The market as democracy (and vice versa)

by Shihang

Consider the common perception of the market and you either think of bustling bazaars or fat cats in top hats. Either way, the market is not identifiable with the individual.  It is not controlled by the common person. It seems to absorb him into a collective, but within this collective, he has to compete antagonistically against other similar individuals. He is constantly affected by market forces, sort of like atoms being perpetually subject to (and causing) Brownian motion.

So, in that light, how intuitively satisfactory is it when we reply “the market decides” when people question about the worth of things? I think Judt nails it on the head when he writes “we know what things cost but have no idea what they’re worth.”

Interesting thought: “the market decides” sounds remarkably similar to “the people decide”. Are markets functional because they’re democratic? Everyone has a say? If there can be market failure, why can’t there be political failure? Are they likely to occur together?

Consider the following two diagrams:

1.

Admittedly a simplified account of economic market structures. Here’s the other one:

2.

Just some thoughts. Just as in economics, a political monopoly on perceived legitimacy may be the result of competition, legitimitately being better than its rivals, or the result of rent-seeking. The PAP would obviously like you to believe that they are so successful at clinging to power because their good policies give them traction, but it is also true that they do their fair share of rent-seeking, from throwing people into jails without trial and suing people indiscriminately for their own gains.

And yet another, if monopolies are a mix of competitiveness and attempts at eliminating competition, how comfortable are libertarians with monopoly? Is it consistent with their stand on political parties like the PAP? The inconsistency in this case is the result of conceptualising the wrong stakeholders: rightly, they see government as between the government and its people. However, they see economics as antagonism between the government and the people as well, when it’s really between consumers and producers.

However, as noted, monopolies can be legitimately defended. They may have lower cost curves, and be more efficient than perfect competition. Similarly, it is conceivable that not having to compete gives a ruling class objective advantages in ruling. Note again the PAP’s arguments.

Another more metaphysical point. It is quite striking that our two greatest social achievements share the similarity of inclusiveness: of including people not by proxy but by emphasising their own individuality as necessary for true inclusion into society. The challenge is not to defend these ideals in name, but in substance, by ensuring that both remain about competition and inclusiveness, not rent and authoritarianism.

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