November 14, 2004

the market system

A book on the market system by Charles Lindblom.The context in which I read this chapter is the hegemony of neo-liberalism, the reduction of the welfare state, the holes in the safety net being stitched over by non-government organizations (NGO) in civil society and the governance of a population within a market economy.

Lindblom says that one can graduate from studying economics in university without understanding how the market system works. I can attest to that. I was inducted into high theory written in equations that had little relevance to what we would call political economy. Nor can you learn to think straight from the ideologues in the public sphere. If they understand how the market works as a system then they are not letting one. They are more concerned to promulgate the virtues of deregulation, privatization of public utilities and competition. It is as if they are reciting an economic catechism and assuming that they know all there is to know about a market system works.

So how can Lindblom help? He helps by distinquishing what we know from what we don't know.

He says we know that a market system is a mechanism for c-oordinating people's economic behaviour across society, through them being tied together and turned this rather than that by market transactions. It is also a governed economic system through the state being a buyer of goods and seller of services; interfering in market transactions through regulating the prices of goods, prohibitions and subsidies. It is a historically formed social institution with a capitalist form that has close connections with democracy.

What don't we know? It is not a case of we know how it works as a system and that we just need technical advice on specific issues. Things are very fuzzy about markets and their relationship to political freedom, the environment, and the welfare state. These are great and unsettled issues and they open up questions about the place of markets in our society.

Lindblom opens up the issues about the market system, which is good, given the centrality of the role markets now play in our lives.

Posted by Gary Sauer-Thompson at November 14, 2004 03:43 PM | TrackBack
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