Given the length and depth of the global financial crisis that started in 2007, why haven't angry mobs punished the miscreants and more laws been passed to prevent a recurrence? Those questions are not posed by Alex Preda, but his thought-provoking analysis of the social processes by which modern financial markets became the legitimate heart of twenty-first-century capitalism does help to understand, perhaps, the public sense of despair rather than irate vengeance. Preda, a postmodern economic sociologist, is most concerned with demonstrating how stock markets established their legitimacy in modern society starting in the latter part of the nineteenth century. His thesis is that they needed to demonstrate to the public at large both the complexity of their activity and the special expertise and abilities required of their members, the professional stockbrokers and dealers. “Framing finance” means setting socially acceptable boundaries between the general public and the specialists active in the securities industry. (He apparently feels there was no other good reason for the success of the stock markets, much less for the high rewards reaped by their members. For example, he argues, “The ticker was not wanted for efficient, accurate, and broad diffusion of price data. It was wanted because it helped reinforce social status and a monopoly over authoritative price data” (p. 128).

To make his argument, he focuses mainly on the influence of the stock ticker, which made available to the outside public the constant stream of price making that occurred within stock exchanges, especially the New York Stock Exchange. The constant clatter of the ticker, with the stream of symbols for companies and the current quotes for their securities, enabled the general public to witness, without really understanding or participating directly in, the frenetic activity within the stock exchange. To interpret the data for the public, chartists such as Charles Dow and Roger Babson, then created heuristic models designed to help the public and even the professional stock traders to comprehend patterns within the stream of data produced by ticker tapes. Preda is bemused by the growing numbers of chartists, their professional organization, and their evident attractiveness to a significant customer base, despite the lack of a scientific basis for their efforts. Historical evidence for their acceptance as a vital part of American capitalism is drawn from the diary of Edward Neufville Tailer, a wealthy merchant and investor in New York, covering the period 1848 to 1907. Tailer's observations on the recurring financial panics and his own actions in response provide Preda with the kind of “ground-truthing” that his theorizing requires. While Preda argues in the abstract that, “A reduction of agency to intentional action is plagued by problems like conceptual regress and circularity” (p. 116), Tailer's absorption in watching the tickers in action wherever his business trips may take him allows Preda to ascribe “agential force” to the stock ticker!

Fascinating as this decidedly non-economic analysis of the rise of the securities markets in the century from 1850 to 1950 may be, the author neglects the existence of detailed price records for the London market dating from 1698. He skips over the principal-agent problems that confronted members of early stock exchanges and determined their self-organization. Many of the features of modern stock exchanges that he ascribes to the information and communications technology of the latter nineteenth century in fact had their origins in the eighteenth century. But he dismisses the early stock exchanges as operating only in disgrace at the margins of society, using as evidence how they and their denizens were portrayed in popular literature as opportunistic scoundrels.

Looking to the future, however, the destruction of the floor trader in all stock exchanges with the adoption of the information communications technology of the late twentieth century, leads Preda to see a wide range of problems emerging for finance in the twenty-first century. The impersonal interface of computer screens and all too human traders creates social dysfunction, which may all too readily lead to economic dysfunction. By breaking down the previous boundaries that separated the finance world's professionals from the rest of society, electronic communications networks have created new challenges for society and for today's policymakers. The sociological perspective offered by Preda provides economic historians interesting ways to frame their own research into the ongoing development of financial capitalism.