Myth of the market

Posted: 25 February 2013 in Uncategorized
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Magic+of+the+Marketplace

There are two ways of responding to the myth of the neoclassical market.

One is to argue that there is no such thing as “the market.” There are only different markets—in the plural. There are capitalist markets and slave markets and communist markets and so on. And, of course, there is no guarantee either that a particular market will come into existence when it is called for or that a market, once it exists, will continue to exist over time. In other words, markets are not self-organizing or self-regulating activities; they are always being broken up and need to be created anew. They are, in this sense, socially constructed institutions.*

The other is to argue that references to the market implicate the entire economic system, and leave the entire system open to criticism. As Richard Wolff explains in his interview with Bill Moyers,

BILL MOYERS: When you say that there’s no economic argument that people should be kept at the– should not share in the gains of economic growth, the response is, “Well, that’s what the market bears.”

RICHARD WOLFF: Well, you know, in the history of economics, which is my profession, it’s a standard play on words. Instead of talking about how the economy is shaped by the actions of consumers in one way, workers in another way, corporate executives in another way, we abstract from all of that and we create a myth or a mystique. It’s called the market.

That way you’re absolving everybody from responsibility. It isn’t that you’re doing this, making that decision in this way, it’s rather this thing called the market that makes things happen. Well, every corporate executive I know, knows that half of his or her job is to tweak, manipulate, shift, and change the market.

No corporate executive takes the market as given. That may happen in the classroom, but not in the world of real business. That’s what advertising is. You try to create the demand, if there isn’t enough of it to make money without doing that. You change everything you can. So the reference to a market, I think, is an evasion.

It’s an attempt to make abstract the real workings of the economy so nobody can question what this one or that one is doing. But let me take it another way. To say that it’s the market is another way of saying, “It’s our economic system that works that way.” That is a very dangerous defense move to take.

BILL MOYERS: Why?

RICHARD WOLFF: Because it plays into the hands of those like me who are critical of the system. If indeed it isn’t this one or that one, it isn’t this company’s strategy or that product’s maneuver, but it is the market, the totality of the system, that is producing unconscionable results, multi-million-dollar apartments next door to abject poverty, then you’re saying that the system is at fault for these results.

I agree with that. But I’m not sure that those who push this notion of “the market makes it happen,” have thought through where the logic of that defense makes them very vulnerable to a much more profound critique than they will be comfortable with.

 

*This is an argument Jack Amariglio and I make in chapter 6 of Postmodern Moments in Modern Economics.

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Comments
  1. Ben says:

    Markets are an example of spontaneous order, the emergence of ordered behavior from the seemingly unorganized interactions of individuals; producing results which are in many cases unpredictable. Also, a market is not an entity, a place, or a group of people. A market is fundamentally a process.

    To say that markets are “socially constructed institutions” is akin to saying living cells are constructed by an intelligent designer.

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