From Christian Borch

Ten years ago this day, US markets opened to a palpable sense of unease. Investors were concerned about the ongoing Greek debt crisis, which grew from the global financial meltdown in 2008.

At 2:32pm Eastern Daylight Time, what started as nervousness and hesitation collapsed into pure terror as US markets nosedived. In 36 minutes, the Dow Jones Industrial Average plummeted 998.5 points – more than nine percent – in one of the largest and fastest same-day declines in the history of US markets. The greater part of this drop saw market values in the range of $1 trillion evaporate within five minutes.

As markets continued their free fall, trading was suspended in panic. When trading activity resumed, an equally remarkable and opposite phenomenon happened. Prices rebounded, and just half an hour later, US markets had recovered most of their losses.

Since all this happened in a blink, commentators have dubbed this astonishing event the “Flash Crash.” No solid estimates exist of specific investors’ gains and losses from the Flash Crash, but prices recovered quickly enough that the event had no demonstrable economic effects in the long term – unlike the 2008 global financial crisis and the ongoing Covid-19 pandemic.

It might surprise some, however, that the Flash Crash had little to do with the European sovereign debt crisis itself. In fact, it was precipitated by a group of smaller, underestimated agents: fully automated, high-frequency trading algorithms. That afternoon in May, these algorithms entered an escalating feedback loop, their cascading orders triggering a brief but precipitous market crash.

The Flash Crash is a defining moment in the modern history of financial markets. It reveals the Janus face of present-day trading algorithms – algorithms can unleash great instability when tossed together, despite their reputation as impartial, rational actors. The Flash Crash also laid bare how little we know about the inner machinations of trading algorithms, as the confusion of US regulators investigating the phenomenon later showed.

In 2010, the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) issued a joint report arguing that a large sell order from Waddell & Reed Financial, a Kansas City-based asset management firm, had triggered unanticipated activity among high-frequency trading algorithms. The algorithms then engaged in a game of “hot potato,” swiftly buying and selling from one another in a downward spiral that caused the Flash Crash.

The CFTC–SEC explanation of the Flash Crash sparked controversy when it was released, and its findings have since been contested by academics and market observers. Years later, US regulators unexpectedly changed their tune when they identified the British trader Navinder Singh Sarao as the Flash Crash’s main culprit. Sarao had purportedly designed – out of his parents’ home in Hounslow in the outskirts of London – a set of high-frequency trading algorithms aimed at manipulating market prices, which ultimately caused the markets to crash. Sarao eventually pleaded guilty to charges of market manipulation, but experts remain divided on whether any individual’s manipulative algorithms can bring US markets to their knees. Are financial algorithms truly that powerful – or are markets penetrated by them inherently that fragile?

After the Flash Crash, regulatory authorities implemented “circuit breakers,” which halt trading if prices move too much too quickly, as their main line of defence. When the Covid-19 pandemic struck global markets in March this year, these circuit breakers kicked in to cushion the outbreak’s ripples in the market. But even circuit breakers – a triage rather than vaccination – have not deterred the several smaller flash crashes that have occurred since 2010.

Even though the Flash Crash occurred ten years ago, we are still in the dark about how algorithmic markets work and how to prevent their ills. One thing is clear, however: the algorithmic nature of contemporary financial markets renders them more vulnerable to crashes, which begs the question of whether we can prevent such sudden crashes when financial algorithms continue to operate in our markets.

In the past six years, colleagues and I have interviewed executives, traders, programmers, exchange officials, and regulators in the US and Europe to better understand how algorithms shape today’s financial markets. Through two research projects with high-frequency trading firms of all sizes and sorts, we have observed algorithmic traders at work and studied their daily operations, concerns, tasks, and overall cultures.

We have realized that individual firms with lax practices for development, testing, and monitoring algorithms face devastating risks. Take the example of Knight Capital, a major US trading firm that suffered a shattering algorithmic mishap in August 2012. The firm’s new software unexpectedly triggered dormant code, which generated orders that lost the company more than $460 million in just 45 minutes. Unable to recover from this mishap, Knight Capital was soon acquired by a competitor.

Though Knight Capital may seem an unlucky exception, a financial culture that does not support the rigorous use of financial algorithms risks markets themselves. Without a thorough understanding of their own algorithms, can firms avoid triggering devastating feedback loops once algorithmic interaction sets in? The cultures of algorithmic trading firms matter in designing more robust markets, and we need to better understand how these firms are organized, how they operate, and how their staff think and work. Crucially, we need to grasp their procedures for developing, testing, monitoring, and understanding trading algorithms long before their cascading effects begin.

There is good news, however – a small group of firms has developed organizational cultures that stress rigor at all levels of algorithmic design and trading. These firms strive to eliminate any negative effects their algorithms may have on markets, and they have developed an ethos built on ensuring market integrity in every respect.

This ethos involves establishing procedures to make sure financial algorithms cannot engage in manipulative behaviour. These firms obsess over bug detection as well as continuous monitoring and testing. They learn from the algorithmic incidents that inevitably occur, whether triggered internally or from outside their operations. Throughout, these firms expend massive, ongoing efforts to comprehend how and why their algorithms behave the way they do, alone and together with other algorithms.

