Keepin’ it real

August 24, 2016

In the previous post, Suhaib Riaz posed an important question, “how critically aware are we that finance is also on a mission to socialize us?” The post demonstrates an earnest effort at self-reflection.  Such efforts are not nearly as common as one (I) would hope or expect from our various institutions of knowledge.

I come to social studies of finance by way of science and technology studies/ science and technology policy.  I study the science and politics of insurance ratemaking including, the role of technological experts in the decision making process.  So, truth be told, I am more familiar with policy scholars and climate scientists than the relevant scholars in organizational studies and management.  But I generally learn quickly and I have found that a select few have made a journey similar to mine.

After reading Riaz’s post, I commented.

I likened the concerns expressed in the post to those regarding the politicization of science.  As I have watched such politicization unfold and the impacts it has on society’s ability to cope and ameliorate its problems, I responded to Riaz’s post by urging collaboration and continuous self-reflection.

Just after my comment, as I was going through emails at the time, I learned that a notable American science policy scholar, Dan Sarewitz, published an eloquent essay geared towards ‘Saving Science’… mostly from itself.  His work, indeed much of his work, aims to lift the veil from science by encouraging scientists and non-scientists to more critically consider the production of science and technology in the context of societal needs, hopes and fears.

I thought more deeply about Riaz’s concern.

Science, much like finance, has benefited and suffered from the myth that ‘unfettered’ production inevitably leads to societal benefit.  In this way, one only needs to be armed with curiosity and all that results will be glorious.

A free scientific enterprise is a myth because it simply isn’t so, at least not anytime remotely recent.  Government steps in often to offer a hand and establish rules of the playing field.  Technology gives science applicability and in turn, drives certain areas of knowledge over others.  In a myriad of ways, we see that societal benefit is not inevitable. Advancements in science and technology have resulted in new risks, severe inequalities, and challenges to our sense of morality.

Yet the myth acts to demarcate the boundary between society and scientists and insulate the institution of science from the critical lens of accountability.  I dare say the myth has served economics and finance in much the same way.

When scientists believe their work occurs separate from the rest of everyone they have no choice but to be self-serving.  I have met countless scientists who believe their work is not about politics.  But, their scientific efforts support their worldview and their worldview supports their scientific efforts.  In either direction the nexus is politics because the justification for inquiry is based on personal visions of what ought to be.  There is always politics.  I think that is ok.  But one has to be aware of it, check in with the rest of society to see how it’s going and honestly consider the role one play’s in guiding the fate of others.

There is much for social studies of finance scholars to glean from the existing science policy literature from both sides of the Atlantic.

In the closing of his essay, Sarewitz notes the “tragic irony” of long standing efforts by the scientific community to shield itself from accountability to ideas and curiosities beyond itself thereby, resulting in a stagnant enterprise detached from the society it claims to serve.  As a means forward, he encourages improved engagement between science and the “real world” as a means to stir innovation, advance social welfare, and temper ideology.

The same suggestion can be made to the world of finance and its growing cadre of prodding social scientists.

Ratings and rankings have received considerable attention here at Socializing Finance, whether it be in the FICO score or in bond ratings that read like some cumulative grade point average (AAA, AA+ AA, AA-, A+, A, A-, BBB+, BBB, B, and so on).   In this post, I want to examine a phenomenon that takes ratings and rankings to their logical absurdity – the proliferation of Top 10 lists.  The object is frivolous; but the growth of consumer ratings is not.  They offer a wealth of data on the practice of valuation – an alternative metric for assessing what’s valuable.

As a Google search will quickly reveal, there are Top 10 lists of everything, including the Top 10 stupidest Top 10 lists.  Entire sites are devoted to the genre:, for example, has thousands of lists organized according to 15 categories, with drop-down menus revealing dozens of subcategories. (But there’s room for more: I was disappointed when I searched the site and didn’t find a Top 10 list of quotes from the Yankee philosopher Yogi Berra.)

Although it has a long pedigree – think of Moses’ list of the Top Ten prohibitions – in its current form the genre probably found its impetus in the 1950s when the standard jukebox held 40 singles. Out of this emerged Top 40 radio programming with the notion of a Top 40 list, later refined in the 1970s in the cloying voice of Casey Kasem’s weekly countdown, defining what would be played on popular music radio – with lucrative results for the major record labels. David Letterman’s nightly Top 10 lists echo Kasem’s countdown, even as his deadpan reading mocks the very project of the genre.

