Talk:Market of Ideas

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Notes on the Performativity of Economics

From a conversation with Yuval Millo. I was thinking about developing this as the content for a stall, but maybe too pushed for time. It needs developing, please do so if you feel inclined.--Trevor 18:27, 11 March 2008 (UTC)

Firstly, some feedback from Yuval: Yes, this all sounds just fine to me. One thing you want to consider is to apply some kind of organising principle to the text. As it stands now, it talks about performativity and then jumps to culture-dependency of markets and so on... You may want to think about some generalisation that you make at the beginning and which will turn the rest of the text into 'cases of...' of that principle. Things like: 'we are going to show you that markets are not external to society and to culture, but are in fact different facets of the same phenomenon. In fact, after you attend this fair you'd wonder why there is a separation between the culture, society and finance pages in the paper...'. Well, you get my drift.

Trevor - the word performativity is wholly new to me (and jars)... is it used elsewhere? Do others know it? If not, please offer a line or two to tell us what it means; your 'illustrations' are of 'two types of things' - fair enough - ... but I see no connection with this 'performativity' thing? Help! --MikeReddin 00:06, 16 March 2008 (UTC)Mike

I use it with the understanding that it relates to identity, specifically the formation of identity - that what something or someone 'is' - is derived from experience. Identity is created in the eyes of the other - I am who people perceive me to be. It is both limiting and liberating. I can 'become' something by 'acting' differently. Similarly the perception of economics is determined by the way in which it is applied and subsequently experienced. Wikipedia link.

The performativity of economics can be summarised quite easily:

There are two types of things in the world: Natural such as gold or rubber and Social such as a King.

An apple is a thing. It has utility value. It can be planted, traded or eaten. Money is useless apart from the belief that it is transferable. Without this currencies, such as the old Iraqi Dinar, are worthless. So money has no fundamental utility, it is a social thing.

Social things don't just happen, they require people to believe in them and they require support through systems and institutions such as accounting, media, law, knowledge or politics.

Through their beliefs people allow someone to be King, a priest or to be married.

If you accept that markets are both a reflection and a determinant of culture, what changes would you like to see in the practice of economics?

I would like to see more emphasis and appreciation for the historical, organisational and institutional development of markets. There is a misperception that all markets are the same - a market in China is not the same as in Frankfurt.

The trend toward international homogenisation is of some concern, through accounting standards for example, what is risky for one culture is not risky for another. The common response is that this adds liquidity, that markets are working. However, different markets will respond to the same event in the same way, such as in the recent default of Russian bonds.

Technology should be given more consideration. If everyone has the best technology the market offers, that homogeneity introduces risk, since the technology will encourages all users to respond in the same way. As far as popular economics is concerned this idea is at the very end of the tail. It is dismissed because it has a feedback mechanism whereas economists prefer models that are one-way (they don't like the same quantity to exist on both sides of the equation - example?).

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