Is the church selling short? Moral condemnation and market practices

September 26, 2008

An interesting follow-up of sorts to our discussion from yesterday about the clash of incompatible orders of worth can be found in the Financial Times. Yesterday, the archbishop of Canterbury, the head of the Anglican Church, Rowan Williams, supported the decision to ban short selling. The archbishop of York, John Sentamu, went further and, according to the FT, ‘called traders who cashed in on falling prices “bank robbers and asset strippers”‘.

This moral condemnation, referring to the fact that short sellers gain from stock dropping in price (and, in effect, someone else’s losses) is correct, of course, according to one order of worth. Yet, short selling is a two-sided practice: someone has to lend the stocks that the short seller sells, and, as it turns out, that someone can be none other than… the Church of England. According to the FT: “Hedge funds pointed to the willingness of the Church commissioners to lend foreign stock from their £5.5bn ($10.2bn) of investments – an essential support for short selling”.

Yes, it is funny and it would be easy to look at this story as just another example of people not really understanding the market practices they criticise. However, there is more than this, I believe, in the story, which brings us back to the discussion about what could be a way to develop a sociological analysis of the events. The unfolding of the market crisis plays out the incompatibility between different orders of worth on the global stage. Yet, very little attention is being paid to how things are actually done. Who are the actors involved, for example, in short selling and what do they do? Very few finance professors can give a detailed answer to this question and, I would bet, even fewer sociology professors. Without understanding the mechanisms of markets at the operational level, we (and by this I include finance and economic sociologists) are cornered into a continuous process whereby we reduce actions, procedures and technosocial structures into ‘manifestations’ of one order of worth or another.

5 Responses to “Is the church selling short? Moral condemnation and market practices”

  1. typewritten Says:

    In this respect, a good classic of the social studies of finance is Bowen’s “The pests of human society”:
    http://www.blackwell-synergy.com/doi/abs/10.1111/j.1468-229X.1993.tb01569.x

  2. yuvalmillo Says:

    Well, it’s a bit a early to a paper from 2007 a ‘classic’, but the title is priceless…

  3. marthapoon Says:

    Yuval, I’m not sure it’s entirely fair to contrast regimes of justification against (short selling) practice. Justification is in and of itself a type of practice, all be it based in words. As far as practice the way you mean it is concerned, science studies have shown that in the act of making science different forms of evidence (the equivalent of rhetorical justification in material setting) can come into play.

    From the point of view of the theory of justification an accusation can not be countered with the question ‘what are short sellers really doing’ (as this is simply an appeal to shift into another regime of evidence). Rather the question is to what degree with attempts to qualify what they are doing as, say, illicit, stick (or not); and how will the parts that stick be uniquely negotiated over the course of the controversy / discussion…


  4. […] last week. The archbishops of the Church of England were commenting on the financial technique of short selling earlier this week. And on Thursday, Bruno Latour – connecting the ecological crisis, science, and […]

  5. typewritten Says:

    (Bowen’s paper is from 1993)


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