Market

Characteristics

Stefan Merten discusses the characteristics of markets, and also directly ties this within the context of free software:

* Distribution of goods

Probably one of the most obvious functions of markets is the distribution of goods. Goods that have been produced in a separate process are brought to a market and there they can be distributed.

This function of markets is certainly something which we generally need in a society which includes separation of labor - i.e. in every society which can be wished for.

In Free Software this distribution can be seen - see (Linux) distributions or countless web sites of Free Software projects or SourceForge or ... However, this is not something I'd call a market but a flow of goods.

* Connection of otherwise separated social entities

If those social entities would not be separated from each other they could cooperate in the first place and would not need to distribute there separately produced good afterwards.

This separation is probably a result of large societies where you can not have this type of connection in each instance because the costs for such a connection are simply too high. This is BTW the end to all these backward oriented types of Utopias where people are connected on a level of knowing each other. No, separation of social entities is not reversable in any society which can be wished for.

In a typical market transaction the connection vanishes as soon as the good is distributed. This maximizes your freedom because you don't need to cope with all these difficulties which human relationships can bring with them.

In Free Software we see this connection when one Free Software project uses other Free Software products. Inside of a project where the developers are connected by being in the same project this type of connection making is not necessary. The developers build up a social entity in itself.

It might be notable that in Free Software sometimes the connection is deeper than only in the moment of distribution. This is when users contribute to the project they are using in one or another way.

To me these would be the key characteristics of markets. Please note that scarcity plays no role until here. However, probably usually this is also understood by markets:

* Exchange based distribution

The goods are not simply distributed to those who need them but exchanged by a general exchange system. I.e.: You can only take if you give at the same time something which is considered equal to the good you are taking. Because goods are not equal - otherwise it would not make sense to exchange them at all - there must be a common third which makes them comparable. In capitalism this is the price of the labor which went into the product plus the surplus.

This is the point where alienation comes in because the exchange system abstracts from the concrete use of goods. Even the production process is changed because suddenly it may make sense to produce for a market.

This is also where the notion of quality of a produced good shifts. When you are producing for yourself or socially related people or because of your Selbstentfaltung then you are heading for absolute quality: Creating the best product you can think of. When you produce for a market it totally suffices to produce a quality which is just high enough to be sellable.

Discussion

Stefan Merten on the infinite growth aspect of capitalist markets:

"WC: Within capitalism we have M-C-M'

The really important sign here is the apostrophe, which you forgot. It indicates the entirely different dynamics of pre-capitalist markets and capitalist markets. Lets look a bit into it.

BC: Goods are generally produced for self-suffiency. To obtain goods someone is not producing, the overplus of the produced goods are brought to market: Either to exchange them directly with other goods or via money being the mediator. At the end, there is not a "surplus good", but only an "other good". There is no (effective) driver for progression. Things develop slowly and under circumstances of personal dominion.

WC: Roles and relationships of C (or G) and M have completely changed (ignoring why and how). When BC the good and thus the needs are starting and end point of the cycle, now money takes this place, and commodities are in the roles of the mean. From the standpoint of the cycle logic, the purpose concerning needs aren't of interest at all. The products may be food or bombs, it doesn't count. The only purpose is to make money.

However, the purpose is not simply to make money, the purpose is to make _more_ money than invested before. This more-logic comes from competition of those producers who want to sell the same commodity on a limited market. A single capitalist can't say "my way of production is ok, I'll do it for the rest of my live", because the competitor doesn't sleep and produces the same commodities cheaper to overtake market share from the competitor. Why overtaking market share? Because of the economics of scale: On a bigger scale you can produce cheaper (more efficient in terms of value). Conclusion: All participants have to strive for increasing the productivity of work to make their products cheaper - by punishment of downfall. They have no choice if they want to stay inside.

"Having no choice" means a coercion to follow the rules of the things (the commodities). This leads to a reversal of the relationship between the social and the things. In capitalism it is no longer the case, that we organize socially what things we want to produce to satisfy our needs, it is reversed: The things seem to have a life of its own, they move and say to us, want we should do, to satisfy their "needs". They say: Produce me cheaper or you're out of the game. This really weird behavior was named "fetishism" by Marx, and this was one of his most important discoveries (and not the exploitation stuff, which of course it true anyway).

Marx in his own words: "Thus the participants in capitalist production live in a bewitched world and their own relationships appear to them as properties of things, as properties of the material elements of production."

StefanMn uses another term addressing the same topic: alienation. Production in capitalism is alienated, we don't do it for us, we do it for M' in M-C-M'. Thus the "C", the products, are only a by-product of an alienated logic, they are not the aim. Being only a by-product also means, that it cannot be controlled, what they are (food, bomb, etc.), because they all serve M'. And moreover, other externalities cannot be controlled too: CO2-emission etc. Ok, states try to implement some controllings via prices, however, this doesn't really help. Stop.

Conclusion: The built-in infinite growth feature of capitalism finally eats the planet -- and us." (Oekonux mailing list, January 2008)

What are markets good for

Paul Cockshott is a planning advocate, and was asked for what particular type of goods markets may be necessary or optimal:

"The labour used in communal free software is part of the social surplus labour. It is only possible for it to be produced insofar as there are people who are either able to put time into it because they are in an academic environment where they have surplus paid time, or because the advance of technology has reduced the working week sufficiently that people have time after paid work to do it.

As I said in an earlier post, goods whose marginal costs of reproduction tends to zero fall into one of the categories for which even indicative markets are not appropriate.

I specified that I thought that the role of a consumer goods market was limited to those goods whose labour of reproduction remained considerable, and for which no objective assesment of need can be arrived at. Where either of these criteria are absent, a market is not appropriate. Information goods -- scientific laws, mathematical theorems, software, electronic copies of music, etc should be distributed freely. Goods that require substantial labour input but for which need can be objectively assesed, should be free but not ad libitum, distribution has to be rationed on the basis of need: examples would be surgery, speech therapy, communal childcare etc." (email, August 2008)