Today, European regulators require some minimum testing and monitoring of firms’ trading algorithms. This is an important first step, but hardly a sufficient one if we wish to avoid a consistent stream of flash crashes. We need a more fundamental attention to the cultures of trading firms, and perhaps even a paradigm shift. After the 2008 financial crisis, many called for banks to implement a new corporate culture with fewer detrimental risk incentives, though little progress has since been made in that arena. Even so, the potential consequences of algorithmic spirals running amok suggest that we should not shy away from driving such change while we still can.

Firms whose cultures, business models, and algorithmic designs emphasize market integrity offer a way forward in ensuring the health and stability of financial markets. Avoiding future flash crashes and mastering the collective power of financial algorithms will require an industry-wide commitment to cultures of accountability, transparency, and integrity.

Our algorithms will settle for nothing less.

Christian Borch is Professor of Economic Sociology and Social Theory at the Copenhagen Business School and the PI of the ERC-funded AlgoFinance research project. His latest book is Social Avalanche: Crowds, Cities and Financial Markets (Cambridge UP, 2020).

 

 

Financial Work Futures Research Centre Seminar & Workshop

“Dark Fun: The Cruelties of Hedonic Communities”

Professor Gary Alan Fine, Northwestern University

Tuesday 11th June 2019, 12:30PM – 1:30PM

Bush House (S) 3.01

Dear Colleague,

Please join us for the next FinWork Futures Research Seminar, by Professor Gary Fine from Northwestern University. Lunch will be provided.

Abstract: While fun is generally conceived as positive engagement and community building, we explore the linkage between fun and cruelty, suggesting that acts of violence and humiliation can be situated within hedonic experience. In this, we provide a meso-analysis of the occasions in which groups engage in activities that are widely judged to be disreputable and deviant, even if providing enjoyment and increasing group cohesion. By examining ethnographic observations of gang activity, bullying, hooliganism, political violence, and brutality in prison, we argue for the concept of “dark fun.” We focus on the role of collective effervescence, local group cultures, and moral ordering as contributing to dark fun. However, in considering fun and cruelty, we argue, following John Levi Martin, that the former is judged by first-person recognition and the latter through third-person analysis. The different perspectives of perpetrators and victims in the same situation suggest the challenge of interpreting a twined phenomenology, requiring different interpretive strategies for fun and cruelty.

 

 

Workshop – “How to Do Ethnographic Work in Organisations”

Tuesday 11th June, 3:00PM – 5:00PM

Bush House (S) 3.01

Professor Fine will also be running a workshop on the 11th of June, from 3:00 – 5:00pm in Bush House (S) 3.01. All are welcome to attend – this workshop should be of particular interest to PhD students who are going qualitative research.

In the current context of financialization, automation and political turbulence, the Social Studies of Finance holds a unique potential to illuminate contemporary economic and societal challenges. The classic research of MacKenzie, Callon, Knorr Cetina, Preda and Zaloom revealed the hidden relationships between the technical and the economic on Wall Street, but this work now needs to be critically broadened and reexamined against a context of political turmoil, insufficient financial reform, and the growing disruption posed by digital technologies.

Following my arrival at the Faculty of Management at Cass Business School this past September 2018, I am looking to hire an Assistant for the coming months to work with me in the  Social Studies of Finance. The tasks entailed in the position include assistance in elaborating grant applications such as Leverhulme Fellowships, British Academy fellowships. It also entails assisting in assembling databases, organizing events, as well as communicating the findings of my research, including: (1) an ethnographic revisit of a Wall Street trading floor, (2) an analysis of the intermediary effects of securities analysts, (3) research in the growing field of responsible investment, including ESG factors and shareholder engagement, and (4) a grounded theory analysis of bank culture in the UK.

As part of the position, the candidate will come into contact with cutting-edge ideas in a vibrant academic field, meet world-leading academics, be part of field-building activities, and join in the excitement of dissecting and understanding financial capitalism from one of its global centers.

The candidate will ideally be a PhD student in sociology, management, or related discipline; be somewhat familiar with the sociology of finance literature as well as science studies and economic sociology, and based in London or near enough to be available to meet in person once every two weeks in my office at Cass Business School in Central London. Excellent writing skills are required. Strength in qualitative research methods is necessary. Good knowledge of economics and economic models (e.g., undergraduate courses in economics) would be a plus. The engagement is for five hours a week, at a City University Grade 5 Spine Point 33, which amounts to a rate of GBP 19.92 per hour.

The appointment is open-ended (subject to funding availability), starting in June 2019. To be considered, please send an email with a cover letter and  CV to Daniel.beunza@city.ac.uk

From Rita Samiolo

Financial Work Futures Research Centre Seminar: “The Social Structure of Algorithmic Trading”
Professor Christian Borch, Copenhagen Business School
Wednesday 12th June 2019, 4:00PM – 5:30PM
Bush House (S) 3.01

Dear colleague,

Please join us for the next FinWork Futures Research Seminar, by Professor Christian Borch from Copenhagen Business School. It will take place on the 12th of June, 4pm in BH (S) 3.01.

