ISRF Political Economy Fellow 2017-18
ISRF Political Economy Fellow 2017-18
Dave is an Honorary Fellow at Loughborough University. His early work, notably in his books The Causal Power of Social Structures and The Reality of Social Construction, addressed broad questions in social ontology and social theory, arguing for a realist – but also constructionist – ontology of the social world. More recently, he has brought this perspective to bear on issues in economic sociology, beginning with the role and nature of gifts. His most recent book, Profit and Gift in the Digital Economy, develops a realist political economy of practices and uses it to analyse the economic structures of some of the best known organisations in the contemporary digital economy.
His ISRF Political Economy Research Fellowship project is concerned with the construction of value in the finance sector. As the global financial crisis has demonstrated, market-oriented theories of financial asset values are bankrupt. This project aims to develop and apply an alternative theory, arguing that the value of assets like money, shares, and derivatives is socially constructed: demand for financial instruments is created by narratives that generate expectations of future value, by institutions that bolster these expectations, and by persuading other financial actors to accept them as facts. While such values are often stabilised, they are potentially highly precarious, generating massive risk for our economic system. A clearer understanding of how that risk is generated can help us to develop a finance sector that prioritises social benefit rather than private profit regardless of the consequences.
As the global financial crisis has demonstrated, market-oriented theories of financial asset values are bankrupt. This project aims to develop and apply an alternative theory, arguing that the value of assets like money, shares, and derivatives is socially constructed: demand for financial instruments is created by narratives that generate expectations of future value, by institutions that bolster these expectations, and by persuading other financial actors to accept them as facts. While such values are often stabilised, they are potentially highly precarious, generating massive risk for our economic system. A clearer understanding of how that risk is generated can help us to develop a finance sector that prioritises social benefit rather than private profit regardless of the consequences. Building on my earlier work on social ontology, the project will use publicly available evidence to examine three cases that exemplify the argument: venture capital investments, the digital currency Bitcoin, and the complex derivatives that sparked the 2008 financial crisis. In employing tools from the philosophy of critical realism and the sociology of social construction, the project breaks with existing frameworks for explaining economic phenomena. Instead it develops an alternative approach introduced in my recent book Profit and Gift in the Digital Economy (Elder-Vass, 2016) which argues that we can understand the economy best as the site of many interacting complexes of practices. This is a framework that allows us to integrate insights from multiple disciplines including economics itself but positions conventional market theory as a description of only one of the many mechanisms that influence economic events. I believe it is an ideal fit for the ISRF’s objective of re-theorising pressing social challenges by drawing on insights from multiple disciplines.
If you would like to contact any of our Fellows to discuss their ISRF-funded work, please contact Dr Lars Cornelissen (Academic Editor) in the first instance, at [email protected].