Like David Warsh, I have been reading Donald McKenzie’s book, An Engine, Not a Camera: How Financial Models Shape Markets. Warsh locates it in comparison to William Poundstone’s book Fortune’s Formula and Perry Mehrling’s biography of Fischer Black, but in many respects it reminds me of nothing so much as Warsh’s own Knowledge and the Wealth of Nations. Only instead of growth theory, McKenzie takes on the story of the rise of finance theory in academia and, particularly, in financial practice.
As Warsh reports, you have to wade through a bit of philosophical musing to get to the finance story. Personally, I like it and it seems appropriate to a book so directly focused on the interactions between theory and practice. Your mileage may vary. But, as Warsh says, “Never mind. To a dedicated reader, the philosophizing is no worse than a heavy accent. There are wonderful stories here….”
I’m only about half way through the book. I may post again once I am done, but I’m a slow reader and Warsh’s column is excuse enough for me to recommend this book to anyone who is at all curious about the performance of financial markets or the interaction between economic theory and society.