Abstract: The rise of new economic sociology in the early 1980s owed much of it success to advances in social network theory. Pioneering work, such as that of Wayne Baker, demonstrated that even the ‘engine room’ of financial markets – the so-called trading floors on which traders were competing with one another – were embedded in social networks. Interestingly, however, the traditional face-to-face networks of financial exchanges only play a marginal role in present-day markets, in which human traders are increasingly being replaced by fully automated algorithms. This prompts the question of whether the type of social network theory that has figured centrally within new economic sociology remains analytical useful when, in fact, it is fully automated algorithms which are behind the bulk of today’s trading. In other words, is social network theory still a potent framework with which to understand financial trading when such trading takes place in an increasingly non-human setting? In this paper, we update social network theory for an algorithmic, non-human market environment. By combining qualitative fieldwork and agent-based modelling, we examine the types of networks that exist between algorithmic market participants. Extending insights by Karin Knorr Cetina, Alex Preda and Donald MacKenzie, we suggest that algorithms engage in social relationships with one another and that social network theory is helpful in shedding light on this social structure of algorithmic trading.
Bio note: Christian Borch is Professor of Economic Sociology and Social Theory at the Department of Management, Politics and Philosophy, Copenhagen Business School, Denmark. Christian’s current work focuses on algorithmic finance and he is the PI of an ERC-funded research project on this topic. His next book is titled Social Avalanche: Crowds, Cities and Financial Markets (forthcoming with Cambridge University Press).

With its central London location, unique research culture, and scholars like Paula Jarzabkowski, Hugh Wilmott, Jean-Pascal Gold, Andre Spicer or myself (Daniel Beunza) the PhD program at Cass Business School offers a unique opportunity to join the Social Studies of Finance community at one of Europe’s leading business schools.

With its young, international, and highly cohesive Management faculty, the PhD program at Cass offers candidates a wealth of opportunities to present in seminars, engage faculty, and join numerous social events. At Cass, PhD candidates will also be able to conduct rigorous research in Management and do fieldwork in the City of London. Located barely ten minutes away from the Bank of England, Cass is connected to the London Stock Exchange, the Financial Conduct Authority, and the Banking Standards Board through its wide network of faculty and alumni.

The PhD program in Management is directed by Elena Novelli, and offers scholarships for outstanding applicants. Applications are open till February 28th 2019. Please find a link here:

https://www.cass.city.ac.uk/study/phd/how-to-apply 

See also attached flyer: Cass PhD flyer_2018

For questions or clarifications, feel free to contact me directly at daniel.beunza@city.ac.uk

 

If you are attending this summer’s Academy of Management Conference in Chicago, here’s three events that I have organized, and which explore topics on finance within organization theory.

Financial crisis

First, a symposium titled “Organizational Lessons, One Decade After the Financial Crisis.” The year 2018 marks the one-decade anniversary of the global financial crisis. In the ten years that elapsed since the bankruptcy of Lehman Brothers, research in economics and finance has developed a robust literature that informs public policy. Conversely, this symposium considers the body of organizational research published on the financial crisis: what have organizational scholars learnt about the crisis by now? What managerial implications and conclusions stem from such lessons? What are organizational scholars missing? This symposium addresses this question with presentations on the use of models in organizations, the intersection between politics and derivatives, wellbeing in investment banks, bank culture, and the institutional dimension of the crisis.

It will do so through four presentations:

“Regulating through Culture? Cultures of Culture in the UK Retail Banking Industry,” by Simon Parker, Nottingham U. Business School, and Andre Spicer, City U. London.

“Embodying the Market,” by Alexandra Michel, U. of Pennsylvania.

“The crisis that won’t go away: Retrospective commentary on institutional analysis of the crisis,” by Suhaib Riaz, U. of Massachusetts, Boston.

“Financial innovation as tool of statecraft: implications for organization theory,” by Andrea Lagna, Loughborough U.

“A Village on Wall Street: From Models to Norms in a Derivatives Trading Room,” Daniel Beunza Ibanez, Copenhagen Business School and City U.

When and where: Monday, Aug 13 2018 1:15PM – 2:45PM at Marriott Chicago Downtown – Magnificent Mile in Clark Marriott Ballroom

Securities analysts

Second, a symposium titled, The Future of Analysts’ Work: Importance and Challenges Ahead. This event aims at promoting debate on the analyst profession by bringing several leading scholars in the study of equity analysts. Our symposium shares papers that highlight the role of analysts as information intermediaries but also as self-interested individuals performing careers, the significant part of which is providing insight and guidance to investors. We do not propose to solve the debate on whether or how analysts can be useful for understanding publicly traded firms and financial markets; rather, we hope to use the symposium as a platform to examine different ways in which the work of equity analysts can provide insight into important organizational phenomena. Each scholar studies analysts from a unique perspective, which combined with our discussant creates an opportunity for lively debate on the role, power, and importance of analysts in modern organizational and strategy research. It will do so through four presentations, and the discussion by Todd Zenger, of the David Eccles School of Business.

It will include four presentations:

“Two sides to the story? Positive and negative aspects of securities analysts,” Mary J. Benner, U. of Minnesota and Daniel Beunza, Copenhagen Business School and City U.

“Analysts’ intertemporal evaluations of firms’ resources during radical technological change.” Ram Ranganathan, U. of Texas, McCombs and Wei Yang, The U. of Texas at Austin.

“Organization’s Centrality in the Employee Mobility Network and Individual Performance.” Matteo Prato, USI (Lugano) and Pino G. Audia, Dartmouth College

“Does playing to type make you a star? Gender and gender-based categories in analyst research.” Anne Bowers, U. of Toronto and Matteo Prato, USI (Lugano)

“When do employees pursue firm goals versus their career concerns?” Viktorie Sevcenko, London Business School and Sendil Ethiraj, London Business School

When and where: Tuesday, Aug 14 2018 9:45AM – 11:15AM at Marriott Chicago Downtown – Magnificent Mile in Clark Marriott Ballroom

Derivatives exchange

Finally, Andrea Lagna and I have organized a tour of the Chicago Board Options Exchange (Cboe) as an OMT off-program event during the next AOM Annual Meeting. Cboe is one of largest options markets in the world. It was the first exchange to list standardized options in 1973 and, since then, it pioneered several financial innovations such as the Cboe Volatility Index and, more recently, Bitcoin futures. This visit is a great opportunity for OMT scholars to experience the fascinating world of derivatives trading in Chicago.

