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Thanks to everyone who responded publicly or privately to my query.
I'm daunted by the wealth of informed comment, and will follow up the
references as diligently as I can.
Pat Gunning's thoughtful response emphasises the substance of my
question: 'what do economists mean by the market'? My enquiry began
because I felt this hoary question might usefully be restated as 'what do
they consider internal to the market, and what do they consider to
external to the market'?
I mentioned the 'analytic' foundation of the distinction, but this didn't
seem to get picked up. I don't think 'analytic' is the same as 'absolute'; I
want to know if there is some other basis for the distinction than
personal whim. I can't see, for example, that the reason one treats water
as part of a river, and an aeroplane above it as outside the river, is
reducible to rhetoric. I think it has something to do with objectivity;
pace postmodernism, I feel it arises from any reasonable way of
conceiving what a river or an aeroplane actually is.
A second point. It is possible to miss an important refinement if one
does not also distinguish an internal phenomenon from an external
linkage. This is an additional idea I'd like to throw into the discussion.
Separate systems can interact, and this does not make them the same
system. Take the extreme case I gave of an interaction between the
market and the climate.
The market interacts with the climate. Does this make the climate a part
of the market? If so, then by the same argument, the market is a part of
the climate. I'm not sure how our noble profession would react to
becoming a branch of meteorology.
I think the fact that we feel compelled to speak of an interaction
'between' climate and market, shows than there is something about the
objective nature of the two systems that obliges us to distinguish them
apart, despite their causal links, on the ontological grounds that each
has sufficient internal coherence to be studied in its own right. This is
what I mean by an 'analytical' distinction.
One can have distinct objects or systems, each coherent in itself, that
interact. Each is governed by a combination of intrinsic elements and
external linkages. It is true we can identify those variables in an equation
system that are connected, but this doesn't tell us whether a connection
is intrinsic or a linkage. An additional criterion is required that must
come from outside the equations as such. I think this criterion is
analytic and has to do with the nature of what is being studied, not the
equations that represent this nature to consciousness.
For the same reason, I don't think the question is entirely answered by
distinguishing the variables that one holds fixed from those that one
allows to vary. To be sure Marshall holds, say, fixed investments
constant in the short run. I'm not convinced he meant to say that fixed
capital is only part of the market in the long run. If he did, I think he
was wrong: it would be like saying the stomach is only a part of the
body when one is eating. I think he meant that fixed investments are
always a part of the market, but in studying some of the market's
behaviour, one may ignore their variation.
So my question can be rephrased: what is the analytical basis on which
economists, historically, have distingushed the market, and its inner or
endogenous components, from those external or exogenous systems or
factors with which it may very well interact?
Alan
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