Radical Markets: Solutions for a Gilded Age?
Jul 15, 2018Many people think that growing inequality, the rise of populism and nativism, and the decay of democratic institutions all have the same cause—the overreach of markets.
Radical Ideas about Markets
13 July 2018
Is the market the key to freedom and prosperity? Don’t markets necessarily lead to economic inequality? Is it possible to make markets work better for everyone? This week we’re exploring Radical Markets for a New Gilded Age.
And we do live in a gilded age, with rampant inequality, the rich getting richer, wages stagnating for the rest. So our question for today is whether markets—so called radical markets—can cure the ills of this new gilded age.
But how could markets possibly be the cure if markets are what got us in this mess? Markets may have given us everything from iPhones and autos to skyscrapers and airlines, but they’ve also concentrated wealth in the hands of the few—to say nothing of pollution and climate change. So we don’t want to overly romanticize markets.
But do we want the government in control? Many of us would take the decentralized power of free markets over the concentrated power of a command economy any day.
Even so, economic power is still highly concentrated today—but instead of being concentrated in the hands of the state, it’s concentrated in the hands of huge multinational corporations. They’re like the robber barons of old except they control everything—including our personal information.
But is the fact that there’s too much power in the hands of corporations really the fault of the market? You could argue that we rely on the market way too much. But what if maybe we don’t rely on markets nearly enough? What if giving more power to the market was in fact the answer to the concentration of economic power?
You might just reply, “Break up the corporations! We’ll get more competition and less concentration of wealth!” But that response doesn’t appreciate the true logic of capitalism and the fact that competition necessarily leads to monopolies. After all, capitalism is all about economic efficiency, and monopolies are, if nothing else, ruthlessly efficient.
Of course monopolies also mean less competition, higher prices, and less choice. So how is that “efficient?” For example, before the Depression there were over a hundred American automobile companies. The market decided it could produce more cars more cheaply with just three.
That’s not to say that unfettered markets are all we need; we also need things like antitrust laws. Does that sound like trying to have our market cake and eat it too? If that means having markets that are lightly regulated, well then… guilty as charged.
So it’s clearly more complicated than just letting unfettered markets do their thing. But let’s take this a little bit farther. Think about labor unions. Without objecting to them on principle, we could view them as a form of monopoly—one that helps to restrain concentrated corporate power. In other words, labor unions are yet another important non-market force.
But let’s not lose sight of the fundamental point: at bottom, either the market is going to allocate things or the government is going to do it. Given the choice between the two, many would take the market over the government almost any day.
Of course, governments can focus on fairness, justice, and the common good; markets don’t care about that. Adam Smith’s invisible hand is a cruel master. Consider how automation has displaced unskilled labor and decimated whole communities. Or consider the gig economy, which looks like it lets everyone work as much as they want whenever they want but actually turns out atomized workers struggling to make a living.
Sound like we need some radical solutions, which is what we’ll ask our guest, Glen Weyl, co-author of Radical Markets: Uprooting Capitalism and Democracy for a Just Society.
Photo by Xavi Cabrera on Unsplash
Comments (5)
Harold G. Neuman
Sunday, May 2, 2021 -- 1:34 PM
The first five lines of yourThe first five lines of your post are mutually confusing..The gilded age is not, Your other questions are self-defeating. None of your opening remarks resemble reality, in other than a postmodern, abstract sense.. Which is just the problem.
We cannot address reality with abstraction. There was never a serious intention to do otherwise. I don't know how there could be another way of looking at this, short of some surreal view-, maybe,Nagel's View From,Nowhere. But, that was a view from detachment, different from abstraction. Yes. So, where are we from there? I don't know...
Harold G. Neuman
Sunday, May 2, 2021 -- 3:03 PM
I have commented on economicsI have commented on economics and capitalism. Said capitalism is hungry. Getting more so. Therefore, if capitalism only gets hungrier, would it not follow that markets go more radical? Back to the law of diminishing returns: When traditional ways and means of marketing grow limp, must the marketers not get more radical? A bit like addictions, huh? Tolerance of the drug requires increasing dosage to obtain an acceptable high. This is neither surorising nor disappointing. It merely IS. Nothing unusual. Just emergence.
