Peter Levin’s Rethinking Markets

February 14, 2008

Economic Sociology, Culture, Markets

Filed under: Culture, Markets — Peter @ 2:04 pm

I’ve been thinking about this for a while, wrote about it in an in-process manuscript, and I’m just trying to work out the argument out loud for a bit. Bear with me, it’ll probably be a few posts.

Limitations on how we think about markets and culture. This is two parts a limitation of our theoretical tools, and one part a limitation that stems from doing sociology from the kinds of markets we are studying. From a theoretical point of view, we remain in something of a false dichotomous bind, between those kinds of markets that have a culture, and those kinds of markets that are culture. The paradigm of embeddedness - and with over 2500 citations, I’m not going to jump into that argument, but instead I think fairly assume for the moment that embeddedness=structural embeddedness=networks - suggests that economic activities are influenced by the fact that they occur in repeated rather than one-off interactions. More broadly, the embeddedness framework implies a split between the economic activity, something purely economic, and the culture/structures/networks that have effects on that economic activity. In effect embeddedness argues for more sociological independent variables for economic dependent variables.

This is not the radical critique of someone like Harrison White, who wants to shift the whole discussion from actors and ties to analyses of ties and structures of ties themselves. But the movement in that direction has not been taken up by economic sociology but by the network people in the proto-socio-physics camp. Duncan Watts in sociology leading to its apotheosis in the Reality Mining of the MIT Media Lab. A post for another day.

On the other side of this dichotomy are those who argue that markets are culture. That is, markets are themselves cultural phenomena. This is close to, but not identical to Viviana Zelizer’s critique, that markets are subsumed by culture. I think she’s right for many cultural anthropologists, but the contemporary economic sociology research points to something a little different (and I claim myself to be more a part of this camp than the first). Here, the aim is to understand the determinants of markets - so, what is a commodity, agency, exchange, interests. Markets become the dependent variables, and a rather wide range of other kinds of variables become the explanations for markets. These include institutions, law, conventions, formulae, theory. Callon and the performativity crowd potentially fits on this side of the divide.

This divide maps onto a distinction made by Ann Swidler with regard to culture (and thanks to KH for pointing this out to me, though he’s not responsible for my argument here) - that the kind of markets that are analyzed come into play when taking one position or the other. When markets are settled, we are likely to look at culture as it affects them; when markets are unsettled, we are likely to analyze the determinants of them. Many studies of manufacturing jobs are now about cultural effects on labor and performance outcomes, not about the making of labor (this was certainly the main gist of Marx and industrial sociology, but as we have split organizational and industrial sociology from economic sociology it has dropped out as such). In capital markets, there is a wide split between those looking for sociological effects on finance - and I might include behavioral finance on the settled/’markets-have-culture’ side of the argument - and those looking for the creation of calculative agencies. And while I’ve placed various markets along this axis, even the same market can slide along this axis as it moves in time from settled to unsettled. So we look at network effects on volatility for options markets (Baker 1984; markets have culture, settled market), but the role of formulae in the making of the options market (MacKenzie and Millo 2003; markets are culture, unsettled market). The origins of the CBOT in the 19th century are about the making of futures; the contemporary work is about effects of regulation on market exchange.

I want to argue that this limits what we research and how we go about researching it. I’d like to suggest that are culture/have culture, and are settled/are unsettled ought to be an orthogonal rather than a two-dimensional axis.

6 Responses to “Economic Sociology, Culture, Markets”

1. jlena Says:
   February 14th, 2008 at 3:38 pm

   i don’t feel terrifically great about the image. i feel like either the two axes are the same axis, or they are different, but one is an attribute of the cases (the empirical worlds under examination) and the other is an attribute of the people examining them. maybe no. 2 is OK, but it feels unsettling.
   i’m looking forward to the post where you put meat on th e bones of “this limits what we research and how we go about researching it” because i’m a wee bit ’so whatish’ also.

2. Peter Says:
   February 15th, 2008 at 10:05 am

   Yeah, the image continues to be not great in my mind as well. Part of the problem, which you point to in your comment, is actually a reflection of the world (and ultimately it is my critique) - that the theoretical model is in fact reinforced by the empirical choice. In other words, either the theoretical choice dictates the kind of markets studied, or else the markets studied are conditioning the theoretical choice. I too prefer to think that #2 is happening (as Becker is fond of pointing out, we don’t just ‘pick’ theories, they become applicable in the cases we examine), because the alternative is that there is a collective sampling on the dependent variable for economic sociology. Blugh.

   Frankly, I actually think that both situations are occurring, and that it points to a weakness in the field. I want to argue for a both/and perspective, and start to see what we get when we look at a particular market with both constitutive (it is culture) and complementary (it has culture, sociology complements economics) perspectives. They are few and far between, though - Kieran Healy’s Last Best Gifts fits, as does possibly Olav Velthuis’ Talking Prices. Not coincidentally that they both come out of the Zelizer school..

3. brayden Says:
   February 22nd, 2008 at 2:36 pm

   I kinda like the figure. I think it’s more a map than a two-by-two table, which I appreciate. I wonder, where would you put the social movements-organizational forms research on diagram? In my mind the work of Rao and others who are investigating the general dynamics whereby new markets emerge is much closer to the “markets as culture” view.

4. markets have and are culture « orgtheory.net Says:
   February 22nd, 2008 at 3:55 pm

   [...] week Peter Levin wrote an interesting blog post about the different kinds of cultural economic sociology. One way to conceptualize the distinctions [...]

5. Yuval Says:
   February 23rd, 2008 at 3:26 pm

   I like the mapping exercise very much. Mostly, as I see it, because it helps us to expose a conceptual/cognitive limitation rather than any institutional reality. The fact that different markets, as they become more techno-socially institutionalised (’settled’), are seen more as markets that ‘have’ culture than manifestations of pre-existing cultures should be attributed, primarily, to the efficacy of the institutionalisation process. It is not, I would argue, that markets gradually distinguish market activity from culture, but it is that in established markets the cultural elements are so deeply and inherently ‘hard-wired’ into the infrastructure that it takes a lot of deciphering to isolate the ‘cultural elements’. For example, the competitive market makers of the CBOE were embedded in the ‘Chicago culture of making business’ - the antithesis of the NYSE specialists. Nowadays the competitive market makers are gone, but you can still find the culture in the algorithms that run the automated ‘designated market liaisons’. That is, the culture is not detached - it is, in fact, entrenched even deeper, into silicon, legal contracts, built spaces, etc.

6. Peter Says:
   February 27th, 2008 at 7:47 am

   Yuval - I agree with you quite strongly that the processes that occur in ‘unsettled’ markets, ie the creation of commodities, structuring of agency, get fused into the technologies and institutional structure of the market itself. So in effect (at least when ’successful’) they become part of the market infrastructure. As you put it nicely, the silicon, legal contracts, and built spaces of the market.

   I’ve struggled with the best ways to: a) synthesize the perspectives of those who treat markets as the dependent variable and those who treat market outcomes as the dependent variable; and b) how to best make visible those parts of settled markets that are infrastructural. It’s easier for me to see how the EPA creates Title IV pollution allowances and sets up that market than it is to see those same processes in the NYSE, even as I know it matters in both places.

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