Abstract
Marketing Shares, Sharing Markets. Experts in Investment Banking is a new and interesting study. It contributes to a critique of the mainstream vision of finance as a natural and rational product of the forces of the market.
The book provides an empirical analysis about the experts working in finance, in particular in investment banking. The idea consists in investigating these experts and how their practices have an impact on the financial industry (p.1). Therefore, two questions are posed: ‘How are investment banking practices organized?’ (p.1) and ‘How do these practices contribute to shape the stock markets?’ (p. 2).
The authors of the book are influenced by the works of Bruno Latour and Michel Callon on the one hand and MacKenzie on the other hand, that is to say by Actor Network Theory (ANT) and social studies of finance. For them, in line with Latour, Callon and MacKenzie, financial markets are constructed by the groups of experts that produce different worlds. However, the main theory used is ANT and in particular the notion of ‘boundary objects’ which correspond to actors (p. 11). For Blomberg et al. shares are a boundary object:
The advantage of this type of boundary object is its ability to resolve different goals, while still enabling communication and interaction between groups of actors that engage with it. This hints at a core characteristic of boundary objects: their ability to be employed in diverse intersecting social worlds. The central assumption is that consensus is not necessary for cooperation to take place (p. 12).
The book concentrates particularly on experts working in investment banks and on shares (p. 11). Different experts produce different identities in relations to these boundary objects which are shares (p. 13). In effect, the actor in the network is the share. Therefore, the share has a central role in this study which draws on actor network theory.
The methodology used combines qualitative interviews, non-participant observation as well as research on documents. The methodology provides extensive information about the processes analysed. Nevertheless, it would have been useful to operate a participant observation in order to accumulate more empirical data.
Investment banks are considered to be central to the ‘buying and selling of stocks’ (p.5). Four groups of experts are defined: the ‘traders’, the ‘analysts’, the ‘brokers’ and the ‘corporate bankers’ (p. 5). The notion of expert is closely connected to the usage and the possession of a specific ‘knowledge’ which is a collective attribute more connected to marketing than more traditional types of expertise (p. 7). Blomberg et al. argue that even though their empirical study is based on investment banking in Sweden it is relevant to investment banking in general because of the globalization of this industry (p. 17).
In the first section of the book the authors focus on trading. It is considered to involve a significant amount of pressure. Traders construct a specific ‘share identity’ which is characterized by flexibility and change because of the multiple trading usages of the share (p. 63). Therefore, traders would ‘constantly requalify the shares that they trade’ (p. 77).
Then, the book narrows the focus even further to the role of analysts. Their role consists in finding ‘interesting investment opportunities’ for traders (p. 66). Analysts provide advices to investors and traders in order to sell or buy specific shares according to prospects of profit, in particular after each quarterly report. Accordingly, the share identity of the analyst would be ‘a singularized good’, as opposed to the share identity of the trader, for whom it is a fluid commodity (p. 83).
In the final section of the book the authors tackle the question of brokers. They explain how the work of brokers was transformed because of the increased computerization of trading (p. 85). The share identity of the broker is primarily connected to his clients’ objectives (p. 106). The sixth chapter deals with ‘experts in corporate banking’ (p. 107). Essentially, brokers now ‘provide financial analysis and advice to corporations’ that need it (p. 108). Their share identity is ‘pragmatic’[‘bankers regard shares as artefacts that can be actively shaped’ (p. 129)]. In the seventh chapter, Blomberg et al. analyse empirically the ‘birth of a share’ and the role specific role of investment banking in it.
Essentially, the worlds of the traders, the analysts, brokers and the bankers are connected by the share, which is an actor within the framework of the actor network theory. In effect, Blomberg et al. argue that the diverse share identities of the different groups of experts operate through an ‘autopoeitic action’, that is to say a sociology which goes beyond the notions of subject and object (p. 226).
Marketing Shares, Sharing Markets. Experts in Investment Banking provides a very interesting empirical study about investment banking that is informed by actor-network theory and social studies of finance. It provides a realistic account about the work of traders, analysts, brokers and bankers in investment banking. The notion of share as boundary object working between the different groups of experts provides a credible account of the functioning processes of investment banking through the materialist flat ontology of actor network theory.
However, for me several problems arise. First of all, the chapter on the history of investment banking is not well articulated with the rest of the study. In effect, it provides only a repetition of the main historiographic positions on the development of finance without delivering a new approach on the history of finance.
Second, there is an epistemological problem. Most of the time, the implicit epistemological position is realism. In other words, it seems that Blomberg et al. describe processes that are actually taking place in the ‘real’ world of investment banking, whereas they argue that they are constructivist (p. 229). Blomberg et al. neglect the question of epistemology. In effect, it is not coherent to use the materialist approach of Latour and Callon with a constructivism based on the phenomenological approach of Alfred Schutz (p. 229). They describe the processes of share identities with ANT without epistemological reflexivity. It is not clear whether the notion of share identity is an ideal type or a real entity.
Third, the authors’ flat ontology of investment banking based on ANT and social studies of finance lacks a coherent account of the relations of power as, for instance, the Foucauldian genealogy or the Marxist class analysis. In effect, relations of power are absent from this study. Relations of power in investment banking are not addressed as though they would not exist, for instance in the production of the share identity. It seems that investment banking is a smooth process without struggles between groups or actors. Different groups of experts could have conflicting interests. Further, the question of relations of power between investment banking and the rest of society is not dealt with, even though investment banking has an important influence on the rest of society.
This neglect of relations of power implies an absence of engagement with the systemic financial crisis of 2008. It could have been interesting to articulate the micro-processes of investment with the large-scale failure of finance in 2008. As a result politics and ethics are completely shrugged off. It seems that the processes of investment banking do not have any consequences concerning social justice or being an ethical subject for the stakeholders.
Despite these epistemological and ethico-political issues, Marketing Shares, Sharing Markets. Experts in Investment Banking demonstrates that financial markets are socially constructed through specific processes and hence are not regulated by the natural laws of the market. Therefore, it constitutes a novel and interesting study that pushes some boundaries but not quite far enough.
This book is definitely relevant for scholars and social scientists who are interested in the social construction of markets. It may also appeal to a non-academic audience which seeks to question the mainstream representation of the market.