"Market": An Essay by Jessica Whyte (Keywords: Neoliberalism; Capitalism; Democracy; Freedom; Peace)

From The Philosopher, vol. 110, no. 2 ("The New Basics: Society").

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Back in 2007, the former head of the US Federal Reserve, Alan Greenspan was asked who he would vote for in the upcoming US Presidential election. Greenspan responded that it made little difference who the next president was. “The world,” he told the Swiss newspaper Zürcher Tages-Anzeiger, “is governed by market forces.” We have all become used to the personification of markets, which react with fear, trepidation, or enthusiasm to the social and economic events of the day. But there was more at stake in Greenspan’s response than a metaphorical use of political language to describe the market. To the man who was once the world’s most powerful banker, it was self-evident that political choices were now constrained by the superior force of market relations. Greenspan’s comment, then, requires us to rethink common understandings of the market. What is a market if market forces now govern us? What is a market if markets can over-ride the democratic political process and determine the priorities to which nations must conform?

What is a market if markets can over-ride the democratic political process and determine the priorities to which nations must conform?

It has become a commonplace that, after decades of neoliberal restructuring, politics has been hollowed out and political decisions replaced by market choices. Despite pervasive myths of spontaneous order, there is nothing natural about contemporary market relations. Markets are shaped by political decisions, laws, regulations, and by the prevailing moral economy in which they operate. Contemporary markets, not least the world market, have been re-constructed under the influence of the decades-long hegemony of neoliberal ideas. This is not to say that the market, or individual markets, conforms to idealised neoliberal understandings of market relations, but it does mean that it is worth examining how neoliberal thinkers conceptualized the nature and the role of markets.

When the Austrian economist and philosopher Friedrich Hayek brought together a group of European and North American liberals to re-found liberalism in the wake of the Second World War, he described their task as the creation of a “competitive order”. Neoliberalism was a political and intellectual project that sought to install the competitive market as the central institution of social life. Instead of state welfare, government regulation of prices, and subsidies to industry, they argued that all economic actors (individuals or businesses) should be forced to compete with each other for their very survival – and should keep the spoils when they were victorious and bear the costs when they lost. Neoliberals stressed the need to break with the naïve naturalism and fatalism of laissez-faire – the doctrine that contended that the economy should simply be left alone – and to mobilise the state to create a moral, political, and legal order conducive to market relations. Despite this critique of market naturalism, which was among the most distinctive commitments of the early neoliberalism, the neoliberal age has seen the establishment of the market as a second-nature – as the inescapable and untouchable horizon of both social organization and political imagination.

When he first published his masterful excavation of the central ideological concepts of his time, Keywords, Raymond Williams did not include an entry for market. Writing on the cusp of the neoliberal counter-revolution, the market seems not to have struck him as sufficiently central to cultural life to deserve detailed examination. In the decades that followed, however, ever more extensive areas of social life – from the family to the university to the “natural” environment to government itself – were subjected to market logics, while market languages of cost-benefit, efficiency, and investment saturated and then displaced political languages.

There is more to this relatively new centrality of the market than the rise of economics as a master-discipline that views all of life through its own economic categories. Neoliberal thinkers never viewed the market as a narrowly economic technology. For them, the market was not simply a mechanism for the efficient allocation of goods and services, as neo-classical economics would suggest. Nor was a market simply, in the definition provided by the Oxford Dictionary of Economics, “a place or institution in which buyers and sellers of a good or asset meet”. Rather, neoliberal thinkers recognized that markets are central social institutions that knit together individuals into distinctive market societies and have significant implications for how people understand and enact their mutual relations. Their goal was to promote markets at the expense of the political process: for neoliberal thinkers it should be the market, not politics, that binds individuals together, allows us to coordinate our actions, and determines how society’s resources are distributed and used.

For neoliberal thinkers, markets are mechanisms for enabling harmonious, mutually-beneficial, social relations between free and equal individuals.

In a neoliberal society, markets thus take on many of the qualities usually associated with the political process. For neoliberal thinkers, markets – unlike politics, which is supposedly marked by coercion and violent conflicts between friends and enemies – are mechanisms for enabling harmonious, mutually-beneficial, social relations between free and equal individuals. Yet, as Lisa Herzog notes in Inventing the Market, unlike the political institutions associated with the modern state, political philosophers have been slow to subject the market to normative evaluation. Indeed, markets are often treated as the unproblematic background of contemporary social life, with few implications for the political questions of democratic legitimacy, individual and collective freedom, or the conditions of social peace. As market competition becomes a norm that permeates all of life, shaping societies and subjectivities, it is imperative to scrutinize this reframing of political languages in market terms. Here, I focus on three key terms that are central to neoliberal defences of the market: democracy, freedom, and peace.

