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Clockwork Justice?

from Peter Radford

One of the central beliefs held by people who advocate a market based worldview is that, somehow, markets are apolitical, they are antiseptic, they are objective. This is nonsense. It is dangerous nonsense.

That markets work according to rules does not make them objective or even impersonal. Rules are human constructs. Ergo markets are simple extensions of base human attitudes and are thus fraught with all the frailties that encumber all human activity.

The sanitization of markets, by which I mean the constant effort to make them appear “natural” or “neutral” and thus “fair”, is an ideological cover that market ideologues desperately, and successfully, propagate. It is a cover to mask the consequences of this supposed naturalness and to give it the imprint of ethical cleanliness. After all if the outcomes of a market are simply those of nature working her course, who are we too argue?

Economists, or at least orthodox economists, are the great cheerleaders of this ruse to get us all to accept our fate. Over the course of the development of economics much work has been put in to the elucidation of the mechanics of markets. There is an overpowering sense of determinism in the result. Start here, crank the machinery, and let the outcomes just flop out. The market is such that any outcome is “correct”, because left untouched market machinery always hones in on the superior outcome. Thus the current distribution of income “must” be the correct one: the market created it and the market is always, unerringly, right.

Except on those few occasions when humans show their irrationality a little too clearly and cause the market to fail. Market “failures” are exceptions to the wonderful rule that market magic is “best”.

Contrast this with the messy decision making within a socio-political system. There the machinery is muddled by human biases, political leanings, venal desires, and other sundry causes of inefficiency. Values intrude. Worse, policy decisions are attached to those who argue for them. A sociopolitical system is overtly subjective. People can be held accountable for the results. Disagreements over values and results are open for all to opine upon and to reject if they so wish. Wrangling and disharmony are rife. Compromise, if it is ever arrived at, seems more torn from nature than a consequence of it. And it never satisfies anyone.

So the comparative equability of the supposed impersonal and entirely natural market is easy to accept. Its justice is fair because of that impersonality. No one voice dominates the others. A market consequence is fair because it is untainted by all those sociopolitical quirks. A sociopolitical consequence delivers a justice that arguable. After all that is how it was decided.

Both systems ration scarce resources. Both are human constructs. Yet one has become so sanitized that many people forget that it is a dreamt up artifact. It doesn’t actually exist.

This is to say that the mechanics exist only in the minds of economists. The lynchpin of market distribution – marginal productivity – is a purely conceptual plug designed to make the machinery run smoothly. It was invented, like most components of the machine, to eliminate the need for those messy sociopolitical debates. And, like those other components, it is never exactly identified in the real world. Economists ignore this absence and plod along by arguing that the economy performs “as if” people understand marginal productivity. As if they are rewarded and behave according the diktats of the machine. As if.

So market based justice becomes a simile. A linguistic device designed to convey a particular message. It is an expression of something. It is as if a hidden hand were orchestrating our activity.

The justice in this world is also as if. It is as if we suspend our faculties and scrunch up our eyes hard enough we will see the outlines of some great machinery working magic  and invisibly coordinating just outcomes for all. As if.

The great economic simile is an expression of the hope that one day we will understand a little more about ourselves and the way we interact. Only instead of studying ourselves we resorted to the much tidier exercise of making up what to study. We invented the simile machine to avoid explaining the real one.

And now we are so blinded by its magic that we forget it was all made up.

And we imagine its outcomes to be just.

Like inequality.

For me this won’t do. To me all inequality is a sociopolitical decision. Whatever is “natural” can be undone by human agency. There is no natural systems. Just us. Just us mucking about in our endlessly complicated and often silly ways. Just us being individuals. Just us with our friends and families. Just us in our villages, towns, and cities. Just us humans.

Which makes me wonder about an irony in the magic.