Top 10 lists are frivolous; yet their very ubiquity invites a moment of reflection.  Taking them (not too) seriously, requires understanding the humorous component of the genre.  Parody is most effective when it gets under our skin to jab at a social practice in which we are complicit.  Who has not resulted to a favorite critic’s list of the Top 10 best movies of the past year when one couldn’t decide on a film to rent?  Or never taken into account a wine’s ratings when choosing a bottle to take to a dinner party? Or consulted an online guide of users’ ratings when choosing a hotel, restaurant, vacation package, software program, or new electronic gadget?  Which is the PhD applicant, dean, or department chair who never perused the rankings of graduate programs?

And so we laugh because we laugh at our partial dependence on lists of ratings and rankings to navigate the uncertainties of finding what’s valuable in the overly abundant world of consumer choices.

We laugh also because, when the humorous genre works best, it does so by exposing a mixture of assessment criteria so ad hoc and absurd as to defy all rhyme or reason in the selection principle whereby any element on the list was “ranked” as higher or lower than any other.  Such ironic lists thus evoke an unsettling sense that many of the rankings and ratings that we (along with our deans, our creditors, and our regulatory agencies) use are organized on an ordinal scale but were cobbled together from disparate and incommensurable principles of evaluation.

Most Top Ten lists, however, are not ironic.  What is immediately striking is how many are deadly earnest.  John Dewey is insightful at this juncture. In his Theory of Valuation (University of Chicago Press,1939), Dewey distiguishes appraisal and prizing:

The double meaning is significant because there is implicit in it one of the basic issues regarding valuation. For in prizing, emphasis falls upon something having definite personal reference, which, like all activities of distinctively personal reference, has an aspectual quality called emotional.

Prizing, Dewey notes, has an emotional quality with a definite personal reference.  This is exactly what one sees in the emphatically non-ironic and non-expert Top Ten lists that are awash on social networking sites.  “If expert critics and juries can award prizes, so can I,” they seem to exclaim.  Here’s my list, the objects I prize, and the reasons for this decidedly personal attachment.

Dewey then goes on to contrast the affectual moment of prizing with the intellectual moment characteristic of appraisal:

Valuation as appraisal, however, is primarily concerned with a relational property of objects so that an intellectual aspect is uppermost of the same general sort that is found in ‘estimate’ as distinguished from the personal-emotional word ‘esteem.’ That the same verb is employed in both senses suggests the problem upon which schools are divided in the present time. Which of the two references is basic in its implications? Are the two activities separate or are they complementary?

The move is typical of Dewey.  Just when we think we have grasped the analytic separation of the emotional and the intellectual – as with the too-quick parsing of means and ends – he invites us to wonder “are they separate or are they complimentary?”

Dewey’s query is a fruitful insight for the sociological investigation of what’s valuable.  On-line ratings and rankings by consumers now provide new sources of data on prizing and appraising – new means to register value judgments in the economy.  Personal Top Ten lists are but the tip of the iceberg of a vast digital repository, much of it time-stamped data.  Whereas economists have long had time sensitive data on price movements, we now (or will soon) have alternative (not separate but complimentary) data bases on the movements of prizing and appraising that register consumer attachments.  These “valuemeters” will need new measures and metrics (Latour and Lepinay 2009: 16).  They can be quantified, but these metrics of personal value judgments need not be expressed in terms of money.  In fact, we will need to avoid the quick temptation to assess how prizing and appraising translate to pricing.  That is the work for corporate (and start up) research departments. The task for economic sociology (and for the field of critical accounting) will be to develop new metrics of what’s valuable (the prizings and appraisings that give us access to value judgments) – valuable precisely because they are metrics that are alternatives to prices.

This is a text that I prepared originally for an exhibition catalog, but I thought that it can also fit nicely with the eclectic spirit of the blog. So, I include it here.


We hear many different stories about where the market is to be found and, consequently, what the market should be. Many of these stories, though not all of them, are exclusionary. That is, they tell us: ‘my market is the real market’. When asked where the market is, the trader on the busy New York, Frankfurt or Hong Kong trading will spread his arms and say ‘here’. The day trader, in the basement of her suburban house will point to the computer screen and say ‘right here. This is the market’. The economics professor, surrounded by books and papers in his university office will point to a formula on a white board and explain why this is the market. ‘Well’, the sophisticated art aficionado is now saying, ‘this is not so problematic. The market simply has many representations’. Yes, quite right, but a representation of what, exactly? Where is ‘the market’?

