economic sociology_the european electronic newsletter Volume 7, Number 1 | October 2005 7.1 editor Olav Velthuis, de Volkskrant, Amsterdam editorial board Patrik Aspers, Max Planck Institute for the Study of Societies, Cologne, and Stockholm University Jens Beckert, Max Planck Institute for the Study of Societies, Cologne Johan Heilbron, Centre de Sociologie Européenne, Paris Richard Swedberg, Cornell University, Ithaca Table of Contents Note from the editor_2 Articles Johan Heilbron: Taking stock: toward a historical sociology of financial regimes_3 David Chiavacci: Overcoming space and social distance: institutionalization of the mass travel market in Japan_18 Leonard Seabrooke: John A. Hobson as an economic sociologist_26 Gertraude Mikl-Horke: An old idea of “human economy” and the new global finance capitalism_36 Interview Carlo Trigilia answers ten questions about economic sociology_44 Book Reviews Read and recommended: recent literature in economic sociology_47 Information Job market_49 Call for papers_53 Conference announcements_58 http://econsoc.mpifg.de Note from the editor 2 Note from the editor Dear reader, In two other contributions, Gertraude Mikl-Horke and Leonard Seabrooke present thinkers that have so far not After six volumes, the newsletter is changing its familiar been ‘canonized’ in economic sociology, in spite of their but by now outdated layout. Christel Schommertz and important contributions to debates of their own days, and Thomas Pott of the Max Planck Institute for the Study of their relevance for contemporary discussions. Mikl-Horke Societies in Cologne, which also hosts the newsletter, shows how the Austrian sociologist Rudolf Goldscheid have done an excellent job developing the new design. analyses the values and interests that underlie economy action and that stand in the way of a ‘human economy.’ The current issue and the next one will be devoted to Goldscheids thinking shows strong familiarities with the historical perspectives in economic sociology. To begin moral economy of the early twentieth century political with, Johan Heilbron provides a historical account of fi- scientist John Hobson. As Seabrooke shows, this moral nancial markets, which shows that stock markets have economy revolves around ‘improperty’, that is the unfair never been perfect, free markets. Instead, they are politi- seizure of assets by others. cal constructs whose emergence would have been infeasi- ble without the government’s own continuous involve- Finally, in the interview series Carlo Trigilia of the Univer- ment. sity of Florence argues that economic sociologists should be more keen on influencing policy. Alex Preda of the In David Chiavacci’s contribution about the emergence of University of Edinburgh recommends readers recent litera- the modern travel market in Japan, a number of core ture in economic sociology. debates in economic sociology, about the role of institu- tions, social networks and culture in producing economic In the next issue historical themes will be continued, change, surface. In fact, the travel market bloomed due to among others with a contribution by Bruce Carruthers of a conception of religion which was not opposed to mate- Northwestern University. Submissions for the issue after- rial life and which allowed pilgrimage to gradually trans- wards, which will be about globalization, are welcome. So form into tourism. are reviews of recent books in economic sociology. Olav Velthuis [email protected] economic sociology_the european electronic newsletter Volume 7, Number 1 (October 2005) Toward a historical sociology of financial regimes 3 Taking stock: toward a historical sociology of financial regimes Johan Heilbron exchange rates are a very recent development. The first Centre de sociologie européenne (Paris) & options exchange opened its doors in Chicago in 1973.2 Erasmus University (Rotterdam) Its first European equivalent started business five years [email protected] later in Amsterdam and was soon handling one million options contracts annually; by the late 1990s, annual Money is the social instrument that gives the turnover in Amsterdam had risen to 60 million contracts. most accurate indication, in its uses and its The trade in shares and bonds underwent similar growth: changes over time, of the degree to which func- between 1980 and 2000 the turnover at Amsterdam’s tions are divided, of the extent and nature of exchange increased by a factor of 80.3 Options, shares, social interdependence. – Norbert Elias – and bonds are generally bought and sold by professional brokers employed by financial companies or institutions. But private individuals are increasingly venturing into the Introduction* field on their own. Attractive returns and a rising tide of offers have turned more and more private citizens into Among the daily torrent of news messages on radio and investors. In the 1970s, about 400,000 people invested in television two subjects have secured a permanent place: stocks and shares in the Netherlands; by 2000, just before the weather and the stock market reports. The financial the decline of the market, the number had risen to almost indicators are reviewed several times a day. Exchange two million.4 rates, share price indices, and major price swings are all reported, often followed by brief explanations. A mild Managing money has become the increasing concern of decline in share prices is explained in terms of profit- ever larger groups of people, and today even crops up in taking, a slight increase reflects a “technical recovery” or reflections on lifestyle and leisure activities. Yet the fasci- “regaining of confidence,” and major fluctuations point nation exerted by fast and smart money is tempered with to investors buying or selling their securities en masse. disbelief and suspicion. The controversies and scandals Thirty years ago, such messages were much like the ship- that hug the headlines with increasing regularity sustain ping forecast or farming news – they were specialized fears of fraud and imminent personal ruin. Financial thrill- reports for a limited audience, intruding only occasionally ers, a genre not much more than 20 years old, revolve in the public sphere. Today, stock market reports are at around swindlers and the swindled in the world of big the heart of the business news, and have become an in- money, around code accounts, front running, and other dispensable part of daily news broadcasts in the wealthy monkeyshines to which gullible outsiders can all too easily parts of the world. fall victim.5 The prominent place accorded the stock market is first of Financial services, as they are humbly known, were one of all related to a series of changes that took place in the the fastest growing sectors of the economy in the last financial world in the last few decades of the twentieth quarter of the twentieth century. Financial transactions century. The growing interest in shares arose together became proportionally more significant, as did the extent with a richly varied assortment of financial services and and social significance of financial institutions and mar- products: new types of loans, numerous investment con- kets.6 Accounts of these developments generally focus on structions, and a wide range of derivative products.1 Many share prices: the narrative is about peaks and troughs, the of these are traded on stock exchanges, which have them- overvaluing or undervaluing of certain shares, and the selves changed dramatically. Options markets are a good corresponding repertoire of decisions: buying or selling. example. Although futures trade has existed for hundreds of years, it was most often vividly contested. Regular and It is quite possible, however, to approach the stock ex- legitimate markets for options on shares and interest or change from a different angle altogether, one that does economic sociology_the european electronic newsletter Volume 7, Number 1 (October 2005) Toward a historical sociology of financial regimes 4 not revolve around share prices but around the social dy- ties and shares. Initially it was states and companies namics of the process underlying fluctuations in the mar- closely linked to states, such as the Dutch East India Com- ket. Share prices result from a large number of actions that pany (VOC), that issued stocks. Once this mode of financ- cannot be controlled by any of the individuals or groups ing became more widespread, the sector entered the third involved. Every investor makes more or less purposeful stage, one of professionalization and institutionalization. decisions, but the combined outcome of these activities is Professional stockbrokers formed their own organizations not intended, and cannot be foreseen, by any of them. The in the course of the eighteenth century, and these in turn movements on the stock exchange do not proceed accord- set up the national stock exchanges, which became the ing to any purpose or plan, they exemplify what Norbert hub of a steadily growing financial sector. From the late Elias has called a blind process. It could scarcely be other- nineteenth century onwards – in the fourth stage – the wise: if prices could be predicted, there would be no trade: stock market underwent further expansion, now driven instead we would have only buyers, or only sellers. specifically by private enterprise. From this time onward, trading on the stock exchange no longer focused on gov- As the unplanned outcome of many related actions, stock ernment loans and shares in state-subsidized or state- prices are