markets and firm behavior
In this paper I want to develop a critique of certain approaches to markets and firm behavior in economics and economic sociology. There are two main targets of the critique. The first concerns some common approaches to markets and the nature of firms in relation to them. Here the diverse range of uses of the term 'market' in contemporary lay and academic discourse are argued to cause confusion. Also problematic in both mainstream and institutional economics is the tendency to treat market exchange as the atomic structure of all economic processes, and as the default form of economic coordination, so that any other forms of organization are either marginalised or treated as problematic exceptions. The second target of critique concerns literature on the socially embedded character of economic processes, on the nature of networks, and the role of trust. While largely endorsing the importance attached to these in recent literature, I argue that their treatment has suffered frequ!ently from being idealist, both in the sense of underestimating material aspects of economic life and in presenting an overly benign view which underestimates the instrumentality of economic relations. In the third section, I venture some obse
· Sztompa, P. (1999) Trust: A Sociological Theory, Cambridge, Cambridge University Press ollapse of the currency - flow. Sometimes the pressures may sweep the networks away. batter down walls (as Marx and Engels said), but only after an advanced guard of marketing people and others have found or opened up some cracks in them or bought off the guards. Markets are socially constructed and have to be reproduced by labour, including the labour of setting prices (Abolafia, 1996), though many of the consequences of their and others' actions are unintended and react back upon them to influence subsequent decisions. · Luhmann, N. (1979) Trust and Power, New York, John Wiley · Ichiyo, M. (1984) 'Class struggle on the shopfloor - the Japanese case', Ampo: Japan-Asia Quarterly Review, 16 (3), 38-49 d cooking it is this absence that we must explain. True, the negative definition is accompanied by a positive one: firms coordinate by means of authority rather than the price mechanism. But this is not all that most firms do; what is distinctive is that, like cooks, they are coordinating production rather than exchange. And of course, without production for exchange, there would be little need for markets. Both neoclassical and Marxist economics have absurdly simplified views of exchange, epitomised in the Marxist description of products being 'thrown on the market', as if the market necessarily was already in existence and that buyers would pick up whatever was thrown in, as long as the price was right. This renders the difficulty of constructing markets (and also setting up 'non-market exchanges', as Hodgson calls them) incomprehensible (Hodgson, 1988). The fact that many (non-retail) firms have more employees involved in marketing and sales than in production becomes a mystery. Such armies of exchange workes are needed because of the difficulty of getting buyers - individual or institutional - to buy something new, and of servicing their purchases. Both neoclassicalists and marxists tend to assume 'the market' is always already there, as an ether. All that is needed is that the price and goods are acceptable and exchange will take place. However, cheap commodities may indeed ! · Baier, A. (1994) Moral Prejudices, London, Routledge Many abstract discussions of 'the market' slide between restricted and inclusive versions (Hodgson, 1999, p. 177). The basis for the powers or forms of behaviour commonly attributed to markets are consequently often ambiguous; is it markets in the restricted sense which give rise to the effects of interest, or markets when mediating between particular kinds of producers, with certain kinds of property relations, and particular kinds of consumers? Since markets can co-exist with different property relations and systems of production, we cannot expect to read off an inclusive account from a restricted focus. This is of critical importance in political economy for understanding and evaluating market economies, and for identifying the sources of competitiveness. Restricted accounts of markets exclude major contextual influences which explain behaviour. On the other hand, a more inclusive view which takes in those influences is going beyond exchange into production and consumption.! · Sayer, A. (1995) Radical Political Economy: A Critique, Oxford, Blackwell · Auerbach, P. (1988) Competition, Oxford, Blackwell tion of takeovers. In such cases we have markets without production - the buying and selling of existing commodities or property, including companies, without adding anything to the existing stock of goods and services. Treating this as equivalent to productive activity is a disastrous error, though it might facilitate - or inhibit - subsequent production, and might affect efficiency. The confusion is echoed further in the Thatcherite practice of encouraging share ownership - i.e. rentiers - as a way of encouraging entrepreneurship: whereas entrepreneurs are celebrated precisely for p
Some common words found in the essay are:
Maurice Dobb, Marx Engels, Annette Baier, Durkheim Marx, Arrow Debreu, Japan Europe, Marx Simmel, Margaret Thatcher, Inclusiveness Concepts, Rhenish Japanese, 'the market', market optic, press ·, university press, opportunity costs, economic relations, real markets, university press ·, social relations, economic behaviour, cambridge polity ·, production consumption, london routledge ·, cambridge university press, cambridge cambridge university,
Approximate Word count = 8496
Approximate Pages = 34 (250 words per page double spaced)
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