Markets and Their Social Construction

Bibliographic Data

ID4899180
AuthorsWarren J Samuels (corresponding author)
Year2004
Volume71
Issue2
Pages357-370
Publication date2004-06-01
Peer ReviewedYes
Open AccessNo
TypeARTICLE
VenueSocial research (JOURNAL)
Journal identifiersISSN: 0037-783X • E-ISSN: 1944-768X
PublisherProject MUSE (PUBLISHER • US)
DOI10.1353/sor.2004.0034
OpenAlexW4299399611
LanguageEN
Citations received8

Warren J. Samuels Markets and Their Social Construction INTRODUCTION My objective is to outline a model of how markets arise and work and are worked. My argument is that markets are neither given nor tran­ scendental but are constructed by the actions of firms and govern­ ments. Several qualifications apply. First, a model is given, not a theory. A model is a set of vari­ ables structured in a particular way to explain something. A theoiy is a hypothesis specified as a particular explanation, the social space to which it is applied, the evidence by which it will be tested, and the deci­ sion rule governing acceptance or rejection. Second, no model can answer all questions. To answer other ques­ tions, other models are needed. Third, eveiy element of the model can be combined with differ­ ent theories. Fourth, no particular theory is adopted; the model is suggested in which particular theories have meaning. MARKETS "Market" is typically understood as the price mechanism and analyzed through some definition of "competition." Typical are fix-price and/or flex-price and strategic game-theoretic models, including limit-entry, administered, and mark-up pricing models. Price is not transcendent; it both controls firms and is an instrument of their power and policy. Economic actors are treated as active agents of change. social research Vol 71 : No 2 : Summer 2004 357 Markets are socially constructed, neither given and transcenden­ tal nor natural but organized to promote some interests rather than others; which interests and how they are chosen and structured, are issues to be determined. A distinction exists between (a) a pure abstract a-institutional conceptual m arket, and (b) an actual m arket that is a function of and gives effect to the institutions and forces that structure and operate through it. One tendency is to theorize in term s of (a) and assum e that (b) comports with (a), selectively reinforcing or criticiz­ ing existing law. The market as an institution and a product of other institutions differs from its conceptualization as a mechanism of price formation. The former view of the market—as process, the result of power, and an arena of power—is absent in the latter (Swedberg, 2003, chap. five). The belief that markets are necessarily competitive begs the definition of competition. Markets are not themselves efficient; they can yield efficient results. The "efficient functioning of m arkets" and "efficient m arket" lack substantive content. Analyses typically explain and designate an outcome as efficient in the sense of either exhausting gains from trade (Pareto optimality) or output maximization. Efficiency in either sense takes place in markets but is driven by agents' actions, not by "the m arket" alone. No single efficient result exists. Efficiency is rightsstructure dependent; different rights structures yielding different effi­ cient allocations, each specific to and generated by a particular rights structure. Efficiency cannot be used to determine rights without the use of some antecedent normative premise as to whose interests are to count; indeed, the structure of rights is often the point at issue. Resource allocation is driven not by markets alone but by the institu­ tions and forces that form and operate through markets, plus agents' actions. The evolutionary dynamics of markets—the core of the present model—and the equilibrating adjustment process are more relevant here than the properties of static equilibrium. 358 social research One circularity in the concept of "market" relates to the "law of one price": that only one price for a commodity can exist in a market. However, a market is often defined in terms of there being only one price for a commodity. The "m arket" is increasingly seen to be a metaphor. But a m etaphor for what? A m echanism , an institution, a process, all of the above, or what? If the invisible hand is identified as the market, one m etaphor is used to define another metaphor. The "m arket" is used here as a primitive, undefined term —both begging num er­ ous questions and cautioning the reader not to substitute his or her favored connotation(s). THE MODEL The social construction of markets combines two models of social control: the market-plus-framework model

Argument (complex analysis) · Competition (biology) · Deci · Economics · Epistemology · Market price · Meaning (existential) · Microeconomics · Political science · Positive economics · Price mechanism · Set (abstract data type) · Computer Science · Economic Theory and Institutions

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