Markets and Marketplaces

Still have a lot of stuff piled up, but before I forget, I want to take the time to expand on a conversation I entered into briefly over at jomama's place. It took place in the comments section of his Command and Control entry; the part that’s of interest to me is the talking past each other that went on regarding the concept of markets and marketplaces.

The assertion was made that “... the ‘marketplace’ is itself a creation of coercive systems. Free people who preceeded the last 10k years of control-freakism didn’t go about their business in any kind of ‘marketplace’.” The question that comes to mind—indeed, which was asked and not really answered—is, “How, then, did they go about their business?”

The answer is simple, really. They did rely on markets and marketplaces—they simply weren’t called that. An excellent quote from a book I’m currently reading illuminates further:

There are only two ways to get what you want in life. You can get it honestly, by trade, work or some other bargain—an economic means of some sort. Or, you can get it dishonestly, by stealing it or taking it away from someone—that is, by political means. .... This distinction works for “things” such as automobiles and whiskey. It also works for other “wants”—such as sex, ambition, and vanity.

Did you catch the fundamental idea implicit in the above? A market exists wherever there’s a need or want. A guy building a house needs materials; typically these days, he buys them from stores that sell lumber, insulation, nails, plumbing fixtures, etc. A guy who wants sex could get in trouble in this country if he tried to buy it by exchanging dollars directly for the service he wants. Instead, he’d probably try buying it indirectly, typically by taking a woman out for a date. The price required to get what he wants varies tremendously, though. Some women will tumble on the first date, irrespective of whether she’s treated to a McDonald’s or Spago meal, while others won’t, even after several dates—in which case the guy will probably move on. The former is what many people seem to have in mind whenever a market or marketplace is mentioned. If that’s the case, then it’s not surprising that issues involving control also come to mind. However, the latter example is every bit as much a market transaction.

To be more clear, let’s consider an example. A marketplace you can think of as “sex with Sunni” exists. Its supply is very limited, but so is the demand (all jokes to the contrary of either point aside). The state did not set up that marketplace, nor does it control any transactions within it. I control the supply side, while any individual who’s interested in some exchange controls the demand side. Negotiations could proceed well, in which case the transaction, we hope, proceeds satisfactorily; or they may break down. Money may or may not be involved; judging by this marketplace’s history, certain emotions are the more usual coin of the realm.

The fact that I never considered this as an explicit marketplace doesn’t change the fact that it is and has been one for many years. Similarly, the fact that primitive individuals didn’t call their exchanges of meats, grains, or labor “markets”, nor set up explicit rules governing transactions, doesn’t mean that they weren’t. Markets are how people have exchanged stuff they have for stuff they want since time out of mind. A marketplace is simply any meeting of individuals interested in exchanging stuff. With that understanding in place, it becomes clear that the idea of a monolithic marketplace is almost as silly as the idea that all markets can be controlled by any central authority.

[On the book I quoted: it’s quite likely I’ll be reviewing it for March’s Salon, so I’m loathe to say more about it at present. I’m not finished reading it either, so until that happens I’m not comfortable recommending it.]