Exploring the Concept of 'the Market': Combining History of Ideas and Historiographical Approaches

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Public discourse surrounding the market typically forwards the image of market mechanisms as some sort of disciplinary force. Such mechanisms are thus given a will of their own and are widely believed to have the capacity to act upon that will to enforce outcomes which otherwise would not have arisen. The populist phrase 'you can't buck the market' is the perfect illustration of this way of thinking, and it feeds perceptions of powerlessness insofar as people are deemed to have lost control of their own destiny in the face of abstract but controlling market logic. Yet behind these pronouncements of the omniscience of market mechanisms there lie any number of analytical assumptions which tend not to be reflected upon at all. We are told that the market is able to assert particular behavioural priorities onto us, but typically we are not told why. The power of the image of a disciplinary force is usually enough on its own to render believable the message contained within the image about the dangers of rebelling.The most significant of the covert assumptions underpinning such social and political passivity is that markets are able automatically to coordinate individual economic activity in pursuit of the best possible outcome. In technical language this is the presumption that they 'clear' perfectly if left alone to perform their task of matching supply faultlessly with demand. This is how the populist conception accounts for the fact of market coordination, through which myriad instances of everyday economic decision-making cohere into a functioning economic system. Unfortunately, real-world markets have a tendency to depart from the accompanying image of allocative efficiency, as was demonstrated only too vividly by the colossal allocation failures which occurred in and around the global financial crisis. Such real-world difficulties are almost certainly related to the fact that at no point in their subject field's history have economists offered an unequivocally economic solution to the issue of market coordination: solutions couched in logical and mathematical terms, yes; solutions couched in genuine economic terms, no. The so-called market coordination problem is described specifically as a 'problem' for good reason, then.My project seeks to reveal some of the ways in which the ongoing inability to resolve the market coordination problem has been rendered increasingly unimportant for academic economists. Professional developments have occurred within both the methodology and pedagogy of economics which have allowed that problem to be almost entirely sidestepped. Methodologically, it is possible to identify a number of turning points from the 1820s to the 1930s which increasingly moved economics to become a 'science of choice', thus eliminating interest in the effects of the broader market environment in which individuals are called upon to choose. 'The market', as a substantive phenomenon of concrete everyday relationships of buying and selling, has consequently all but disappeared from economics research, albeit leaving economists susceptible to the accusation of being out-of-touch in moments of acute market distress. Pedagogically, from the 1870s onwards, students have learned to understand the fundamental economic essence of individual choice through exposure to examples drawn from a hypothetical Robinson Crusoe economy. No coordination is necessary in a one-person desert island setting, which turns the question of how markets work into a mathematically-tractable exercise in logic. Neither are moments of market breakdown ever allowed to occur, because the underlying logic drawn from the surrounding equations is always able to assert itself. This makes it relatively easy to understand why many commentators have asked for a new type of economics to be developed in the wake of the global financial crisis, one which breaks fundamentally with the mathematical framework in which the Robinson character is forced to live.