Thursday, September 10, 2009

The state and the market - two competing institutons

In politics there is often a gap between those that want that a problem should be regulated by the state or by the market. The former are often socialist and the latter liberals, somewhat simplified. One can view both the state and the market as social institutions that regulate the relationship between people. Which institution you like the best may depend on how it is organised and which context you are in. The same person that is sceptical to market solutions may feel fully at ease and on an equal footing with the farmer from which she buys her organic veggies, and may think that it awful that the government forces him to keep her chicks inside because of bird flu or that he has to spend a lot of money to invest in a new packing shed for the veggies to comply with government regulations. And she that is against "big government" may demand that governments step in and take over bankrupt banks or support ailing car industries.Not to speak of that they often support big tax-financed repressive forces (military and police).

In shape and form the market and the state are very different. We, as citizens have very little access to the state, our role is to pay taxes and regularly cast a vote for who should rule us. The market on the other hand is a lot more participatory and at least in theory we are all equal (admittedly a bit theoretical). The market can be seen as a social network, and with that view the difference to the state is less. And it becomes even less when governments, like they increasingly do, take over the management methods and organisational principles from them market place; the language of the market place (we all heard government agencies speaking about clients and customers) and finally purchase a lot of its services in the market place.

The problem with the market is mainly that those that already have the upper hand, those with better information or better bargaining power gets a better deal most of the time and that the gaps tend to increase rather than decrease. Government take-over of markets have been disastrous most of the time, but the market take-over of government is almost as bad. The main challenge for the future lies not only in improvement of the workings of the market and improvements in democracy and finding the right balance between market and state. I believe it lies as much or more in the development of new institutions that will take over relevant parts of what is now done by either market or state.

Herein lies the real opportunity for change.

1 comment:

  1. Everything start from the family. Just look at most western families and their children, how they are "bring-up" and how they "look" at their parents-a world of so called "civilized society". Any good institutions must come-up from healthy family traditions such as the famous American folks home videos-Little House on the Prairie.