Theory, Reality, and Performativity in Markets

The purpose of this article is to analyze the relation between scientific knowledge in the form of theories and the world that such theories are about. The focus is on market theories. I argue that everyday knowledge, conceptualized using the notion of “lifeworld,” is the bedrock of scientific knowledge. I also make two distinctions, one between types of markets and one between principles of order in markets. There are two different types of markets, fixed-role markets and switch-role markets, and no existing theory can be used to explain both of them. In fixed-role markets, such as a producer market of garments, actors are identified as either sellers or buyers. In switch-role markets, such as the stock exchange market or currency market, actors are not identified with one role. The other distinction is between standard and status markets. In a status market, order is maintained because the identities of actors on both sides of the market are ranked according to status, which is a more entrenched social construction than the commodity traded in the market. In a market characterized by standards, the situation is reversed: the commodity is a more entrenched social construction than the social status of actors in the market. These distinctions are the backdrop of my analysis of the idea that markets are performed. It is concluded that *The author studied sociology at Stockholm, Harvard, and Columbia Universities, and is research fellow at the Max-Planck Institute for the Study of Societies in Cologne and Associate Professor at Stockholm University. Aspers is the author of Markets in Fashion, A Phenomenological Approach (Routledge 2005), and he has been chair of the economic sociology research network of ESA. His research interests are economic sociology, especially markets, theory, fashion and phenomenology. The author gratefully acknowledges the financial support by Axel and Margaret Ax:son Johnson Foundation. He thanks Caroline Dahlberg, Richard Swedberg, and Olav Velthuis for their suggestions. He is especially grateful for the comments by the reviewers and Laurence Moss. American Journal of Economics and Sociology, Vol. 66, No. 2 (April, 2007). © 2007 American Journal of Economics and Sociology, Inc. the performativity approach is useful today for analyzing switch-role markets. A further conclusion is that neoclassical economic theory can be used in understanding switch-role markets, but not fixed-role markets.