The Sociological Approach to Financial Markets

As a part of the renaissance and growth of economic sociology during the past two decades, and in response to processes such as economic globalization, financial markets have been increasingly scrutinized by sociologists. Their investigation is seen as relevant with respect to understanding the structure and dynamics of advanced societies, the dynamics of social development, as well as fundamental aspects of human behaviour. This paper charts recent developments in the sociology of financial markets; its starting point is the treatment of the concept of information within three sociological orientations: the social-structural approach, sociological neo-institutionalism and the newer social studies of finance. By highlighting their different assumptions about information and market behaviour, I discuss how these approaches conceptualize financial markets, the methodological implications and the ways in which they contribute to the study of financial exchanges. Copyright 2007 The Author Journal compilation © 2007 Blackwell Publishing Ltd.

[1]  Urs Bruegger,et al.  Global Microstructures: The Virtual Societies of Financial Markets1 , 2002, American Journal of Sociology.

[2]  C. W. Smith.  Auctions: The Social Construction of Value , 1989 .

[3]  M. Douglas,et al.  Purity and Danger: An Analysis of Concepts of Pollution and Taboo. , 1967 .

[4]  A. Shleifer,et al.  Inefficient Markets: An Introduction to Behavioral Finance , 2002 .

[5]  Joel Podolny.  Networks as the Pipes and Prisms of the Market1 , 2001, American Journal of Sociology.

[6]  Mark S. Granovetter.  Economic Action and Social Structure: The Problem of Embeddedness , 1985, American Journal of Sociology.

[7]  Kathryn Henderson,et al.  On Line and On Paper: Visual Representations, Visual Culture, and Computer Graphics in Design Engineering , 1998 .

[8]  Michel Grossetti,et al.  Markets from Networks. Socioeconomic Models of Production , 2003 .

[9]  G. Munn.  Encyclopedia of Banking and Finance , 1992 .

[10]  A D Puth,et al.  More heat than light. , 1974, Journal of rehabilitation.

[11]  Mitchel Y. Abolafia.  Framing Moves: Interpretive Politics at the Federal Reserve , 2004 .

[12]  Caitlin Zaloom.  Ambiguous numbers: Trading technologies and interpretation in financial markets , 2003 .

[13]  H. Garfinkel,et al.  Temporal order in laboratory work , 1983 .

[14]  Alex Preda,et al.  Where do Analysts Come from? The Case of Financial Chartism , 2007 .

[15]  M. Callon.  Europe wrestling with technology , 2004 .

[16]  C. Perrow.  Complex Organizations: A Critical Essay , 1975 .

[17]  K. Polanyi.  The Great Transformation , 1944 .

[18]  Wilfred Dolfsma.  The Social Construction of Value , 2004 .

[19]  D. Zorn,et al.  Here a Chief, There a Chief: The Rise of the CFO in the American Firm , 2004 .

[20]  Fabian Muniesa,et al.  Des marchés comme algorithmes : sociologie de la cotation électronique à la Bourse de Paris , 2003 .

[21]  Joel Podolny.  Status Signals: A Sociological Study of Market Competition , 2005 .

[22]  K. K. Cetina,et al.  The Practice Turn in Contemporary Theory , 2001 .

[23]  Frank Dobbin,et al.  Forging Industrial Policy: The United States, Britain, and France in the Railway Age , 1994 .

[24]  Michael Lynch,et al.  Discipline and the Material Form of Images: An Analysis of Scientific Visibility , 1985 .

[25]  Bruce G. Carruthers,et al.  City of Capital: Politics and Markets in the English Financial Revolution , 1997 .

[26]  M. Douglas.  Purity and Danger , 1966 .

[27]  G. Poggi.  Economy and Society: An Outline of Interpretive Sociology , 1969 .

[28]  D. MacKenzie.  Long-Term Capital Management and the sociology of arbitrage , 2003 .

[29]  Manfred Kochen,et al.  On the economics of information , 1972, J. Am. Soc. Inf. Sci..

[30]  M. Callon.  What Does It Mean to Say That Economics Is Performative? , 2006, Do Economists Make Markets?.

[31]  H. White,et al.  Where Do Markets Come From? , 1981, American Journal of Sociology.

[32]  Fabian Muniesa.  Performing prices : the case of price discovery automation in the financial markets , 1999 .

[33]  Wayne E. Baker,et al.  The Social Structure of a National Securities Market , 1984, American Journal of Sociology.

[34]  A. Pickering.  The mangle of practice : time, agency, and science , 1997 .

