Market Economy - Part 2

Past, Present, and Future Markets

Past
In all of the market economies prior to capitalism markets were embedded in society and existed primarily to serve the needs of those societies. It was shown by the preeminent economist Karl Polanyi that in those previous economic systems market relations were less important that social relations, reciprocity, and community obligations. Whenever markets did attempt to rise to power then society pushed back. Such push-back is evident from a 14th century document in which profitable merchants were described as “Man-haters” who were opposed to the common good.

Present
In capitalism private investment (i.e. capital) mediated through the financial market utilizes the labor and retail markets to increase itself. This increase is a necessity because capital is by its very nature expansive. When allied with the power of the State then capital successfully forces the disembedding and ascension of market relations from society resulting in capital achieving and maintaining social dominance. Society and culture now must serve the market.

Future
Since capital enters the economy through the financial market in a post-capitalist economy the financial market would be replaced with non-capital mechanisms of investment. This absence of capital would not mean the end of the other markets. Markets, such as labor and retail, would continue to exist but would evolve to take on new roles and functions in society.

There’s much we can’t know about the evolution of markets in a future economic democracy. But one thing we can say with confidence is that with the absence of capital then we should expect to see a re-embedding of markets into society. Markets would return to their historic and natural role of serving society rather than forcing society to service them.

Veterans and the Health Care Crisis

Since today is Veteran’s Day I decided to delay posting part 2 on market economies but to instead this week address how large numbers of veterans, when they return from serving their country, are denied access to basic health care.

In a recent study, "Lack of Health Coverage Among U.S. Veterans from 1987 to 2004", it was revealed that as of 2004 nearly 1.8 million veterans lacked health care coverage. When one included the members of their households then the numbers without health care coverage shot up to 3.8 million.

This lack of health care coverage for veterans and their families is symptomatic of a larger problem in our society. According to the study, "Like other uninsured adults, most uninsured veterans are low- to middle-income workers, who may be too poor to afford private coverage but are not poor enough to qualify for Medicaid or free VA care." In other words, the problem of the lack of health care coverage for our veterans is the same as those found in the general public.

There are “third way” solutions to providing health care coverage to veterans and indeed to all Americans. Those solutions will be addressed in future postings. At this time it is sufficient to say that high-quality, affordable health care is a fundamental human right. Our “leaders” in Washington need to wake up and realize that we are not consumers of health care anymore than we are consumers of the air that we breathe. Without both we die.

Market Economy - Part 1

A Definition & Some History
In a comment to my posting, “Economic Democracy: The Basics”, a reader stated that he thought private financing was a basic feature of market economies. I wrote in my reply that I would later post details as to why that assumption is wrong.

A definition is necessary. By “market economy” I mean an economy where goods and services are provided via a market exchange rather than either communal sharing or State distribution.

Market economies were around long before capitalism.

All the way back to ancient Rome there were merchants (Mercatores) as well as markets, such as the famous Forum. It was primarily through these markets and from these merchants that Romans acquired their goods using Imperial coinage for money. But this market economy didn’t operate based on private investment. Though there were financiers (Negotiators) the Roman economy was based on slaves who provided largely agricultural labor, upon trade with other cultures, and on draining the conquered people of their resources.

During the Middle Ages there were also market economies. Goods were sold in the markets of the towns and villages as well as at the annual Fairs. Yet the economy of the Middle Ages wasn’t based on private investment as we know it but largely upon tribute paid vertically between classes and individuals, which were decided by inherited property and social ranking (fief).

In capitalism goods and services are still sold via the market but now there is also a financial market in which shares of economic ownership are bought and sold (i.e. private investment). This financial market dominates capitalism in the way slavery dominated Rome and fief dominated the Middle Ages. Due to its central role in capitalism it gives the appearance that it is the defining feature of market economies. It is upon a closer look that one find’s that it’s clearly not.

While private investment is an essential feature of capitalism it is not an essential feature of market economies.

Coming Soon: Past, Present, and Future Markets