It includes:

  1. a) 1 hour tour of the Cboe trading floor during active trading.
  2. b) 1/2 hour Q&A session
  3. c) Cboe souvenir trading badges.

http://www.cboe.com/education/educational-tours

When and where: The tour will take place on 10 August 2018, 2-3.30pm. It is full already, but if you’d us to put you on the waiting list, please get in touch with me at dbe.ioa@cbs.dk

Futures of finance and society, 2018
University of Edinburgh, 6-7 December

Organisers: Nathan Coombs, Tod Van Gunten
Keynotes: Donald MacKenzie, Annelise Riles, Gillian Tett
Sponsors: Edinburgh Futures Institute/University of Edinburgh

Call for papers available here


Ten years on from the global financial crisis, the settlement between finance and society remains ambiguous. Regulation has been tightened in traditional areas like banking, against a backdrop of fiscal austerity and the proliferation of new monies, financial platforms and investment vehicles. Building on the success of the Finance and Society Network’s previous ‘Intersections of finance and society’ conferences, ‘Futures of finance and society’ asks what new social, organisational and political forms are emerging and what direction they should take.

This two-day event, based at the University of Edinburgh’s historic Medical Quad, aims to deepen dialogue between the diverse disciplines contributing to the field of ‘finance and society’ studies. It seeks to develop new synergies between political, sociological, historical, and philosophical perspectives. In addition to providing a venue for presenting ongoing empirical and theoretical research, contributors are invited to propose and debate potential solutions for improving financial stability, expanding financial inclusion, and mitigating inequalities associated with financialisation.

The conference is organised through the Finance and Society Network (FSN), in association with the journal Finance and Society, the Edinburgh Futures Institute, and the University of Edinburgh’s School of Social and Political Science (SPS).

Confirmed keynotes:

  • ‘Finance studies twenty years after Callon’, Donald MacKenzie (University of Edinburgh)
  • ‘Financial citizenship: Experts, publics, and the politics of central banking’, Annelise Riles (Cornell Law School)
  • ‘Financial cultures and financial crises’, Gillian Tett (Financial Times)

Contributions are invited in two formats:

  • Papers; abstract of up to 300 words
  • Panels; abstract of 100 words plus 3-4 paper abstracts up to 300 words

Themes on which we encourage contributions include:

  • Sociology of financial markets
  • Finance and social theory
  • Finance and inequality
  • Heterodox economics and finance theory
  • Gender and finance
  • Derivative and structured finance
  • Central banking and shadow banking
  • Financial crises, past and present
  • Financial regulation and state activism
  • Temporality, historicity, futurity, fictional expectations
  • Financial modelling and forecasting
  • Theology and finance
  • Finance and social reproduction
  • Finance and neoliberalism
  • New perspectives on financialisation
  • Financial markets and the digital economy
  • Financial technology
  • Money, financial markets, and psychoanalysis
  • Popular cultures of finance
  • Financialisation and contemporary art markets
  • Contemporary art practice in the age of finance

Please submit abstracts and proposals by 1 September 2018 to Nathan Coombs and Tod Van Gunten at the following address: futuresfinancesociety-at-gmail-dot-com

The editors of Finance and Society are encouraging paper submissions from conference participants.
For more information on the journal please visit: http://financeandsociety.ed.ac.uk

More information on last year’s FSN event is available on the 2017 conference website: https://intersectionsfinancesociety.wordpress.com/

We invite contributors to submit an extended abstract of 2-3 pages (incl. references) to markets2018.mpp@cbs.dk. Proposals should indicate topic, theoretical positioning, methodology and outline findings, if appropriate. Inquiries about the workshop can be made to the workshop organisers. We will notify contributors about acceptance in early March. As in previous years, in order to facilitate discussion at the sessions, we will make papers available beforehand. Full papers should therefore be emailed by Monday May 7th, at the very latest. Information about the workshop, local arrangements, affordable local hotel accommodation, the final programme, etc. will be uploaded on the conference webpage: www.tilmeld.dk/Markets2018.

 

The Theme

 

The 5th Interdisciplinary Market Studies Workshop will take place in Copenhagen, a city which derives its name from the harbour and the associated place of commerce that existed there from the 11th century. Købmannahavn translates as ‘chapman’s haven’ and ‘merchants’ harbour’ (portus mercatorum), and as such the city is a living example of how markets and cityscapes have always tended to co-create each other. Copenhagen’s history reveals another insight. Recent critics of the neoliberal city have argued that the privatization of public spaces and the redefinition of the built environment as the object of speculation have led to a privileging of the needs of wealthy investors, for whom shopping malls and luxury hotels matter more than affordable housing and places of recreation (Sassen, 2014). From that perspective, Copenhagen seems to have been a city of speculators, projectors and investors long before we started to speak of neoliberalism: a metropolis thriving on risk, expansion, and even appropriation, of geography and temporality.

