors promoted particular models over others in order to benefit their own careers. As Fabio has already alluded, forceful contingents actively fought against the promotion of certain mathematical representations of the market because of the threat they represented to their mode of knowledge creation. A war raged in the halls of academia that had real material implications.

MacKenzie’s story is persuasive because he demonstrates that the academic battles over the supremacy of certain financial models also had real consequences for the financial markets they sought to describe/explain. Take as an example his wonderful account of the creation of financial derivatives markets. In the early 1970s derivatives markets lacked appeal and a customer base because many people still associated them with gambling. In order to overcome this moral (and political) hurdle, the early planners of the market sought support from a legitimate voice who could lend instant credibility. They found a friendly supporter in Milton Friedman. MacKenzie, based on his interviews with Friedman and Leo Melamed (the creator of Chicago’s currency derivatives market), explains how he got Friedman to sign on:

Melamed and the president of the Mercantile Exchange, E.B. Harris, arranged to talk with Friedman over dinner in the art deco splendor of the Waldorf Astoria Hotel on New York’s Park Avenue…Friedman was instantly enthusiastic. “He said, ‘That’s a terrific idea. It’s a wonderful idea. You must do this.'” (Melamed interview) Melamed asked, “if I [Friedman] would be willing to write a little paper for them on the case” fora currency futures exchange (Friedman interview). Friedman replied, “‘I’m a capitalist first,’ and I [Melamed] said ‘How much?’ I immediately knew what he meant and he liked that….He said ‘$5000.’ I said, ‘It’s done.’ Just like that.”

Friedman’s opinion paper opened the door for currency derivatives trading, establishing its cultural and socio-political legitimacy. Which regulator was going to argue with the esteemed economist?

This level of detail in the telling of his story not only makes MacKenzie’s tale interesting, but it also makes it a rich sociological case demonstrating the embeddedness of markets in culture and politics. Perhaps that is why I was a little disappointed with MacKenzie’s single-minded adherence to the performativity story. The book is surely a major contribution to the sociology of science, but the contributions to economic sociology are in the details.* Perhaps as more economic sociologists pick up this book (and his articles), we will make even more substantial connections between MacKenzie’s interest in science and our search for explanation of economic behavior.

*In the conclusion MacKenzie makes some suggestions regarding how his work resonates with the economic sociology literature, but I felt like he could have been stronger in this regard.

Written by brayden king

November 13, 2006 at 9:17 pm

Posted in brayden, sociology

3 Responses

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  1. So, for those of us who (a) haven’t read MacKenzie, and (b) are rather skeptical of economic sociology’s seeming fascination with borrowed jargon, what’s performativity?

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    anon

    November 14, 2006 at 12:37 am

  2. For an introduction to MacKenzie’s book you can read this post. Performativity is the idea that theories or models bring about the very conditions that they attempt to explain.

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    brayden

    November 14, 2006 at 4:57 am

  3. […] the comments that followed Teppo’s posting on performativity, and similar debates on orgtheory (here, here, and here), socializing finance, organizations and markets, and old- fashioned journal […]

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