Comments on Market Devices – round three
September 7, 2008
Commenting on the previous Market Devices post, Peter made a crucial point; one that, actually, I got quite a few times in different shapes. The general form of this question is something along the lines of “doesn’t the application of sociology of scientific knowledge to markets turn them (or even, reduce them) into fields of knowledge creation and testing? Aren’t markets important for other reasons than for validating or refuting predictive models?”
Yes. To say that markets are important primarily because they are public experiments where models and theories are tested would be silly. Markets are much more than that and the various descriptions are known well: markets are arenas for the allocation of scarce resources; they symbolise and enact political ideologies; they are part and parcel of contemporary capitalism and so on.
But, and this is the point where SSF is is misunderstood: the SSF approach does not ‘transform’ markets into some sort of laboratory so that they would fit as a case for the sociology of science. Instead, SSF research suggests that (1) there is deep involvement of expert bodies of knowledge in market activities and (2) the involvement of that knowledge shapes markets and their behaviour. Hence, to understand markets we have to know how things such as models, theories and their technological applications operate. In this respect questions regarding validity of models (or the construction of their usefulness) are as important for the analysis of markets are factors such as pre-existing social affinities and ties (embeddedness) or how different types of auctions help to bring about different types of market behaviour (micro-structure economics).