Re: What is a market?
I am trying to think about cultures that don't have the economic institutions that Western countries have. For example, if the people of one nation voluntarily adopted Islamic law and did not charge interest, voluntarily, would that be a market? Basically, I want to get beyond voluntary interaction and try to think about the institutions you need in order to have Western style markets. So if people abolish interest rates, they're abolishing one of the key market mechanisms. Although it's voluntary, it's certainly missing something important. The question is getting more difficult. Clearly, economic institutions in Germany, France, and the U.S. are all different. I think the question being asked is what essential features do they have in common that distinguishes them from, say, Russia or China. I don't know how to answer it, but one way to begin would be to ask why you focus on Western markets. Are you picking them because they are wealthier? If so, then you are asking what features of markets make people wealthier. Reuven Brenner has argued that active capital markets make an enormous difference. There is work out there on the importance of corporate governance and legal regulation of stock exchanges. The important point, at least it seems to me, is that a whole list could be drawn up of things that are different, but whether they are key is a difficult empirical question. Each one is a counter-factual: how wealthy would people be in the absence of the mechanism. Bill Sjostrom + William Sjostrom Senior Lecturer Department of Economics National University of Ireland, Cork Cork, Ireland +353-21-490-2091 (work) +353-21-427-3920 (fax) +353-21-463-4056 (home) [EMAIL PROTECTED] [EMAIL PROTECTED] www.ucc.ie/~sjostrom/
Re: What is a market?
Not that I do not enjoy the theoretical / philosophical excercise - but I just wanted to point out that I have a hard time imagining an alien making it to earth without already having a very clear understanding of what a market is - in fact, I believe the market as being one of the points on which I am sure we will have something in common. Jacob W Braestrup On pp 30-31 of *What Should Economists Do?*, James Buchanan takes issue with the orthodox view that the market is a *means* of accomplishing the basic economic functions an engineered construction, a mechanism. Buchanan argues that the market should be defined as such: The market or market organization is ... the institutional embodiment of the voluntary exchange processes that are entered into by individuals in their several capacities. This is all there is to it. Individuals are observed to cooperate with one another, to reach agreements, to trade. The network of relationships that emerges or evolves out of this trading process, the institutional framework, is called the market. It is a setting, an arena, in which we ...observe men attempting to accomplish their own purposes, whatever these may be. Seth Giertz __ Do You Yahoo!? Yahoo! Health - your guide to health and wellness http://health.yahoo.com -- NeoMail - Webmail
RE: What is a market?
I'm a Political Scientist by schooling A Political Scientist has made a nice point about Markets and Economies. The MARKET always exists, one's economy may or may NOT take cognizance of the Market. A market is the interplay of supply and demand for various goods. It always exists... Islam may or may not recognize interest. Which is a concomitant of a supply and demand for money. The result may be slow or no growth of the economy, OR a societal equivalent that may or may not be as efficient as interest, e.g., pledges of one's first-born, or vassalage, or support on issues of the day, or monetary gifts to the lender, to reward him for his altruism To me a market is the interplay of supply and demand. The economy is how government and society deal with this interplay. -Original Message- From: fabio guillermo rojas [mailto:[EMAIL PROTECTED]] Sent: Monday, April 29, 2002 1:35 PM To: [EMAIL PROTECTED] Subject: Re: What is a market? A pure market economy exists where all economic activity is voluntary for all persons in the economy. There are neither restrictions nor imposed arbitrary costs on peaceful and honest human action. I am trying to think about cultures that don't have the economic institutions that Western countries have. For example, if the people of one nation voluntarily adopted Islamic law and did not charge interest, voluntarily, would that be a market? Basically, I want to get beyond voluntary interaction and try to think about the institutions you need in order to have Western style markets. So if people abolish interest rates, they're abolishing one of the key market mechanisms. Although it's voluntary, it's certainly missing something important. Fabio
Re: What is a market?
I am trying to think about cultures that don't have the economic institutions that Western countries have. Fabio The pure market is trans-institutional. The voluntariness of human action does not depend on any particular institutions. One can have a voluntary society in a primal or primitive hunting and gathering economy. For example, if the people of one nation voluntarily adopted Islamic law and did not charge interest, voluntarily, would that be a market? Yes, if the people meant all the people. Basically, I want to get beyond voluntary interaction and try to think about the institutions you need in order to have Western style markets. This is a different question than your original question of what is a market. So if people abolish interest rates, they're abolishing one of the key market mechanisms. It is impossible to abolish interest rates. All one can do is change who gets the interest and the form the interest payments take. If one loans funds without an explicit payment of interest, then implicitly the lender is gifting the interest to the borrower. If a bank becomes a partner in an enterprise instead of loaning it funds, then the interest is implicitly paid to the bank in the form of profits. Although it's voluntary, it's certainly missing something important. No, it is just a different institutional structure for obtaining the interest or shifting who receives it. Fred Foldvary = [EMAIL PROTECTED] __ Do You Yahoo!? Yahoo! Health - your guide to health and wellness http://health.yahoo.com
Re: What is a market?
On pp 30-31 of *What Should Economists Do?*, James Buchanan takes issue with the orthodox view that the market is a *means* of accomplishing the basic economic functions an engineered construction, a mechanism. Buchanan argues that the market should be defined as such: The market or market organization is ... the institutional embodiment of the voluntary exchange processes that are entered into by individuals in their several capacities. This is all there is to it. Individuals are observed to cooperate with one another, to reach agreements, to trade. The network of relationships that emerges or evolves out of this trading process, the institutional framework, is called the market. It is a setting, an arena, in which we ...observe men attempting to accomplish their own purposes, whatever these may be. Seth Giertz __ Do You Yahoo!? Yahoo! Health - your guide to health and wellness http://health.yahoo.com
What is a market?
Imagine that an alien arrives on planet earth and asks you what is a market? What kind of economic system would count as a market? I know this can be a sticky question, but how would you describe the economy of Russia or China, and why doesn't it count as a market? Is it just the lack of the state, or the presence of a state supported system of law, or would the economy of a place like Sweden count? Fabio
