edgecase
Author: StJohn Piano
Published: 2020-11-28
Datafeed Article 194
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375 words - 62 lines - 2 pages




David Graeber: "You don't get markets without states."

To expand a bit: You don't get markets without a central authority that can enforce standards & arbitration, and which charges businesspeople a tax for participation.

Merchants are not noted for their solidarity, being temperamentally most focused on their own financial interests. This means that, if they're in the same line of business, they'll compete however they can, often lowering the standards of the product so that they can offer it to customers at a lower price. Customers often don't have the time / inclination / expertise / money to investigate poor standards, if the changes are well-hidden or numerous.

The only entity who can enforce standards of behaviour / quality is "he who owns the market", i.e. a central authority, and that entity will do it for reasons that are more related to "power" / "security" than to "profit".

If the customers are capable of evaluating quality themselves (with e.g. groceries, rather than financial contracts), then the central authority can consist of "the set of people who live in the local neighbourhood". Example: They all get sufficiently annoyed at the corner-cutting practices of a local businessman. But... they'll usually have to coordinate i.e. achieve political consensus i.e. form a state.

Today most people live in large states, and often forget that states can be quite small. Many would take Graeber's statement as justification for a gigantic state, with enormous levels of market regulation, levels that risk destroying various markets completely (by making participation unworkable for all concerned).

However, there's quite a spectrum in between the city-states of the Peloponnesian War and the continent-spanning states of today, and the city-states were perfectly capable of running useful markets. (If an army turned up, and the local city didn't like them much, they wouldn't let them inside the city. But they might make the concession of allowing a market to be set up near the army camp so that the soldiers could buy food, water, supplies, etc.)

An addendum: The notion of "free markets" is nonsensical. Markets are owned, usually by someone who's not primarily interested in money.

A conclusion: "You can't have a market without a state, but the state can be quite small."