July 14, 2010
OK, a last follow-up from me on the latest instance of ‘performativity-bashing’.
Daniel did the right thing in this post by showcasing an empirical social studies of finance research paper that uses the notion of performativity to explain an aspect of the crash. It is the right thing to do because producing better research is the best answer to criticisms. However, dealing with some of the critical points helps to sharpen the message of performativity and, in general, that of social studies of finance.
First, the claim that performativity is ‘just like’ Merton’s self-fulfilling prophecy was made, time and time again by none others than Donald MacKenzie and myself. I presented the paper about the Black-Scholes formula and CBOE about a dozen times and each time, without fail, I stated that the fundamental process at the basis of performativity is not different from self-fulfilling prophecy. That said, the empirical and conceptual innovation is that we show in detail how self-fulfilling prophecy comes about, how it becomes institutionalized, under what conditions it is ‘reversed’ and we expose the crucial role that non-human actors play in the process.
Second, we hear time and again the claim that social studies of finance is ‘sympathetic to the markets’ and the fact that SSF researchers analyze market devices in such great detail is an indication that they actually ‘go native’. The reason behind the detailed analysis is very different, of course. Understanding the intricacies of the analyzed subject is a crucial part of the strand of sociology of science from which the social studies of finance. This intellectual landscape includes, for example, Leviathan and the Air-Pump (Steven Shapin and Simon Schaffer), Andrew Pickering’s work on particle physics, Harry Collins’ works on the detection of gravitational waves and Donald MacKenzie’s research on missile guiding systems. This is very partial list, of course, but the similarities between the pieces are obvious. All these works are empirical, they strive to understand the techno-scientific knowledge embedded in the machines/devices studied and, critically, they identify and analyze the reflections of the larger political, social and cultural circumstances where these technologies were developed. This last point should be made again, for the benefit of the ‘attackers’: if you want to gain better understanding of the processes through which the financial crisis came about then you really have to understand the nuts and bolts of the business. And, no: simply saying that ‘it’s all greed’ or that ‘the models are always wrong’ (or their more elaborate, but not less simplistic, academic equivalents) is not nearly good enough. Instead, by understanding the minute details of, say, how credit derivates are designed sheds new light on the macro conditions of neo-liberalism and gain better understanding of the crash.
Lastly, people sometimes assign agency to ‘economics’ when it comes to performativity. The fact that economic theory is being ‘made accurate’ does not mean that the theory or ‘economics’ operated so that this aim is achieved. Instead, performativity is the result (which is frequently unintended) of hybrid networks of actors who operate so as to promote a variety of agendas (scientific, political, commercial, etc.). There is no single ‘big brother’, economist or otherwise, which pulls the strings to make theories come true. Funnily enough, a piece that is presented frequently as a fierce criticism of performativity, the one by Philip Mirowski and Edward Nik-Kah, does just that: it shows how a collaboration between economists, politicians and other professionals brought about the establishment of a market that performed economic theories.
PS – These arguments, of course, would not make any difference to the avid ‘performativity bashers’. In fact, answering them would make as much sense as shouting at the TV when Fox News is on. It’s still fun, though.