In An Engine, Not a Camera , Donald MacKenzie argues that the emergence of modern economic theories of finance affected financial markets in fundamental ways. These new, Nobel Prize-winning theories, based on elegant mathematical models of markets, were not simply external analyses but intrinsic parts of economic processes. Paraphrasing Milton Friedman, MacKenzie says that economic models are an engine of inquiry rather than a camera to reproduce empirical facts. More than that, the emergence of an authoritative theory of financial markets altered those markets fundamentally. For example, in 1970, there was almost no trading in financial derivatives such as "futures." By June of 2004, derivatives contracts totaling $273 trillion were outstanding worldwide. MacKenzie suggests that this growth could never have happened without the development of theories that gave derivatives legitimacy and explained their complexities. MacKenzie examines the role played by finance theory in the two most serious crises to hit the world's financial markets in recent years: the stock market crash of 1987 and the market turmoil that engulfed the hedge fund Long-Term Capital Management in 1998. He also looks at finance theory that is somewhat beyond the mainstream—chaos theorist Benoit Mandelbrot's model of "wild" randomness. MacKenzie's pioneering work in the social studies of finance will interest anyone who wants to understand how America's financial markets have grown into their current form.

Recommended on 1 episode:

Is Decarbonization Dead?

Biden passed the most ambitious climate legislation in American history. Trump just shredded it. What does that mean for the future of renewable energy in America? Where does the climate movement go from here? And is it too late for us to avert climate catastrophe? To answer these questions, I invited onto the show two climate experts: Jesse Jenkins, who is a leading climate modeler and a professor at Princeton University, where he runs the Princeton ZERO Lab, and Jane Flegal, who is the executive director of the Blue Horizons Foundation and served on the Biden administration’s climate policy team. We discuss how far Trump’s policies have set us back, the lessons the climate movement should learn from this loss and what the next wave of climate politics may look like.

Books recommended:

• 📕  Frontiers of Illusion: Science, Technology, and the Politics of Progress by Daniel Sarewitz
• 📘  Why Nothing Works: Who Killed Progress―and How to Bring It Back by Marc J. Dunkelman
• 📗  Energy: A Human History by Richard Rhodes
• 📙  Red Mars (Mars Trilogy) by Kim Stanley Robinson
• 📕  Mating: A Novel (National Book Award Winner) by Norman Rush
• 📘  An Engine, Not a Camera: How Financial Models Shape Markets (Inside Technology) by Donald MacKenzie

Jesse Jenkins , Jane Flegal July 25, 2025 6 books recommended

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