The Market System: What It Is, How It Works, and What to Make of It

Christian Century, Oct 10, 2001 by Douglas A. Hicks

The Market System: What It Is, How It Works, and What to Make of It. By Charles E. Lindblom. Yale University Press, 304 pp., $26.00.

CITIES SELL the names of their sports stadiums to the highest corporate bidder. Coke and Pepsi compete for vending machines in schools in order to "brand" young people with their product. Will it be shocking to learn soon that the First Baptist Church has changed its name to the Energizer Baptist Church? (Think of the possible marketing campaigns with the Energizer bunny at Easter.) Perhaps we will first see corporate sponsorship of mission trips. Then corporate-endowed positions for specialized ministries. These possibilities may seem outrageous, but they are surely more thinkable today than they were just ten years ago.

Concerns about the increasing role of the market are widespread. But at the same time the virtues of the market are widely touted and hard to deny. A growing number of people of faith have examined how we spend our money, where and how much we work, whether the economy is just, and how much income is enough. Are there ways to enjoy the benefits of a market system without allowing it to dominate our lives?

Economists are often of limited help on this question, since they hesitate to discuss values. When asked whether they have a theory of the human person, economists usually say that their goal is more limited: they seek only to explain and predict human behavior on the assumption that people strive to maximize their welfare through exchanges in the market. Some economists, of course, see every activity as a marketplace transaction--dating and marriage, political behavior and even religious commitment can be viewed as the pursuing of maximal self-interest.

Charles E. Lindblom and Amartya Sen are refreshing figures in the field, because they are willing to point out the flaws and limits of the market as well as its virtues. Lindblom and Sen extend the tradition of political economists running from Adam Smith to John Kenneth Galbraith. Lindblom's The Market System reads something like a primer in economics--without the supply and demand curves or references to production of "widgets." He stresses that when encountering the term market, the reader should "think society, not economy." It refers to more than a geographic place where persons go to buy and sell products. (Even the Soviet Union had its fair share of these.) Rather, the market system is an institution by which much of society is coordinated according to the interaction of buyers and sellers who exchange scarce goods and services at nonfixed prices.

Lindblom, professor emeritus at Yale, notes that persons who construct a church "with paid labor and bought materials" are engaged in market activity, even if their reason for doing so is to have a place for the expression of religion. In this instance and in others, Lindblom insists we look to the ends or purposes for which the market mechanism is employed. Such questions, of course, make it more urgent for people of faith to engage in moral and theological reflection.

As Lindblom shows, there is a difference between how much of society the market can coordinate and how much it should coordinate. For in stance, most societies have decided that slavery--the buying and selling of human beings--is not acceptable, even though the market mechanism could be employed to such an end. (A tragic exception is the current situation in Sudan. Interestingly, an economic study of the slave trade there would consider whether the effort by some Christians to buy slaves in order to set them free has had the effect of increasing the market price for slaves.) Another potential market is in human organs. Whether organs should be bought and sold in the open market is a moral question; the market mechanism certainly can, and to some extent already does, function to regulate supply and demand of hearts, lungs and kidneys.

A leading Catholic ethicist and economist, Daniel Rush Finn, has pointed out that the boundaries placed on the market are a critical element in "the moral ecology of markets." Working along similar lines, Lindblom contrasts the "maximum domain" of the market system and the "chosen domain" that a society gives to the market. It reminds us that we as citizens should not take the market as given and immutable, but rather that it is our responsibility to shape how it functions and shall not function. Lindblom argues that terms such as "government intervention" or "government interference" miss the point. A system of laws provides the foundations for a market system to work at all.

Further, the government is the largest market participant, buying and selling many important goods and services. It has an important regulative role in guaranteeing workers' and consumers' protection and in guarding against monopolies and collusion. No serious citizen could truly want unregulated markets--we only need to review the recent history of the former Soviet Union to see the chaos that results when a market economy is unconnected to other institutions of a well-ordered democracy.