Francis Bacon called his most troublesome idol after the marketplace simply because that was where so much talking got done; talking, and exchanging, or as he put it, ‘the commerce and association of men with each other’. But he would have been amazed by the idea that anyone could treat a market itself as an idol – that anyone could feel the kind of worshipful confusion he was warning against, about the actual process of buying and selling. Ideas start to look important at different points in history, and in 1600 markets were not yet the focus for very much thinking. As far as Bacon was concerned, they would have been functional, rather obvious things, about which there wasn’t much to say. When he talked about the idols of the marketplace, the picture that formed in his mind could have been of the once-a-week markets held in the market towns of his England, all spaced out around 15 miles from each other, so no-one with a cartload of turnips to sell ever had to drive more than 7 miles or so there and 7 or so back, a roughly two-hour journey. Or maybe it was a picture of the daily street markets in London, or of the giant trade fairs still going from the middle ages, where the meadowlands outside cities turned into temporary grids of tent-stalls and tent-warehouses. As an educated person, of course, he knew about the agora of ancient Athens, which had been a space for shopping and a space for politics at the same time: a starting-point for the whole European sense that commerce and association happened in marketplaces. But in none of these cases will it have struck him, or anyone else much, that there was anything remarkable going on in the actual transactions in which the turnips changed hands. Or, to put it another way, that there was any wider significance you could pick out of the relationship between the buyer and the seller of the turnips, as a buyer and a seller, as opposed to all the other relationships that they might be in with each other, as social inferiors and superiors, as neighbours, as members of a church congregation, as friendly individuals or hostile ones. Why would you choose to concentrate on the turnips? The market relationship wasn’t prominent yet. It didn’t stick out in people’s minds. It didn’t look as if it explained anything beyond itself.
But over the centuries since, markets have played a larger and larger role in the ways we explain the world to ourselves. Taking their cue from the first sophisticated financial markets, in seventeenth-century Amsterdam and eighteenth-century London, then working their way back with new curiosity to the humbler domains of turnip-swapping, people started to see how much of human behaviour hinged on the moments the coins were counted out – even if people were unconscious of it, even in areas of human life apparently far remote from the buying and selling. When the buyer and the seller arrived at a price, it was realised, that one number, that one quantity of shillings and pence, worked as a kind of instant, spot calculation of the relative value, to those people at that instant, of drastically different uses of human time and labour. The price of a pound of turnips sold to a tailor tells you how much turnip-farming is worth in terms of stitching and bias-cutting. Suddenly, the two activities have become convertible. And calculations like that are going on all the time, and forming the basis on which people plan for the future, so the price of turnips will help to determine how much turnip-farming goes on in the economy – and how much tailoring, too. Without anyone having to give explicit instructions, without the participants necessarily being aware of it, markets co-ordinated the busy, various world. This was a discovery that particularly appealed to those who were eager for there to be sources of order in human affairs which didn’t depend on the powerful giving orders: or who took a sceptical view of how important our conscious intentions were in getting things done. If, through markets, the world ran itself, where was the need for kings? If, through markets, self-interest tied society adequately together, where was the need for the enforcement of virtue? Adam Smith famously pointed out that it wasn’t the ‘benevolence’ of the butcher, the brewer and the baker that brought us our dinner – just the exchangeability of a certain amount of butchering, brewing and baking for a certain amount of whatever we did. He didn’t, quite, call the force that co-ordinated human affairs through the market the ‘invisible hand’. That was a semi-satirical phrase of his, used to describe the way that the greed of the rich has consequences they don’t expect. But it was taken up later as a name for what he preferred to call ‘the obvious and simple system of natural liberty’. The invisible hand became visible shorthand for the principle that markets, on their own, create order.
Politics ever since, you could say, has been an argument about how much power market relationships should be allowed to have, about how much of life should be handled through prices. There were always limits. The question was only where they lay. Conservatives of all kinds tended to like markets because they seemed, in a rough-and-ready way, to reward individual deserving; and conservatives tended to dislike markets because they threatened traditional, unpriceable relationships, including the traditional obligations of the strong to defend the weak. No, said conservative politicians in Britain in the 1830s, you may not calculate a price for sending a seven-year-old boy up a soot-choked chimney. Radicals of all kinds tended to like markets because they undermined old, encrusted social structures; they menaced toffee-nosed gits the world over. ‘All that is solid melts into air’, wrote Marx ecstatically, in this mood. He saw every link between people being destroyed except ‘callous cash payment’, and he almost seemed to welcome it. It might be a colder world, where the market ruled, but at least it didn’t decorate its hierarchies with pretty sentiments. On the other hand, radicals disliked markets because they seemed to produce spectacular injustices towards those who only had their labour to sell. No, said social democratic politicians at the end of the nineteenth century, you may not calculate the price of a week’s work in industry by seeing what Amalgamated Gigantic Ltd can persuade an individual worker to accept. You will have to deal with your employees in an equally amalgamated, equally gigantic form, in labour unions. Market prices might co-ordinate the world, but they clashed repeatedly with other values, old and new.
