July 31, 2010
Meet The Markets
We hear a lot about The Markets. Nick Robinson’s Five Day’s That Changed Britain recently invoked these spectral figures. Apparently they hovered over Greece in early May, threatening to turn on “rudderless Britain” if a coalition deal wasn’t quickly secured. More widely, a key part of the Tory cuts narrative has is that immediate and severe fiscal retrenchment is necessary or The Markets will punish us.
Given the frequency of such rhetoric you’d be forgiven for forgetting that “The Markets” refers to the uncoordinated collective actions of many thousands of unconnected individuals, working within enormous and extremely complicated financial sectors across the globe. Uncoordinated actions, moreover, which are buffeted about by millions of constantly-changing factors, which themselves have different meanings and imperatives for different agents in different situations.
On the contrary you might understandably come to think of “The Markets” as, in effect, people. As conscious, reflective, decision-making agents, taking stock of situations and acting rationally to pursue specifically chosen ends and means. (Note: some economists argue that markets act “rationally” in the sense of efficiently processing information and moving in a calibrated direction accordingly. This may or may not be completely true, but either way it’s different to what I’m getting at, which is the idea of conscious, reflective, deliberating agents making decisions to act in certain ways).
Indeed what we appear to have ended up with is a popular conception – amongst media pundits, politicians and voters – of markets as persons. This interests me, for these reasons.
Firstly, the idea of “fictional persons” has been explored at length by historian and political theorist Quentin Skinner. Skinner claims that Thomas Hobbes originally conceived of the State as a “person by fiction” 350 years ago, a conception that deeply influences how we think today. The “fictional person” of a State stands distinct from the specific agents of government. It takes on a personhood of its own, and is able to act and bring about events in ways that are highly analogous to the actions of a real (physical, human) person. Think, for example, of when we say “the state imprisoned him for 47 years”, or “the state’s defences were mobilised to repulse attackers”.
As a consequence we operate with an extremely useful fiction (that perhaps even ceases to be wholly fictional when enough people believe in it). An entity which deliberates, chooses and acts – but exists over-and-above its constituent parts. Something that pre-dates and outlives governmental administrations; that is more than the mere sum of politicians, the judiciary, the army and police.
Indeed it is hard to imagine the modern world without such useful fictions. Permanent presences across the globe, fighting wars, meeting at the UN, signing trade agreements and all the rest. Fictions can be extremely useful. If believed in by enough people, they can do crucial work in ordering societies and making them function.
Secondly, the process of personation lends The Markets an air not just of consciousness, but also of conscientiousness. That The Markets will respond favourably to the right incentives, the right actions – or, if you like, the right offerings. By making The Markets into (fictional) persons, a space is opened up in which to treat them as, in effect, capricious gods. The ancient Greeks and Romans followed systems of polytheism within which deities had (eerily human) character traits, and especially flaws. This allowed the ancients to construct world-views within which it made sense to try and appease certain deities. By pleasing them or attempting to pander to their prejudices – for example, by making the right sacrifices. Anybody who reads the Old Testament will know that the Judeo-Christian tradition did not leave this view of sacrifice behind. Apparently, we carry it with us still.
Which raises the question: by conceiving of The Markets as fictional persons are we creating mythical entities which we seek to appease by dramatic fiscal austerity? Are we telling ourselves a collective fairy story that although the gods that decide our economic fates are capricious, they can nevertheless be bargained with?
Thirdly, we must ask the Foucauldian question: if the above musings have any truth to them, who is this process of fictionalised personation benefiting? Which power-interests are being served?
Let’s hypothesise. Imagine you’re a right-wing administration determined to slash the state for ideological purposes, or a right-wing media outlet disposed to promote said state-slashing. How useful would the notion of such deified but capricious entities be – especially if such entities could allegedly be placated only by the kind of fiscal austerity you already favour? Thought so.
Tim Worstall said,
July 31, 2010 at 8:26 am
Quite.
And one can observe very much the same process from the other side. “The People” will not accept, or do not want, cuts for example. Said People is just as much a fictional person being utilised for the political rhetoric.
Judging from the various comment boards the reaction of individuals among the People to the cuts in housing benefit was most unlike what The People are supposed to be saying.
What? How Much? £100,000 a year? HB? The new limit is only £20,400? But that’s more than I earn!
Paul Sagar said,
July 31, 2010 at 10:05 am
Tim, good point.
paulinlancs said,
July 31, 2010 at 10:39 am
The ‘is it?’ isn’t it?’ nature of this piece makes me want to throw the computer at the wall, for no other reason than you’re too clever by half.
Anyway, when you get to the point where markets becomes god-like and must receive sacrifice, and who that benefits I get you.
Anyway, you say ‘you’d be forgiven for forgetting that “The Markets” refers to the uncoordinated collective actions of many thousands of unconnected individuals, working within enormous and extremely complicated financial sectors across the globe.’
