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do sociologists have anything to say about market design?

Brayden

Over at Organizations and Markets, Peter asks, what is meant by market design? The concept seems like an oxymoron. According to the pure Hayekian view, markets are organic social structures that emerge from the bottom-up. Markets, by definition, don’t need a design. They just happen.

That markets have an underlying social and institutional structure is perhaps the most important idea to come out of economic sociology. The “embeddedness” concept captures our view that markets cannot exist apart from societal relations or the institutional fabric of society. Markets are inseparable from social life. But does this mean that markets are designed? I’m not sure that this is implied.

Some seem to be arguing that markets are an accidental by-product of relationships or institutions. You make a change to the rules of the game and the market takes a new form, but market changes are often unintentional outcomes. I see this as clearly different from the idea that you can design markets to fit particular social needs. In fact, due to our view of markets as emerging out of extant social structures, we are more Hayekian than we’d probably like to admit.

Maybe the economic sociologists most interested in how markets are intentionally designed are the social studies of finance scholars. You know, the performativity folks. That markets can be shaped by particular technologies that have a specific design purpose is almost exclusively in the terrain of these scholars (but also see the work of Marion Fourcade-Gourinchas whose work examines the role of the economics profession in market design). If you want to study market design you’ll probably find more resonance with the law and economics crowd who are more explicitly concerned with designing property rights regimes (e.g. De Soto).

Written by brayden king

June 13, 2007 at 4:20 pm

4 Responses

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  1. In his lecture on “the birth of biopolitics” (1978-1979), Michel Foucault makes a very interesting point about whether or not Hayek’s point of view about market spontaneous order was compatible with an idea of market engineering (Foucault’s point is that it was explicitely not incompatible, neither for Hayek nor for the Ordo-liberals’: his stake is on their impact in post-war German economic policy). About De Soto, there is interesting work by Tim Mitchell on the performative career of this economist.

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    stet

    June 13, 2007 at 8:10 pm

  2. The Hayekian notion of the emergence of the institution of the “market” was/is significant for public policy, yet too often neglected by sociology. This is a good one Brayden.

    Hayek viewed “central/state market planning” as deleterious for citizens, although cheered “market discovery,” by “planning entrepreneurs.” In articulating this, Hayek simply wanted to lead scholars and “laypersons” away from the presumption that government “designs/plans” can always improve matters (e.g., income inequality, externalities, and etc.) by merely applying rational procedures. Hence, “planning/design” of the market is possible, according to Hayek, if the risks are shouldered by the speculators/entreprenuers, they are aware of prevailing social/economic conditions, and it is undertaken under the institutions of private property, money, and contract enforcement.

    Having not read the article, I am not sure if Klein is speaking to contemporary sociologists, but Weber had much to say about planning. In fact, Max Weber, never wanting to bring value judgments into his sociology merely examined socialism rationally, and asked: What effect will this type of society have on the possibility of formulating accurate prices? Weber discussed how a planned economy would be compelled to blend political bureaucracy and economic bureaucracy (Weber believed that struggle – violent, economic, and political were the only ways to allocate resources). Weber believed that the entreprenuerial spirit would suffer in a planned economy due to individuals adapting their behavior to the struggles of political bureaucracy.

    This can be seen in Economy and Society (One of the early chapters of the first volume).

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    Brian Pitt

    June 13, 2007 at 9:40 pm

  3. […] This was rehearsed recently in its last iteration at Organizations and Markets, and referenced by Braydenbut occurs quite regularly. I think the idea of the ‘natural’ (and here is part of the […]

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  4. […] 15th, 2007 Brayden King refers to the topic of market design in a post in Orgtheory. I completely agree with Brayden that the question of are (or to what extent) markets […]

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