Economics as social engineering? Questioning the performativity thesis

Abstract

The social engineering ambitions of economics have never been so high. Economists are increasingly invited to construct markets from scratch or to design mechanisms that mimic the market. Science students take these social engineering efforts as evidence for the capacity of economists to make the economy more like its description in economic theories. This paper scrutinises one such viewpoint. It examines Michel Callon’s performativity thesis that presents the stronger stance regarding the impact of economics on the economy—economic theory can be made true by construction. It concludes that the research carried out thus far fails to support this thesis. It has shown that economics, understood in a very loose sense, has an active role in market building.