(Part 2 of a series on Political Economy I am writing on this blog. See Part 1 here. I recommend reading the introduction and Part 1 of the series, the two pieces linked above, prior to reading this piece)
Introduction
A Brief Recap
In our last post, we discussed the moral-political background of the field of economics; how the sovereign makes non-economic choices that nonetheless profoundly affect (and direct) economic choices (and goals, etc.) of agents. So how does this relate to our concept of the economic market? First, we must begin to understand how, like with the whole field of economics, markets are grounded in a moral-political background. In the process, we will dispel misunderstandings about how a market can be “free” and disprove claims about how markets are “amoral”. A number of other writers have discussed this topic as well, and we will see some of their contributions to the subject later.
Following this deconstruction of the concept of the market, we will reconstruct said concept through a more rigorous post-liberal lens, and understand how sovereignty and morality come into play. We will also begin to understand that markets can take multiple forms and don’t necessarily need money (or equivalent systems) to operate.
The Flawed Modern/Liberal Understanding of the “Market”
To begin, Adam Katz presents a brief but interesting explanation of the Liberal (probably includes you. Yes, you. You are almost certainly a Liberal of some stripe) understanding of the marketplace:
The market, in its most abstract, praxeological terms, is understood as the interactions generated by the free choices of individuals. As an ontology, this is absurd, if for no other reason than that no one chooses the language in which these choices are made.
In other words, markets are perceived as being comprised of the “free choices” of economic agents, whether they are individual persons or firms (or the government). A “free market” is therefore a market without regulation or other “interference”, because the agents within such a market are presumed by the Liberal to be “free” by default. Of course, as Katz points out, such a concept is nonsensical for two general broad reasons:
- As Katz explicitly notes, there are material “supports”/”context” of the market that exist prior to the consent of the individuals taking part in the marketplace
- There is no such thing as a market independent of sovereignty (and therefore of the state/government). Claims otherwise are largely built on a misunderstanding of the nature of government/the “state” coupled with an interesting ideological undercurrent that will be explored later in this piece
Point one is easy to understand: we don’t consent (either actively or, arguably, at all) to all parts of a market or exchange in general. Our consent may be “inferred” but this gets into tricky areas trying to prove such an inferred consent. So, all markets possess nonconsensual components (the language that it takes place in and, to some degree, the rules/mechanisms of the market — or, in the words of the great ZippyCatholic, may he rest in peace, “Contracts are always definitely consensual. Contracts are never completely consensual”).
But moving beyond that, the biggest issue with the Liberal understanding of the Market has to do with the understanding of the market as separate from sovereignty/the state/government in some fundamental way; as if, the market can exist independent of the State. As noted in our previous post, the entirety of economics is embedded in a moral-political background that is governed by, well, the government. Property norms and the goals of production (ultimately, the most fundamental rule of the marketplace) are defined and defended by the government. A market cannot exist separate from sovereignty/government. In other words, the market is not a purely mechanistic system of supply and demand that arise from the preferences and budgets of agents, but rather a more complicated system that operates within a framework established by a non-economic actor (the sovereign) which is informed by and, in turn, informs the preferences of the agents within its territory. In the words of my friend, Anglo:
“First off we must dispel the myth of Locke and Smith: there is no ‘natural law’, no ‘invisible hand’; there is only states and statecraft (a centre, if you will). The Chartalists are correct in identifying that the ‘Market’ is the structure of the state in which if one part is missing the whole thing cannot work, from the stock market to the humble Sunday market one way or another there existence is relent on that sovereign centre.”
Similarly, in his work, “Debt: The First 5,000 Years,” David Graeber presents multiple historical examples of the above mechanism of the sovereign developing the market:
“…one need only take a glance at Kautilya’s Arthasasatra, the Sassanian ‘circle of sovereignty,’ or the Chinese ‘Discourses on Salt and Iron’ to discover that most ancient rulers spent a great deal of their time thinking about the relation between mines, soldiers, taxes, and food. Most concluded that the creation of markets of this sort was not just convenient for feeding soldiers, but useful in all sorts of ways, since it meant officials no longer had to requisition everything they needed directly from the populace or figure out a way to produce it on royal estates or royal workshops. In other words, despite the dogged liberal assumption — again, coming from Smith’s legacy — that the existence of states and markets are somehow opposed, the historical record implies that exactly the opposite is the case. Stateless societies tend also to be without markets.”
