I have come to conceive of markets as centres of communicative action reliant on the norms of reciprocity, sincerity and charity. In this formulation mathematics is not used to determine (predict) the truth but as a language to facilitate discourse. I believe, based on sociological studies of the markets, that when market makers offer a price they can be seen as making a claim, which can be challenged by speculators and arbitrageurs, who either accept the claim/price and let it pass, or challenge it by taking the price or offering their own. In this sense mathematical models are used to justify claims, furthermore I believe this practice of using mathematics in justifying claims in finance was adapted in both politics, to deliver democracy, and science: I do not believe in stochastic systems models can be used to predict, only to justify in a discursive process.
This might seem academic and irrelevant, the practical usefulness is that it enables me to identify why practices described by Farmer might be unethical, rather than relying on an instinct that speculation in complex financial instruments just can't be right (where as geo-engineering, genetic modification or nuclear weapons are OK). I aim to show in my research, that such markets can offer growth without creating the inequality that Michel Loreau objected to, but I feel is a consequence of the aim at efficiency that a 'Darwinian' economics demands.Money, Maths and Magic
Economics, Ecology and Ethics
Tim Johnson | Lecturer (associate professor) in the Department of Actuarial Mathematics and Statistics, Heriot-Watt University, Edinburgh
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