Harold G. Neuman
Monday, May 3, 2021 -- 1:11 PM
So, there must be symbolismSo, there must be symbolism and/ or metaphor attending your picture of a shopping cart in a parking garage? I don't get it. Is THIS mass/popular/modern culture or is it that silly notion of post-modernism? Are you philosophers or what?
Look,(as Joe might say) i can get to what you are getting at. Have thought about for several decades. Wasn't until I felt strongly enough about things; at least imagined those were going south, that I spoke up. OK. Joe is older than me. Neither of us are brainiacs when it comes to modern philosophy. We're maybe more interested in what makes semse.
Nothing wrong with that. Ask Sam Harris...
Dwells
Friday, May 7, 2021 -- 3:52 PM
I used to think that “optionsI used to think that “options trading” was about as radical as one could get. Nowadays it must be something like “globalism” and/or bit coins. Back in the ‘70s I shared a rooming house with Mike. He lived frugally for a time while working for the railway accumulating a nest egg of a few 1000s Canadian loonies. Full disclosure: with a college major in Psych, I have a bias towards behavioral observation. I watch how people act and react.
Mike started playing the market. There was a place where he could trade stocks right in the neighborhood where we lived. He would sit and watch the market ticker on an overhead screen that spanned the long back wall of the trading room. After hours, the screen displayed, “The quick brown fox jumps over the lazy dog”.
Mike sought cheap stocks that were trading and moving up/down. He thought he could cash in on the fluctuations and line his pockets. This was an abstraction with the same allure as a pyramid scheme or roulette. Sadly, it didn’t work out for him.
A decade later I met Gary. His abstraction of choice was “options trading”. On road trips Gary told me how it was that he could make a tidy profit. I never followed his explanations, probably because I am a skeptic and an anti-gambler. However, Gary was good at options trading. Later, when I spoke to him about these shenanigans, my Dad’s reaction was the word, “Greed.”
The market is supposed to be a way to share in the accumulation of wealth, but I would never try to do this on my own. As Tommy Smothers used to say, “There are Pumas down in those crevasses.” Using that same metaphor my financial advisor is my personal big game hunter.
I would not trust my government to fiddle with “radical markets” or try to make them even more radical. It sounds like a get rich quick scheme and (yes Dad) “greed”. I’ll stay clear of bit coins, too. Gambling addiction is a terrible thing. I would not want my country or society to risk our collective resources in some market boondoggle. In describing my two examples I used the word: abstraction. Humans are veritable fountains of abstraction. However, our abstractions have unpredictable emergent properties. Hence my reference to gambling. Just saying.
Countries are in the markets much in the same way as I am—via my trusted advisor—seeking to maintain capital with modest returns. My advisor has hundreds of clients like me, and he has done a good job for us. In dealing with markets, I think the proper stance ought to be “conservative” rather than “radical”.
I found a brief, helpful, and quite positive summary of the book—prompting the following additional remarks:
1) I am reminded of the—almost as radical—electoral reform abstractions such as proportional representation. I expect the reaction would entail as much foot-dragging, too. The first-past-the-post abstraction holds us tightly in its grip.
2) Weren’t we still fighting over 18th century market regulation ideas—to combat things like robber barons—in the early 20th century?
3) Often our collective response takes effect well after the disasters are upon us. Consider our response to the COVID19. In another century, all the pandemic preparedness we are creating now will be gone again, won’t it?
4) One of these times we will wait just a little too long. Unless… we discover another way to frame and address such problems. The attachment we have for prior abstractions delays the implementation of new ones. We must deal with that before we go extinct.
Harold G. Neuman
Thursday, May 13, 2021 -- 12:09 PM
Once upon a time, in orOnce upon a time, in or around 1986, I tried options trading. Had no good reason for this. After losing around 4,000 dollars, I realized it was no more than a scam. Nothing ventured. It is a scam, inasmuch as one gambles with one's money. So, my loss was someone else' gain. Once bitten, twice shy.