(Chapter 3, Page 87–88, Graeber)
Going further, is it even coherent to imagine a market without a set of property norms? At the end of the day, someone (or someones) is determining the rules by which we determine who owns what. As Joseph Singer wrote on property norms (and as quoted in yesterday’s piece):
“Property norms help answer this question by orienting us in a moral universe through background understandings that define legitimate interests. Norms orient us, first, by telling us who is an owner with regard to any particular entitlement in a resource, and second, by telling owners when they are obligated to take into account the effects of their actions on others.”
(Joseph Singer, “How property norms construct the externalities of ownership”, Oxford Scholarship Online)
In every single market that has ever existed, there are property norms. Even if that is as basic as “Might makes Right” or “anything that you claim as yours AND that you can defend is yours”, it exists. And our ideas of property norms are answers to moral questions. Every single market that has ever existed has existed within such a moral-political background (and, as we know, there is no such thing as “political freedom”). Understanding markets in this way, even market economies are, to a very real degree, planned economies. In other words:
Markets are intentionally created top-down, and maintained/directed for a specific purpose in the same top-down manner.
The Allure of the “Free Market”
Perhaps one of the more vexing questions that faces anyone engaged in a post-Liberal analysis of economics is “why is this notion of the ‘free market’ so persistent and strong?” Anyone involved in the post-Liberal sphere will note the sheer strength of Liberal language and how unbelievably emotionally potent it can be (who wants to say “I am against freedom?”); however, the concept of the ‘free market’ seems to have some of its own quirks. Notably, anything that resembles what we colloquially refer to as a “planned economy” seems to vest greater decision making power about planning in a smaller number of actors and this of course raises an issue: “why should I trust these nerds running the economy? How do I know they know anything? Fancy econ theory with weird terms are not a substitute for actual knowledge.” Consider it a single point of failure: even if everyone is an idiot, chances are at least a few people will accidentally get something right and run successful firms so this colloquial “market economy” seems to beat a system where a small group of nerds (who may also be idiots and/or delusional) try to manage everything. And this is, of course, a very serious point. We can have debates about things like the calculation problem (we won’t because I don’t care about it) but that doesn’t shake the genuine worry that we’re putting too much power in the hands of a small group of people who cannot be scrutinized and who may not have any idea what they’re doing with a system as unbelievably complex as any sophisticated economy is. So…what do we do with this realization?
Reconstruction: Arriving at a Better Understanding of the “Market”
So, what is a market in economics? We know that the Liberal understanding is flawed but I’d like to propose a basic definition stripped of those flaws and we can build off of this basic definition:
A sphere/field wherein the goals of production are met by competition between different entities who have access to the means of production who make decisions regarding those means of production based on some kind of signal
In Capitalism, this has to do with privately owned firms making decisions about investment, distribution, and production based upon price signals formed by complex relationships between supply and demand within the economy. But, could we have an alternative framework? Perhaps one even without capitalist property norms and commodity production? Well, any system where entities make choices about production, distribution, and investment based upon some signal can generate a true market. Such alternative systems are indeed possible, and will be (in my opinion) key to building a viable post-capitalist system.
Moving on to the next step, we need to remember that all markets exist in a moral-political and material context. So, taking these considerations into account, we can arrive at our final definition of the market stripped of all Liberal misunderstandings:
A sphere/field, embedded within a moral-political and material framework, wherein the goals of production are met by competition between different entities who have access to the means of production who make decisions regarding those means of production based on some kind of signal
Next Steps
So, over the course of our series on political economy so far, we have provided a more rigorous post-liberal grounding for the field and we have used that grounding to deconstruct the Liberal notion of the “market” and arrive at a more accurate understanding of the concept. This sets us up very well for the next piece in this series, which will investigate different property norms themselves and how they interact with different kinds/sectors of markets in the economy.
