GLOBALIZATION
Markets and Politics
The purpose of this WEB space is to provide students
meeting social science materials for the first time with an understanding of
the concepts of both politics and the market. The account is not detailed but
it does draw on a historical background. The purpose of this page is to provide
some introductory material on markets.
Skim the pages quickly to see
how familiar you are with the concepts. Then if you need to, go through it
slowly, take your time and check out your understanding of the concepts at the
end of the space.
What is Political Economy?
The separate terms 'state' and 'market' provide us
with the term 'political economy'.
If the state did not exist
everything would be decided by price mechanisms and market forces. The price
of commodities and labour would change in accordance with market conditions and
there would be no intervention.
If the market did not exist the state
would allocate economic resources as it saw fit.
Critics of former
communist states have suggested that the command economies of these states were
based on the state deciding everything and the market having no role to play.
Critics of particular versions of 'new right' approaches have
commented that the reliance on the market for allocating everything leads to
inequalities. It can lead to needless suffering by those unable to participate
in market activity through no fault of their own, e.g. the infirm and the old.
You
can pursue these ideas by looking at some of the arguments over dependency
theories in another workspace.
Markets arise from
exchange
relations.
exchange Make sure you understand this term. Marx
gave an important definition of
political
economy
which we explore at different points in the course.
Exchanges have to become regular if they are to have any
importance in social organisation. Money and prizes become the key mechanisms
of developing exchange relations. Of course it often seems as though some
qualities lie outside the financial exchange relationship, or cash nexus, e.g.
quiet respect at a funeral or appropriate behaviour in public settings. But a
considerable part of our daily lives that apparently seems to be unconnected
with money has its price.
Debates in recent years have focused on how
commodities that are often felt to be available to all, such as health care or
other forms of social provision, have become part of a market framework. Such
relations frequently involve other part sof the globe albeit not necessarily in
a direct manner.
The Entrepreneur
We
all know of specialised traders, ranging from used car dealers to specialists on
music, computers etc.. The entrepreneur is a specialised trader but does not
have a direct relationship to the product. The used car dealer buys a car from
me and sells it on to someone else. The entrepreneur, however, buys or hires
inputs, or, organises a production process, and then sells the resulting
products and services. A company such as 'Virgin Airways' is owned by an
entrepreneur. Here the process of transporting paying passengers from one place
to another is a production process where inputs are hired and the resulting
service 'friendly, comfortable travel' is sold. The entrepreneur has put up the
financial risk in this case and reaps the profits. While the presentation may
conceal it Marx's 'real relations of production' could be identified in this
scenario. But so too could a range of other complex relations.
An
entrepreneur wields authority in a market system. It is this person's authority
which is accepted through payment. The entrepreneur brings formal organizations
into the market. Here we need to consider how in Europe in the 19th century
machines and coal. Coal mines became a business enterprise and so to did
machine building and co-ordination. The ensuing search for raw materials and
customers gave us as part of the modernisation process market links with the
rest of the world. Understanding the nature of these links and exploring their
impact and implications is an important aspect of globalization studies.
The Three-Market System
The rise of the
entrepreneur and linked organizations changed the former relatively homogenous
exchange system into a multi-faceted form. We can identify three different
forms:
People no longer directly exchange their labour for particular
services. Instead they enter into a particular set of markets - the labour
market and related factor markets to obtain money. Broadly speaking this leads
us to towards production processes.
They enter another set of markets
to exchange that money for the goods and services they desire. This is the
consumption process.
The third and final set of markets are those of
business enterrpises who buy and sell with each other. These are intermediate
markets from which we as individual consumers and individual suppliers are
excluded. Exchange is often larger in volume. Thus manufacturing enterprises
buy from other enterprises who supply components, raw materials, electricity,
etc..
Some questions to ask yourself
Do
you understand the following terms: quasi-market, true market, social market,
trans-national corporation? If you do then go on to explore the introductory
material on politics. If you do not, have a look at the brief definitions below
before exploring the material on politics.
WORK IN PROGRESS!!
Return
to discussion of student understanding of the term 'political economy'
Course
Outline