Inducing Disorientation in Larval Economists

by Cosma Shalizi on July 29, 2006

As a good neoclassical, neoliberal economist, Brad DeLong is acutely aware that the market system is not natural at all, but a delicate historical anomaly. He is worried that it is so familiar to his students that they will find alternate modes of social organization almost incredible; accordingly he wants to mess with their heads:

Would making Berkeley’s first-year economics Ph.D. graduate students this fall read short biographies of William Gates and William Marshall as a way of getting at the idea that there are non-market societies that work very differently from our own today—would that be a teaching idea of extraordinary brilliance or of total insane lunacy?

The rest of the post is an extended excerpt from the New York Review of Books review of a biography of William Marshal (which goes on to my to-read list). The question I have is, what should DeLong make his students read, to give them a vivid sense of just how differently production and distribution could be and have been organized? Argonauts of the Western Pacific, perhaps? Gilgamesh?

And: those of us who teach things other than economics, what books do or should we hand out as ice-axes for our students’ frozen seas? ( This one is mine.)

{ 68 comments }

1

Henry 07.29.06 at 6:19 pm

For the first query, maybe Sahlins’ “Stone Age Economics,” although I think his claim that reciprocity can’t be properly explained by rational choice is far too strong I think. Or Polanyi’s essay, “The Economy as Instituted Process” (conveniently reprinted in Granovetter and Swedberg’s economic sociology reader). Or maybe best of all the early bits of Tawney.

For the second, I really like Jean Ensminger’s “Making a Market: The Institutional Transformation of an African Society” which is a really nice and smart application of institutional economics to the process of market creation and institutional change among Kenyan pastoralists. Avner Greif’s new book too is very good.

2

David Sucher 07.29.06 at 6:26 pm

Dune by Frank Herbert would be a worthwhile addition to the list. I think the most useful scenarios and imaginings of possible futures (i.e. other ways to organize society) would come not out of history but out of “science fiction.”

3

David Sucher 07.29.06 at 6:26 pm

Dune by Frank Herbert would be a worthwhile addition to the list. I think the most useful scenarios and imaginings of possible futures (i.e. other ways to organize society) would come not out of history but out of “science fiction.”

4

tom s. 07.29.06 at 7:46 pm

Maybe Christopher Hill’s “The World Turned Upside Down: Radical Ideas During the English Revolution”, in which the Diggers, Levellers and so on challenge much of what we now treat as normal as it came into being (http://www.strecorsoc.org/docs/hill1.html). Maybe I’ll head back to DeLong’s site and post it there too…

5

David Sucher 07.29.06 at 8:15 pm

And to answer DeLong’s question “…would that be a teaching idea of extraordinary brilliance or of total insane lunacy?”

In the abstract it would be neither. It might well be a useful didactic technique but it could also degenerate into a bunch of wish-lists about how things “oughta be.” As with almost everything in life, manifestation trumps intention i.e. a good idea is nothing if poorly executed.

The educational goal itself — “…getting at the idea that there are non-market societies that work very differently from our own today…” — seems weirdly naive for grad students at one of the best universities in the world. Maybe I am missing something but don’t they teach history any more?

Moreover, to the extent that novelty is an important factor, teaching about our society by comparing it to others (either real past or imaginary future) has been done many times before.

I am curious to know more about your characterization of the market system as a “delicate historical anomaly.” (Of course I guess the same could be said about representative democracy — it’s new to our species and there is no guarantee it will last in the face of repressive forces world-wide.)

6

jim 07.29.06 at 8:26 pm

I’m assigning a couple of chapters of Yochai Benkler’s Wealth of Networks to my Junior level class. In the associated lecture, though, I’m going to talk more about a continuum of practice rather than a sharp discontinuity between market-driven production and peer production.

7

Randolph Fritz 07.29.06 at 9:11 pm

It’s the large scale society, more than any single other thing, that is the distinctive feature of our time; we have more in common, in some ways, with Rome or China at one of its peaks than with William Marshall’s Europe. I don’t think there are that many forms of large-scale economies, really; Marx identified industrial capitalism and agrarian feudalism, and we’ve begun to theorize about what might be called information socialism. Perhaps bronze-age or iron-age empire is a fourth. Small scale, now…everything and all over the map. Hunh… Pacific Northwest Amerind gift economies?

8

John Emerson 07.29.06 at 9:35 pm

A properly-done history of the steppe, culminating with the Mongol Empire, would introduce the student to a world amazingly different than ours in most respects, and uncomfortably similiar in a few.

9

Walt 07.29.06 at 9:39 pm

John: Is there such a book?

10

Daniel Nexon 07.29.06 at 10:27 pm

John and Walt: Barfield, The Perilous Frontier: Nomadic Empires and China? Or, if one is content to end with the Hsiung-Nu, how about Di Cosmo, Ancient China and its Enemies?

11

vivian 07.29.06 at 10:45 pm

Well Walt/John: In the SF vein, Harry Turtledove’s Videssos novels (several series’ to date) includes a sojourn in the steppes, with slightly disguised Mongols, Romans and Scandinavians. Can’t recall which one features the Celt and the Greek hanging out in the yurt – neither Amazon nor Del Rey have that detail and the library is closed tonight

12

post pc 07.29.06 at 10:55 pm

A Future for Socialism
Beyond Greed and Scarcity
Idle Theory

“They are gentle, loving, faithful, lacking in all guile and trickery. The words denoting lying, deceit, greed, envy, slander, and forgiveness have never been heard. They have no jealousy, no sense of possession. Real, what I thought a dream.

