Market Devices, Stable Markets and Counterfactuals (Or, Maybe Harrison White Was Wrong)

One of my favorite pieces of economic sociology, and one of the most foundational in the field, is Harrison White’s Where Do Markets Come From?. In that paper, White disputes dominant economic models of markets, arguing that such models rely on businesses making decisions on hypothetical demand and supply curves, rather than actually observed data. White generates stable markets that fit some observed data using only data available to individual firms – specifically, the quantities produced by their competitors, the price competitors charge, and the firm’s own production cost schedule.

I’ve always liked the way White takes economics to task for assuming that actors act on information they can’t possible have. But…

Today, I’m reading through documents for a professor I’m working for. Many of the documents are what Callon, Millo and Muniesa might call “Market Devices” – specifically, in this case, forecasts of supply and demand based on all kinds of technical and political assumptions. The details aren’t important here, but the end result is: page after page of hypotheticals, given form, and made actionable. If I were an executive of a company in this industry, I could open up this book and say, ah yes, here’s how much of the product will be demanded in 5 years, and in 10, and here’s how much production capacity currently exists, and all the known planned expansions. Etc. Yeah, the projections are just projections – but they are projected, and thus can be used in decision-making.

So, as a provocative closing, I’ll ask – does the performativity approach imply that (at least for markets with a sufficient amount of economization, enough market devices) White was wrong? What can we learn from comparing these two approaches (and the standard economic account)? Is there a way to merge the two approaches?

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1 Comment

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