Execpet that they’re not unco-ordinated in the jumbly conscious-decision making way you set out (at least I think you do). As John Austers (Lex from the FT) sets out as his principal thesis in The Fearful Rise of the Markets, a key reason for bubbles is that index-linked funds drive most investment decisions, including those made by supposedly active fund managers, in the same direction.
So even people in the markets treat, albeit unconsciously, the markets as gods.
If the markets bow to the markets, my head hurts, but are we moving from the Foucauldian view of fictional person as means of oppression to the Baudrillardian oppression of fictional person as part of a virtual reality? Or something.
Paul Sagar said,
July 31, 2010 at 12:38 pm
Paul, your hostility seems somewhat unwarranted (and uncharacterstic).
I must say I’m not entirely sure what to say in reply as you seem to be more preoccupied with shouting at me than anything else….
Paul Sagar said,
July 31, 2010 at 12:40 pm
I mean Paul, over at TCF you frequently discuss Kuhneian views of pre-science, Gramscian hegemony and post-Keynesian moderny monetary theory. So to attack me for citing abstract thinkers and being “too clever by half” appears very odd indeed.
Leo said,
July 31, 2010 at 3:52 pm
Given my track record on book recommendations here i’m tentative about making this one, but i just finished reading Ernesto Laclau’s really interesting ‘On Populist Reason’, which is in large part about how discursive entities like ‘the people’ come to be formulated, thought of and used. I’d recommend it both as a study of populism and as an example of what a book-length dissection of this idea of fictive personification can reveal about the way politics works. I’d be very interested to read a similar treatment of the specific concept of ‘the markets’ – one that looks at how it is used, who has shaped it, etc.; so if anyone knows of anything like that i’d be interested to hear about it.
Richard said,
July 31, 2010 at 3:58 pm
I thought when people were referring to the markets they actually meant the financial markets. It’s a sort of lazy shorthand.
Agog said,
July 31, 2010 at 4:50 pm
Funny, I always thought ‘the markets’ was generally a lazy shorthand for ‘the rich.’ After all the majority of assets that constitute ‘the markets’ are owned by the very wealthiest people. So when someone talks about ‘the markets’ demanding something or other, what they mean is thing demanded is in the financial interest of the rich.
Just me I guess.
Tom Freeman said,
July 31, 2010 at 6:12 pm
This reminds me of something somebody else once said.
“They are casting their problems on the market and who is the market? There is no such thing! There are individual traders and investors and there are businesses, and no government can do anything except through businesses, and businesses look to themselves first.”
Dan said,
July 31, 2010 at 9:28 pm
Thirdly, we must ask the Foucauldian question: if the above musings have any truth to them, who is this process of fictionalised personation benefiting? Which power-interests are being served?
Why does the explanation have to be of this form? It seems far more plausible that it comes down to the common cognitive bias tending towards the anthropomorphization of powerful forces affecting our lives – something humans have done for virtually our entire history.
Paul Sagar said,
July 31, 2010 at 10:47 pm
Dan, the obvious answer is because it’s interesting to ask the further question about power interests, not least because it might have important social consequences.
Mark said,
August 1, 2010 at 1:23 am
“After all the majority of assets that constitute ‘the markets’ are owned by the very wealthiest people”
If we lived in a society in which every person started with exactly the same amount of wealth, earned exactly the same amount, saved the same amount each year, earned the same return on their investment and lived to the same age, we’d still be in a situation where the top 10% owned 40% of wealth and the top 50, 90%.
It’s at least partly due to the effects of saving and compound interest – if public health care is effective it’s liable to make wealth inequality worse.
Instead of the fictional person of “the wealthy” – (aren’t they scary….) we should use the more cuddly and helpful term – “the elderly”.
Agog said,
August 1, 2010 at 8:29 am
Mark,
Oh right. So when people talk about the need for ‘market-friendly’ policy they are talking about addressing the needs of elderly women in Afghanistan and Burundi? And not pushy young high-gross-worth business people from Chicago and Singapore? Hmmm.
Peter said,
August 1, 2010 at 2:19 pm
That’s the funniest thing I’ve ever read on the entire internet.
Paul said,
August 1, 2010 at 3:54 pm
You took my response as hostile? Hostility never entered my mind. The first para is nothing more than self-effacing irony, although it should be seen in the context of the last sentence; only people like me, who pretend to clever without really being, mention Baudrillard nowadays.
Perhaps self-effacing irony doesn’t travel well on the internet, but it was supposed to be an admission that I simply didn’t follow the rhetorical twists and turn in your OP, though I got the end bit about markets as deity. Sorry, if it came over wrong.
My substantive point, that we underestimate how actively funds are managed, and that markets are often on a form of auto-pilot, still stands.
Paul Sagar said,
August 2, 2010 at 12:09 am
Paul; a case of lost-in-internet-translation, I fear!
Not the first time, and surely not the last time, I suspect.
No hard feelings.
Labour’s response to the deficit could look like this | Liberal Conspiracy said,
August 2, 2010 at 9:16 am
[...] be fully monetized, as inflation might then bite. But it does mean we shouldn’t kowtow to the capricious gods of the [...]