Then, for most of the twentieth century, markets had a rival; another system, in a variety of flavours from murderous through to humane and scrupulous, which promised to do the job of markets and do it better, do it more purposefully, so that the slow, lackadaisical flow of information about how much turnip-farming there should be every time someone bought turnips was replaced by quick, decisive, explicit choices. It didn’t work. Twentieth-century socialism killed millions of people in its murderous versions, and in its humane versions won dignified, civilised lives for millions of people who wouldn’t have had them otherwise. But the murders were pointless, and the dignified lives were achieved by redirecting profits that had already been made in markets. Once the flow of information through an economy reached a certain fairly low level of richness and complication, it turned out, the institutions that were supposed to make the quick, decisive choices started to flounder – whereas markets seemed to be able to go on digesting any amount of information, one lackadaisical bit at a time. Socialism didn’t, after all, have a working alternative for the basic thing that markets do.
And now it’s now. The rival has disappeared, and, perhaps in reaction, markets rule in our minds. We praise markets, we applaud markets, we reflexively attribute good things to markets, with far less scepticism than ever before, far less attention to the limits of the power of price. Not only are markets universally acknowledged as the one, the only plausible way for the economic life of societies to be organised. In more and more ways we have started to see markets, or market-like patterns, in the non-economic behaviour of the universe. It’s as if they have become our one and only model for anything decentralised, our one label we have available to apply to anything that doesn’t run on orders, from tornadoes to the eating behaviour of chimpanzees. I’m not kidding about those two examples, by the way: there really have been studies comparing the turbulent air flow in tornadoes to the global currency markets, and the fruit-gathering of chimps to the strategies of sho
ppers. This is an important change. When people perceived something of universal significance in markets before, it tended to be because they had a theory that they believed was universally true about the world, and had spotted a resemblance between it and something that markets did. First the theory, then markets as an illustration of the theory. The world’s like this, and, to help you understand, it’s a bit like a market. For example, the ancient philosopher Herakleitos believed that the cosmos was made of fire, with every other element being just fire in a state of temporary metamorphosis, sure to change back into fire in due course. What was this like? Why, like the way that olive oil could turn into money and (if you wanted) back into olive oil again, down at the agora. Herakleitos said: ‘Everything becomes fire, and from fire everything is born, as in the eternal exchange of money and merchandise.’ Now, though, when we announce that in this way or that way the world is a market, we tend to mean that the organisation of the market really is written into nature all the way through, like the words in a stick of seaside rock. You can find people saying, now, that the structure of a vegetable market or a stock exchange is a just a manifestation on our familiar scale of things of a kind of order that’s manifested on every scale, throughout the universe.
Most of us, of course, don’t believe anything so drastic. But then we don’t have to. To have a consensus, you don’t need everyone to agree. You need everyone to agree more or less about the bunch of beliefs in the middle of a subject, while its edges can be handily defined by propositions that seem bold, extreme or plain nutty, according to taste. You can also find people today, for instance, who think that markets are never-ending elections, more perfect and more powerful than the dreary old democratic kind, because they take ballots continually on every aspect of our shared existence, from our preferences in soap to – well, to our preferences in shampoo, really; that’s one of the problems with that theory. You can find people who think that markets are artificial intelligences, giant reasoning machines whose synapses are the billions of decisions we make to sell or buy. You can find people, especially in America, who think that markets are God’s providence at work, His way of taking care of His creation. And again, in these strong forms, most of us don’t go along: we don’t think that markets are universal ballot boxes, or that they’re brains, or that the invisible hand is God’s hand, any more than we believe that nature is a market. But that doesn’t mean we aren’t influenced. That doesn’t mean that our sensible, commonsensical views here in the middle of the consensus aren’t shaped by the wilder views that define its outside edges. Most of us do believe, in some vague, not-quite-defined way, that markets have something to do with us expressing ourselves: a weak form of the super-election idea. And that markets somehow incorporate everybody’s combined knowledge, even if they don’t exactly cogitate. And that they’re kind of, sort of, natural, though we’ll probably give the tornadoes a miss. And that – leaving God out of it, at least by name – markets are somehow wise; that they do produce the most benign possible outcomes that there can be, for the largest possible number of people.
