Innogen · News · July 30, 2008

Innogen Professor awarded the 2008 Zelizer Distinguished Scholarship Award

Donald Mackenzie photo

Read more about 'An Engine, Not a Camera'.

The selection committee, composed of Josh Whitford, Leslie Salzinger and Marion Fourcade, found the book to be ‘an outstanding and innovative contribution to the social study of the financial world, and a striking illustration of the utility of a science studies' approach to economic processes’.

'An Engine, Not a Camera: How Financial Models Shape Markets' has also been awarded the 2007 British International Studies Association’s (BISA) International Political Economy Group (IPEG) Book Prize and the 2005 John Desmond Bernal Prize, awarded jointly by the Society for Social Studies of Science (4S) and the Institute for Scientific Information.

The following review comes from the website of the book's publisher, The MIT Press

'In An Engine, Not a Camera' , Donald MacKenzie argues that the emergence of modern economic theories of finance affected financial markets in fundamental ways. These new, Nobel Prize-winning theories, based on elegant mathematical models of markets, were not simply external analyses but intrinsic parts of economic processes.

Paraphrasing Milton Friedman, MacKenzie says that economic models are an engine of inquiry rather than a camera to reproduce empirical facts. More than that, the emergence of an authoritative theory of financial markets altered those markets fundamentally. For example, in 1970, there was almost no trading in financial derivatives such as "futures." By June of 2004, derivatives contracts totaling $273 trillion were outstanding worldwide. MacKenzie suggests that this growth could never have happened without the development of theories that gave derivatives legitimacy and explained their complexities.

MacKenzie examines the role played by finance theory in the two most serious crises to hit the world’s financial markets in recent years: the stock market crash of 1987 and the market turmoil that engulfed the hedge fund Long-Term Capital Management in 1998. He also looks at finance theory that is somewhat beyond the mainstream--chaos theorist Benoit Mandelbrot’s model of “wild” randomness. MacKenzie’s pioneering work in the social studies of finance will interest anyone who wants to understand how America’s financial markets have grown into their current form.

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