Not only are they not moral, they're not inherently efficient, let alone just or fair. Markets possess no magic capacity for resolving differences that human beings can't (or won't), and they don't know more or less than we do. They're not bad, but they're not good either. Markets are agnostic to morality.

Markets aren't conscious. They don't have moods or opinions. They're not aware in the way that humans, bugs, or even plants are, so they're not really "theys" or even "its" as much as they're artificial, impermanent constructs that are entirely dependent on people and their actions. Markets can't originate anything -- there's no such thing as a "market-based solution" -- they can only vet things based on (and only up to) the limitations of how they're structured by the people who create and manage them. Markets can't calculate value or costs that aren't submitted to them (which is why economics has the concept called "externalities" for real things that are utterly invisible to one financial model or another, like pollution spewed into the atmosphere)

The aphorisms and analogies about markets being naturally "free" or that competition within them evidences "survival of the fittest" are not only incoherent but factually incorrect. Nature is far from an ideal state to which we should aspire. Animals spend most of their waking time searching for food when they're not avoiding becoming meals for other animals. They're free to compete until the rules change, which happens all the time, throwing one species into crisis while elevating another into a better niche. Wasps are more "fit" as the lay their eggs in living caterpillars, and weeds are "free" to spread across a field and eradicate what's already growing there.

We invented civilization so that we didn't have to live like that.

And markets aren't free insomuch as they're man-made; they're free like baseball games and blackjack tables are free, as in you can operate freely within the constraints of the rules. They were never free in the past and will never be so in the future. Usually, proponents of free markets are either blind or purposefully oblivious to the aspects of markets that favor or reward them in greater proportion to everyone else.

There is no "invisible hand" of pure self-interest that drives participants in a marketplace to achieve a good greater than one they could have collectively imagined. People who quote Adam Smith on it go far beyond what he intended, since the idea came in a book entitled The Wealth of Nations that came after a prior book, The Theory of Moral Sentiments, in which it's believed Smith shared his most important insights. Smith thought that human action had a significant moral dimension and that individuals had a responsibility to care for and support one another; he saw the mechanism of the market as the neutral place where these sentiments could be valued and shared. He also believed that governments had a serious role in any society. Any so-called "invisible hand" was a function to realize these very visible purposes.

So what does this have to do with branding and marketing? Frankly, it raises a few questions that I simply can't answer, and it bugs me:

  • How did markets get branded as such an absolute good? I suspect it may be a function of how the alternatives of state-controlled markets earned such rotten reputations, at least in part. But faith in the concept borders on religious fervor. Beverage and toothpaste brands should be so lucky.
  • Why are we so comfortable with such an uncomfortable idea? Even when the reality suggests doing otherwise, your average American (yours truly included) puts their money and trust in frighteningly unpredictable tools. Is it a function of having few/no other alternatives, or of hope trumping reasonable expectation?
  • When did any market prove that it could "fix" public policy problems? The idea getting bandied about these days that we could outsource a thorny issue like health care to a marketplace is stunningly vacuous, yet people suggest it without laughing. Again, is it because we can't conceive of (or accept) an alternative?

I've been an outspoken advocate of more truth and clarity in the marketing communications coming from the major financial services brands, especially in the wake of the lingering global economic meltdown, yet few if any of them have opted to tell us anything different than variations on the "why worry, trust us" theme that worked over the past half-century. Maybe it's because they know we consumers have this nutty, almost genetic predisposition to have faith in the market-driven premise...not just as hopeful investors, but in faith that markets are mechanisms for solving the public policy questions that we can't or won't fix ourselves.

If they're right, we’re really, really wrong. Markets aren't moral. Only we can be.

(Image credit: efficiency in action)

Original Post: http://www.dimbulb.net/my_weblog/2011/06/markets-arent-moral.html