 

From its very beginnings, Copenhagen existed as a market: the place was permanently settled by fishermen and traders, and it developed around the needs of traders and merchants. In the early 17th century, the now famous district of Christianshavn was built by King Christian IV to accommodate a new generation of global merchants who needed modern docks for their ocean-going ships that transported goods between China, India, Africa and Northern Europe. More recently, Copenhagen has become one of Europe’s largest consumers of steel because of the building of Nordhavn, a harbour area that is home to ferry and cruise-ship berths, a container terminal, marina, and industrial companies. With its various harbour areas, canals and inner-city bridges, ‘Merchants’ Harbour’ shows that it was planned from the beginning to enable market-based interactions.

 

With this in mind, the workshop organizers invite participants to reflect on the ‘situatedness’ and the ‘sitedness’ of markets. It has long been recognized that it is only within specific historical, spatial, cultural and power-mediated contexts that market actors are able to construct, negotiate and contest the meaning of their actions (Aspers, 2011: 40-56; Tucker et al., 2015). But what is it precisely that makes a social situation ‘a market’; what infrastructure – formal and informal – is needed to bring about and stabilize markets; and what kind of new social situations in turn are brought about by those who take part in markets? While papers on all aspects of market-related phenomena, both empirically and conceptually, are welcome, we invite participants to consider the idea more closely that markets exist in the form of concrete situations, zones and sites (Finch and Geiger, 2010). When approaching market situations and situated markets, we also encourage participants to reconsider recent changes in the nature of political language in North America and in Europe, and in particular the continuous production of homelands and strangers in response to the ongoing migration crisis. Finally, 2018 will mark the tenth anniversary of the collapse of Bear Stearns and Lehmann Brothers. This should raise questions as to the contributions of market studies to the analysis of the financial crisis (Mackenzie, 2011). The conveners therefore particularly welcome papers dealing with any of the following three aspects of the situatedness of markets and of market situations:

 

  1. Language and Imaginations. Market actors need and produce their own genre of concepts, metaphors and rhetoric. Like the term ‘crisis’ (originally denoting a fork in the road), ‘liquidity’, ‘capital’, ‘finance’, and ‘bubble’ are not just economic terms, but also metaphors. We are interested in research that studies the market-building work that economic and managerial concepts are involved in (Chiapello and Gilbert, 2014). What do the changes in the language used by market actors reveal about market-related imaginations, strategies and disappointments (Bakhtin, 1984: 145-195; Tribe, 2015)? This question also points to the fact that markets are not just situated in a concrete site understood as space, but also within the framework of language, that is within word plays, metaphors and allegories.

 

  1. Strangers and Borders. There exists of course a long-standing debate whether markets need, produce or ameliorate estrangement. According to Max Weber, economic action turns even closest friends into calculating strangers (Weber, 2013: 80-93; Roscoe, 2014). By contrast, Viviana Zelizer and Eva Illouz have argued that even the most intimate relationships are often market-mediated. According to both Zelizer and Illouz, love outside the market would be grey and lifeless (Illouz, 2007; Zelizer, 2007). Following on from that, we are interested to hear about work that studies more closely the kind of borders that markets require and erect; and in turn, what kind borders – physical and metaphorical – do markets undermine, and why and how do they tend to do so.

 

  1. Time and Fortune. Developing visions and imaginations of future events are key aspects of all economic action (Beckert, 2013). This insight points to the fact that markets also exist in time as a form of context and situation. What’s more, the temporal nature of markets extends from the present into the appropriation of the past (Samman, 2012). Historical projectors and contemporary entrepreneurs enrol future possibilities into present value, employing narratives of possibility (Parker and Hamilton, 2016) and sophisticated accounting techniques (Muniesa et al., 2017) to capitalise on these imaginations. Market time zooms through the material, the technological, rhetorical and the social. We are therefore interested in receiving proposals that employ time as an analytic category.

 

Our Keynote Speakers

 

Jens Beckert is Professor of Sociology and Director at the Max Planck Institute for the Study of Societies, Cologne. His research interests include the sociology of illegal markets, wealth and inequality, and the role of imaginaries and narratives in the economy. His most recent book, Imagined Futures: Fictional Expectations and Capitalist Dynamics (Harvard University Press, 2016), received an Honourable Mention for the 2017 Zelizer Award for Best Book in Economic Sociology.

 

Eve Chiapello is Professor of Sociology at the Centre d’Étude des Mouvements Sociaux at EHESS Paris. Her research examines the phenomenon of the financialisation of our economy and the tools used for said financialisation. She became widely known for her study (with Luc Boltanski) of The new Spirit of Capitalism (2006). Currently, she leads an international research project on financialisation and the fabrication of intangible assets, funded by the Humboldt Foundation in collaboration with the University of Hamburg.

 

How to Submit

 

We invite contributors to submit an extended abstract of 2-3 pages (incl. references) to markets2018.mpp@cbs.dk. Proposals should indicate topic, theoretical positioning, methodology and outline findings, if appropriate. The revised deadline for submissions is Friday, February 9th, 2018. Inquiries about the workshop can be made to the workshop organisers. We will notify contributors about acceptance in early March. As in previous years, in order to facilitate discussion at the sessions, we will make papers available beforehand. Full papers should therefore be emailed by Monday May 7th, at the very latest.

