Donald Mackenzie’s latest in the LRB
September 19, 2014
In this issue of the London Review of Books, Donald Mackenzie describes the communication technologies that help high frequency traders do their thing (Be Grateful for Drizzle, v. 36:17). After an extensive discussion of how fibre-optic cables, microwaves, millimetre waves, and laser transmission through the atmosphere move information between the exchanges, Mackenzie asks a relatively straightforward question:
The right question to ask about high-frequency trading is not just whether high-frequency traders are good or bad, or whether they add liquidity to the markets or increase volatility in them, but whether the entire financial system of which they are part is doing what we want it to do.
Compare and contrast to Vasant Dhar, former HFT trader and Head of Information Systems at Stern School who wrote in a commentary at CNBC:
Let’s not risk our markets to a populist-based reaction that asks whether HFTs do any “social good,” but rely instead on an objective analysis of the “big data” that emanates from the markets.
On the one hand science studies says that technologies can be designed to accommodate a variety social visions. On the other, once in place, material infrastructures do constrain the kinds of choices we can make.
I definitely think we have to treat big data analytics as a space where political battles can happen in data-saturated systems, but it can’t be the only one. And yet, the dominance of digital data must neutralize some of the tools that social scientists usually deploy to contribute to the conversation. Not all conversations about the social good are possible, but which ones are…?
Since exchanges are not my topic of research, I’m sort of off the hook on this one. But still, I’m left wondering how to go about taking a position.