The Market – Class Discussion –Review of Daly and Cobb: Characteristics of the Market Questions –Limitations of Market Economics –Modifying or Reforming the Market

Review of Daly and Cobb Characteristics of the Market The market is the forum for trade of goods between consumers and producers. The economic problem of society: “how to secure the best use of resources known to any members of society for ends whose relative importance only these individuals know” (p.45) Individual consumers know their preferences –They act directly to satisfy them in the marketplace –Buying products but also in their choice of investments Individual producers know their own capacities and options –They act on this information by choosing what/how to produce

Characteristics of the market Critical concepts for the market: –The market is able to make use of scattered information –The market features decentralized decision-making –Individual consumers assumed to seek the greatest utility (satisfaction) –Individual producers assumed to try to maximize their profit The alternative: –Centralized decision-making means that all information must be centrally organized (impossible). –It is argued that the market is the most efficient means of allocating resources.

Questions What are some examples of technologies that have been improved or developed directly in response to market forces? How would you say that market economy has affected the development of technology? Has it encouraged certain forms of technology over others? How do you think that media and advertising shape the market for technologies? Do they distort the market or enhance the market?

Question: Where are some good examples of decentralized decision-making with regard to technologies in the market? Can you think of examples where decentralized decision-making might not be appropriate?

Limitations of Market Economics 5 limitations from Daley and Cobb –The tendency for competition to be self eliminating –The corrosiveness of self interest on the moral context of community that is presupposed by the market –The existence of public goods and externalities –Efficient allocation does not imply just distribution –Efficient allocation does not imply an optimal scale of the economy relative to the ecosystem

Question: How can the cost of externalities be incorporated into pricing within a market system?

Modifying/reforming/regulating the market Question: What kind of world-view is reflected in the market system? Question: Why would we want to modify or reform the market? - To relieve some of the limitations of market economics. - To address the emphasis on personal self-interest, the main emphasis of market economics, that is at odds with many value systems

Market Reform How could one modify/reform the market to stress other goals (other than personal/corporate self interest?) –Local self-reliance initiatives –Ethical investments –Activist shareholders –Social indicators other than the GDP –Other ideas? Examples of the above?

Ethical Investments / Activist Shareholders Ethical Funds © –Claim to be “socially responsible investing” –Encourage companies to change how they operate through shareholder resolutions

Example shareholder resolution: Walmart and Global Human Rights Standards … Whereas…the conventions of the United Nation’s International Labor Organization (ILO) on workplace human rights … include the following principles: 1.All workers have the right to form and join trade unions and to bargain collectively (ILO conventions 87 and 98), 2.Workers representatives shall not be the subject of discrimination and shall have access to all workplaces necessary to enable them to carry out their representation functions (ILO Convention 135), 3.There shall be no discrimination or intimidation in employment. Equality of opportunity and treatment shall be provided regardless of race, color, sex, religion, political opinion, age nationality, social origin, or other distinguishing characteristics (ILO Convention 100 and 111), 4.Employment shall be freely chosen. There shall be no use of force, including bonded or prison labor. (ILO Convention 105), 5.There shall be no use of child labor. (ILO Convention 138) …. Therefore, be it resolved that shareholders request that the company commit itself to the implementation of a code of corporate conduct based on the aforementioned ILO human rights standards by its international suppliers and in its own international production facilities….

Other Questions (if there is time) Why do some countries have a strong culture of innovation and invention? What is the connection between the military, the market and the control of technological change? The technology boom of the mid-late 1990s appears to have been built on the unrealistic assumptions of technological growth. What does this phenomenon have to say about our values regarding technology? What role do patents play in the market economy?