From Rationality to Hyperreality: Paradigm Poker
Norman B. Macintosh
September 19, 2008
International Review of Financial Analysis, Vol. 12, No. 4, 2003
Queen's School of Business Research Paper No. 04-09
This paper, following McGoun's (1997) seminal article comparing the economy of financial securities to a hyperreal poker game, argues that finance and accounting researchers should take the “linguistic turn” that has rejuvenated theory and research in many, if not most, of the social science and humanities in recent decades. In general terms, this means following Ludwig Wittgenstein's language game paradigm rather than Karl Popper's scientific deductive hypothesis testing methodology. The paper illustrates this by drawing on some of Jean Baudrillard's' ideas, particularly his concept of hyperreality and his phases of the image theoretic.
The paper presents a poststructuralist genealogical analysis of the radical ruptures and reformulation of the meaning attributed to the accounting sign of earnings over the feudal, counterfeit, production, and simulation eras. It concludes that, as with many other signs in contemporary society, the earnings sign no longer has any relationship with, nor does it any longer refer to, any real or intrinsic profit but instead floats ungrounded in today's financial economy.
The paper recommends that researchers in finance and accounting adopt paradigms from literary theory, semiotics, linguistics, and semiology rather than continue to rely on economics-based theory, which has lost its power for explaining and predicting happenings in today's financial economy of self-referencing models and images.
Number of Pages in PDF File: 14
Keywords: Economic theory, Financial economy, Paradigm poker, Earnings management, Derivative securities, Black and Scholes modeling, Hyperreal financial economy, Phases of the image, Orders of simulacra, Accounting sign-of-signs, Linguistic turn, Baudrillard, Popper, Wittgenstein, Cambridge Moral Science Clu
JEL Classification: A11, A13, A14, A20, G13, G14, G15, G20, L21, M40, M41, M49
Date posted: April 24, 2009 ; Last revised: May 17, 2009