 

Workshop Venue and Programme

 

The Workshop will be organized in collaboration between the Department of Management, Politics and Philosophy (Stefan Schwarzkopf) and the Department of Organization (Trine Pallesen, Christian Frankel, José Ossandón) at Copenhagen Business School. It will take place at the Kilen Building of CBS, right next to the Metro Station ‘Fasanvej’, which is a convenient 20-minutes underground train ride from the airport. For further information see:http://www.cbs.dk/en/about-cbs/contact/maps/kilen-kilevej-14-ab.

 

The workshop will begin at 5pm on Wednesday 6 June with a wine reception at the old Stock Exchange Building in the heart of Copenhagen (http://english.borsbygningen.dk/). The two main conference days are 7 and 8 June, and we expect to finish at around 4.30pm on Friday.

 

Conference Fee and Webpage

 

We expect the conference fee to around DKK 1,700 (ca. GBP 200; EURO 230). Please note that this is an approximation only. The fee includes access to the full papers via the conference webpage, two lunches, a conference dinner, and a wine reception. Information about the workshop, local arrangements, affordable local hotel accommodation, the final programme, etc. will be uploaded on the conference webpage: www.tilmeld.dk/Markets2018.

 

Organizing Committee

 

Lotta Björklund-Larsen, Linköping University (lotta.bjorklund.larsen@liu.se

Alexandre Mallard, Ecole des Mines ParisTech (alexandre.mallard@mines-paristech.fr)

Philip Roscoe, University of St Andrews (pjr10@st-andrews.ac.uk)

Stefan Schwarzkopf, Copenhagen Business School (ssc.mpp@cbs.dk)

 

Local Arrangements

 

Stefan Schwarzkopf, Copenhagen Business School (ssc.mpp@cbs.dk)

Trine Pallesen, Copenhagen Business School (tp.ioa@cbs.dk)

Christian Frankel, Copenhagen Business School (cf.ioa@cbs.dk)

José Ossandón, Copenhagen Business School (jo.ioa@cbs.dk)

 

 

Reposted from Estudios de la Economía at the request of José Ossandón

Call for Papers: Market Situations – Situated Markets. 5th Interdisciplinary Market Studies Workshop, Copenhagen Business School, June 6 – 8, 2018. Keynote speakers: Jens Beckert (Professor of Sociology and Director at the Max Planck Institute for the Study of Societies, Cologne) & Eve Chiapello (Professor of Sociology at the Centre d’Étude des Mouvements Sociaux at EHESS Paris). We invite contributors to submit an extended abstract of 2-3 pages (incl. references) to markets2018.mpp@cbs.dk. Proposals should indicate topic, theoretical positioning, methodology and outline findings, if appropriate. The deadline for submissions is Monday, January 29, 2018. Inquiries about the workshop can be made to any of the workshop organisers. We will notify contributors about acceptance by early March, and full papers will be due early May.

The Theme

The 5th Interdisciplinary Market Studies Workshop will take place in Copenhagen, a city which derives its name from the harbour and the associated place of commerce that existed there from the 11th century. Købmannahavn translates as ‘chapman’s haven’ and ‘merchants’ harbour’ (portus mercatorum), and as such the city is a living example of how markets and cityscapes have always tended to co-create each other. Copenhagen’s history reveals another insight. Recent critics of the neoliberal city have argued that the privatization of public spaces and the redefinition of the built environment as the object of speculation have led to a privileging of the needs of wealthy investors, for whom shopping malls and luxury hotels matter more than affordable housing and places of recreation (Sassen, 2014). From that perspective, Copenhagen seems to have been a city of speculators, projectors and investors long before we started to speak of neoliberalism: a metropolis thriving on risk, expansion, and even appropriation, of geography and temporality.

From its very beginnings, Copenhagen existed as a market: the place was permanently settled by fishermen and traders, and it developed around the needs of traders and merchants. In the early 17th century, the now famous district of Christianshavn was built by King Christian IV to accommodate a new generation of global merchants who needed modern docks for their ocean-going ships that transported goods between China, India, Africa and Northern Europe. More recently, Copenhagen has become one of Europe’s largest consumers of steel because of the building of Nordhavn, a harbour area that is home to ferry and cruise-ship berths, a container terminal, marina, and industrial companies. With its various harbour areas, canals and inner-city bridges, ‘Merchants’ Harbour’ shows that it was planned from the beginning to enable market-based interactions.

With this in mind, the workshop organizers invite participants to reflect on the ‘situatedness’ and the ‘sitedness’ of markets. It has long been recognized that it is only within specific historical, spatial, cultural and power-mediated contexts that market actors are able to construct, negotiate and contest the meaning of their actions (Aspers, 2011: 40-56; Tucker et al., 2015). But what is it precisely that makes a social situation ‘a market’; what infrastructure – formal and informal – is needed to bring about and stabilize markets; and what kind of new social situations in turn are brought about by those who take part in markets? While papers on all aspects of market-related phenomena, both empirically and conceptually, are welcome, we invite participants to consider the idea more closely that markets exist in the form of concrete situations, zones and sites (Finch and Geiger, 2010). When approaching market situations and situated markets, we also encourage participants to reconsider recent changes in the nature of political language in North America and in Europe, and in particular the continuous production of homelands and strangers in response to the ongoing migration crisis. Finally, 2018 will mark the tenth anniversary of the collapse of Bear Stearns and Lehmann Brothers. This should raise questions as to the contributions of market studies to the analysis of the financial crisis (Mackenzie, 2011). The conveners therefore particularly welcome papers dealing with any of the following three aspects of the situatedness of markets and of market situations:

