Academic journal article Review of Social Economy

Beyond Contested Exchange: The Importance of Consumption and Communication in Market Exchange

Academic journal article Review of Social Economy

Beyond Contested Exchange: The Importance of Consumption and Communication in Market Exchange

Article excerpt


Over time, the economic discourse on markets has changed. The history of economic thought after Adam Smith reveals a tendency to abstract from the social dimension of market exchange. The market became a placeholder for a set of unquestioned meanings about the role of human action in the world. The term "the market" came to be emptied of most of its social content. Take, for example, the case of markets under perfect competition. "Under perfect competition there is no room for bargaining, negotiation, remonstration or mutual adjustment and the various operators that contract together need not enter into recurrent or continuing relationships as a result of which they would get to know each other well" (Hirschman 1982: 1473). Yet, actual markets are often rife with personal dependency and contingency. This does not mean that the moral philosophy of Adam Smith is an atavistic legacy of a former era. Amartya Sen, reviewing the history of an economic discourse that often included references to the values and social norms necessary for the maintenance of a market economy, remarked,

The work you end up having may possibly be called sociology. But it is economics as economics has been understood until very recently. Adam Smith, Marx, Mill, even Edgeworth, Wicksell and Marshall regarded these types of inquiries as perfectly legitimate parts of economics.

(Klamer 1989:146)

Current research on efficiency wages and transaction costs utilize models of economic behavior that require a theory of market institutions. However, the institutional structure of market exchange appears at odds with the neoclassical theory of markets under perfect competition in which individual agents come to the market with a given menu of preferences. Both Samuel Bowles/Herbert Gintis and David Levine recognize this as a problem in neoclassical economic theory. In its place, they offer two distinct conceptualizations of market exchange. Bowles and Gintis suggest that market power is often a prerequisite for the effective utilization of resources within the capitalist enterprise. Levine constructs a classical theory of exchange for a post-subsistence economy. He identifies market exchange with the need for individuals to define for themselves a distinct way of life in order to secure the recognition of others and preserve the integrity of the self. Both, however, share the view that market participation helps to shape the interests of the participants. The middle ground between a theory of market power and individual personality formation lies in the inherent social relations governing market exchange. By exploring this middle ground, market exchange can be presented as a set of communicative practices through which individual needs are shaped and defined and power is challenged or maintained.

The structure of this paper is as follows: In part 1 of Section II, I offer a brief critical review of recent attempts to construct an institutionally based neoclassical theory of market exchange on the basis of transaction costs and efficiency wages. I argue that neither approach allows for a study of systematic market-based power. Next, I identify two attempts to construct a theory of market exchange rooted in a description of social interaction and economic power. Part 2 of Section II examines the theory of contested exchange put forth by Samuel Bowles and Herbert Gintis. Part 3 of Section II applies contested exchange theory to the case of consumer services. I note that contested exchange in consumer markets results in a theory of consumer sovereignty. In part 4 of Section II, I consider David Levine's attempt to link market exchange to the requirements of individual personality development. I argue that Levine provides a salient counterpoise to Bowles and Gintis. From Levine's perspective, individuals use consumer goods to fulfill certain social needs - namely the individual's recognition by others as a unique entity. …

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