The Social Construction of Markets

22 01 2010

“Make a law, make a business”  – Old New Jersey Saying, according to C.A. Fitts

Contrary to what the ‘free-market’ enthusiasts believe, markets are deliberately created by people. They do not simply exist in nature, as some natural feature of the world.

Human beings constitute market places by making laws, rules, promises, commitments, standards, rights, group norms, contractual and property rights, etc.  They define acceptable behavior. There is always a legal-regulatory component to marketplaces, and it always precedes market activity. Conservatives don’t want to believe this.

Market constituting activity is categorically different than competitive buy-sell activity. Only then can a market function effectively.

Without the institutional structures, exchange among humans becomes lawless, theft, war. (For more on this thread, click here [link not active].)

One example of this is the Bail Bonds industry.  An NPR story reports:

According to the Justice Department, two-thirds of the people in the nation’s jails are petty, nonviolent offenders who are there for only one reason: They can’t afford their bail.

The reason that they can’t afford bail is because the Bail Bond lobby does all it can to make it hard for petty offenders to have any alternative but use bail bonds outfits.

The story details how hard it is simply to pay your own bail with your own cash at the county courthouse.

Structuring the institutional frameworks for markets to create artificial scarcity is widespread in our system.  I am cataloging this here [link not open].