That's not to say that I don't think, in its idealistic form, marketisation doesn't necessarily have a decent idea - I rather like the "emergent and liberal improvement" at its heart. But I suspect that any "fair" system needs to take into account all plausible factors in order to be sustainable and achievable. This includes the possible "successes" of markets.
Yeah, if you want to criticise markets you have to understand what they do pretty well, which is :
But you also have to understand their weeknesses :
Alas, I think the "weaknesses" you mention, or at least the last 2, are more "inherent design" acknowleged by the system. I made the link in my head today between free markets and all that artificial evolution I grew up with - isn't the point of a market to basically act as a "selection algorithm", for whatever factors are involved? Isn't the whole point of the freedom to "create" "progress" through inequality? Maybe thinking of it as a "continual revolution" that sustains a continuous scale of power, rather than an extremely polar separation of classes, would be useful.
I see three main "challenges"...
(I was writing this while Graham wrote his - but haven't amended to make any response yet)
My underlying thoughts on markets is that free markets are like an evolutionary process, and as such can be tremendously creative. But evolution can also be enormously cruel and can go for long periods of time when one species is massively (unfairly one might say) dominant over others (e.g. humans today).
So, we use a welfare system and regulation to add a little humane rounding to curb the most cruel side effects of an otherwise creative and self-organising system.
In this way I see 'markets' as the default dynamical system that has always existed. The 'bad' features of markets (like the potential runnaway feed back loops of wealth and power) are just natural laws, that if left untempered by our shared political will would leed towards a cruel, unjust, unequal world.
The really interesting 'trick' that the liberal democracies have achieved is to understand where the default dynamical system must be intervened with to prevent 'dangerous' runaway dynamics (e.g. political power, company monopolies) and where it's OK to let the full wrath of evoluationary dynamics do it's creative (and destructive) worst (e.g. freedom of thought, expression, assocition and movement leeding to such artifacts as the current obsession with Posh and Becks)
The core eternal problem of politics in these liberal democracies is then about how to fine tune the level of intervention. I think the EU have roughly got it right and the US is not quite intervening enough. Also, here I would definitely agree with Graham's point (made on DecentralizedLeft) that a bad feature of the current approach to politics is the excessive focus on money (in particular growth in monetary wealth) as being the yardstick.
However, I wouldn't call this a problem with markets - rather I think it's a political problem (See WhyTheFocusOnGDP ).
The great thing about markets is that they provide distributed decision making processes that are hard to corrupt en masse (?sp?). The key weakness of any centralised approach is that it puts too much decision making power into the hands of a human single point of failure. The 20th centuary is all the evidence needed that this single point fails more often than it succeeds.
Graham / Oli,
I think it's slightly strange to complain about the importance of money in a market. If a market is an information processing system, money is the protocol or carrier of information within the system. It's a bit like saying that computers are OK, except for their obsession with bits. Or better, the internet is OK, but why do we have to worry about packets so much?
I, of course, believe you can fine-tune the way money works and this will subtly change the nature of the market.
Partially. Money is a means, but has now become an end as well, mostly because it's a means. If that makes sense. The difference between money and bits is that money has potential - it's a resource that can be saved and used later, whereas bits are just representation, and don't have any purpose outside of a particular communication instance. I guess you could say that "bandwidth" is a possible power protocol - people in control of more bandwidth have the ability to DoS? those with less - but laws dictate that acruing of such "communication" power is illegal, where as accumulating money is fine, and indeed encouraged. Money as a resource, rather than merely a communication method, is designed into the system (see stock markets, interest rates, et al), and as such it has become more important than anything else, despite the fact that it has very little direct "practical" value. (Tangible money can only be made into paper planes or burnt.) This is what I object to.
A way to keep money as a simple communication method (i.e. "I want this. I think it is worth this much.") without giving it more "funcationality" may solve this partially, I'm not sure. I'm always intrigued by schemes to dissuade the acruement of cash for its potential, such as negative interest, that prompt people to spend rather than save, but have no idea (yet) as to how to make a transition away from the existing model. A process of evolution is needed, rather than reversal, and most people would see negative interest schemes as most certainly negative.
I generally agree with you, except this : The core eternal problem of politics in these liberal democracies is then about how to fine tune the level of intervention.
Right now, it's not about fine-tuning. It's about defending this principle. The US isn't just somewhere which has got the balance a bit wrong. It's at the front of a massive rolling back process, which started in the early 70s and keeps gathering momentum.