Markets and Rivers


A lot of people on the so-called "right" tend to see markets as the most efficient way to allocate resources, think of them as information processors better than the people that constitute them, ascribe a kind of "wisdom" to them, and sometimes almost go so far as to argue that the market is always right - they verge on worshipping markets as a kind of secular god.

A lot of people on the so-called "left" tend to see markets as inherently evil, something that has to be stamped out.

But then there are other people, myself included, who don't think in either of these terms.  

First of all, I want to emphasize that the existence of a market is not the same thing as capitalism.  Capitalism is a recent phenomenon - it has only existed for a few centuries.  Markets, on the other hand, have existed for a very, very long time - back pretty far into the prehistoric era.  (It may even be possible that something like markets exist among some non-human animals - maybe even plants.)

It also might be noted (though I'm not sure how relevant this is) that at no point in the history of any so-called "communist" nations was there ever a time when markets did not exist in these countries.

Are markets "natural"? ...Yyyyyessss, -ish, depending on how we are defining "natural."  Let's not get started with that mess just now.

Have markets always existed?  No.

Will markets always exist?  I don't know for sure - how could I?  But, probably not.  If the loose consensus of current cosmologists is correct (it might not be) and the universe is going to keep expanding indefinitely, around a nonillion years from now, when many protons have decayed to the point that atoms have ceased to exist, and no matter exists at all except for black holes expanding away from each other at near the speed of light, I doubt there will be many markets.  Of course the end of markets may come much sooner.  (The end of capitalism certainly will.)

I see a market as somewhat analogous to a river.  Under certain conditions (if there is an area of uneven elevation, and if the rate of precipitation and snow melt exceeds the rate that the ground can absorb it into the water table or it re-evaporates, this results in runoff, which in turn results in uneven erosion of different soil types, and water finding the path of least resistance) a river will appear.  Once a small river or stream appears, it will erode its river bed, creating a new topological low point, causing other streams to feed into it, and gradually a river will get deeper and wider, resulting in complex river systems, with tributaries and deltas.

Similarly, under certain conditions, a market will arise.  Once it appears, it tends to grow - but not forever.

Are rivers "inevitable"?  No, not really.  Sometimes rivers dry up.  Sometimes they never form.  Often they change course, sometimes gradually, sometimes catastrophically.

Rivers can be useful - for drinking, bathing, irrigation, hydroelectric power, and so on.  They are almost always destructive, eating away at their beds through erosion, and sometimes they cause massive disasters - flooding, mudslides, etc.

Can rivers be controlled?  Yes, to some degree.  Can they be rerouted?  Sometimes, though it may be extremely difficult.  Can they be destroyed?  Certainly, and in fact it's a major problem around the world that rivers are drying up.  Can they be contained?  Sometimes, but not always.

Sometimes societies change rivers - they make them deeper or shallower, they move them around, and so on.  But more often, the direction of causation goes the other way: rivers change societies - they grew up around rivers, and rivers to this day often form the "natural" boundaries between different countries.

And the same more or less goes for markets.  They arise given certain conditions, they can be very powerful, they can be used and exploited for certain benefits, they're almost always destructive during normal times, and they can be extremely destructive during crises.  Societies can, to some degree, direct their markets, but more often it's the markets that direct societies.  It's not a perfect analogy, but I find it somewhat helpful.

Are markets "man-made"?  I think it would be better to say that they are (often) made out of people.  Or at least, historically, they have been.  Nowadays, of course, many are made at least partly out of non-human entities, like software algorithms.

Okay, so what is a market?  I would define a market this way: a market arises whenever there are several competing interests, where not all of them can simultaneously be fully satisfied, but more than one of them can be at least partially satisfied, and an effective means of negotiation exists between at least some of them.  There's a lot of loaded words to unpack in there - "negotiation" being the big one, but also "interests," "satisfied," "effective," and so on.  This is how it is with definitions - you define one term in terms of other terms, which have to be defined in terms of still others.  I certainly won't get to the bottom of all of this in this brief essay.

For now, I want to point out a few things.  First of all, the word "market" may conjure up a specific picture in your head: traders shouting and gesturing on the floor of the New York Stock Exchange, or people carrying goods in baskets on their heads in a traditional African village, or an ancient Greek agora, or something of the like.  Those are all certainly markets, but I'm using a fairly broad definition of market here, that includes all kinds of things, many of which would not necessarily have a clear sign up, advertising that this is a marketplace.  Sometimes markets pop up in the strangest places.  For instance, when a government is trying to decide which documents to declassify, and which to keep classified - do you think there might be some opposing interests on this topic?  Yep.  Do you think there may be some negotiation involved?  Yep.  Folks, we have a market.  As I've already indicated, there may be a kinds of markets among plants and non-human animals.  Maybe there are microscopic markets inside our guts.

Markets involve both a kind of competition and a kind of cooperation.  Competition goes way back, perhaps to the very origins of life.  Often it is a matter of life and death, and quite often it involves violence.  Cooperation can also be found throughout the evolutionary world, both within a species and even between species, in many kinds of symbiosis.  Perhaps markets can be considered a kind of phase of organization, somewhere between a more extreme form of competition and a more complete form of cooperation, just as liquid is a phase of matter between solid and gas.  

I also want to emphasize the fact that markets are not inevitable - not by a long shot.  Let's say you have 7 organisms that all want to consume a set of limited resources.  If one of those organisms is vastly more powerful than all the others, and is willing to utterly neutralize the others, by killing them, by permanently scaring them off, or however, then no market will arise.  Similarly, if you have 7 organisms that all want to consume resources that are effectively unlimited, then no market will arise, because their interests can all be simultaneously satisfied.  (For instance, for most of our time on Earth, breathable air has not been a scarce enough resource to become a market - but that may change, and it's already starting to change.)  Or, again - if you have 7 organisms that all want to consume a set of limited resource, but there's no way for these organisms to communicate, not even in the most rudimentary displays, then, again, a market has no way of arising, because no negotiations can occur.

Nonetheless, and here is the point: a market is a thing that happens.  We can study how they arise, and how they grow, and how they collapse, and hopefully we can learn to prevent them from destroying everything that we cherish.


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