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As early as 1905, the Austrian School economist Frank A. Fetter declared in his Principles of Economics that “the market is a democracy where every penny gives a right to vote.” Fetter’s argument for the democratic credentials of the market rested on the claim that the consequences of each purchase extend far beyond the individual consumer to direct industry as a whole. Fetter made the individual consumer responsible for everything from employment rates to the scale of European proselytization and colonization. The consumer “decides to buy a book, and more type and paper are made, and more printers are employed,” he wrote; “he subscribes to foreign missions and Christian workers penetrate farther into Africa.”

Fetter’s analogy, which construed consumption as a form of voting, became a staple of neoliberal discourse in the century that followed, and one that united the diverse strands of the neoliberal movement. In The Social Crisis of our Times, the German neoliberal, Wilhelm Roepke re-signified Ernest Renan’s definition of a nation, describing the market economy as “a ‘plébiscite de tous les jours,’ (a daily plebiscite) where every monetary unit spent by the consumer represents a ballot”. The Chicago School economist Milton Friedman used a typically trivial example in Capitalism and Freedom, arguing that, on the market, “each man can take a vote, as it were, for the colour of tie he wants and get it” without having to submit to the preference of the majority.

Of course, “each man” cannot have the wind farm or coal-fired power station he wants; large-scale decisions about the use of resources and the impact of such use on the environment are not matters for individual choice. And, as even the neoliberal thinkers realised, the distribution of “ballots” in the market-place is deeply unequal, giving those with wealth far more say than those without. It is not the preferences of individuals that direct industry in this model, but only those preferences that are backed by money; when the market replaces the democratic processes, those without money will have little influence on their society. As the utopia of consumer democracy was used to delegitimize political democracy, large sections of the world’s population have been deprived of any say in the use of resources, including rapidly-depleting natural resources.

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Throughout the twentieth century, the neoliberal campaign against socialism, social democracy, and economic planning was fought, to a large extent, on the terrain of freedom. This much is clear in the titles of the books of two of the neoliberal movement’s most prominent figures: Friedrich Hayek’s Law, Legislation and Liberty and The Constitution of Liberty, and Milton Friedman’s Capitalism and Freedom and (with Rose Director Friedman) Free to Choose. The neoliberal advocacy of freedom was intimately tied to a myth of market competition as offering liberation from the paternalism and dependence of the welfare state and the looming totalitarianism of economic planning.

It is no small irony that a neoliberal movement that emerged as a celebration of individual freedom would find its slogan in Margaret Thatcher’s now infamous words: “there is no alternative.” Neoliberal advocacy of freedom has always been accompanied by an anxiety that freedom must be kept within strict margins if it is not to threaten the market order. Hence, neoliberal freedom ultimately becomes indistinguishable from submission to the impersonal force of the market. Hayek is famous for his claim that the market allows individuals to utilize dispersed, tacit knowledge that no central planner could access, and for reviving the Scottish Enlightenment contention that the market is a “spontaneous order” that is, in the words he borrowed from Adam Ferguson, “the result of human action but not of human design.”

Neoliberal advocacy of freedom has always been accompanied by an anxiety that freedom must be kept within strict margins if it is not to threaten the market order.

In both cases, however, despite his paeans to freedom, Hayek made clear that the individual is never free to refuse the demands of the market. In his account of knowledge, he made clear that price signals do not actually conveyinformation that would allow us to rationally formulate our plans; they act as proxies for knowledge that guide our actions in conditions of deep ignorance. Just as Greenspan claimed that the world is governed by market forces, Hayek argued that we are governed by prices. The correlate of his account of spontaneous order was thus that we must submit to the market and refrain from attempting to challenge the lot it dispenses to us. It “was men’s submission to the impersonal forces of the market that in the past has made possible the growth of a civilization which without this could not have developed”, he wrote in The Road to Serfdom. A liberalism that came into existence as an explicit critique of the naturalizing myths of nineteenth-century laissez-faire soon came to re-naturalize the market order and insist that its results should be treated as fate.

