Algorithmic Finance and (Limits to) Governmentality: On Foucault and High-frequency Trading

Research output: Contribution to journalJournal articleResearchpeer-review

Abstract

In this essay I discuss algorithmic finance, specifically the use of fully automated trading, including high-frequency trading, in the light of Michel Foucault's notion of governmentality. I argue that a governmentality perspective offers a fruitful way of understanding particular aspects of high-frequency trading, such as how algorithms are designed to govern other market participants' anticipations of market dynamics. However, I also argue that, to fully understand the realm of algorithmic finance and high-frequency trading, it is important to supplement a governmentality approach with an analytical lexicon which is not primarily centred on productive forms of power. Specifically, I suggest that, according to media discourses on high-frequency trading, algorithmic finance often works in ways that are better grasped through, e.g. Elias Canetti's work on predatory power and Roger Caillois's work on mimesis.
In this essay I discuss algorithmic finance, specifically the use of fully automated trading, including high-frequency trading, in the light of Michel Foucault's notion of governmentality. I argue that a governmentality perspective offers a fruitful way of understanding particular aspects of high-frequency trading, such as how algorithms are designed to govern other market participants' anticipations of market dynamics. However, I also argue that, to fully understand the realm of algorithmic finance and high-frequency trading, it is important to supplement a governmentality approach with an analytical lexicon which is not primarily centred on productive forms of power. Specifically, I suggest that, according to media discourses on high-frequency trading, algorithmic finance often works in ways that are better grasped through, e.g. Elias Canetti's work on predatory power and Roger Caillois's work on mimesis.
LanguageEnglish
Article number6
JournalLe Foucaldien
Volume3
Issue number1
Pages1-17
ISSN2515-2076
DOIs
StatePublished - 2017

Keywords

  • Algorithmic finance
  • Caillois
  • Canetti
  • Foucault
  • Governmentality
  • High-frequency trading
  • Power
  • Subjectivity

Cite this

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Algorithmic Finance and (Limits to) Governmentality : On Foucault and High-frequency Trading. / Borch, Christian.

In: Le Foucaldien, Vol. 3, No. 1, 6, 2017, p. 1-17.

Research output: Contribution to journalJournal articleResearchpeer-review

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