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.