A market is something which emerges through the actions of everyone but the design of no one. They are part of what Hayek called the extended order of human cooperation. Recognizing the fact that markets themselves are not consciously created, but that they offer myriad benefits to participants and non-participants alike, raises many questions.
Two such questions that I have been pondering lately are these. The first was brought to my attention by a lecture given years ago by James Buchanan. The second a natural consequence of looking at too many economics textbooks.
1. Is participation in an extended market order enough to keep society glued together? In other words, do we need more than this to establish important communitarian bonds? On the one hand participating in the informal market setting drastically reduces the need for commonality of experience with others along a great many dimensions of behavior. On the other hand, participating in the extended order allows for a greater range of interactions than would otherwise be possible. Furthermore, a Hayekian insight into this participation is that participation in the market order itself is only possible because of myriad individuals’ ability to adhere to evolved rules and traditions that are themselves part of the extended order. Adherence to these rules is not something that is conscious. The point being is that markets are only possible when civil society has a set of rules and traditions that act as the glue. Or more directly, the existence of markets perhaps is evidence itself that society is glued together.
2. I will not go into detail here. But if there is a widely held understanding that the preponderance of markets is “good” for the general welfare, and that market participants do not consciously choose to be part of the market, or if they do so, they do it only in their narrow self interest, do we find ourselves in the unusual position of arguing that governments should be doing anything and everything to promote markets, if in fact the justification for government action is either to improve upon some ubiquitous market failure, or to promote some vague notion of the general welfare? This point is worth an entire book. I am not capable of writing it.
You’ve meet James Buchanan? I’ve been enjoying his articles on cost a lot lately. Been helping me sort out issues at work. But I’ve understood that the government’s role is to help markets function,, in a sense. However, usually they seem to do the exact opposite. I guess I could ask when does collective action, such as groups of people establishing rules for a particular market, become 1) necessary and 2) government?