The sophisticated art lover may revolt now: ‘why do we need a ‘real market’ that would be represented? Why couldn’t we have plurality without an obligatory original? Isn’t the artists’ re-creation of the market just as valid as that of the traders’ or as that of the securities analysts? Haven’t you heard of Walter Benjamin or Baudrillard?’ Yes. There is a faint smell of postmodernism in the air, but I think that this time the sophisticated art-lover may actually do a little better then state that ‘anything goes’.

When we state that any representation of the market is valid because there is now fundamental original that can be represented we implicitly focus on the outputs of markets. For example, the artist may take the voices of traders, graphs representing price movements or an aural translation of prices and embed these into a work of art. This brings us back, sneakily, to the apologetic position where we have to defend our ‘soft’ representations of the market against the ‘hard’ representations that analysts, accountants of finance professor produce. Isn’t there a way out?

Maybe we could shift our focus from the representation itself to the one using it and to the experience of its use. That is, what do people experience when they interact with representations of the market? An initial answer may be that these representations can help people understand where they are vis-à-vis the market and then, they can use this understanding to develop an idea of where to go next. The immediate example is of a map. You are not sure exactly where you are, but a short look at the map and a comparison with the terrain around you, may help you to estimate your location.

But, the alarm bell on our art-lover’s desk is ringing. ‘How can you look at the terrain if there is nothing ‘original’ outside? Didn’t we just say that there are only competing representations of the market?’ Well, let’s be more subtle about our examples, and maybe we will get closer to what market participants experience. You have a map, but you cannot see the terrain right now, as it’s night and it’s raining heavily. You have to rely on the map. But, the art-lover is asking, ‘is there a terrain (market) out there or isn’t there?’ Let us wait a little bit with this question. Remember, we are focusing on the experience, not the market. Let us find out what participants do with the representations.

The geographical map, like a risk map, a graphical representation of past price changes or a printout of mathematical prediction model, to name but a few, is what cultural anthropologists frequently call a ‘summarizing symbol’. Such symbols capture, in a compact informational package, numerous references to related entities. For example, the French flag may represent to a French person the sound of the French language, the beauty of a Parisian boulevard, the taste of regional food and patriotic pride. All these things, and countless others, are ‘compressed’ into a three-coloured rectangular. ‘Yes’, says our art-lover, ‘but these reminiscences are not in the flag; they are simply evoked by the flag, while the map actually includes new information. The French person is ‘smarter’ than the flag, while the market participant is not smarter than the representation of the market’.

This is true. But, the representation of the market, as smart as it may be, does not know what would be the next step that the market participant may take. Granted, the representation and the trader or analyst work together with their representations of the market, but none of them is a-priori superior cognitively to the other. Representations of the market, in their role as summarizing symbols, operate with us (and sometimes, unfortunately, against us), market participants, in our joint person-machine endeavor to make sense of where we are vis-à-vis the market and help us devise our next step.

‘Hold on’, cries the art-lover, almost dropping his espresso, ‘I am returning to the question you didn’t answer before: is there or isn’t there a market that we represent? Now you really contradict yourself. How can a representation of the market, be it a graph, an annual report or a work of art help us to find the market if there is no original market to be found? How can we position ourselves in relation to something if that something does not really exist?’

‘There is no contradiction there’ we should answer. We do not know if there is or there is not a ‘real’ market out there and neither should we care. The floor trader, the on-screen trader and the economics professor we met earlier may or may not care about the authenticity of the market whose representations they interact with. What they do care about is that the representation works. It provides them concise, compact, summarising information that allows them to make sense and make decisions.

The art-lover is now grinning cynically: ‘I like this agnosticism. It’s all very clever, but what has that got to do with aesthetic representation of the market?’ It is related to aesthetic appreciation just as much as it is related to economic, political or social evaluation and decision-making. In fact, when examined carefully, one can find elements of different realms in each market decision. It is not a coincidence that the brain sites that process emotions and logical decision-making are coupled, as recent research indicates. We think and feel at the same time. The different representations of the elusive market are all valid as long as they provide us with a valid experience. Is it interesting, moving, pleasing and insightful? Does it reverberate with your feelings and your intellect? Does it help you to understand or sense things better? If so, this is it. You found the real market.