Abstract
The meltdown in financial prices in 2007 and 2008 prompts the question of why the previous peak prices were ever regarded as reasonable. Prevailing pricing dynamics were in part produced by the influence of economists’ valuation models, which supposedly gave insights into the one true price that would emerge under conditions of market self-regulation. The valuation models thus helped traders to justify paying higher prices for all sorts of esoteric derivatives instruments, but not because their inputs produced an accurate representation of the relationship between historical price data and verifiable patterns of real-world economic socialisation. They were readily accepted despite being devoid of genuine economic content because they provided a means of visualising an ever more complete financial market structure built purely on demand-and-supply dynamics.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
Similar content being viewed by others
Author information
Authors and Affiliations
Copyright information
© 2014 Matthew Watson
About this chapter
Cite this chapter
Watson, M. (2014). The Collapse of the Model World: From Faith in Equations to Unsustainable Asset Bubbles. In: Uneconomic Economics and the Crisis of the Model World. Building a Sustainable Political Economy: SPERI Research & Policy. Palgrave Pivot, London. https://doi.org/10.1057/9781137385499_2
Download citation
DOI: https://doi.org/10.1057/9781137385499_2
Publisher Name: Palgrave Pivot, London
Print ISBN: 978-1-349-48126-2
Online ISBN: 978-1-137-38549-9
eBook Packages: Palgrave Intern. Relations & Development CollectionPolitical Science and International Studies (R0)