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Alan Freeman wrote:
> (4) Which brings me back to my original question: since many
> economists do speak and write as if there was a definite institution
> called the market, and since they clearly claim to know more about this
> institution than non-economists, and since they act as if this knowledge
> is based on the scientificity, in some sense, of their activities, where
> exactly do they locate the boundaries of the objects of which they
> claim to have special scientific knowledge? What is the basis of their
> science?
Alan, let me try to field your question. I share your concerns about the
widespread use of a term that few if any economists devote the effort
necessary to properly define. But I want to emphasize the difficulty
involved in making such a definition, given the space limitations of an
email. In a way, by asking for a definition of "the market," you are
asking for a history of thought in economics. This may explain why
listmembers might be reluctant to answer you directly.
I am fairly certain that the real-world reference for the use of this term
are observations of (a) exchanges involving money and (b) the
connections between different sets of exchanges, for example the
connection between exchanges of consumable goods and exchanges of
the resources needed to produce them and the connection between
exchanges of substitute goods and complementary goods. In other
words, when people use the term "market" or "market economy" they
are referring to such exchanges and their connections.
Problems arise when one tries to formalize these rather vague
references for the purpose of "scientific analysis." By this, I mean the
logic of economics, which proceeds from assumptions to deductions.
It is evident that the exchanges and connections described above are
not the only exchanges and connections that one observes in society. A
science of economics aims in part to disengage a particular set of
exchanges and connections from others and from other phenomena
that are always or usually present but which are not related, or at least
directly related, to the problems of interest to economics. How the
disengagement proceeds depends partly on what those problems are.
In other words, its method of disengagement depends on the interests
of the economist(s).
It follows that a complete answer to your question would have to deal
with the interests of "economists." Since the time of Adam Smith at
least, many economists have been concerned with the role of
government in relation to exchanges involving money. More
specifically, they have been concerned with the conditions under which
it can be deemed appropriate to intervene -- i.e., to prevent or
otherwise restrict the free exchange of goods or services for money. In
line with these interests, their method of disengagement consists of
constructing a definition of the market in terms of its antithesis, market
intervention. They try to incorporate only this aspects of exchange for
money that are needed to deal with the problems raised by arguments
for and against intervention. In a more complete sense, a definition of
the market would require a treatment of arguments for and against a
wide range of market interventions.
This is not a complete answer, of course. A more complete answer
would account for ideas such as the property system and market
failure, which have emerged and been refined by economists who have
such interests. But it should give you a general idea of what at least
many economists are up to when they use the term "the market" or "the
market economy."
Pat Gunning
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