[Dec 2007, Volume 4 Quarterly Issue] Pdf File size - The IIPM Think ...

MORE MARKETS, LESS GOVERNMENT
what can be provided for in a cognitive
mind set of an individual. The calibration
of markets using hierarchy, however,
as the defining attribute, does not quiet
capture all that what make up for markets.
Markets as constructs have evolved
and have changed with time moving
from points at which barter was entered
into to places where the magnitude is at
once large and complex. The pattern of
thinking and arriving at explanations
that have accompanied these transformations
have similarly changed course.
What causes them and why these are
useful to transactions in society, therefore,
remain important issues. And these
have been so for some time now if we
exclude the antiquity from the purview.
Arriving At A Framework Handy
Enough For A Debate
The market is not an island floating in a
sea of societal events. The market is
probably more like an iceberg that has
a ninth of it unseen. These are not institutions
that occur in relative isolation.
Instead these occur when commerce
clearly engages the society as an activity
that a society needs to engage itself
with. Accordingly, and for instance, ‘the
“Spirit” of Capitalism’, in a manner that
Weber approached the issue and elaborated
upon it, probably has a lot to do
with the issue of markets. Weber was of
course concerned with commerce, and
the manner in which this activity
emerged from after being confined to
ethical pits for a long time and particularly
during the Middle Ages and up to
the beginnings of the modern period. As
regards markets, these were accepted as
a part of commerce for these went alongside
commerce. Weber was writing in
the 1890s and he referred to the term
‘economic order’ to which both the individual
and the enterprise had to comply
with. If the modern period is identified
with a pervasiveness of the economic
order and in which compliance comes in
as given, it was not so earlier. ‘The capitalist
spirit’ Weber wrote, ‘has had to
prove itself in a hard struggle against a
world of hostile forces.’ 2 On matters related
to the establishment of commerce,
then, we would need to go an earlier author.
Adam Smith in his The Wealth of
Nations wrote of the manner in which
feudalism underwent erosion. The erosion
had to do with the establishment
and the consequent spread of commerce
and manufacture. The observations of
Smith are relevant in yet another manner.
The spread of commerce and manufacture
brought in certain fundamental
changes in the society. And finally it
brought in the first hints of the involvement
of the ruling elite in this spread.
The Chapter was entitled tellingly “How
the Commerce of Towns Contributed to
the Improvement of the Country”. In it
Smith wrote, ‘commerce and manufactures
gradually introduced order and
good government, and with them, the
liberty and security of individuals.’ 3 The
rationale for the coming in of peace over
that of warfare that were carried on by
manor lords between themselves was
traced to the declining influence of these
manor lords over the sovereign. The surplus
could now be expended on manufactories
that commerce helped deliver
for consumption. And Smith, who was a
votary for individual efforts, once again
emphasized on the ‘desire of bettering
(their) condition’. Smith wrote that, ‘The
natural efforts of every individual to better
his own condition, when suffered to
exert itself with freedom and security, is
so powerful a principle, that it is alone,
and without any assistance, not only capable
of carrying on the society to wealth
and prosperity, but of surmounting a
hundred impertinent obstructions with
which the folly of human laws too often
encumber its operations.’ 4 Smith had his
reservations about commerce and those
who practiced it, and yet he was emphatic
on the impact that commerce and
manufacturing had on society. On the
whole the impact was good. There is a
primacy of economics in his statement
Markets have almost assumed a proxy for the economy.
Markets, then are structures that hold the interest of many.
The grip on the interest accrues from a recognition
that markets and human societies have moved in
tandem over long periods of time now
for he points out that the momentum
generated could surmount the hindrances
to progress. It is of these and similar
hindrances that the referencing by Weber
highlighted.
The intermixing of politics and economics
was clearly seen by others too
and the emerging viewpoint clarified
that the expansion of economics went
along with an expansion of the political
landscape. Of the many who wrote on
this issue, Adam Fergusson (1723-1816),
THE INDIA ECONOMY REVIEW
25