Peter Levin’s Rethinking Markets

May 20, 2005

discretion in markets

Filed under: Daily — Peter @ 12:17 pm

Ok, this is going to come out shabbily:
There is a paper I’m working on, for which I’ve been really interested in discretion. If one of the places where sociology can and should contribute to discussions of markets is in the organizational and institutional constitution of price, another is in the creation of action around choice.

We actually have a paucity of vocabulary around choice in markets. There are the central motifs of price and quantity - the formalisms required to make price and quanitity (or liquidity as Carruthers and Stinchcombe would say) free-floating. These are actually quite astounding if you look at the history of futures markets, the work required to make contracts enforceable, stable, standardized. All this so that people could extract the ‘economic’ decision-making from the ’social’ environment (I’ll rant again that this is a theoretical rather than an empirical distinction).

There is also something that Anselm Strauss called ‘articulation work.’ This is the work that is required for cooperative action. Not just ‘institutions’ in the North sense of rules of the game, but ongoing, complex work of making sure that multiple actors can act both in solidarity and in competition. I like to think that this is what Abolafia was getting at in his book Making Markets - the opportunism and restraint that underlie many of the buy/sell decisions expressed by his traders. The contemporary expression of articulation work is in the wonderful work of Leigh Star, whose work on infrastructure, CSCW (computer-supported cooperative work), and categories, is well-grounded in Strauss and an undervalued application to technology.

What I have in mind is something like ‘flexible formalisms’. This is the ability to change the rules, make exceptions, put the formal structure aside, all in the interests of maintaining the smooth operation of work, in this case markets. The downside of this kind of work is nepotism, cronyism, ends-oriented political action (ahem, US Senate). But the upside of this kind of work is to make clear the kind of things that smooths work out.

Two examples, one from life and one from research.

(more…)

May 3, 2005

Commensuration, again, and Transvaluation

Filed under: Daily — Peter @ 8:51 am

Actually, I looked a bit at transvaluation, and it doesn’t seem to be quite the same thing. Or at least, as Inigo once said, it does not seem to mean what you think it means. As far as I can tell, transvaluation is more about the shifts from one value system to another (often in context of Nietzsche, seems to be applied often enough to the Chinese case).

What commensuration links to is a historical tradition dating further back, dare I say to Aristotle? Elizabeth Anderson’s work on value and ethics in economics gets at this, as does Porter’s look at the rise of quantification (what he calls ‘mechanical objectivity’). The idea is that once you can make things directly compare-able via an external metric (slightly different from, but related obviously to quantification), decisions become obvious. There need no longer be angst-y decisions about whether to take path A or path B - 4 is greater than 2, and that makes valuation transparent.

Transpose this onto the question of whether to drill for oil in Alaska or continue to buy oil from Saudi Arabia, and it becomes apparent (to sociologists at least) all the impossibly complicated factors that need to be taken into account. My favorite anecdote on this count is in Wendy Espeland’s The Struggle for Water. She recounts an economist trying to do a cost-benefit assessment of building a dam in Arizona - a commensurative feat if ever there was one. Part of this entailed figuring out how much to value river-tubing. There are standard techniques of forcing the social world into quantitative economic analyses, including (in this case) asking how much people would pay for the privilege of tubing if they had to. None of the poor intrepid economist’s models were robust or stable enough to account for this activity. And so, it was simply deleted from the equation.

The problem is, we have a serious deficiency, made worse by neoclassical models of economics, in evaluating qualitatively different objects, events, activities. This may be an organizational fact, part of a historical moment in the world. It may be a cognitive feature of being human. Beats me. But it has to be met head-on, I think, as part of the sociological project of re-evaluating both the relationship between the economic and the social (in the broadest sense) and the ways in which we allocate scarce resources (in the still-gigantic-but-less-broad sense).