“We shall make a new start. A fresh beginning. Here the blessings of the earth are bestowed upon all. None need grow poor. Here there is good ground for all, and no cost but one’s labor. We shall build a true common wealth, hard work and self reliance our virtues. We shall have no landlords to rack us with high rents or extort the fruit of our labor.” – John Smith, The New World (2005)

13

John Emerson 07.29.06 at 11:20 pm

Not really. Barfield is great, as is Di Cosmo. Denis Sinor has done a lot of great articles.

In my feeble, procrastinating way, I’m working on something like this.

14

jonathan 07.30.06 at 12:08 am

Thorstein Veblen’s “The Instinct of Workmanship” (1914) is probably the greatest refutation of the market crazies ever written.

15

derek 07.30.06 at 4:18 am

John Keegan’s A History of Warfare introduces those of us to who may think of war as nothing more than Clausewitz’s “policy by other means” to some of the spectrum of historical societies who conducted war in ways, and for reasons, that we and Clausewitz would scarcely be able to recognise as “war-like” at all. Among the examples he describes are Easter Island warriors, Zulus, Mamelukes, and Samurai.

16

Tracy W 07.30.06 at 5:29 am

Is the “market system” (loosely defined) really a delicate historical anomaly?

We know that markets will appear in POW camps and ghettos. We know markets will thrive in the face of significant government effort to wipe them out (eg the market for illegal drugs, black markets in the USSR).

We know that democracy very seldom results in a majority voting for the abolishment of private property (has it ever? Not just nationalisation of some services, but abolishment of private property in general and/or abolishment of wage labour?).

17

derrida derider 07.30.06 at 5:56 am

I second Hill’s “The world Turned Upside down” – in spite of its intrusions of Marxist orthodoxy, a profound and imaginative book.

18

Bill Tozier 07.30.06 at 7:41 am

Every field has its crackpots, as well as its alternative valid approaches. If there were one thing I’d wield as ice-axe—lacking an actual ice-axe but wanting the same sort of invigorating social effect—it would be a section (in any discipline) on the crackpot literature. The penumbral, psychoceramica that surrounds the periphery of any cogent academic community.

Dangerous? Maybe. But it helps, sometimes, to start a conversation with, “Now, why is this person a fool?” and then segue into, “Now, why are we comfortable saying this person is a fool?”

19

Brett Bellmore 07.30.06 at 7:41 am

The market, from a certain perspective, has to be delicate and unstable. Otherwise, there’s no excuse for tinkering with it, and some people just love to tinker with it.

20

Jacob T. Levy 07.30.06 at 7:42 am

Smith’s Wealth of Nations, especially combined with Lectures on Jurisprudence, can apply the icepick perfectly well for both economists (because Smith, while not sure about its delicacy or robustness, is quite clear that commercial society is a new, rare thing that emerged under a particular set of conditions) and for non-economists (because the propensity to truck, barter, and exchange isn’t unique to commercial societies).

Smith did more than even Montesquieu, I think, to really try to understand how non-market social orders were real, functioning, and stable [across some very long timespan] social orders. Brad’s made these points before, but they bear repeating.

Of course, Smith’s unread by econ grad students other than Brad’s– and not often read by poli sci grad students outside political theory. (I have the impression it’s a little better in Soc…?)

21

Brendan 07.30.06 at 8:07 am

Isn’t the obvious choice to read a book about the economics of the Inca Empire? My understanding (which could be wrong) is that the Inca Empire was run entirely via a ‘command economy’ and contained no markets of any sort. Thus, apparently, studies of Incan economics became strangely popular amongst third world Marxists who wanted to prove that Hayek’s critique of socialism was false.

‘ Like all civilized peoples, the Incas faced the problem of population
expansion against a limited food supply. They solved the problem well enough
to support large military, bureaucratic, and priestly establishments by
developing what economists call a “command economy.” They used no money, no
credit, and very little trade beyond the barter conducted locally by
government agents. The state planned all economic operations and kept all
accounts, assigning the land to be worked, supervising the worker who produced
the crops, and collecting the harvests in warehouses. A similar approach was
used in manufacturing. From its storehouses, the government distributed goods
to individuals, to the military, and to government projects. In the process,
it built roads, operated hospitals, and maintained schools. Private property
was limited to the simplest personal possessions, including the luxuries of
the privileged classes.

This economy functioned through four levels of precisely defined social
gradations. At the top were the Incas, all related directly or indirectly to
the reigning emperor. They held the highest positions in government, the army,
and the priesthood. A notch lower were lesser aristocrats and nobles among
conquered peoples, who held local offices, up to subgovernors in the
provinces. The two upper classes made up a privileged elite. Trained in
special schools, their members were identified by luxuries in food, dress, and
housing. They were also exempted from taxes and cruel punishments. At the
third level were common workers. They were generally confined to their
villages, their work was prescribed, their dress and food were restricted, and
the government even checked the cleanliness of their houses. Commoners were
thus little better off than the lowest class of slaves, who were taken as war
captives and assigned as servants to the upper classes.’

http://history-world.org/emerging_civilizations.htm

22

John Emerson 07.30.06 at 8:24 am

Bill Tozier, your method strikes me as utterly misguided. Becker’s economic theory of the family strikes me as crackpot, but he got a Nobel Prize for it. (More at my URL).

