The Market as Traffic-An Economic Metaphor
McDowell, George R., Journal of Economic Issues
"[T]he market is ... a traffic in claims, not in things," wrote John F. A. Taylor (1966). In that assertion, Taylor suggested that the analysis of market behavior may be more complex than many economists are prepared to contemplate even though most understand it to be a true statement. Taylor further explained that in seeking to understand markets, it is not the movement of commodities that is important but the relationships between people with respect to the things. John R. Commons, exploring the relevant units of analysis for institutional economics, affirmed Taylor's view: "The ultimate unit of activity must also be a unit of mutually dependent interests. The relation of man to man is one of interdependence as well as conflict" (1961).
In all societies, the relationships between people and their behavior are influenced by many things. Each society has a cultural basis of behavior unique to its own traditions. The loading of public buses in England is quite different from in Italy, and in Japan the subway system hires "pushers" to assure that the trains are loaded quickly. Are these behaviors indicative of market behavior? The notion that behavior in one domain may be instructive to other behavior including economic behavior was made explicit by Thorstein Veblen in his famous essay, "Why Is Economics Not an Evolutionary Science?" (1898). Wrote Veblen, "Since each of these passably isolable interests [from the preceding sentence], eg. the economic, aesthetic, sexual, humanitarian, devotional interests, is a propensity of the organic agent man, with his complex of habits of thought, the expression of each is affected by habits of life formed under the guidance of all the rest."
Let us take Taylor quite literally and examine "the market is ... traffic" as an economic metaphor. Economic and driving behavior in Albania, China, and the United States will supply the basis for developing the metaphor.
In Albania the Soviet-style society under communism for the almost fifty years prior to 1992 is best characterized as a culture of privilege. Since janitors earned almost as much as university "pedagogues," what distinguished people in the society was who they were, or as the Albanian's codified it, "biografi." Depending on one's biografi one could be imprisoned or banished to a remote village for years even for the most trivial offense. Displaying a poster of the Beatles in a university dorm room brought one of these harsh sentences (Luan Xhoja, personal communication, Tirana, Albania, 1995). If instead of a "bad biography" you had a "good biography," then you and yours would have access to the best schools and professions and to what few luxuries the society offered. Who you were was all important! Who you were was determined by who your father, mother, aunts, uncles, and friends were and what their relationship was to the regime.
What made these personal relationships (biografi) so important? It was, John Litwack argued, fundamental to the character of Soviet-style economies (1991). The Litwack argument about the importance of individual contacts in Soviet-style economies goes something like this:
The Plan ("yearly material balance plan") distributed inputs and proscribed output quotas for all enterprises in the economy. But the Plan was never an adequate basis for operating the economy, and most enterprises needed to make constant administrative adjustments. Indeed, argued Litwack, the continual adjustments to the Plan were a prerequisite to Soviet-type planning and led some to describe the system as centrally administered rather than centrally planned. The transactions to make those adjustments required both information and trust, but since the adjustments were strictly extra-legal, the trust had to be based on something besides laws.
Most state enterprises had an expediter with an intricate web of long-term personal contacts, many based on familial relationships. The expediter was prepared to swap supplies and services so that quotas could be achieved. …