The efficacy of the simile rests in large part on the rational activities of human agents directed automaton-like by the inexorable logic axiomatically incorporated into the machinery. This doesn’t sound much like choice. Nowhere is there room for personality, difference, or stubborn disregard for consequences. In short it lacks most, if not all, the features the market ideologues praise in their heroes.

Where is the individuality of a cog in a machine? Clockwork is hardly free.

And clockwork justice seems a little out of step in our digital world.

Wolfgang Streeck says it better than I do:

“Capitalist PR experts tirelessly hawk around the view that, whereas markets distribute according to general rules, politics does so with an eye to power and connections. The fact that markets, in assessing efficiency and allocating rewards, disregard the initial endowment that participants bring to them can be ignored more easily than redistributive policies, which must be publicly debated and actively implemented. Also, policy decisions can be attributed to particular individuals or institutions, which can therefore be held accountable for them, whereas market judgments – especially if the market is assumed to be a state of nature – seem to fall from the sky without human intervention and have to be accepted as a fate behind which lurks a higher meaning intelligible only to experts.”  ~ Wolfgang Streeck, Buying Time, The Delayed Crisis of Democratic Capitalism. Italics in the original.

I assume the experts Streeck is referring to are economists. In which case I question the understanding.

But that’s another matter.

  1. F. Beard
    July 4, 2014 at 1:53 pm

    How can anyone speak of markets when the banks are a government-privileged credit cartel for the sake of themselves and for the so-called creditworthy which always includes the rich?

    Let’s have ethical money creation AND restitution for previous theft via government privilege before anyone dare hint the markets are just.

  2. C-r D.
    July 4, 2014 at 2:28 pm

    I could not agree more with the above post.The way I see it is that “exchange” is natural while markets are reflexive constructs designed to facilitate exchange. At this point in time, the fact is, most markets are manipulated (exchange rates, interest rates, gold, corn, oil, wheat, etc) and they distribute according to “market power”, followed by inequality and conflicts. Is it not time to drop that neo-liberal nonsense to the effect that markets are natural?

  3. Herb Wiseman
    July 4, 2014 at 5:18 pm

    While I really liked the article I was not always sure about which markets are being referred to. Have we taken the concept of the ancient marketplace for the selling and exchange of goods and morphed that into the so-called stock and bond markets? Are there different experiences with the different so-called markets? Services? Real estate? Economists seem to behave as if the rules of the ancient marketplaces apply to the other so-called markets.

  4. July 4, 2014 at 9:12 pm

    Most simple markets work reasonably well due to their transparency or information symmetry, e.g. the goods markets. Services markets (e.g. financial services) work relatively poorly due to their information asymmetry, at least partly because consumers do not have the knowledge they seek in their providers.

    The government’s role is to monitor and reduce information asymmetry and its effects. The government should not be running the show, because politicians and bureaucrats are mostly psychopaths who want power and control for their own sake. The power of governments should be reduced to reduce the risk of tyranny.

    • F. Beard
      July 4, 2014 at 9:51 pm

      The power of governments should be reduced to reduce the risk of tyranny. Lyonwiss

      So we can be ruled by the Pinkertons and those who rent them?

      No. Government should be strong in its proper sphere and weak to non-existent outside that sphere.

      Of course, government support for banking has caused all sorts of problems (e.g. the Great Depression, WW II and the Cold War) that has required government to exceed its proper functions much like dealing with a tar baby or an Asian land war draws one into more trouble than he might have anticipated.

      Biblically, the proper role of the king seems to have been to protect against foreign enemies but also to punish those who oppressed the poor and weak and who denied them their RIGHTS which were not inconsequential. So the Right’s dream of having government step aside so the poor can be looted has no Biblical basis.

  5. robert r locke
    July 5, 2014 at 7:49 am

    Why do people talk about the tyranny of government all the time; why not talk about the tyranny of the firm governance systems in the private sector. Why do people talk about the market when discussing mal-distribution. The problem is who decides who gets what from the results of market activity (a legal problem that has to do with the constitution of the firm in civil society)

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