Plenty of mainstream economists dismiss, e.g., JK Galbraith as (if not a crackpot) a marginal incompetent of no real importance. Once you get students thinking about crackpottery, the field of economics will lose all definition for them and they will go howling mad.

23

Carlos 07.30.06 at 9:14 am

Hasn’t DeLong assigned Avner Greif in the past for this purpose?

Also, I wish DeLong would update his knowledge of how the Roman economy worked. He’s still teaching M.I. Finley, and Kevin Greene has pretty much demolished him.

24

Seth Edenbaum 07.30.06 at 9:43 am

There is no system, there are systems. But DeLong is only interested in one and he has no interest in making his students more curious than he is.

25

french swede the rootless vegetable 07.30.06 at 10:25 am

For an excellent insight on how market economy is not a natural state but something that has to be delicately tuned to function properly read “the Mysteries of Capital” by Hernando de Soto

26

french swede the rootless vegetable 07.30.06 at 10:34 am

Tracy W: We know that markets will appear in POW camps and ghettos.

I think you can argue that’s it’s because those people have culturally internalised market behaviour; it’s not a real tabula rasa situation.

I’m not so sure the result would be the same if you put !kung or papuans in your camps and ghettoes.

27

anonymous 07.30.06 at 11:10 am

The relevant sections of Hume’s History of England would probably do a good job of it, since he takes us from Anglo-Saxon England, through feudalism, all the way to commercial civilization during the Glorious Revolution.

28

Joel Hanes 07.30.06 at 12:45 pm

Ursula LeGuin

_The_Dispossessed_
_The_Telling_

29

Lysias 07.30.06 at 1:13 pm

You might like to consider using Plutarch’s On Sparta for a picture of a cashless, militaristic, slave economy, that held property in common. Not very lovable, but it persisted for 400 years.

30

Dan 07.30.06 at 2:57 pm

I’ve just somehow wangled four years funding for a PhD in Leeds, where I’m supposed to see if computer modelling of socio-economic systems can do away with the notion that the current market order is ‘natural’ – or more specifically, investigate the nature of the balance between spontaneous order and purposive planning. (Shameless plug: more details at me blog). God knows how I managed that – but reading this post

1. Gave me loads of reading material – thanks.
2. Scared the bejeezuz out of me. Having got this funding, I’ve no idea how I’m actually gonna do it. Ah, well, something’ll occur.

I agree with David Sucher – getting students to see that things can be different isn’t so tricky, and maybe isn’t the point. A lot of PhD students in the social sciences work slavishly to refute mainstream theories – I imagine in the hope that some kind of alchemy will occur, magically dissolving the order they’re criticising. I probably think like that too – but bah! Favourite quote that I hope’ll get me through PhD land – Buckminster Fuller:

You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.

31

Tracy W 07.30.06 at 3:57 pm

Tracy W: We know that markets will appear in POW camps and ghettos.

French swede: I think you can argue that’s it’s because those people have culturally internalised market behaviour; it’s not a real tabula rasa situation.

Perhaps, perhaps not. But if people who have grown up in the market situation keep recreating markets then this continual recreation is an argument that the market system is not that delicate. If people dumped markets whenever the opportunity arose then you’d have some evidence for delicacy, as it is markets seem more robust than speaking a particular language.

Plus, we’re humans. Inherently social animals. When do we ever have a tabula rasa situation? So what relevance would our responses under a tabla rasa be?

32

John Emerson 07.30.06 at 4:02 pm

“Markets existing at all” is not “market society”. That’s Polanyi’s point — there are markets everywhere, or almost, but a market society is one in which markets have a dominant importance.

33

cosma 07.30.06 at 4:47 pm

I was careful to say not “markets” but “the market system”. The former are common and robust; the latter is not. Lots and lots of societies (maybe all, I don’t think anyone knows) have institutionalized “truck, barter and exchange” in one way or another. Very few, and that very recently, have made decentralized exchange the predominant coordinating mechanism of production and distribution. That is the market system. It seems to have lots of prerequisites, some technological, some legal, some institutional, some cultural, etc. (no subsistence crises, internal peace, stable property rights, not-too-crooked cops, not-too-political courts, not-too-creative accountants, etc.). Saying that some of these are fragile is not to suggest that they should be broken. It is not even to predict, a la Schumpeter, that alas they will break and then we’ll really be sorry. And, of course, saying this is not to imply that it is so delicate that it must never be tampered with, on pain of returning us all to the idiocy of rural life, with boots stamping on our faces for good measure.

34

Mark 07.30.06 at 4:53 pm

The best book on this to read is David Graeber (formerly of Yale), _Toward an Anthropological Theory of Value_ (2001). In it he explicitly reflects on the problem of providing alternate bases for sophisticated economies, granted the historical contingency of markets, and examines several anthropologists’ attempts to provide theories of primitive notions of exchange and value (Mauss most prominently, which he attempts to update with some success). He gives an account of how the Iroquois system of wampum exchange was affected by its contact with markets, which I found fascinating. His main goal seems to be developing a non- (or anti-?) marxist alternative to neoliberal understandings of value/commodity/exchange.