  1. Language and Imaginations.Market actors need and produce their own genre of concepts, metaphors and rhetoric. Like the term ‘crisis’ (originally denoting a fork in the road), ‘liquidity’, ‘capital’, ‘finance’, and ‘bubble’ are not just economic terms, but also metaphors. We are interested in research that studies the market-building work that economic and managerial concepts are involved in (Chiapello and Gilbert, 2014). What do the changes in the language used by market actors reveal about market-related imaginations, strategies and disappointments (Bakhtin, 1984: 145-195; Tribe, 2015)? This question also points to the fact that markets are not just situated in a concrete site understood as space, but also within the framework of language, that is within word plays, metaphors and allegories.
  2. Strangers and Borders.There exists of course a long-standing debate whether markets need, produce or ameliorate estrangement. According to Max Weber, economic action turns even closest friends into calculating strangers (Weber, 2013: 80-93; Roscoe, 2014). By contrast, Viviana Zelizer and Eva Illouz have argued that even the most intimate relationships are often market-mediated. According to both Zelizer and Illouz, love outside the market would be grey and lifeless (Illouz, 2007; Zelizer, 2007). Following on from that, we are interested to hear about work that studies more closely the kind of borders that markets require and erect; and in turn, what kind borders – physical and metaphorical – do markets undermine, and why and how do they tend to do so.
  3. Time and Fortune. Developing visions and imaginations of future events are key aspects of all economic action (Beckert, 2013). This insight points to the fact that markets also exist in time as a form of context and situation. What’s more, the temporal nature of markets extends from the present into the appropriation of the past (Samman, 2012). Historical projectors and contemporary entrepreneurs enrol future possibilities into present value, employing narratives of possibility (Parker and Hamilton, 2016) and sophisticated accounting techniques (Muniesa et al., 2017) to capitalise on these imaginations. Market time zooms through the material, the technological, rhetorical and the social. We are therefore interested in receiving proposals that employ time as an analytic category.

Our Keynote Speakers

Jens Beckert is Professor of Sociology and Director at the Max Planck Institute for the Study of Societies, Cologne. His research interests include the sociology of illegal markets, wealth and inequality, and the role of imaginaries and narratives in the economy. His most recent book, Imagined Futures: Fictional Expectations and Capitalist Dynamics (Harvard University Press, 2016), received an Honourable Mention for the 2017 Zelizer Award for Best Book in Economic Sociology.

Eve Chiapello is Professor of Sociology at the Centre d’Étude des Mouvements Sociaux at EHESS Paris. Her research examines the phenomenon of the financialisation of our economy and the tools used for said financialisation. She became widely known for her study (with Luc Boltanski) of The new Spirit of Capitalism (2006). Currently, she leads an international research project on financialisation and the fabrication of intangible assets, funded by the Humboldt Foundation in collaboration with the University of Hamburg.

How to Submit

We invite contributors to submit an extended abstract of 2-3 pages (incl. references) to markets2018.mpp@cbs.dk. Proposals should indicate topic, theoretical positioning, methodology and outline findings, if appropriate. The deadline for submissions is Monday, January 29, 2018. Inquiries about the workshop can be made to any of the workshop organisers. We will notify contributors about acceptance by early March, and full papers will be due early May.

Venue

The Workshop will be organized in collaboration between the Department of Management, Politics and Philosophy (Stefan Schwarzkopf) and the Department of Organization (Trine Pallesen, Christian Frankel, José Ossandón) at Copenhagen Business School. It will take place at the Kilen Building of CBS, right next to the Metro Station ‘Fasanvej’, which is a convenient 20-minutes underground train ride from the airport. For further information see: https://www.cbs.dk/en/about-cbs/contact/maps/kilen-kilevej-14-ab.

Organizing Committee

Lotta Björklund-Larsen, Linköping University (lotta.bjorklund.larsen@liu.se)

Alexandre Mallard, Ecole des Mines ParisTech (alexandre.mallard@mines-paristech.fr)

Philip Roscoe, University of St Andrews (pjr10@st-andrews.ac.uk)

Stefan Schwarzkopf, Copenhagen Business School (ssc.mpp@cbs.dk)

Local Arrangements

Stefan Schwarzkopf, Copenhagen Business School (ssc.mpp@cbs.dk)

Trine Pallesen, Copenhagen Business School (tp.ioa@cbs.dk)

Christian Frankel, Copenhagen Business School (cf.ioa@cbs.dk)

José Ossandón, Copenhagen Business School (jo.ioa@cbs.dk)

Guest blogpost by Ekaterina Svetlova, Diane-Laure Arjaliès and Philip Grant

Book by Diane-Laure Arjaliès, Philip Grant, Iain Hardie, Donald MacKenzie and Ekaterina Svetlova (2017), Chains of Finance: How Investment Management is Shaped, Oxford: Oxford University Press,

https://global.oup.com/academic/product/chains-of-finance-9780198802945?cc=gb&lang=en&

We may be entering ‘the age of asset management’, suggested the Bank of England’s Director of Financial Stability (now Chief Economist), Andrew Haldane, in an April 2014 speech. Investment management firms control assets equivalent in value to around a year of total global economic output—ca. $100 trillion. Yet the media and academic attention has been focused far more on banking or various types of ‘traders’ than on the investment management industry – despite the large impact of the latter on the economy and society more broadly.

