The Situation of Financial Markets

Below the jump you can watch an outstanding and fascinating  video episode, “Mind over Money,” by PBS’s NOVA, that asks the question “Can markets be rational when humans aren’t?” and that includes significant segments describing some of the work by Situationist friend Jennifer Lerner.

(We’ve placed the (52 minute) video after the jump because it plays automatically.)

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Bernard Harcourt on “Neoliberal Penality”

Bernard Harcourt, the Julius Kreeger Professor of Law and professor of political science at the University of Chicago, presented his fascinating paper “Neoliberal Penality: The Birth of Natural Order, the Illusion of Free Markets” at the third annual conference on Law and Mind Sciences, “The Free Market Mindset: History, Psychology, and Consequences,” which took place on March 7, 2009 at Harvard Law School.  The abstract for his talk is as follows:

In the Encyclopédie in 1758, under the entry “Grains,” Francois Quesnay declared that “It is quite sufficient that the government simply not interfere with industry, suppress the prohibitions and prejudicial constraints on internal commerce and reciprocal external trade, abolish or diminish tolls and transport charges, and extinguish the privileges levied on commerce by the provinces.” Quesnay’s vision of an economic system governed by natural order led to a political theory of “legal despotism” that would stand on its head an earlier understanding of a more seamless relationship between economy and society. By relegating the state to the margins of the market and giving it free rein there and there alone, the idea of natural order facilitated the unrestrained expansion of the penal sphere. It gave birth to our modern form of neoliberal penality.  In this presentation, I will trace a genealogy of neoliberal penality and explore the effects it has had in the field of crime and punishment specifically, and in the area of economy and society more generally.

To watch his fascinating talk (in three nine-minute sections) click on the videos below.

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For a sample or related Situationist posts, see “The Situation of Racial Profiling,” “Conference on the Free Market Mindset,” and “The Categorical Situation of ‘Money’.”

Do You Implicitly Prefer Markets or Regulation?

To find out, you can take the “Policy IAT 1.0″ (a roughly 15-minute task), click here.

For those of you on IBM-compatible computers, you can now access our new version, “Policy IAT 2.0,”  by clicking here.

Emotional Reactions to Law & Economics – Abstract

Peter Huang posted his latest manuscript, titled “Emotional Reactions to Law & Economics, Market Metaphors, & Rationality Rhetoric” (forthcoming in Theoretical Foundations of Law and Economics) on SSRN. Here’s the abstract.

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This chapter makes three fundamental points about law and economics. First, although some people feel strong, negative emotional reactions to utilizing microeconomics to analyze non-business areas of law, others feel no such emotional reactions. This chapter advances the hypothesis that people who do not view the world exclusively through an economics lens are likely to experience negative feelings toward applying microeconomics to non-business law areas, while people who view the world primarily through an economics lens are unlikely to experience such emotional reactions. Second, although law and economics remains an uncontroversial subfield of applied microeconomics; it has become a dominant, yet still controversial field of scholarship in legal academia. This chapter proposes that differences in how most academic and professional economists perceive law and economics versus how most academic and professional lawyers perceive law and economics are due primarily to differences in how familiar they are with microeconomics presented in a mathematically rigorous fashion. Third, much research considerably and significantly qualifies many well-known and often quoted alleged benefits of competitive markets and unbounded rationality. People who are familiar with this research appreciate that the extent to which markets and rationality are socially desirable is more complicated than people do not understand this research suggest. This research involves not only traditional microeconomics, but also behavioral economics, cognitive psychology, social psychology, and neuroeconomics.