35

Bruce Simon 07.30.06 at 4:54 pm

One example of reframing/reusing markets (“eco-economics”/gift economy) is sprinkled throughout Kim Stanley Robinson’s Mars trilogy, more in the second novel than the others, if I remember correctly.

36

asg 07.30.06 at 5:29 pm

Good choices to challenge basic assumptions held by economics graduate students might involve exposure to public choice theory, particularly the idea that the state cannot design outcomes and state actors are subject to incentives just as market actors are.

Good readings are: Buchanan and Tullock, “The Calculus of Consent”; Mancur Olson, “The Logic of Collective Action”; Bryan Caplan, “Rational Irrationality” (http://www.gmu.edu/departments/economics/bcaplan/ratirnew.doc)

37

Sylvia S Tognetti 07.30.06 at 5:44 pm

There is an important distinction in types of markets, that I think was made in Polanyi’s “The Great Transformation” and probably in his classic paper mentioned in the first comment, on “the economy as an instituted process” which is whether the market is socially embedded, i.e., subservient to social goals, or not. But, of course, he also makes the case that the so called “free market” is hardly neutral. For more elaboration on the Polanyi framework, I also recommend “Cultural Economies Past and Present” by Rhoda H. Halperin, and “The Prisoners’ Dilemma and Coase’s Theorem: A case for democracy in less developed countries?” by Michael Lipton (a chapter in “Economy and Democracy” by R.C.O. Mathews).

I also have some discussion of this topic at http://www.postnormaltimes.net in context of the idea of creating markets for ecosystem services.

38

Tracy W 07.30.06 at 9:53 pm

I was careful to say not “markets” but “the market system”. The former are common and robust; the latter is not. Lots and lots of societies (maybe all, I don’t think anyone knows) have institutionalized “truck, barter and exchange” in one way or another. Very few, and that very recently, have made decentralized exchange the predominant coordinating mechanism of production and distribution.

I guess this means what you define as “predominant”. I recently read The Last of the Wine by Mary Renault and her description of Athens, particularly when the allocation of scarce resources really started to bite during the siege of Athens, strikes me as an economy with a predominant use of markets. Despite the ration distributed in Athens during the siege and the tribute extracted from subject nations. Eg the hero saves to buy armour from the output of the family farm (until war intervenes), buys food in the market, wins money at the Olympic games, etc.

And I have recently been reading up about the history of marriage in England, which means reading the history of marriage in Northern Europe. And in that literature the situation of marriage for the lower classes as being a chosen relationship back even in medieval times appears to be attributed to the ability of men and women to earn by labour an income independently of their parents. This again implies a society where production and distribution are handled to a large extent by markets.

And the Bible, with its money transactions, (most famously Judas betraying Jesus for 30 pieces of silver, but other examples are the fable about the workers hired by the rich man, or the story of the prodigal son, or the story of Jesus clearing the temple of money-lenders), imply a money-based society and an expectation that the readers/listeners would be familar with such market features as money-lenders.

In my non-systematic readings, the unusual thing that strikes me about modern market systems is not that they are the predominant means of coordinating production and distribution, but that the ruling class now often works for wage or salary at some point during their lives and sees nothing wrong with this. And the ending of slavery of course is another vastly unusual thing. But not the use of market systems just by themselves.

39

Brendan 07.31.06 at 7:26 am

Fair enough, Tracy, but how do you explain the Incan Empire example I mentioned earlier? (please note I am not an expert in South American history…the Incans may actually have used SOME form of market mechanism I am not aware of, in which case my point fails).

40

John Emerson 07.31.06 at 7:36 am

Free-market absolutists are torn between believing that the pure free market society is the BEST society and should be put in place everywhere, and saying that free-market economic principles are universal truths and that all societies everywhere always already were free-market socities (just, in most cases, very bad ones). The possibility of any alternative principles of organization must be excluded.

Of ancient societies, Athens was on the free-market end, but the Athenian state made enormous formal and informal non-market demands on the Athenians, and not only for defense purposes. I think that medieval Florence, Genoa and Venice were similiar.

41

joseph heath 07.31.06 at 8:36 am

I would recommend Janos Kornai’s _The Socialist System_. It’s not going to convince anyone that a non-market system is desirable, but if the goal is to demonstrate the contingency of familiar economic arrangements, it is unrivaled.

42

SamChevre 07.31.06 at 9:07 am

I think that within economics, you could accomplish the goal of understanding “markets aren’t normal” by reading three well-known economics books.

Buchanan, The Calculus of Consent (showing the interaction of government and market)
Galbraith, The New Industrial State (advertising and organized production)
Adam Smith, The Wealth of Nations

All three have the advantage of being easily readable.

43

dearieme 07.31.06 at 9:39 am

If I wanted students to grasp the idea of change, I’d explain that William Marshall didn’t say “I still have the hammer and the anvil with which to forge still more and better sons!”. Whatever he said, he said in Norman French, not English.

44

David Sucher 07.31.06 at 9:51 am

I guess I’d question (and seriously it is a question) Cosma’s assertion “Very few, and that very recently, have made decentralized exchange the predominant coordinating mechanism of production and distribution.”

Maybe that’s true and maybe not. I get nervous about discussions like this because they seem to have so much of purpose about them i.e. to prove one system better than another.

What would be a real example of the opposite? i.e. of a complex society based on something besides the “decentralized exchange…the predominant coordinating mechanism of production and distribution.” (The modifier “complex” is key.)