Chains of Finance – How Investment Management is Shaped, published at the Oxford University Press, aims to address this gap. The book explores the inner workings of the industry, shedding light on the known but above all the unknown of investment management practices. The key message of the book is simple: The investment management industry is better understood as a chain of multiple intermediaries linking savers to the companies and governments that issue financial instruments, rather than as an addition of professional groups tied to a specific set of expertise, such as fund managers, securities analysts, and investment consultants. The investment industry today has actually little to do with individual savers choosing which shares or bonds to buy directly. Rather, most of their money flows through the investment chain, an often extensive sequence of interdependent go-betweens.

For example, savers’ decisions are frequently guided by financial advisers and ‘wealth managers’; they may also be influenced in their choices of mutual funds by specialist firms such as Morningstar and Standard & Poor’s that award these funds ratings. Furthermore, most ‘savings’ in fact take the form of contributions to workplace pension funds. These funds, with some variations across jurisdictions, usually have trustees responsible for investing the assets, an activity which they generally delegate to investment managers. Trustees’ decisions about which investment management firms to use are often guided by investment consultants. Following the chain in a different direction, fund managers (and traders in their firms acting on their behalf) need to choose where to execute their orders to buy or sell shares or bonds, and these decisions are strongly affected by fund managers’ relationships with brokers or dealers, in particular to those who work for big investment banks.

Chains of Finance explores how the intermediaries of the investment chain shape each other’s practices, channel the flows of savers’ money, and ultimately form audiences for each other’s performances of financially competent or expert selves. This performance of expertise is all the more important in an industry where performance is everywhere measured by putatively objective numbers, and where it is statistically almost impossible for an investment manager to consistently deliver above market returns—and yet where firms continue to charge clients substantial fees and individual fund managers are generally well remunerated. This generates a situation where links in the chain act as critical observers of others with whom they are linked—consultants and trustees critically observing and measuring fund managers, for example—and at the same time need these same others—trustees generally feel legally obliged to delegate investment management functions to professional firms, and consultants need managers for their own profession to exist.

We thus picture the investment chain as a series of relations that both constrain and enable. We show that investment managers’ decisions cannot properly be understood by focusing simply on a fund manager’s beliefs about particular securities or markets, but are co-shaped by clients, brokers, investment consultants, securities analysts, and even unions and politicians.

Importantly, the arguments and case studies presented in the book are built on ethnographic and auto-ethnographic work in the investment industry spanning several years in four cities (Paris, Zurich, Frankfurt, London) and 451 in-depth interviews with investment management industry employees in those locations as well as Edinburgh, New York, and other places in the US and Canada. Our ethnographic field research allows us to provide a thorough analysis of the asset management industry from a social science perspective and brings insights that could not be obtained by a purely theoretical work.

For example, one part of our study focuses on attempts by a number of links in the chain to pressure the US subsidiary of a French automotive manufacturer to recognize unions at its plants and improve working conditions there. In unprecedented meetings, fund managers, pension fund trustees, representatives of different French unions, French politicians, and US workers came together to try to work out a way to use a shareholding in the car company to bring about meaningful change in line with responsible investment objectives. What ensued, however, was a demonstration of the difficulty of moving the chain due to the constraints intermediaries impose on each other through their relationships. The fund managers would only act on instructions from the clients; the clients, as represented by the pension fund trustees, did not want to do anything that might contradict their legal duties; the politicians were unsure whether they could bring about pressure on an American subsidiary; the unions were focused on getting the best deal for French workers.

In another chapter we show how the investment management division of a Frankfurt bank formed a new ‘quant’ team. Reacting to the external expectations set by clients, investment consultants and competitors, the division’s managers decided they need a new, quantitative, ‘rigorous’, ‘scientific’ approach alongside their existing ‘fundamental’ method. In other words, the establishment of this quantitative department was driven by marketing, precisely because it could help to present the fund managers’ work as more rigorous and scientific. Clients such as pension funds, and the investment consultants who advise them, want to hear about rigour and ‘process’, a theme we came across time and time again in our research.

Elsewhere in the book we demonstrate that the client–fund manager relationship is not a simple principal–agent problem, but a multi-faceted, contextually dependent, malleable matter. Institutional investor clients such as pension funds have the power to set the terms of investment to constrain fund managers. Simultaneously, fund managers can also reshape what their clients imagine their interests to be, influencing their clients to align their goals with those of the managers. Moreover, relationships between clients and fund managers (and also brokers/traders and fund managers) are often characterized by reciprocity, loyalty and even amity, not by control and punishment.

Our analysis of an investment chain comes at a time when the view of financial markets as networks is influential. We do not see this as a rival theory. The chain is, however, a way of thinking about financial markets that helps make clearer the character of the various interactions. The concept of the investment chain also allows a complementary approach to the question of where influence resides within finance. The book shows that power lies in the chain and its multiple influences on investment decisions. Last, the book shows that the chain matters to outcomes in financial markets. These include a range of issues with broad societal consequences. Despite the investment chain’s importance, and its ubiquity in official reports across a variety of concerns with financial market operations, the chain is rarely the subject of explicit academic enquiry. It is even less often the subject of public debate. If a poorly functioning investment chain contributes to lower growth, inequality, poor workers’ rights, and a hotter planet, its functioning should be a matter of urgent academic and political enquiry. This book is a first step towards this direction, one we hope more researchers and practitioners will follow.