Gian Piero de Bellis

Neither state nor market

(2017)

 


 

Note

A clarification aimed at overcoming both the theoretical and practical division-contraposition between state and market.

 


 

Some of the most important organs of the human body are dual, if one can say so: two cerebral hemispheres, two eyes, two nostrils, two lips, two lungs, two hands, two feet.

This bodily dualism has also become, for many, a cultural dualism, i.e. a way of seeing reality based on dichotomous oppositions, the most common and well-known of which is that of left and right in politics.

However, having two eyes allows us to have a panoramic view; two hands allow us to grasp many more objects and two feet take us everywhere, in all directions, not just east or west. Therefore, we should be weary of translating bodily dualisms into all sorts of cultural dualisms or, even worst, opposing cultural dichotomies.

Yet this is not the case.

Another case of the view based on opposing dichotomies is state vs. market. For some, the world is divided between those who are pro-state and those who are pro-market. The former advocate more state and less or no-market; the latter the exact opposite.

For some, the market is a reality lacking organization, that needs to be managed and controlled: that is why there is the need for the state (+state); for others, the state is a bureaucratic pachyderm that stifles free enterprise and creates problems: that is why there is the need for the market (+market).

Without stating it openly, the proponents of this contrasting dichotomy assume:

(a) that there is a clear opposition between these two realities (state/market)
b) that one is to be preferred by far to the other (+ state and - market or vice versa)
c) that these two realities exhaust the whole field of choice (either state or market)

But is this really the case?

Even a superficial glance at the past shows that in all cases where a market was formed, the authorisation of a king or local lord was essential. In more recent times, the rise of nation states has led to the formation of national markets, protected by trade barriers introduced by rulers and state representatives in the form of laws, often at the direct and pressing demand of those holding economic power and operating in a specific market.

And even when state rulers, trained in a non-interventionist liberal creed, were extolling the virtues of producers and traders freely operating on the market, it was the producer-traders themselves who expressed the need for regulation and control, clearly to their own advantage. They pushed for state barriers to foreign goods, to internal agreements to share the market amongst themselves, to set a common price, or to form cartels and trusts, to reduce a, for them, dangerous competition (see: Arthur Robert Burns, The Decline of Competition, 1936). In some cases they relied on rules imposed by a figure of considerable power and prestige to protect them and survive  a crisis. This was, for instance, the role of Pierpont Morgan and the House of Morgan in the United States before the birth of the Federal Reserve (see: Matthew Josephson, The Robber Barons, 1934).

Then, when many countries were involved in industrial production and finance, the search for wider markets for the sale of goods and the placement of capital was accompanied and promoted directly by the states, first as imperialism and then in the form of customs unions and trade areas shielded from the outside world.

The concrete realities of state and market then show remarkable similarities, such as:

state

market

political power

economic power

seeks to dominate the whole society

tries to dominate all exchanges

the human being seen as voter-taxpayer

the human being seen as worker-consumer

Objective: universal subjugation

Objective: universal commodification

Beyond these similarities, there is one characteristic, inculcated in people's minds, that makes these two realities tremendously similar: hypostatisation. People, who believe in the exclusive or dominant existence of these two opposing realities, attribute to them the features of a real flesh-and-blood person. The state and the market are seen as two deus ex-machina who, from the height of their competence and immense power, are capable of solving or generating (according to the individual's point of view) all problems. Hence the expressions: the state will intervene, the market will solve, or, it's the state's fault, it's the market's fault.

This is the current view in the newspapers, on television, among ordinary people.

But, fortunately, it is not the only one.

In December 2009, in the Great Hall of Stockholm University, in occasion of the awarding of the Nobel Prize in economics, Elinor Ostrom, a world-renowned scholar, gave a presentation (the Prize Lecture) that condensed years of research.

In it, Ostrom envisaged a much more articulate conception than the simple and essentially misleading alternative of state and market. Her starting point is the reformulation-overcoming of the conventional distinction between public and private goods, which is entirely functional to the perpetuation of the dichotomous state-market model. Ostrom, echoing her earlier formulations, presented the following typology:

- Common-pool resources (lakes, forests, etc.) for alternative use
- Public goods (peace, security, knowledge, etc.) for universal use
- Private goods (food, clothes, etc.) for personal consumption
- Toll goods (theatres, swimming pools, etc.) for joint use.

On the basis of this classification, Ostrom, together with other researchers, has developed a management model that is much more articulated than the simple state-market scheme. For example, referring to common pool resources she states that "common pool resources can be owned and managed as government property, private property, community property, or owned by no one. "

And thus, in the presence of multiple possibilities of ownership and management, it follows that it is not at all sensible to refer only to the conventional alternative constituted by the pair state-market.

The title of her speech at the Nobel ceremony fully condensed his ideas: Beyond Markets and States: Polycentric Governance of Complex Economic Systems.

One could even go further and put forward the radical position: neither state nor market, meaning by this

a) the end of the territorial monopoly of the state as the supreme regulator of a society;
b) the end of the cultural monopoly of the market as the supreme or unique mechanism for the exchange of goods and services.

This would represent the end of universal subjugation and commodification. And also the overcoming of conceptual dichotomies that reflect very poorly the current reality (if they ever did it in the past).

There are in fact 'private' goods (cars, housing) that can become instruments of public or common use (car-sharing, uber, airbnb) and 'public' goods (security) that can be purchased and enjoyed even in a specific and limited manner (security provided by an agency at an event). In essence, disrupting the conventional categories of the past is necessary to understand the present and build the future.

And probably in the future we will witness the

a) overcoming of politics (relations of power) and its replacement by civics (relations of civility);
b) overcoming of economics (situations of scarcity of basic goods and services) and its replacement by wellness (well-being dynamics).

But these are scenarios that must be built in facts rather than defined in words.

And this is a fascinating task for many people in the months and years to come.


Research suggestions

(1977) Vincent Ostrom, Elinor Ostrom, Public Goods and Public Choices

(1990) Elinor Ostrom, Governing the Commons, Cambridge University Press, Cambridge

(1991) Robert C. Ellickson, Order without Law, Harvard University Press, Cambridge, Mass.

(1996) Roderick T. Long, In Defense of Public Space

(1998) Roderick T. Long, A Plea for Public Property

(2009) Elinor Ostrom, Beyond Markets and States: Polycentric Governance of Complex Economic Systems

(2012) Elinor Ostrom, The Future of the Commons, Beyond market failure and government regulation, The Institute of Economic Affairs, London

 


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