Financial economics actively alters markets rather than merely describing them

Evidence

The “machineries of knowing” (Knorr Cetina 1999, p. 5) that make up finance theory’s engines of inquiry are among this book’s topics. More central to the book, however, is another issue. Financial economics, I argue, did more than analyze markets; it altered them. It was an “engine” in a sense not intended by Friedman: an active force transforming its environment, not a camera passively recording it. — Donald MacKenzie, An Engine, Not a Camera, 64

Categorization

• DEFINE: Sets up the book’s central performing-role-of-theory thesis in explicit opposition to Friedman’s original engine metaphor.
• corroborated: 2 independent passages support this claim — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 64
• XREF: connects to: Critical finance studies treat markets as discursively constituted rather than merely material — Aris Komporozos-Athanasiou, Speculative Communities: Living with…, 578; Market conversations do not merely transmit information but perform the economic action itself — Karin Knorr Cetina & Urs Bruegger, Global Microstructures: The Virtual…, 29; Financial pricing formulas actively construct the markets they purport to measure — Max Haiven, Cultures of Financialization, 84 (+14 more)

Broader Connections

• Economics actively shapes the economy rather than merely describing it #corroborates (0.95) — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin, 1987
• A market model can shape markets actively rather than merely describing them #corroborates (0.95) — Donald MacKenzie, An Engine, Not a Camera, 1165
• The discovery-then-acceptance narrative misdescribes how financial economics shaped markets #expands (0.90) — Donald MacKenzie, An Engine, Not a Camera, 386
• Finance theory altered its own empirical object of study #corroborates (0.90) — Donald MacKenzie, An Engine, Not a Camera, 388
• Economic theory succeeded in derivatives markets partly by making markets conform to it #corroborates (0.90) — Donald MacKenzie & Yuval Millo, Constructing a Market, Performing Theory, 9
• Observing economics used in markets does not prove it shapes them. #complicates (0.85) — Donald MacKenzie, An Engine, Not a Camera, 88
• Economic theory and actual market practice cannot be radically separated in derivatives #corroborates (0.85) — Donald MacKenzie, An Engine, Not a Camera, 1182
• Option pricing theory did not describe markets but remade them in its own image #corroborates (0.85) — Donald MacKenzie & Yuval Millo, Constructing a Market, Performing Theory, 182
• Finance progressed where it studied markets rather than firms’ internal workings #expands (0.75) — Donald MacKenzie, An Engine, Not a Camera, 327
• Modern financial markets are deliberately designed entities #qualifies (0.75) — Donald MacKenzie, An Engine, Not a Camera, 1235