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Mutualist Blog: Free Market Anti-Capitalism

To dissolve, submerge, and cause to disappear the political or governmental system in the economic system by reducing, simplifying, decentralizing and suppressing, one after another, all the wheels of this great machine, which is called the Government or the State. --Proudhon, General Idea of the Revolution

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Tuesday, March 14, 2006

What Exactly Are Markets?

That's a question Michel Bauwens raises, by email, as a follow-up to this post, or maybe this one. In those two posts I wrote, respectively:

The problem is that "free markets" are usually defined too narrowly; the term "market" is conventionally used to refer to the cash nexus, and to the institutions in and through which money exchanges are conducted. But properly speaking, the "market" encompasses all forms of voluntary, non-coercive interaction.

* * * *

...if we take "market" in the broad sense of the realm of voluntary association, rather than coercion, then the family and community are a perfectly natural part of a free market order. As I argued in my earlier post, the problem is the tendency to identify the market narrowly as being coextensive with the cash nexus.

Michel acknowledges my broad statement that

"market" encompasses all forms of voluntary, non-coercive interaction

but suggests it might be clearer to distinguish in some way between markets in the narrow sense and the broader sense of the realm of non-coercive action (which includes activities like p2p that do not involve exchange for private gain).

A commenter, Jacob, had already suggested that different terms were needed, suggesting "market" for the cash nexus and "exchange" for "the broader range of economic interaction."

Now, an Austrian would probably quibble at the statement that p2p does not involve exchange and private gain. Any individual choice, in a sense, involves an "exchange" of sorts, in which a lesser good in terms of the individual's hierarchy of values is exchanged for a greater one--all to promote his private gain (in the sense of maximizing his perceived utility). One ultra-Rothbardian I had unpleasant dealings with on an email list several years ago went so far as to deny (in rather vehement terms) that anything could exist outside the cash nexus. Every action was an exchange, he said, because it involved an opportunity cost--and anyone claiming to the contrary was a "liar" or a "scumbag," or some such thing.

Of course, I fully understand the praxeological argument. But it's still necessary to have some common sense terminology that distinguishes between "private gain" in the narrow sense (as opposed to mutual aid and the gift economy), and "private gain" in the sense of psychological hedonism as a grand unifying theory of all human action.

Likewise, it would be convenient to be able to distinguish between "market" in the narrow sense of an institution through which goods and services are exchanged in the cash nexus, and "market" in the broader sense of all uncoerced transactions.

As it happens, I like "market" in both cases. The use of "market" in the latter sense is important to free market advocates, because it highlights our claim that there is plenty of room for mutual aid and the gift economy in a free market order, and that we're not just a bunch of stock-jobbers who'd dig up the Parthenon to get at the coal deposits underneath. When free market anarchists speak of a wholly free market order, we mean one in which p2p, cooperatives, and the like are enthusiastically welcomed.

But Michel and Jacob are right: using the same term for both ideas is confusing. I could pull a Greenspan and call them M1 and M2. But the best solution, for me anyway, is just to go ahead and keep using the word "market" in both senses, but be a little clearer which sense I mean it in.

Since I use the terms "capitalism" and "socialism" in a considerably different sense than most people, I learned a long time ago not to get bent out of shape by such differences in usage. What matters is that we make it clear what we mean. The same principle applies to the present case.

One exception, though: the use of "free market" to describe the existing corporate welfare state. When neoliberal politicians use the term in that sense, and people like Thomas Frank and Rod Dreher accept their usage at face value, it really chaps my hide. I'm willing to accept different usages among people of good will. But I'm not willing to let a perfectly good word be ruined by scoundrels.


Blogger Sergio Méndez said...

Reading this post makes me wonder if markets isn´t the same Braudel called "material life", which is divided in different sub-spheres...

March 18, 2006 11:45 AM  

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