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Out of the Pits: Traders and Technology from Chicago to London. By Caitlin Zaloom. Chicago: University of Chicago Press, 2006. xdii + 224 pp. Index, notes, bibliography, photographs. Cloth, $29.00. ISBN: 0-226-97813-3.
Reviewed by Paul J. Miranti
In her brilliant qualitative study, Caitlin Zaloom draws on cultural anthropology and economics to evaluate the nature of technological and market change in the trading of futures and options. This inquiry was partially informed by her own experiences, first as a floor trader at the Chicago Board of Trade (CBOT) and later, in London, as a computer trader through various global markets. The historical controversy that serves as a backdrop for her analysis was the transformation of trading from "open-outcry," or face-to-face, transacting perfected in the nineteenth century to computer-augmented commerce, which emerged during the 1990s. A major problem militating for change at the CBOT was the inability of traditional labor-intensive practices to handle greatly increased transaction volumes as constraints of space and personnel imposed physical limits on the number of orders that could be successfully executed. There were also limits to the pool of capital that the "locals," or market makers, could concentrate in providing liquidity to trading.
Dr. Zaloom argues that the explanations put forth by economic rationalists for assessing the co-development of markets and technologies are too narrow. Instead, she persuasively contends that the evolution of financial exchanges is better understood as the product of a complex and subtle synthesis of economic, social, and cultural influences. Zaloom unifies her evaluation by concentrating on the outlooks and actions of three classes of human agents who seek, through a changing array of "experiments" or plans, to skim profits from the market's underlying transactional flows: designers,...