A globalised world requires a set of people trained in a certain skill which is useful in understanding the functions, reactions and effects of things on the market and the market itself. Thus quite naturally, the educational institutions started churning out economics students with the very specific set of skills of number crunching in economics. Do note this article is not about what schools are doing and how the world is receiving more number crunching economists than it perhaps requires. This article is about the lost need to philosophise economics.
For too long now we have had a set of established rules and theories that govern the way we, as students of economics, understand the subject. The consequence of this fixation has been the lack of development of new economics ideas and thoughts since the 1990s.
Ideas or concepts as simple as markets have remained unchanged with ‘a structure that allows buyers and sellers to exchange goods and services and therefore engage in a transaction’ often being settled upon as the definition. I reject this idea. Definitions like these often lack key ideas within their framework. This definition does not touch on the interactional aspect of the transaction. Does the inclusion of the idea ‘voluntary transaction’ lead to a conclusive opening within the framework of the idea ‘transaction’? Is it sufficient in highlighting the possibility of there being no exchange and therefore no transaction?
The semantics that are engaged in above are the foundation for this piece. Philosophise. Complicate. Simplify perhaps. These three words have become seemingly inconsequential in the daily ritual of economic discussions. The main focus of economics today is on communicating an exercise, pattern or interaction to the participant(s) and thereby highlighting the need for action or no action. There is absolutely nothing wrong with this supposition. Economics should indeed be used to communicate information, often critical in nature, to the participant(s) but in this process the desire to interpret information in more than two ways has been lost.
Two ways of defining ‘market(s)’ are highlighted here. One is the basic idea of a structure facilitating a transaction. Another involved the inclusion of the terms ‘voluntary transactions’ that, according to some, would allow room for no transaction to happen. I present another set of two different ideas which, when involved in this framework of a definition of market, can broaden it and even provide an altogether different set of perspectives.
Market is a structure providing for interaction between groups of individuals interested in an object and/or instrument. This framework builds upon the idea of an interaction, which includes the acceptance of an offer and the rejection of an offer. Therefore this framework allows for room to leave a transaction open due to it being deemed as unfavourable by one participant or a multiple set of participants.
Contrast the above idea with the following definition of market. Market is a structure providing for voluntary interaction between groups for a pre-defined product/instrument. This framework includes the possibility of there simply being no interaction, which is to say there was supply but no demand or there was demand but no supply. Do note this idea is different from the idea highlighted above because the former idea assumed the possibility of there being a supply and a demand with the possibility of there being no match. The latter idea didn’t follow this assumption of existence of the two variables and assumed the possibility of non-existence of any one of the variables.
In all the above mentioned frameworks there still lies ample room for further philosophisation of concepts, perhaps regarding the usage of buyers and sellers, goods and services, individuals, interest, object, instrument and pre-defined. Of course, this attempt to philosophise market is perhaps extremely limited but still has great ramifications. However, there is still room for a macro attempt at philosophising this concept. The usage of pre-defined has opened up an aspect that can be used to consider this at macro as well as micro level.
Similarly, there is no dearth of concepts and ideas that cannot be further philosophised and perhaps complicated. However, the requirements and needs of today’s society often leave little room to allow for or recognise such attempts.
I end this article with the hope that I have triggered an attempt to philosophise concepts not limited to economics alone because there are multiple meanings and ideas that can exist even in the periphery of a concept.
About the Author
Dhruva is a 20 year old fresh graduate from St. Xavier’s College, Mumbai with Majors in Economics and Political Science. He blogs at An Indian Youngster and tweets at @Dhruva_Mathur and is followed by Kevin Rudd, Foreign Affairs and European Council on Foreign Relations among others. In his spare time, he enjoys reading and debating. He is a Social Liberal with a Right tilt for economics oriented towards development.