On Markets - Archive

My two thoughts here are it is silly to talk about market immorality without balancing it with state immorality and failure . Additionally the market emerges from people and is not (only )imposed on them which is not given much weight .

Better than Bureaucrats
Many people who have made a great deal of money have behaved unethically , taken risks worked hard spotted opportunities or been lucky . Usually all the above . Politicians have a worse balance tending towards sloth cowardice and dishonesty .Bureaucrats , having no judge but other bureaucrats are probably the most morally corrupted by their surroundings .Only the truly vilest dissimulating invertebrate snake slithers to the top.( As Orwell noticed , the beetle kind of man…)
Price is not Ethical
Price keeps the score but is not the game. Nothing useful can be said about it alone .
Sunder Misunderstands
Sunder is wrong in that markets can and do exist outside and prior to the state , they cannot exist prior to a level of trust and peace and will self-organise rules over time .The state may be the most obvious agency for enforcing the rules , but not necessarily . Markets then , are not in themselves moral but they do require an external or public morality to function at all .The state does not . Markets are in the gross way morally better and over time we will see this even in China ( It may be a long time )
Law Is Not Enough.
Sunder`s conception is disproportionately theoretical as you would expect. The rule of law is not enough. One does not extend trade credit on the basis of a possible court appearance. One does not believe specs on the basis we can sue . We can make no long term supply agreements on the basis a gun boat might be sent . For this reason trade guarantee exists to promote trade in Africa .It is decidedly imperfectPatterns of trust and cooperation that evolve over time are of great value .Often these will be encoded , for example into Common Law (now under assault ) .
Rules Unknown To Players
Real rules are quick silver and complex , grounded in a civilisation and will only be disrupted by the clumsy state .The participants do not see the global picture , the state almost nothing .The real world of transactions is a far more heterogeneously human and activity than I recognise here. In the setting of Premium (In Insurance ) the extent of cock up illogic and skulduggery of all sorts is legion . Even if over time the cycle le of soft and hard markets oscillates to those in it the markets imperfections are blindingly obvious . As a Sacred cow it is a non contender
The Honesty problem.
Honesty is encouraged as reputation is valuable but first cheat is an ever present danger and all markets struggle with the need for freedom and trust as essential prerequisites . The state may have role here but it is currently unaware of its limitated ability to perform such a role hence the parasitical mess that is the FSANote the state and its familiars tend to corruption and have only a tangential interest in any supposed ‘good’ anyway
Long Term and Short term.
Rewards decisions and effect s may take place over very differing time periods. Take education . Given what I have said about the bushy variousness of the market while it may well be that given a demand there will eventually be a supply there may be numerous reasons why that supply takes years to arrive. We would not be wise then to leave the supply of adequate education to the unaided market
Financial Infra Structure
Insurance is essential for any new productive activity but capacity may come and go and in undeveloped economies the fluctuations in price may be impossible to trade in. For this reason tariffs are often set in developing economies so as to ensure a supply . This is expensive and ultimately far far less efficient than a market but the need for certainty over along term trumps cheap
Time Lags
Eventually it is not at all unlikely that rules will evolve that prevent the market acting in such a way as to destroy its customers but that may not be in time. Here the state may usefully apply rough rules acting as a guardian of the long term . If it does so without the advice of those in the business though it will very likely get it wrong as Brown has so spectacularly shown .Its actions will always have unpredicted and harmful effects as well as good
Summary
Capitalism has increased living standards , tended to promote trust and civil relations and eventually distributed reward more fairly . Reaching this point may take a very long time indeed though ( to long by centuries for blacks slaving on Sugar Plantations ) and it was obviously right for the state to intervene in early industrial society . I see a role for the state as described but there is an over riding problem in that bureaucracies will seek to protect and expand their power .They are far harder to remove than suppliers and buyers in a market. The default positioning therefore is to distrust any argument for more state control . We certainly need less now