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Along with democracy and freedom, peace is the other key value that liberal and neoliberal thinkers have often attributed to the market. In his classic 1977 book The Passions and the Interests, Albert Hirschman identified a distinctive argument for the pacifying effects of the market. The thesis, whose most developed form he finds in the work of Baron de Montesquieu, identified commerce as a source of “sweetness, softness, calm and gentleness” (douceur) that could pacify society by mobilizing the interests to countervail the passions. On Hirschman’s telling, it was only in the wake of the French Revolution, the Napoleonic Wars, and the social dislocation of the industrial revolution that this thesis was eclipsed by anxieties that, far from promoting morality and “civilization”, the market was undermining moral virtues and producing widespread anomie, atomization, and class conflict. By the twentieth century, he concluded, no observer could still subscribe to this hopeful vision of the pacifying market.

Despite affirmations of the pacifying role of commerce, coercive market integration has licensed great violence and the destruction of non-market forms of life.

What Hirschman seemed not to appreciate was the extent to which a variant of this justification of capitalism was central to neoliberal thought in the twentieth century. In the inauspicious circumstances of the two world wars, neoliberalism was founded on the argument that a society coordinated through the competitive market would replace the violence and political conflicts of mass politics with voluntary, mutually-beneficial, harmonious social relations. It was for this reason that Hayek described the market as a “catallaxy” – a term he derived from the Greek verb katallatein, which meant both to exchange and to turn from an enemy into a friend. And yet the neoliberals were also clear that pacified market relations require the violent suppression of any challenges to the market. Despite affirmations of the pacifying role of commerce, coercive market integration has licensed great violence and the destruction of non-market forms of life.

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Although, so far, we have been concerned with “markets” or “the market”, most contemporary markets are capitalist markets. The market, under capitalism, is not simply a space in which goods and services are exchanged; it is, for many of the world’s people, an imperative, the very condition of survival. Capitalist societies do not merely use markets; they are regulated by markets, which means that decisions about what is produced, how resources are distributed, how many people are employed and under what conditions, are ultimately driven by the need to maximize profit. Production for the market is not unique to capitalism, but market participants under capitalism are dependent on the market for survival in a way that belies neoliberal celebrations of their freedom and independence.

This is particularly true of labour markets, where the very time of human life and the productive capacities of human beings are sold as commodities. This need to sell one’s labour to survive, as Karl Marx noted, makes the wage-labourer “doubly free” – free of the dependence and immobility that typified feudalism, on the one hand, but free also of any other option than to sell one’s labour on the market. The capitalist market, as the historian Ellen Meiksins Wood has argued, is not so much an opportunity as it is a form of compulsion. Marx himself referred to the “dull compulsion of economic relations” that secures the subjugation of workers. This compulsion bears down not only on individual workers but on all market participants, and, ultimately, on whole nations, which must engage in a competitive struggle to produce efficiently and attract investment – at the expense of labour and environmental conditions, and, ultimately, beyond the reach of the democratic process.

Again, there is nothing natural about such compulsion; it is the result of a historical process of enclosure and expropriation regulated by law and enforced by punitive power. The result of decades of neoliberal restructuring has been to intensify such market dependence by enclosing and privatizing formerly common goods and depriving people of non-market sources of welfare and survival, from housing to hospitals. At the same time, existing market forces have been strengthened by the weakening of those institutions – from trade unions to political parties – that bolstered the bargaining power of workers or intervened into the market in the name of ends not reducible to profit. This has been what is necessary to instil that submission that Hayek saw as the necessary subjective comportment in a market competitive society.

Far from fostering democratic participation, freedom, and peace, the imposition of the competitive market as the regulator of social life has reduced the scope for collective self-determination, subjected us all to an abstract form of compulsion that limits individual and collective freedom, and generated new domestic and international conflicts. Submission to the market as a form of fate is the reality of a world that is, as Greenspan insisted, “governed by market forces”.

Jessica Whyte is Scientia Associate Professor of Philosophy at the University of New South Wales, with a cross-appointment in the Faculty of Law. Her work integrates political philosophy, intellectual history, and political economy to analyse contemporary forms of sovereignty, human rights, humanitarianism and militarism. She is author of Catastrophe and Redemption: The Political Thought of Giorgio Agamben (2013) and The Morals of the Market: Human Rights and the Rise of Neoliberalism (2019).

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From The Philosopher, vol. 110, no. 2 ("The New Basics: Society").

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