Saturday, January 29, 2011

Wallison on "The Market"

 William K. Black does a superb job of deconstructing the work of Peter Wallison and his almost childlike faith in "the market," never better expressed in this line:
If the business of banking is inherently unstable, it would long ago have been supplanted by a stable structure that performs the same functions without instability.
Hoo boy.  If there is a problem, the market would have solved it.  I can't top Black in his particular explanation of why this remark is so goofy, but I would generalize and make it a bit more abstract.  The point is that there is not now and never has been such a thing as the market.  Markets (like governments) are cultural artifacts, created out by humans out of a whole range of possibilities some half-forgotten, others half-remembered,  most lost in a substrate of inarticulate presumption invisible even--or most of all--to the person who relies on them.

There amay have been a time when we were so culturally isolated that we couldn't fully comprehend the point. We've way  outgrown that kind of naivete now.  We have the work of, e.g.,Milhaupt and Pistor greart range of meanings of the term "corporation;" Ian  Bremmer, on how infinitely various are the definitions of the public-private divide; Dani Rodrik on the circuitous and varied paths to "development"--how almost none honors the standard model and how most can be best described as a matter of accident.  Oh, and yes, we have our own Hyman Minsky to show us how our own model of a "market" m ay itself harbor the seeds of its own destruction.  To erect "the market" as a talisman in a world of such variety and complexity simply cannot be taken seriously; it has far less to do with adult discourse than with a infantile invocation of magic.

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