by From Terry Hathaway Contemporary political and economic discourse sees capitalist systems characterised as market economies, and references to both The Market and markets are ubiquitous; markets are seemingly everywhere. This situation is distinctly odd, as while economic relations have been more and more characterised as “markets”, many economies have seen both the withering away of traditional marketplaces and the concurrent growth of hierarchically ordered non-market economic organisations (i.e. corporations). The reason that markets can be both seen everywhere and exist practically nowhere is due to two points. First, “markets” have been defined according to abstract principles – often product similarity or price uniformity – that do not include place. While abstraction is not an
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from Terry Hathaway
Contemporary political and economic discourse sees capitalist systems characterised as market economies, and references to both The Market and markets are ubiquitous; markets are seemingly everywhere. This situation is distinctly odd, as while economic relations have been more and more characterised as “markets”, many economies have seen both the withering away of traditional marketplaces and the concurrent growth of hierarchically ordered non-market economic organisations (i.e. corporations).
The reason that markets can be both seen everywhere and exist practically nowhere is due to two points. First, “markets” have been defined according to abstract principles – often product similarity or price uniformity – that do not include place. While abstraction is not an issue per se, abstraction that cuts away from a central defining feature – in this case, the place of marketplace – is unhelpful. Second, the dominant definition of the market, stemming from neoclassical economics, has chosen exchange as the principle by which a market is defined; whenever there is exchange there is a market. Rendering “the market” as a synonym for “exchange” means that “the market” can be seen in all economic systems throughout the entirety of human existence and paints capitalist relations of transactionary exchange as universal, natural and inevitable; “in the beginning there were markets” as Williamson (1975: 21) writes.
The consequence of these two points is that we are left with an idea of the market that is non-instituted and non-socialised. Moreover, the latter definition of “the market” captures everything and so defines nothing. It is, however, possible to rescue a definition of “the market” by including a requirement of place alongside exchange, multiple sellers, and similar goods. Applying such a definition, however, renders markets a relatively marginal part of contemporary capitalism.
While this argument may appear to rest on pedantry, the consequences of labelling economic exchange as a market are huge due to the centrality of the market to economic discourse and imagination. Using the term “market” brings up the image of the bustling marketplace, bazaar, or souk where prices are subject to bargaining between buyer and seller, and sharp competition occurs between the many stall-holders. Calling exchange “the market” thus implicitly characterises the exchange as taking place in a competitive environment, with broad equality of bargaining power, and with prices dynamically responding to the laws of supply and demand. In this manner, the market-as-exchange definition smuggles in a whole range of other ideas; the definition is central to a wider, and politically hegemonic, market discourse. Read more: http://www.paecon.net/PAEReview/issue97/Hathaway97.pdf