[35]  Elias L. Khalil,et al.  Donald MacKenzie ’ s An engine , not a camera : how financial models shape markets , 2009 .

[36]  N. Luhmann.  Essays On Self-Reference , 1990 .

[37]  C. Lawrence.  The pasteurization of France , 1990, Medical History.

[38]  Steven B. Andrews,et al.  Structural Holes: The Social Structure of Competition , 1995, The SAGE Encyclopedia of Research Design.

[39]  David Stark,et al.  For a Sociology of Worth , 2000 .

[40]  Brian Uzzi,et al.  Embeddedness and Price Formation in the Corporate Law Market , 2004 .

[41]  Success and Survival on Wall Street: Understanding the Mind of the Market , 1999 .

[42]  O. Velthuis.  Talking Prices: Symbolic Meanings of Prices on the Market for Contemporary Art , 2005 .

[43]  Jens Beckert,et al.  What is sociological about economic sociology? Uncertainty and the embeddedness of economic action , 1996 .

[44]  N. Fligstein,et al.  The Transformation of the American Economy, 1984-2001 , 2004 .

[45]  Ezra W. Zuckerman,et al.  The Categorical Imperative: Securities Analysts and the Illegitimacy Discount , 1999, American Journal of Sociology.

[46]  Herbert Kalthoff,et al.  Practices of Calculation , 2005 .

[47]  W. Powell,et al.  The New Institutionalism in Organizational Analysis , 1993 .

[48]  Judy L. Klein.  Reflections from the Age of Economic Measurement , 2001 .

[49]  G. Franke,et al.  Information diffusion in electronic and floor trading , 2000 .

[50]  Ezra W. Zuckerman,et al.  Structural Incoherence and Stock Market Activity , 2004 .

[51]  Csr Young,et al.  How to Do Things With Words , 2009 .

[52]  L. Henderson.  On the Social System , 1993 .

[53]  Alex Preda,et al.  Socio-Technical Agency in Financial Markets , 2006 .

[54]  Hendrik Vollmer.  Bookkeeping, accounting, calculative practice: the sociological suspense of calculation , 2003 .

[55]  Charles Perrow,et al.  Organizing America: Wealth, Power, and the Origins of Corporate Capitalism , 2002 .

[56]  B. Carruthers,et al.  Making Markets: Opportunism and Restraint on Wall Street , 1999 .

[57]  Søren Damkjær,et al.  Theory, culture and society , 2006 .

[58]  Neil Fligstein,et al.  Markets as Politics: A Political‐Cultural Approach to Market Institutions , 1996 .

[59]  T. Parsons.  The Social System , 1953 .

[60]  Greta R. Krippner.  The elusive market: Embeddedness and the paradigm of economic sociology , 2001 .

[61]  Jacob Torfing,et al.  State, Economy and Society , 1990 .

[62]  Kathryn Henderson,et al.  On Line and On Paper , 1998 .

[63]  David Stark,et al.  How to recognize opportunities: heterarchical search in a trading room , 2006 .

[64]  R. Burt.  The Social Structure of Competition , 2004 .

[65]  D. MacKenzie.  Is Economics Performative? Option Theory and the Construction of Derivatives Markets , 2006, Journal of the History of Economic Thought.

[66]  Hayagreeva Rao,et al.  Sources of Durability and Change in Market Classifications: A Study of the Reconstitution of Product Categories in the American Mutual Fund Industry, 1944-1985 , 2004 .

[67]  H. White,et al.  Markets from Networks , 2004 .

[68]  M. García,et al.  La construction sociale d'un marché parfait. Le marché au cadran de Fontaines-en-Sologne , 1986 .

[69]  M. Callon.  Actor-Network Theory—The Market Test , 1999 .

[70]  CLAUS OFFE,et al.  Die Wirtschaft der Gesellschaft , 1990 .

[71]  Philip Mirowski,et al.  More Heat Than Light: Economics as Social Physics , 1989 .

[72]  Philip Mirowski.  Machine Dreams Economics Becomes a Cyborg Science , 2001 .

[73]  Philip Mirowski,et al.  More Heat Than Light: Economics as Social Physics , 1989 .

[74]  Don Slater,et al.  Introduction: the technological economy , 2002 .

[75]  D. MacKenzie,et al.  Constructing a Market, Performing Theory: The Historical Sociology of a Financial Derivatives Exchange1 , 2003, American Journal of Sociology.

[76]  Greta R. Krippner.  The Financialization of the American Economy , 2005 .