[9 September 2009]
PopMatters General Features Editor
In the past few posts I have been trying to get at ways in which the fantasy of perfect markets can be deployed ideologically, used normatively to shape people’s thinking and aspirations, how we assess how reasonable our behavior is when we attempt to be “objective”. Here are some more propositions:
1. If the laws assume a particular institution, subjects will conform their thinking to accommodate the institution in that mandated form.
2. If attempts to legislate a rational market into existence occurs, to simplify governing and entrench advantages already embedded in the status quo, then people must be forced to become homo economicus, must habitually restrict self-knowledge to cost-benefit analysis.
3. Perfect markets imply an ongoing process of equilibria being found. A chief way of trying to legislate perfect markets into existence is to try to force equilibrium, mandate it as a norm.
4. Market rationality is not merely the presumption of calm, omnipotent calculation in an instant. It also incorporates the assumption that we are always arbitraging as equilibrium are coalescing—this activity is presumed to fashion the equilibrium, but only after certain already-favored parties have already taken advantage of the imbalance in the process. This exploitation can then be popularly conceived as justice, as inevitable, as harmful to impede.
5. In an economy with alleged, presumed or mandated perfect markets, timing is what is always at stake. We exploits the discrepencies on the way to equilibrium, and who suffers the equilibrium as fait accompli. This is matter of how information and the opportunity to act on it is distributed. The advantages of timing—the arbitrage opportunity—tends to disappear from the macro view, hiding any exploitation or injustice.
6. All of this is an elaboration of the observation that the useful fiction of efficient markets can be used as an ideological tool to browbeat people and curtail freedoms, and also to hide actual imperfections pertaining to timing. It’s an ex post facto alibi for unfair outcomes.