Difference between revisions of "Markets"

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{{DES | des = Existing markets are not spontaneous: they are social [[institutions]] that have been often created, heavily modified and regulated by [[governments]] throughout history.  Because markets are amoral, they need [[regulation]].  Markets are not distinctive to [[capitalism]]; they exist in all economic systems more sophisticated than a hunter-gatherer economy. | show=}}
 
{{DES | des = Existing markets are not spontaneous: they are social [[institutions]] that have been often created, heavily modified and regulated by [[governments]] throughout history.  Because markets are amoral, they need [[regulation]].  Markets are not distinctive to [[capitalism]]; they exist in all economic systems more sophisticated than a hunter-gatherer economy. | show=}}
 
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Latest revision as of 12:26, 1 December 2020

Existing markets are not spontaneous: they are social institutions that have been often created, heavily modified and regulated by governments throughout history. Because markets are amoral, they need regulation. Markets are not distinctive to capitalism; they exist in all economic systems more sophisticated than a hunter-gatherer economy.

Links

Real Markets (11 links)
Actually existing markets (as opposed to theoretical free markets) are unnatural, are created by government, are rife with market failures, are amoral, are based on the coercion of property and rights, cannot escape crony capitalism and cannot be understood with simple economics 101 models.
Free Market (25 links)
"Free Market" (for libertarians) is a propaganda term, by which libertarians actually mean unregulated markets. Free markets cannot exist: they are an ideal model in economic theory. The vast majority of uses of "free market" are actually about real, regulated, imperfect markets, which are very little like free market models. Truly free markets would include markets for anything, including murder, and require perfect information and perfect competition. I recommend "unregulated market" instead of the propaganda term "free market".
Unregulated Market (7 links)
Includes black markets. In an unregulated market, you have the freedom to buy and sell whatever you want, no matter how noxious, no matter how fraudulently. Drugs, fake drugs, poisons, child prostitutes, slaves, beatings, torture, executions, military force, mass murder: all these are sold in unregulated markets. Libertarians generally oppose market regulation, and thus would produce these ills. Unregulated markets cannot correspond to the free market model because there is not perfect competition (assumptions of perfect information and rationality fail.)
The Economy (1 link)
Capitalism and Markets are only parts of the economy: the economy is a very heterogeneous system that includes government production, domestic economy, and gift transactions. Libertarian focus only on vanilla capitalism and markets makes easy ideology, but ignores vast and important swathes of the real economy.
Alternatives To Markets (1 link)
It is easy to forget that the vast majority of economic activity occurs outside of markets, and is outside of markets for good reasons. Environmental services, household production (including raising children), production of public goods and central planning of production within corporations all lie outside of markets. There are also important non-market mechanisms such as Matching Theory.
A Libertarian Case for the Moral Limits of Markets [More...]
Matt Zwolinski, hobbled by libertarian propaganda and framing, attempts to square the circle of libertarian faith in markets with the reality of the involuntary nature of property and market externalities.
Capitalism, Markets and Laissez-Faire (22 links)
Libertarian ideology worships these gods with feet of clay, and wishes no limits to them. History and common sense tell us that limits must be imposed on them, they must be regulated.
Collective Action Problems (3 links)
A very common class of problems where conflicting interests between individuals make cooperation difficult. Markets can be very good solutions to collective action problems, but they can also fail to solve the problems when values other than property (such as justice or equality) are not represented and in cases of The Commons. Libertarians seldom recognize solutions to these problems other than markets.
Consumers Are At A Disadvantage In Markets (5 links)
Consumers are generally amateurs attempting to compete with professionals. The professionals use a wide variety of psychological tactics to maximize the money extracted by misdirection, hiding information, and fostering irrationality. Regulations can alleviate this problem.
Economic Reforms (8 links)
Our current economic system concentrates wealth in very harmful ways. There are plenty of reforms that could help resolve this problem. Libertarian ideas generally would result in greater concentration of wealth.
How Natural is Capitalism, Exactly? [More...]
"The fact is that capitalism is a highly planned system with a questionable history -- there is nothing ‘natural’ about it."
Individual Choice (2 links)
Individual choice is a misleading concept: individuals do not control the choices available and are heavily influenced by advertising, propaganda, and other irrational factors. It also focuses attention away from alternatives, such as social choice.
Market Design (4 links)
Markets don't just spontaneously happen in their final (or current) form. They evolve or are designed by government and participants. Without such design or evolution, markets are rife with failures. Government must be involved to shape the laws and regulations that give order to the market.
Market Failure (35 links)
Real world economies are rife with market failure. This means choosing between second-best options such as imperfect markets, NGO's and government solutions. Ideology and economic theory cannot say which is best: you must resort to experimentation and history.
Market Fundamentalism (9 links)
The unholy ideological trilogy of Laissez Faire, Free Market and Invisible Hand. Beliefs that supposedly will solve all the world's problems.
Markets Are Amoral (2 links)
Markets are tools, with as much morality in them as hammers. Hammers can build, hammers can kill: so can markets. Libertarians pretend markets and the transactions within them are always moral, but they are not.
Markets Are Created By Government (11 links)
Modern markets rely on stable property, transportation, currency, educated workers and customers, and other factors with enormous market failures. Remove the government infrastructure of these, and markets will shrivel.
Markets do it better and cheaper than government. Not. (1 link)
A common propaganda claim from Milton Friedman. Patently untrue for a number of market failures. An additional problem is that the products would be different, sometimes in undesirable ways, because markets have no incentive to create positive externalities
Markets in Everything (1 link)
A propaganda theme at Marginal Revolution blog. Be amazed at the triumph of markets everywhere, but don't notice that they are often missing, noxious or poor substitutes for government. Markets are tools, like fire: but you wouldn't want fire in everything.
Markets in Organs (7 links)
Society is very leery of creating markets for organs, for very good reasons. Many libertarians (following ideological dictates of Self-Ownership and Market Fundamentalism) think organ markets should be unregulated.
Repugnant Markets (6 links)
Some markets (or potential markets) are offensive for a variety of reasons. Markets for kidneys and price gouging, for example. They may involve objectification, coercion, slippery slopes, or undermining of important institutions. Libertarians often say marketize anyhow, while ignoring non-market alternatives.
The Gridlock Economy: How Too Much Ownership Wrecks Markets, Stops Innovation, and Costs Lives (book) (1 link)
"Usually, private ownership creates wealth, but too much ownership has the opposite effect -- it creates gridlock. When too many people own pieces of one thing, whether a physical or intellectual resource, cooperation breaks down, wealth disappears, and everybody loses."

