Free Markets (7) - Fear Idol

For many people, the free market is an idol of fear. Primitive people blamed bad harvests on failure to appease the weather Gods. They made an idol out of something that they feared. We know that the weather gods do not exist. Modern people like to blame the troubles of economic life on the free market. Some have built "the market" up into something evil with terrible powers to do harm. Oliver O'Donovan refers to the market as a personality and calls it Leviathan.

Markets do not regulate themselves. They adjust themselves, but like the brutish and short-sighted Leviathans they are, they trample people beneath their feet while the do so. (The Ways of Judgment, p.65.)

Donovan and those who fear the market are raising up an idol that does not exist.

The reality is that the market does not close factories and lay people off. This is done by the managers and owners of businesses. They might say that they market forced them to close the factory, but that would not really be correct, either. It would be more correct to say that the people stopped being willing to buy what the factory produced at the price that was offered.

To be morally responsible, an entity must be able to make decisions and understand the consequences of their actions. Markets cannot think. Markets cannot make decisions. So markets are not moral entities. The moral decisions are made by people participating in the market. They are the ones with moral responsibility.

Contrary, to what most people think, markets do not set prices. In fact prices are never really set. In a market, you can see offers to sell for a price. You can see other people offering to buy at a price. You sometimes see a transaction occurring at a price, when the offers of a buyer and a seller coincide, but that does not set the price. A transaction may never occur at particular price again, if no other buyer or seller is willing to trade at that price. Buyers and seller decide prices, by agreeing to a transaction at a particular price. But they only set the price for their transaction. Their deal may influence the price for later transactions, but it does not set a price.

Those who speak as if the market can make decisions, be morally responsible and cause evil are idolising the market. Some people have built the market up into something mysterious and malignant with terrible powers to do harm. This gives them something to blame, but they have created an idol that does not exist. My approach is to demystify the market. A market is nothing more than communication and interaction between people.