Was (for an example) 11th century Constantinople not a trading city? Did the Emperor (or his bureacracy) determine where the trading expedition were to go? Or what price to set for slaves and incense? I honestly don’t know but from my understanding, Constantinople was huge, complex and the center of a robust economy. (Comparing it to us is a bit more useful than comparing 8th century Norway to us.) Was Constantinople’s economy based on something besides “decentralized exchange?”

Obviously I come at this from the perspective that there is no real alternative to a trading economy* and private property because the transaction costs of anything else are too high to be practical in anything but a hunting/subsistence society. But I admit that I am no expert so these are real questions.

*I am not quite sure what a “market system” really is so I don’t use that term.

45

John Emerson 07.31.06 at 10:06 am

David, you have a lot of homework to do.

One example of a non-market economy is one in which wealth and property are monopolized, first, by a military elite which does, by our standards, no productive work at all, and second, by a clerical establishment which actually does do some productive work, but whose disposition of wealth and property is mostly not on a quid-pro-quo exchange basis.

IE, the European Middle Ages.

Within this economy there was lots of exchange, but exchange was not the dominant form of organization. Those who specialized in exchange (Jews and bourgeois) did not have political rights and had limited legal rights, and the non-economic elites’ habits of extortion limited their power and the growth of the economy too.

Tribal societies and band societies are other examples. The family is still another.

It looks to me as if you are a Type B economic absolutist, and that you would be likely to transform non-market exchanges into market exchanges by alleging fictitious intangible values — e.g., that Christians sent money to the Church and to Rome in exchange for “salvation utilities”.

46

SamChevre 07.31.06 at 10:08 am

Wouldn’t William Marshal be his generations equivalent of J. C. Watts? He seems to have done the same thing–used his skill and physique to win sporting contests, and then used the contacts and fame from his sporting contests to gain political power.

47

Seth Edenbaum 07.31.06 at 11:23 am

Again: “Utilitarian Materialism or Deontological Idealism?”

When I said above that there is no one system I was referring to the present not the past. DeLong’s basic unit of measurement is the individual. Sorry for quoting myself so much but he has no interest in the struggle between “Economic Liberalism and Individualism and the Anarcho-Conservativism of working class Catholic communities.” Social cohesion- and social coercion- are moral failing to him. He imagines himself a free-thinking individual unencumbered by history. Then why does he go apoplectic over Chomsky- whose purblind rationalism is so similar to his own? Why does he have the same reaction anytime anyone brings up social anthropology? Remember the debacle over Jared Diamond? He has no interest in Sahlins; and he’s not going to read Sahlins’ student, Graeber. He’s no going to be interested in the anti-modern system of social coercion -in Brooklyn NY!- that produced the landlady who charged me 1/4 market rate for 14 years and never raised the rent! [It started at 1/2]
You want vulgar determinsim? DeLong is more the product of his environment than I am. His reactions to most things are utterly predictable.

Individualism is not a fact, it is an ideology.

48

Mike Giberson 07.31.06 at 1:26 pm

I found Sons of the Sea Goddess: Economic Practice and Discursive Conflict in Brazil by Antonius C. G. M. Robben to be useful for thinking about relationships between society and forms of econonic organization. It is focused on a particular ethnographic case, and so avoids a lot of speculative and useless generalization. It doesn’t give the “big picture,” but in presenting a story of small changes in economic organization in a small coastal fishing town in Brazil, it may help Westernized capitalist-bred students recognize the contingency in some of our current traditional forms of organization.

However, it appears the book is out of print.

49

Tracy W 07.31.06 at 5:17 pm

Brendan – I’m not arguing that all societies are predominantly market systems, or even that all societies with cities are predominantly market systems.

I’m arguing against the idea that market systems are a delicate historical anamoly. Anything that’s been around for thousands of years and doesn’t get voted out by democracies doesn’t strike me as that much of an anamoly or that delicate.

John – One example of a non-market economy is one in which wealth and property are monopolized, first, by a military elite which does, by our standards, no productive work at all, and second, by a clerical establishment which actually does do some productive work, but whose disposition of wealth and property is mostly not on a quid-pro-quo exchange basis.

Well, how big is this military elite, and the clerical establishment before you say that the system is not ‘predominantly a market system’.

Many European countries have sizable portions of the population living on welfare benefits – does that make them not a market system?

How much effort can your military elites put into running their households and farms before they start counting as doing productive work by our (your) standards?

How much wealth and property must be monopolised before a society stops being pre-dominantly a market system?

Within this economy there was lots of exchange, but exchange was not the dominant form of organization. Those who specialized in exchange (Jews and bourgeois) did not have political rights and had limited legal rights,

Peasants and merchants and tradesmen may not have had much in the way of political rights or legal rights, but that doesn’t mean that the people didn’t exist. The peasants and merchants and tradesmen may not have counted for much in the minds of the military elites and clergy, but we surely can take a wider view of society and count them as much as the William Marshalls of the time.

This does come down to a definitional thing. If we’re really going to have an argument about whether a society is predominantly a market system we need some definition of predominantly. You look at medieval Europe and see ruling lords and monastries and say it isn’t predominantly a market system. I look at medieval Europe and see coins and market fairs and labour exchanges and cities claiming charters from royalty and say it is predominantly a market system, with the sword-fighting elite kind of stuck on.

