26 Market
“To allow the market mechanism to be sole director of the fate of human beings and their natural environment… would result in the demolition of society” (Karl Polanyi (1944) The Great Transformation)
26.1 Capitalism as Anti-market
"Fernand Braudel has recently shown, with a wealth of historical data, that this picture is inherently wrong. Capitalism was, from its beginnings in the Italy of the thirteenth century, always monopolistic and oligopolistic. That is to say, the power of capitalism has always been associated with large enterprises, large that is, relative to the size of the markets where they operate.
The idea that “real” capitalism did not emerge till the nineteenth century industrial revolution, and hence that it could not have arisen anywhere else where these specific conditions did not exist. To criticize this position, Fernand Braudel has also shown that the idea that capitalism goes through stages, first commercial, then industrial and finally financial, is not supported by the available historical evidence. Venice in the fourteenth century and Amsterdam in the seventeenth, to cite only two examples, already show the coexistance of the three modes of capital in interaction. Moreover, other historians have recently shown that that specific form of industrial production which we tend to identify as “truly capitalist”, that is, assembly-line mass production, was not born in economic organizations, but in military ones, beginning in France in the eighteenth century, and then in the United States in the nineteenth. It was military arsenals and armories that gave birth to these particularly oppressive control techniques of the production process, at least a hundred years before Henry Ford and his Model-T cars.
This largely ignored military component of large scale enterprises is, I believe, another good reason to replace the term “capitalism” with a neologism like “the antimarket”, since we can simply build this military component right into our definition of the term.
26.2 Scarcity
26.2.1 Neoclassical Supply and Demand
Bichler and Nitzan
The ideal neoclassical economy is a natural construct made up of numerous utility-maxim- izing agents. These agents are independent of each other, autonomous and rational. They have unlimited desires for hedonic pleasure, which they derive from consuming goods and services, but they have only limited means – or resources – to satisfy these desires. The difference between what they crave for and what they can afford generates ‘scarcity’. 3 Scarcity is inherent and per- manent, so agents are compelled to produce, sell and buy more and more commodities without end.
26.3 Humanising the market?*
Pope Francis
AF ew summers ago when a range of policymakers, business people, academics, labour leaders and charity workers gathered at the Vatican to discuss the future of the market system, Pope Francis surprised us by joining the lunch and sharing a parable. He observed that:
Our meal will be accompanied by wine. Now, wine is many things. It has a bouquet, colour and richness of taste that all complement the food. It has alcohol that can enliven the mind. Wine enriches all our senses. At the end of our feast, we will have grappa. Grappa is one thing: alcohol. Grappa is wine distilled. Humanity is many things – passionate, curious, rational, altruistic, creative, self-interested. But the market is one thing: self-interest. The market is humanity distilled. Your job is to turn the grappa back into wine, to turn the market back into humanity. This isn’t theology. This is reality. This is the truth.
Mark Carney
It is vital to rebalance the essential dynamism of capitalism with our broader social goals.
As we move from a market economy to a market society, both value and values change. Increasingly, the value of something, of some act or of someone is equated with their monetary value, a monetary value that is determined by the market.
The logic of buying and selling no longer applies only to material goods, but increasingly governs the whole of life from the allocation of healthcare to education, public safety and environmental protection.
26.4 Commodification
Commodification, putting a good up for sale, can corrode the value of what is being priced.
As the political philosopher Michael Sandel argues, “When we decide that certain goods and services can be bought and sold, we decide, at least implicitly, that it is appropriate to treat them as commodities, as instruments of profit and use.”
Putting a price on every human activity erodes certain moral and civic goods. It is a moral question how far we should take mutually advantageous exchanges for efficiency gains. Should sex be up for sale? Should there be a market in the right to have children? Why not auction the right to opt out of military service?
There is extensive evidence that, when markets extend into human relationships and civic practices (from child-rearing to teaching), being in a market can change the character of the goods and the social practices they govern.
One of the best-known examples was documented by Richard Titmuss in his comparative study of blood-donation systems in the US and the UK, The Gift Relationship. Titmuss demonstrated that in economic and practical terms, the UK system of voluntary donations was superior to the US system, which paid for donations. He added an ethical argument that turning blood into a commodity diminished the spirit of altruism and eroded people’s sense of obligation to donate blood to support others in their community.
This underscores the moral error of many mainstream economists, which is to treat civic and social virtues as scarce commodities, despite there being extensive evidence that public-spiritedness increases with its practice.
Value in the market is increasingly determining the values of society. We are living Oscar Wilde’s aphorism – knowing the price of everything but the value of nothing – at incalculable costs to our society, to future generations and to our planet.
Marx
Carney thinks Capitalsim can be put under administration. Let us be reminded of some older thinking on this issue:
Modern bourgeois society with its relations of production, exchange and property, a society that has conjured up such gigantic means of production and exchange, is like the sorcerer who is no longer able to control the powers of the netherworld whom he has called up by his spells.
26.5 Advertising
We no longer need to spend billions on advertising. Instead of treating advertising as a tax-deductible cost of production we should tax it heavily as a public nuisance. If economists really believe that the consumer is sovereign then she should be obeyed rather than manipulated, cajoled, badgered, and lied to.
Herman Daly (2008) Steady State Economy (Sustainable Development Commision) (pdf)
26.5.1 Greed
From DW
A motor for the dynamics of a market economy
Greed as a “very strong wish to get more of something, especially food or money,” an “excessive desire for wealth or possessions,” of “more of something than is needed.”
The Catholic Church regards greed as one of the seven deadly sins. But in society today, greed is often seen as a necessary evil, be it at the stock exchange or on the soccer pitch.
An insatiable desire for more money, prosperity and material things may seem objectionable, but greed is also a motor for the dynamics of a market economy. People are greedy for knowledge, development and success. And who doesn’t share a greed for love, recognition and friendship?
Indeed, greed is a topic of great ambivalence, as Paula Lutum-Lenger, director of the Stuttgart-based museum Haus der Geschichte Baden-Württemberg (House of History Baden-Wurttemberg), told DW. The museum picked the subject for the first show in a planned trilogy of exhibitions on greed, hate and love.
Shop until you drop.
Greed is embodied by extreme consumerism: “Shopaholic” is not just a word, but has become a lifestyle for some people who can’t seem to get enough of shopping.
Produce until you drop.
To increase profits, businesses attempt to reduce production costs by all means. One example is portrayed in the exhibition through a small cow sculpture. It refers to the fact that the EU withdrew milk quotas in 2015, which meant dairy farmers made less per kilo of milk. But it also outlines how the dairy industry developed over the centuries, obtaining today’s extremely high milk yields through various questionable methods: According to the museum, a cow in 1800 would give about 1,000 kilos of milk per year, a figure that had quadrupled a century later. A cow in 2020 produces up to 10,000 kilos per year.
Greed, hate and love are all “forces that drive humans, key emotions in history and present society,”. Greed can lead to excesses threatening our eco-system.