Markets Are Us

Sorry, but I need to sound off on this.

I am tired of economists, policy makers, and others mentioning markets. As in “let the market decide” or “we should let the market heal itself.”

Enough.

A market is nothing more than a group of people transacting together. People. As in us. We the people. Markets are us.

They are not great mysterious forces. They are not abstractions hovering in mid air. They are not supply and demand. They are not amorphous inanimate systems. They are not mechanisms.

They are none of these things.

They are people. Sometimes lots of people. Sometimes a few people. Without people there are no markets. Sometimes working well. Other times not so well. Sometimes rigged. Sometimes not rigged. Each unique because the people that comprise it are different.

Sure we can mimic them. We can model them. We can identify some regular characteristics of transactions that seem to occur whenever people transact. But we cannot get rid of the people in a market.

Not, that is, without getting rid of the market. And we should always – always – remember that if the people that make up the market change, so does the market. People matter. They can change the properties we see as regularities if they so choose. They can collude. They can organize. They can interfere with each other. They can exclude others. In other words markets are human made. They reflect people. And what people want to do. Markets do not exist to impress upon people. People impress upon markets. Markets do not dictate what we do or how we do it. We dictate what a market is and how it works. We are the market.

The allure of the abstraction is that it diverts our attention from the people who animate the market. Thus it is convenient for a policy maker to talk about a market correction instead of having to say someone lost money or their job. It sounds less threatening. It is certainly less humane.

And letting “the market heal itself” is simply an obscure and sanitized way of saying that some ore of our fellow citizens are about to lose their jobs.

Markets are social networks subject to all the complexities of regular human interaction along with the special complexities associated with production and consumption of goods and services. That regularities appear to emerge from those social interactions does not relieve those who study such regularities from incorporating people in their analysis. Indeed: their analysis is devoid of content if they fail to do so. Content relevant to a market that is. It may have relevance to a self contained mind game. But not to any market that we might encounter as we transact together.

If, for a few months, we forced all our policy elite to speak in terms of people and not markets, they would be brought face to face with the real subject of their attention: people. And the lives or livelihoods of real flesh and blood people.

Perhaps then we would get more humane policy making and much less of this faux intellectual systems speak. Only in a technocratic or bureaucratic world is it tolerable for leaders to be insensitive to the raw material of their subject. People inhabit our marketplaces. People. Regular people.

Markets are us.

Thus putting people back into economics and business discourse seems to be a worthwhile struggle. It might make those models a little messy. Well, a lot messy. But at least they would be realistic and humane.

And how ironic is it that one of the great humanist thinkers – Adam Smith – who warned against “systems men” whom he regarded as self delusional in their belief that they could identify abstract forces within a system, should have spawned the great inhuman tradition within economics. His unfortunate metaphor about the invisible forces that appear to direct a market, was taken literally and made into a mechanical magical balancing act by the disciples of Leon Walras, a French engineer turned economist. The Walrasians, in order to model more and more perfectly their self referential world, have chased humankind from their theorizing. They speak, instead of economic agents transacting in a utopian setting. The point being that it became more important to chase after Smith’s demon of an invisible force, than it was to heed his call to avoid believing we could untangle the enormous and intractable complexity of a market full of ordinary people doing ordinary things.

Smith knew markets are us.

We should not forget.