Anyone following this blog should know that I don’t concede an inch on the tired old debate between centralism-hierarchy-pyramid networks-command and control, on the one hand, and decentralism-markets-scale-free networks-autonomous exchange on the other hand. Without doubt, the historical struggles in organizational and social life have been largely defined in these terms, but that definition was always one dimensional and overly simplistic. There was of course always a third variable at work, which might be characterized as decentralism-association-peer networks-collaboration. Though, I also don’t see this third variable as some magic elixir, as many do. The success of MIFO depends precisely on finding a sweet spot in the organizational space of the resulting triangle. That’s a topic to address in future posts.
However, having said all that, I do think that markets have much more to offer to the solution than is frequently acknowledged. The problem is that so many working in organizational theory seem to be intellectually steeped in the problematic “Progressive” tradition, which has consistently stigmatized, vilified, even demonized, markets as cesspools of wanton greed. I want, then, to just say a few words here in defence of markets and their contributions. First, we really have to get over this ridiculous Progressive propaganda. Greed, really? Sure, people can act greedily, with or without markets, that’s just the human condition, but does “greed” accurately characterize the vast majority of market exchanges? When you go to your local grocer to buy some tomatoes and onions, is that exchange being informed by greed? Even if you assess the relative value of different tomatoes, hoping to get a better price, is that greed? I can go along with the dictionary’s definition of greed as excessive desire. I don’t understand what’s excessive about making an exchange with someone. My local grocer is run by a hard working immigrant family. I’m sure they make a decent income from it, but they work pretty damn hard, too. I don’t consider them to be acting out of greed any more than I am in trying to get the best value I can if shopping to make a nice dinner for my daughter. This vilification of market activity is just ridiculous in my estimation.
Furthermore, contrary to the Progressive myth, the great classical liberal economists did not defend the market as appealing to crude human greed machines, operating exclusively on economic calculations. The fact is that the Smiths, Lockes, Humes always had a profoundly moral dimension to their defence of markets. And, I would say, rightly so. The private property rights underpinning markets have always been bound up with individuality, privacy, personal security, cooperation and political freedom. That is just as important as the economic value of maximizing the utility of resources, individually and collectively. Obviously markets are not perfect, laissez faire markets are impossible, and there are situations under which markets do not work well, jeopardizing both aggregate and individual interests. The knee-jerk vilification of them, though, by so many on the self-styled left is simply ignorant.
The greatest irony of all this, though, is that the very same trendy, “liberal” cyber-hipsters who endlessly extol the virtues of the new internet age will be among the more relentless in their smarmy, ironic dismissal of markets as some dinosaur form of social organization. The real irony though is at their expense; such people’s blind market-hatred, distorting their view of the topic, prevents their realization that the market was the original Web 2.0 platform. I understand that Web 2.0 is a little contentious, in both its meaning and implications. However, I don’t think I can go wrong in using Tim O’Reilly’s definition. In a nutshell: 2.0 is where users’ usage create what they use. Google, Wikipedia, Bit Torrent, etc., and all the others are captured by this definition. Every time you search something on Google, by choosing a search result, you contribute to future search results, in contributing to Wikipedia entries the users create the entries they use. This of course is exactly what markets have always done.
This might not be immediately clear to some because of the confusion arising from the Progressive distortion about what markets do. The emphasis on greed points attention to the exchanges facilitated by markets, where, supposedly, everyone is screwing everyone else – buying those damn tomatoes. Consequently, many people are confused into thinking that markets produce trades, but that isn’t ever true. No market has ever produced a trade. Actors (individual or collective) make trades. Confusing this would be like saying that Google produces all those web sites that come up in a search. What Google produces are search hierarchies. What markets produce, of course, are prices. And, fascinatingly, markets produce these prices in a manner extraordinarily similar to the function of the internet.
From every little corner of the network, information is accumulated that, in a vast decentred coordination system, calculates and circulates the prices arising from these thousands upon millions of inputs. People have to take actions in the world. Each time an individual has to decide to buy, build, sell or settle, they consult this collectively generated price as part of, though rarely the only factor in, their decision. However, once that decision is made, and an action is taken – to buy or sell something, to build it themselves or to settle without – that action becomes part of the knowledge pool of the market network. By the very taking of the action – even if to not enter the market – the actor contributes to the decentred knowledge coordination and contributes to the ever remade price. What’s the difference between this and contributing to the hierarchical rankings of search results on Google? The users’ usage creates what they use.
Markets certainly don’t have all the answers. To effectively evaluate their contribution to organizational and social challenges, though, the narrow-minded, knee-jerk Progressive demonization of markets has to be put aside to better understand their cultural, moral and communicative, as well as they’re extremely important economic, virtues.
April 21st, 2010 at 6:00 am
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May 12th, 2010 at 2:25 pm
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