KEMI 2EN07 - Sociology and Political Economy of Financial Markets

Financial markets have become a central institution in modern market societies but often remain obscure and complex. Traditional courses on finance and financial markets typically focus on technical aspects such as option pricing, asset allocation, and asset valuation. In contrast, the ambition of the Sociology and Political Economy of Financial Markets course is to explore financial markets as human institutions. This approach encompasses their history, politics, policies, regulation, hierarchies, various forms of rationality, norms and beliefs, social networks, cognitive categories, and labor markets. Understanding the day-to-day functioning of financial markets is crucial not only for grasping this specific institution but also for comprehending the broader logics that extend beyond it. Financial markets are at the forefront of new forms of capitalism, making them an excellent observatory for studying its development. This course will bridge concrete examples of financial markets with recent advances in the emerging field of the sociology and political economy of financial markets, as well as with classical studies in economic sociology and political economy. It will be valuable for students interested in financial markets, whether as a potential professional career, a matter of political concern, or an exciting topic of scientific study.
Matthias THIEMANN,Olivier GODECHOT
Séminaire
English
Students are expected to read one scientific article each week and focus on three specific articles throughout the course. They will write three memos (or 2 memos and an oral presentation) based on these articles: 1. Experience Memo (1-2 pages): Relate the paper's findings to your own experience of finance. 2. Reaction Memo (1-2 pages): Critically analyze the paper, either positively or negatively. 3. Perspective Memo or in class presentation: Depending on the number of students, either an oral presentation of the paper or a third memo that places the paper in the context of the course content. The professor will organize discussions based on students' memos, and all students are expected to actively participate in these discussions.
Autumn 2024-2025
• Three short reports: 20% each • General participation: 40%
1. Introduction and historical approach of financial markets
Debated article: Fligstein, Neil. 2021. Chapter 2. From Mortgages to Mortgage Securitization, The Banks Did It. An Anatomy of the Financial Crisis. Harvard University Press, 31-62.
Reading material Carruthers, Bruce G. 1999. Trading on the London Stock Market, City of capital: Politics and markets in the English financial revolution. Princeton University Press, 160-194.
2. Rationalities of the market. Performativity of theories and social backgrounds
Debated article: Beunza, Daniel, 2019. Chapter 5. Models and Reflexivity, Taking the Floor, Princeton University Press, 73-97.
Reading Material:
MacKenzie, Donald and Yuval Millo. 2003. Constructing a market, performing theory: the historical sociology of a financial derivatives exchange, American journal of sociology, 109 (1). 107-145.
In French: MacKenzie, Donald and Yuval Millo. 2003. « Construction d'un marché et performation théorique : sociologie historique d'une bourse de produits dérivés financiers », Réseaux,21(122): p. 15-61.
Godechot, Olivier. 2016. Back in the Bazaar. Taking Pierre Bourdieu to a Trading Room, Journal of Cultural Economy 9(4): 410-429.
3. Gender and hierarchies on the financial labor market
Debated article: Neely, Megan Tobias. Chapter #, Hedged out. Inequality and insecurity on Wall Street, University of California Press.
Roth, Louise-Marie. 2006. Selling Women Short. Gender Inequality on Wall Street, Princeton University Press
Godechot, Olivier. 2008. "Hold-up" in finance: the conditions of possibility for high bonuses in the financial industry, Revue française de sociologie, 49 Supplement Annual English Edition: 95-123.
In French: Godechot, Olivier. 2006. « Hold-up en finance. Les conditions de possibilité des bonus élevés dans l'industrie financière », Revue française de sociologie, 47 (2): 341-371.
4. Cognitive and social embeddedness: Financial categories and social networks
Debated article: Yenkey, Christopher B. 2018. The outsider's advantage: Distrust as a deterrent to exploitation. American Journal of Sociology, 124(3): 613-663.
Baker, Wayne. 1984. The Social Structure of a National Securities Market, American Journal of Sociology 89(4): 775-811.
In French: Baker, Wayne. 2005. La structure sociale d'un marché à la criée, Idees, n° 139, mars 2005, 56-69 & Idees, n° 140, juin 2005, 58-68.
Zuckerman, Ezra W. 1999. « The Categorical Imperative: Securities Analysts and the Illegitimacy Discount », American Journal of Sociology104 (5): 1398-1438.
5. The regulatory embeddedness of financial markets
Debated article: Abolafia, Mitchell. 2001. Making markets: Opportunism and restraint on Wall Street. Cambridge, MA.: Harvard University Press, chapter 1 and chapter 8
Reading Material: Thiemann, Matthias and Jan Lepoutre. 2017. Stitched on the Edge: Rule Evasion, Embedded Regulators, and the Evolution of Markets. American Journal of Sociology Volume 122, Number 6, pp. 1775-1821
6. The political economy of financial markets and housing
Debated article: Mark Blyth. 2008. The Politics of Compounding Bubbles: The Global Housing Bubble in Comparative Perspective. Comparative European Politics Volume 6, pages 387–406, (2008)
Reading Material: Thiemann, Matthias. 2024. Taming the cycles of Finance: Central Banks and the Macroprudential Turn. Cambridge: Cambridge University Press, pp. 250-264