Which brings us back to Francis Bacon. Because those are modern idolatries in just the sense he was talking about when he tried to clear the ground for the birth of experimental science. He thought that it might be possible to disenchant the world: to get the idol-worship, the magical thinking, out of it, and to see only the clear, factual, cause-and-effect connections between things. But it turned out that that could only happen by a special effort of self-discipline within a special type of thinking, reserved for science, and not perfect even there. The rest of the time, the world could not be disenchanted. It could not have the anti-wand waved over it which would kill the idols and make the magic die, for exactly the reason Bacon himself identified when he said that the most troublesome obstacle of all was going to be language. We think, for the most part, in language and through language, guided by its images, entwined with its network of connections. In the case of our present-day beliefs about markets, we don’t necessarily feel that we know that our beliefs are true: just that it is known, that someone else somewhere else has worked these things out in detail. We also have a problem of perception where markets are concerned. We can’t tell ourselves what markets feel like, directly, except in terms of atmosphere, in terms of the frenzy of an open-outcry trading floor or the tones of voice of a bloke on a stall trying to shift the last two boxes of slightly bruised bananas at four o’clock. The trouble is that markets as such are not really visible from any single vantage point, only the separate transactions that make them up; from them, the market emerges, a grand swirl of prices formed by all the interactions of all the buyers and sellers. We’re in it, but we can’t see it, any more than individual ants can see the logic of the whole anthill. Unless, that is, we exploit language’s power to fix it in our mind’s eye, to give us (as it were) the impossible top-down view of it. So what kind of comparisons are we likely to make, given a culture presently besotted with markets, and a middle ground of opinion slung between outré valuations of them as embodiments of freedom, reason, God and nature? Remember: we make markets, but they don’t do what any of us, individually, choose. Even the biggest individual actor in the most thinly traded market must usually deal with outcomes that are not under their control. This thing we make together acts back upon each of us as an independent force. We have a choice, in theory: we could carefully describe it to ourselves as a complicated phenomenon, partially of this nature and partially of that nature, different in different cases, sensitively dependent on the particular rules we institute to run it. We could, but on the whole we don’t. We prefer, on the whole, to say that the market is like a red, red rose. We call on the gloriously simplifying powers of the images in our heads, which assert, in bright strong colours, that the market resembles this one vivid thing – or this one, or this one, from out of the permanent stock of images we keep for this job: the job of representing the powerful, complicated forces of our world on a scale we can handle intuitively. And so we use the imagery we used to use for good kings, for wish-granting spirits, for the God in heaven who follows the movement of every atom: for powers who are also persons, and who can therefore possess a person’s intentions, a person’s benevolence.
Meanwhile, here are some of the dull, detailed things that people actually do know about markets. Markets are never perfectly efficient, except in conditions of tightly defined mathematical utopia, where everyone knows everything. Markets do not handle the majority of the world’s economic activity, because it’s only a limited category of goods that can be traded as impersonally as turnips; for everything else, you need relationships of trust, in which price no longer does the decisive work. Markets do not run stably on their own, without regulation or supervision. Markets can be madder than any of those who participate in them, as well as wiser. Markets do not look after people. A nice severe depression is usually enough to kill that idea for a generation, but we haven’t had one for a while.11
You can go further. Markets do not hope, dream, plan, help, show mercy, have compassion, do justice. They are silver and gold, the work of men’s hands. They have mouths, but they speak not; eyes have they, but they see not.
(2007)
UNICORN HUSBANDRY
1. Unicorn husbandry
Red Plenty is wilfully devoted to the deadest of dead issues: the planning problems of a no longer existent system which has no prospect of ever becoming existent again. Unicorn husbandry, biplane manufacture, sermon publishing – take your pick of impractical comparisons. This seems like a good place to start. Because though the imp of the perverse played a major part in my decision to write the book; and I was positively attracted to the whole business of being the first person in thirteen years to consult Cambridge University Library’s volumes of The Current Digest of the Soviet Press; and in general to the challenge of taking on the most outrageously boring subject-matter I could find, and wrestling it to the floor, and forcing it to disgorge its hidden jewel of i
nterestingness; despite all this, I did also have some sensible motives for going where I did, and they have a lot to do with the generation I belong to.
I was twenty-seven when the Soviet Union fell, ceased to be, shuffled off this mortal coil. I was too young to have experienced the sense of it as a place which, barbarous and dictatorial though it was, nevertheless was essentially on the reasonable side of the economic argument; somewhere that, by opting for planning, had chosen the better economic model. On the other hand, I was too old to view it as a historical will-o’-the-wisp, vanishing as I studied it, and leaving nothing behind but tedium and stale air. For me, as a teenager in the early 1980s, having the traditional nuclear annihilation dream at regular intervals – my friends would usually drive past me in a bus while the asphalt melted just behind my fleeing heels – the USSR was not a possible object of admiration, but it was an object of solidity. Its defining feature was its permanence. It was an inevitable part of the planet’s architecture: obsolete but immovable. And then it did move, and when it went its going suddenly disclosed a set of hidden linkages that pulled various aspects of my familiar, home experience away after it. It seemed that my Western socialism – the unbarbarous kind – had had an unsuspected dependence on the existence of the Soviet model. And not just because the USSR was definitionally useful to social democrats, letting us point and say ‘Not that!’ It had also served, it turned out when it was gone, as a sort of massive concrete tent-peg, keeping the Overton window (not that it was called that, yet) tethered at its left-hand edge in a way that maintained the legitimacy, in Western discussion, of all kinds of non-market thinking. When the USSR vanished, so with amazing speed in the 1990s did the entire discourse in which there were any alternatives to capitalism that had to be taken seriously. This was the biggest intellectual change of my lifetime – the replacement of one order of things, which I had just had time to learn and to regard as permanent, with a wholly different one, in radical discontinuity with it. The before/after photographs of my time might as well be pictures of different people, it seemed to me. And once we were in After, Before receded faster in the culture than it did in actual chronology, until the previous edition of the world came to seem not just remote but improbable, an unlikely past for the present to have had.
True Stories Page 13