50

Slayton I. Mustgo 07.31.06 at 5:24 pm

Since S-F seems to be fair game, Samuel Delany’s Neveryon series has some interesting early market stuff. It is set in a time when writing, trade, and many things are just being invented. Rubber balls appear as a fad. A just ruler builds the New Market (a cleared space with markings for stalls). 4-legged pots (always wobble, rarely tip over) supplant 3-legged pots (never wobble, easy to tip).

Not really enough material to make the series recommendable, except as a pleasure in their own right.

51

David Sucher 07.31.06 at 6:46 pm

I guess what this post/thread illustrates is that an enormous generalization — “…the market system is not natural at all, but a delicate historical anomaly.” — might best be offered not as an aside but squarely as a question for debate or if asserted should be backed up with a bit more rationale, explanation, facts etc.

I am particularly not convinced by a tag-on explanation distinguishing the existence of “markets” from a “market system.”

As to the example offered of the European middle ages (and which one: early? or late) is there anyone here who could even comment with any authority on whether that assertion is true? It’s my understanding that the flowering of aristocratic chivalry in the late middle ages was in response to the dynamism of markets and the decreasing political importance of those armed & titled thugs. Chivalry was a response (as were the Crusades) to the fact that the knights had nothing to do because the were prevented by their own egos from being in trade. But of course that is distant recollection and “the late middle ages” covers at least three centuries and a large continent.

(And btw, thank you John Emerson for your concern about my intellectual development.)

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jared ross 07.31.06 at 6:58 pm

It might be just as valuable to look at non-market interpretations parts of our own society. Just because something can be considered a market doesn’t mean that that is the best perspective on the issue. The spheres of political capital and government capital are probably the easiest to do this with. Looking at the ways resources are used by communities may be another way to show students that the economic perspective isn’t always the best perspective.

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John Emerson 07.31.06 at 8:02 pm

“It’s my understanding that the flowering of aristocratic chivalry in the late middle ages was in response to the dynamism of markets and the decreasing political importance of those armed & titled thugs.”

Toward the end of the middle ages, markets increased in importance, compared to the earlier period. Do you regard this as a killing criticism of what I said? In other words, society was starting to move in the direction of a market society. They were moving away from a society which was not a market society. All societies have markets, but market societies are dominated by them.

I understand that you are not convinced, but I am not yet sure whether you have any analytic vocabulary or historical data at your disposal. It’s hard to argue with people who are starting from zero and use their zero as an argument.

And you were right in concluding that my concern for your intellectual development is not entirely sincere.

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Tracy W 07.31.06 at 8:45 pm

All societies have markets, but market societies are dominated by them.

What is your criteria for deciding when a society is dominated by markets, rather than simply having markets?

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John Emerson 07.31.06 at 8:53 pm

The existence of powerful non-market institutions such as aristocracies, property-owning religious establishments, autonomous military units, tribal groups, and large politicized property-owning clans, together with the political exclusion and relatively lesser importance of groups devoted to trade, finance, manufacturing.

Large parts of the economy dedicated to tribute, gifts, and offerings of various sorts, rsther than quid pro quo payments.

The market is always present in non-market economies, and always exerts pressure on the other forms of organization, but after about 1700 in the West the market groups grew increasingly powerful and dominant, and the others increasingly marginal and powerless.

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Tracy W 07.31.06 at 11:55 pm

Hmmm, I disagree with the first part of your definition of a non-market dominated society. Political power is not the only part of society. Just because merchants, peasants, tradesmen, etc, are excluded from political power doesn’t mean that they’re not part of society. Slaves in southern USA were excluded from political life, but judging by Frederick Douglas’s autobiography they not only had their own society but interacted with the broader society.

And of course, not only were merchants, etc, often excluded from political life, but so were nearly all women. Again, just because someone is excluded from politics does not mean that they are not part of society. To put it another way, if women, male peasants, merchants, tradesmen’s lives were not part of society then what were they part of?

I tend to think of whether a society is pre-dominantly a market-orientated society in terms of whether people in everyday life trade in markets. In the case of ancient Athens, even the Athenian nobility participated in markets, eg the hero’s father has a farm on which the hero, his father and their slaves work (until war takes it away), from which produce is sold to support their lifestyle in town, as opposed to their being self-sufficient or gaining supplies through patronage relationships or some other means.

I agree that there has been a massive change in the acceptability of paid employment and directly handling money amongst the political elite. But remember that before the democratic reforms of the 19th century in most places around the world the political elite was a very small proportion of the total population. And even then as far as I know it was acceptable for a gentleman to improve his land and sell his estates’ produce.

Large parts of the economy dedicated to tribute, gifts, and offerings of various sorts, rsther than quid pro quo payments.

How much is large? How does this compare to modern welfare state transfers?

And how do you get figures on the sizes of the relative portions of tribute/gifts/offerings to total economic output in medieval Europe? – I always thought even the total GDP figures were terribly dodgy. And our records from then are biased because of the small number of people who could read and write and kept records. As far as I am aware economic historians are still arguing over total living standards in medieval Europe.

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John Emerson 08.01.06 at 12:41 am

“Not having political rights” includes, for example, not being able to testify in court, or not being able to defend yourself against the expropriation of your property. It was a real suppression. Slavery is an extreme case of loss of political rights, since it included loss of the right to contract marriages, and the right of the owner to kill you.

