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From:
[log in to unmask] (Alan Freeman)
Date:
Fri Mar 31 17:19:13 2006
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----------------- HES POSTING ----------------- 
 
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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