Quotations

There is an alternative view of the state and law [...] found within the German historical school, the original American institutional economics, parts of the new institutional economics, and elsewhere. The basic proposition is that the state provides an essential social and legal scaffolding for all private enterprise. Consider property rights. Individual property is not mere individual possession; it involves socially acknowledged and enforced rights. Individual property is not simply a relation between an individual and an object. It requires some kind of customary, legal, and moral apparatus of recognition, adjudication and enforcement. Similar considerations apply to the market: rather than the mere ether of individual interaction, markets are social institutions. Most of them are structured in part by statutory rules.
Geoffrey Hodgson, "From Pleasure Machines to Moral Communities: An Evolutionary Economics without Homo economicus", pp. 158-9.
[T]he market, as Hayek says, processes information and on that basis, determines, for example, the best way to organize production. But applying this logic shows that hierarchical economic planning may not be such a bad thing at least when combined with markets. The boundary of the firm -- how big it will be -- is determined by the answer to the question, should this component be produced inhouse or purchased? But this is also the boundary between organizing things according to the market or according to the hierarchical structure of command that has led capitalist firms to be termed (ironically) as ‘mini-planned economies.” The ‘verdict of the market’ in this case is that both markets and hierarchies have a place in the economy!
Sam Bowles, "How Hayek’s Evolutionary Theory Disproves His Politics"
The majority of economic activity takes place without any direct connection to markets, undertaken in the household or government sector, or within large corporations that trade in the market sector, but use central planning to organize their own activities.
John Quiggin, "I Pencil: A product of the mixed economy"
Those values [expressed by markets] are not pretty. They are that the whims of the rich matter more than the needs of the poor; that it is more important to keep bond traders in strippers and cocaine than to feed hungry children. At the extreme, the market literally starves people to death, because feeding them is a less "efficient" use of food than helping rich people eat more.
Cosma Shalizi, "In Soviet Union, Optimization Problem Solves You"
The basic competitive-markets model dating back to Adam Smith has been modified over time by the inclusion, in rough historical order, of monopoly, externalities, scale economies, incomplete and asymmetric information, irrational behavior, and many other real world features.
Dani Rodrik, "Rescuing Economics from Neoliberalism"
Neoliberalism and its customary remedies -- always more markets, always less government -- are in fact a perversion of mainstream economics. Good economists know that the correct answer to any question in economics is: it depends.
Dani Rodrik, "Rescuing Economics from Neoliberalism"
There is nothing wrong with markets, private entrepreneurship, or incentives -- when deployed appropriately. Their creative use lies behind the most significant economic achievements of our time. As we heap scorn on neoliberalism, we risk throwing out some of neoliberalism's useful ideas. The real trouble is that mainstream economics shades too easily into ideology, constraining the choices that we appear to have and providing cookie-cutter solutions.
Dani Rodrik, "Rescuing Economics from Neoliberalism"
Professor Hayek... does not see, or will not admit, that a return to ‘free’ competition means for the great mass of people a tyranny probably worse, because more irresponsible, than that of the State. The trouble with competitions is that somebody wins them. Professor Hayek denies that free capitalism necessarily leads to monopoly, but in practice that is where it has led, and since the vast majority of people would far rather have State regimentation than slumps and unemployment, the drift towards collectivism is bound to continue if popular opinion has any say in the matter.
George Orwell, "Review by Orwell: The Road to Serfdom by F.A. Hayek / The Mirror of the Past by K. Zilliacus "