Just having some markets doesn’t make a market society if the large decisions are made off-market. For example, serfs did not sell their product to the highest bidder; they gave negotiated amounts to the same man every time.

Athens is not a good example of a non-market society. It was probably more a market society than any society of its time, and more than most societies during the next 20 centuries or more. The early middle ages are a better example, or perhaps Mongol Persia or Ottoman Turkey. And markets were a factor in all of these societies, but big decisions (especially land-ownership and most of agricultural production) were non-market. Even much of XIXc Russia was non-market, with an unfree work force, and a mix of subsistence farming, landowner expropriation, and government expropriation.

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cosma 08.01.06 at 8:36 am

Back in the day (i.e., well through the 20th century), my father’s father’s family basically owned and ruled the village of Shalez, and some adjacent parts of Ghazni province in Afghanistan. They did not acquire this land by purchase: the clan came in from the Khyber Pass and seized it by force from the previous holders. (They also built karezes, but that just added hydraulic despotism to conquest.) The terms my ancestors offered to their tenants were in no meaningful sense market-driven, being partly customary and, to a much larger degree, driven by the relative military power of various clans. They certainly had markets and money, but there was a whole huge sector of the economy where decisions were not being made by market mechanisms, and any attempt to introduce them would have met with powerful opposition.

It wouldn’t be quite accurate to describe this set-up as “feudal” — my great-grandfather wasn’t Amir Abdurrahman‘s vassal in the sense that William Marshal was King Henry’s — but it was of the same general ilk. There were compelling reasons why agrarian societies generated arrangements like this, where big chunks of the economy fall under the sway of specialists in armed coercion, who hold clearly-defined pieces of territory as tenaciously as they can. (These reasons are clearly explained by people like Ernest Gellner and William McNeill, or for that matter ibn Khaldun.) As Jacob Levy notes up-thread, Adam Smith was very clear on the importance of neutralizing people like my ancestors. (Remember that the classical trio of factors of production is land, labor, and capital.) This is tricky enough, but neutralizing them without just setting up the central government as oppressive landlord in their place was even harder. A surprisingly strong case can be made (see McNeill again, or Mark Elvin’s The Pattern of the Chinese Past) that the breakthrough to sustained, market-driven exponential economic growth ought to have happened in Song dynasty China, but it was that last bit which tripped them up.

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John Emerson 08.01.06 at 10:08 am

Cosma, Frederick Lane’s “Venice and History” includes several articles developing the idea of “protection rent”. Steensgaard’s “The Asian trade revolution of the seventeenth century” develops this idea and compares the different ways the Portuguese, the Dutch, and others dealt with the protection cost of trade. Charles Tilly’s “Coercion, Capital, and European States” 900-1992 uses similiar analysis to W. European history.

I think that the military factor in history and society is systematically always there, but tends to be treated as an ingression from the outside or a breakdown since right-thinking people don’t want to recognize it as normal.

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Walt 08.01.06 at 3:34 pm

Tracy: I honestly can’t figure out your point, which seems to be “if I deliberately change the meaning of what you say, then I can prove that markets aren’t fragile.” People have made it clear that they just aren’t talking about what you’re talking about, so why do you insist on trying to make them?

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Tracy W 08.01.06 at 5:12 pm

Walt – I’m now arguing over what the definition of a market-dominated society should be. I’m saying that I think that definitions that merely concern the political elites are not relevant for countries where the political elites are a very small portion of the whole population.

I’m trying to persuade you to change the definition you are using as I think it is more valid to incorporate all of a population when deciding what a place’s society is like.

I am sorry I did not make this more explicit. I am trying openly to persuade people to change the definition, I am not attempting to do so secretively. I disagree with John’s definition and I am deliberately trying to change it. Is this explicit enough?

Incidentally, what’s the argument for ignoring the vast majority of the population in determing whether a society is market-dominated or not?

And by the way, I am not arguing that all societies are predominantly market-orientated. I am just arguing that there is a long history of societies predominantly orientated around the market. And this is part of my reason why I doubt the statement that “the market system is … but a delicate historical anomaly.”
Citing counter-examples in Afghanistan or Russia is not enough to disprove my case, someone has to disprove the examples I have cited.

Based on what John has so far said, the statement that “the political elites regarding money earned by markets as respectable is a historical anomaly” is much more supportable. It was not what was originally said though. (I don’t think we have enough data to judge whether such a situation is “delicate” – ask me again in 500 years :) ).

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John Emerson 08.01.06 at 6:17 pm

Tracy, you seem to regard the political elites as off in some separate world. What made them elite was their ability to extract wealth from the commoners, usually by non-market (coercive) means. What made it a non-market society is that the majority of the population (small farmers) could not choose to sell their produce to any of various buyers on a merket, but were required to sell it to a single individual (or to the state), often at an artificially-set low price. Alternatively, they simply had to give a share of their produce to their lord, using the remainder for subsistence purposes. A small market sector remained, but that didn’t make this a market society.

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David Sucher 08.01.06 at 10:10 pm

Let’s step back a second.

Asserting that there are tribal, subsistence, hunter-gatherer societies which don’t do much trading is a trivial assertion. Of course there are. And I for one had no intention of suggesting otherwise.

The interesting issue is not whether there are “alternate modes of social organization.”

(If a grad student at Berkeley much less a commenter on this blog is not aware of such ” “alternate modes of social organization”….well…whatever.)

