Tuesday, November 15, 2005

If you don't like the market, leave it!

These past few weeks have been a bit frustrating for me. Everyone has been angry at petroleum companies and I can't get a clear explanation of why. Friends, bloggers, newspaper columnists, and even Senators have been saying that petroleum companies must be manipulating the gasoline market, but the only evidence that they present is high gasoline prices and high profits in the wake of Hurricane Katrina.

I searched the web in the hope of finding a clear argument against the oil companies, but could find none. However, I did find one commentator who succinctly summarized the situation:
(T)he basic problem is that we live in a market economy in which only a small fraction of the population actually seems to understand markets or be comfortable with their adverse outcomes.
In other words, high gas prices and high oil company profits are exactly what we should expect from a market economy after a hurricane strikes a region with a lot of oil refineries. Why do so many people have a problem with this?

The answer seems to be that people are offended that the oil companies are benefiting at everyone else's expense. The thing that these critics seem to ignore is that this is how markets work every day; there is nothing special about the behavior of the oil companies. It's a hard fact of life that strangers tend not to care about strangers, and consequently most of our interactions with strangers are driven by selfishness. The lack of consideration is increased when the interactions are impersonal, as most market interactions are.

I'm going to state this clearly: nobody in the oil companies cares one bit for our welfare. Not the CEO, not the engineers, and not the marketers who set the prices. We would be fools if we expected them to care. Everyone knows that it is foolish to depend upon the kindness of strangers; it is equally foolish to depend upon the fairness of strangers, especially in a situation where "fairness" doesn't have a clear definition.

This illustrates a basic fact about markets which is both their strength and their weakness: markets are a way for people to cooperate when they have absolutely no concern for each other's welfare. This is good, because it allows us to find benefits in situations where no benefits would exist otherwise. However, this is also bad because if we allow ourselves to become dependent upon a market, then as soon as it is no longer in our partner's interest to provide us with what we need (whether it is goods or a job), then we suddenly have no way of getting our hands on the things that we need.

Many people seem to think that our dependence on markets is inevitable, and consequently they try to regulate them to make sure that they never fail us. They try to regulate the market by means of the government, but the government suffers from the exact same weaknesses as the market: the people who run the government don't give a damn about us. Our relationship with the government is just as impersonal as our relationships with corporations, and it is just as strongly influenced by selfishness. The corporations need our business, and the politicians need our votes, but there's only so much influence that we can exert with our votes.

If we want economic systems that are based around the idea that we actually care for the people who are dependent upon us, then we need to build our economic lives around those people: our friends, our family, our churches, and our neighbors. At first glance, this may seem impossible and completely foreign to the way that we live our lives. However, every day we make decisions that affect the extent that we are dependent upon markets, and many persons are consciously making the decision to minimize their dependence on markets.

Below are a number of links to resources that can help us to minimize our dependence upon uncaring and unpredictable markets. But first, I want to make one more point: each of us has the ability to decrease our dependence upon the market. This ability may seem to be minimal at the moment, but as more of us decide to consciously reduce our dependence on the market to provide us with essentials, our ability to do so will increase. We will gain from each other's experiences, and we will gain the ability to create institutions to replace market institutions. Many of us have immense wealth and we can choose to use this wealth to create a more secure and humane economy, or we can choose to squander this wealth on frivolous luxuries and status symbols.

Update: Perry Eidelbus has a good post that distills this issue to its essence--the justice of this situation depends upon the extent that we can choose to not buy gasoline.

The following links provide commentary, information, resources, and social networks that can help us to step outside of the markets. This list is by no means exhaustive, or even the best stuff out there, but is what I could pull together at the moment. I'll be addressing this topic in future posts and will provide more resources as I come across them.

  1. Could you live without money?
  2. Community Resource Management: Old Rules, and New Sustainable Ones
  3. The Populist Farmer
  4. Cohousing Association of the United States
  5. What is Counter-economics
  6. The "Living simply" Yahoo! group
  7. The New American Dream, the Shared Capitalism Institute, the Open Co-op.
  8. Off-grid blog. Exteme, but extremists are always good for experimenting with new ways of doing things.


Geoffrey Styles said...

Thanks for the link to Energy Outlook. The only thing in your argument that I'd take issue with is that no one in oil companies cares. Having spent 8 years in supply and distribution, directly involved with ensuring reliable supplies at the refinery and service station level, I can say that most of the folks in that part of the business work incredibly hard to keep your local gas station from running out. It's not just greed that motivates them, but a combination of professionalism and a recognition of the importance of the work. I can only imagine the lengths these folks had to go to in order to keep things running as smoothly as they did, post Katrina and Rita. It's a 24/7 job, in spades.

Adam said...

Thanks for elaborating on that point. Of course you're right: many people do take pride in their work. I simplified and exaggerated with the hope of emphasizing that this is a secondary concern (after providing for one's own family) and that by the time the good or service has made it through the market, this pride in a job well done has been transformed into a monetary value and the seller will charge the consumer as much as he can get away with.