The interesting and non-trivial issue is whether you can have a complex, populous, presumably urban and technological society with values similar to ours (pluralist, tolerant, non-misogynous etc etc) without heavy reliance on markets to organize itself. It does not appear so but that is only an empirical observation.

Markets are information-processing devices and the need for information processing is low in hunter-gather-herding societies — so they don’t develop markets.

But as societies grow their needs for social coordination grow and the question is whether there is an alternative to markets as a way of successfully organizing an economy which has passed poverty. (I reject the term “market system” as it is not a recognized term of art.)

That’s why I asked the question about Constantinople. That’s why I sugggested Dune because it shows a weird mix of inherited feudal “aristocratic” power ruling parts of a very capitalist economy in which drugs are a critical element of social stability.

The interesting question is not about hunters and herders using vast landscapes. The interesting question is about complex urban cultures which value individual freedom and whether there is an alternative in them to markets.

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Walt 08.01.06 at 10:52 pm

David: You are anxious to redefine Cosma’s original question away from what should DeLong make his students read, to give them a vivid sense of just how differently production and distribution could be and have been organized? We might find these other organizations personally shitty, but they existed, and they supported what were complex cultures for their day. (And really, hunter-gatherers is the only example you can think of? The Soviet Union was an awful totalitarian dictatorship, but they managed a per-capita GDP of several thousand US dollars, and to put a man into space. I’m glad that the Soviet Union is gone, but that doesn’t mean I can now conclude that it never existed, even in theory.)

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Tracy W 08.01.06 at 11:59 pm

Glad to see you agree that a society is not just about the elite.

Firstly, even when an elite can extract wealth from their serfs, they still would interact with markets. Eg http://www.history.ac.uk/eseminars/sem24.html describes the history of cities and markets, and the significant role of supply of food to cities, and how that would change in times of crisis. Consequently someone was selling food in response to markets, that these someones may have been mostly noblemen and monasteries rather than individual peasants does not mean that production was not being determined by markets. To borrow an example from PETA, farmers treat animals as property, but we would say that a NZ farmer is still part of a market-dominated society because their decisions about how to farm.

http://assets.cambridge.org/052149/5814/sample/0521495814ws.pdf

http://66.102.7.104/search?q=cache:q3K5YQWAHisJ:orion.oac.uci.edu/~garyr/papers/LSMM_20june2003_EEH_final_submission_formatted.doc+markets+medieval+europe&hl=en&ct=clnk&cd=28

So again we come to the definitional problem of what is a society with a market system.

Secondly serfdom died away in Western Europe during the medieval period. The institution lasted much longer in Eastern Europe, and was only introduced in Russia in the 16tn century. See http://www.answers.com/topic/serf or the Wikipedia articles. This is again societies managing to go for centuries with market-systems, implying that a market-system is not a historical anamoly.

Interestingly, the Wikipedia article states that a serf could decide what to raise and sell the produce of their own land at markets, but it doesn’t give a citation for this, and it doesn’t state where such rules applied (given the diversity of medieval Europe, I doubt it was universal), and I have never heard elsewhere that serfs had such rights over the produce produced on their own land, so I don’t know what probability to assign to the likely-truth of that statement.

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John Emerson 08.02.06 at 5:09 am

The interesting and non-trivial issue is whether you can have a complex, populous, presumably urban and technological society with values similar to ours (pluralist, tolerant, non-misogynous etc etc) without heavy reliance on markets to organize itself.

I don’t think so. I think that what is Delong and Cosma was trying to do was figure out how to teach American students to imagine what some of the other (earlier) kinds of society (those which were not market societies) were like. They were not trying to imagine an equally-good or superior utopian alternative to market society.

There’s a symmetrical difficulty in understanding “family”, which takes on political and economic roles in societies with a weak state (some of them non-market societies.) In these societies “family” is not mommy and daddy and kids and brothers and sisters and uncles and aunts and cousins at a family reunion.

In the XIXc a big Chinese family (clan) would have a military unit and would often effectively provide local government over an extended area. Economically it would function like a corporation, and extract profits from its clan members and from neighboring clans. The typical clan member knew that the clan head existed and had to be deferred to, but he might be a second cousin three times removed whom had never met.

Confusion about the traditional meaning of family was blatant in Ronald Reagan’s pronouncements to Muslims and Chinese on the importance that “family” had for him. By traditional standards, family was extremely unimpoortant to Reagan. To him all it meant was [aying the bills and not cheating on his wife.

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cosma 08.02.06 at 10:11 am

Speaking for myself, I was not raising the issue of “whether you can have a complex, populous, presumably urban and technological society with values similar to ours (pluralist, tolerant, non-misogynous etc etc) without heavy reliance on markets to organize itself.” (For the record, I’d answer that question “no”, but I don’t pretend to have a proof.) I really was trying to ask a question about raising historical awareness. Similarly, given DeLong’s well-known political commitments, and the fact that he is an economic historian, thinking about a course on economic history, I strongly suspect that that is what he had in mind as well. I do not, however, believe myself able to divine what was in his heart of hearts from a blog post.

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Seth Edenbaum 08.02.06 at 12:05 pm

People who imagine that the lens through which they see the world, is the world. From feudalism to post-humanism without the experience of bourgeois revolution.

Now I think I understand you Cosma.

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