You appear to be lacking social ontology for collective entities. Try this one on for size: http://www.colorado.edu/Sociology/gimenez/soc.5001/durk1.html

Alternatively, you could get all methodologically individualist (no real agents but humans) but then you would have to admit “there is no such thing as society” and other such nasty things. Or government, for that matter.

But in basic terms, the markets are nothing more than the aggregate of what people are prepared to take a punt on. I opened a stocks and shares ISA account for the first time last week in the hope of finding some way to get an inflation matching saving. For the first time, I was confronted with a bewildering array of options for investing in the UK and the world. Which company, which sector, which government bond? Which currency?

I am now a miniscule part of the “market” and all I am pushing for is a relatively safe place to store some of the value I have earned. That is why the market is important, not least because Governments never have the resources to fulfill all their electoral committments, so they are always trying to borrow some of those saving. Well, this isn’t (yet) a fascist or corporatist economy where private value can be seized and used for Government projects. That is why Government’s have to persuade savers that they are a sound place to lend.

As society is the sum of individuals, markets are the sum of transactions made by individuals.

Next time you hear that ‘the markets’ are pushing for this, that or the other, substitute the words ‘the bankers’ into the sentence. It will take you rather closer to the reality of the situation.

Actually it takes you further away from the reality, as the majority of London stock market trading activity is not carried out by banks, or the bankers working inside them.

I’m not so sure that your title really works. I’d agree that the term ‘market’ is frequently misunderstood as some type of force that exists outside of human interaction. I’d also agree that economists and commentators often refer to it blandly as some type of coherent entity with a will, thereby obscuring the fact that a market is just shorthand for a myriad of independent actions undertaken by independent individuals. But that doesn’t equate to a market not existing.

“notion of reification could hardly come up with a more clear-cut example.”

Ooooh, I dunno. Democracy, will of the people, equally reified aren’t they?

I’m not so sure that your title really works.

To be fair, it’s probably Sunny who wrote the title.

I can see where Dave is coming from by saying that the ‘ market ‘ is not an entity of itself. However, financial markets are a numerical manifestation of sentiment. What determines sentiment is the newsflow and fundamentals. Kind of applying a rather wide meaning for the term banker to say that financial markets are just the views of bankers.

Should governments care how participants in financial markets interpret their policies? Well it depends which markets we are speaking about. For example, look at how the various markets responded to the outcome of the eurozone summit. The ever hyper skittish equity markets gave a big twinkles up and rallied strongly. Governments working together had changed the sentiment to positive. The euro in the FX rallied because there was no big fallout that would lead to Germany dumping the EZ and leaving the rest to their fate. However, the only market that really mattered was the Italian bond market and there was a twinkles down because although sentiment had changed the fundamentals had not. Italy was still run by a clown. Italian debt was still too high and growth too low. Since Italians are the ones who continually vote to be run by a clown: why would anyone believes they will change until they are forced to change? All could be lumped under financial markets, but they are saying different things.

Governments are free to follow any policies that they want and buyers of their debt will just keep pricing their risk until they can no longer afford to borrow.
Does that mean governments are being forced to do ‘ markets ‘ bidding ? Governments are just not in a position to ignore the bond market when that is where they are raising money.

2
I would go further and suggest that society is bigger than the sum of its’ individual parts, likewise, the market is also bigger than the sum of its’ individual transactions.
But the OP is correct, we do refer to the market as if it is a being with a mind of its’ own, I suppose this may suit certain politicians who can blame ‘the market’ when things go badly. Or alternatively, for pro-capitalist supporters, they can indicate how markets have brightened all of our lives.

It isn’t really the bankers as some sort of independent group. It’s our very own pension fund managers, ISA fund managers, insurance underwriters etc. if you use these you are contributing to the market.

Hurray for this post! I’ve been saying the same thing for a while now. Markets are not living creatures, they don’t have “emotions”. Enough of treating them as if they do.

It is worrying how unquestioningly people assign markets and the economy all sorts of “God-like” attributes…

“It’s our very own pension fund managers, ISA fund managers, insurance underwriters etc.”

Yeah, like we have any say over what these rarefied few decide.

We are forced to deal with them, to a greater or lesser extent, depending on our circumstances, but effectively our control over their actions is zero.

Well said Dave and Mary.

Yes, people always complain about having to do what ” the markets” want – why should we be dictated to by “markets”? I agree, it is better to think of people than markets.

To take example of government debt, far better to replace “markets” with “people we need to lend us money “. Then it is easier to see why governments need to pay attention to what they people they want to borrow money from think.

>>>”As society is the sum of individuals, markets are the sum of transactions made by individuals.”

Yes, with some individuals having a billion times more votes than others.

>>>To take example of government debt, far better to replace “markets” with “people we need to lend us money”

Or, far better again, to replace with “people who took all the value we created and didn’t pay a fair share of tax on it, that we now need to lend us money”.

No such thing as a Hegelian Marxist I’m afraid. And it is quite possible and routinely observed that individuals acting in aggregate do not necessarily act as they would on their own. Take Capitalism itself for example.

@11. Firstly, I was making the point it isn’t the ‘bankers’ – the infantile bad-guy of the current protests – it is much more than that which operate with the market.

It is very simple – if you don’t like the system don’t use it. Don’t have a pension fund that invests in the stock market, insurance that is guaranteed by the market or savings that invest in the arket. Use credit unions, mutual savings and insurance societies which have a non-market policy (if there isn’t one, why not campaign to start one).

Moaning about the markets while benefiting from them is rank hypocrisy.

Isn’t the point that “the markets” are just a construct, and therefore their structure (and operation) are not immutable, so we should make sure that they exist in a socially beneficial form.

I’m surprised to see no reference here to the research papers of Robert Shiller and his criticism of the efficient market hypothesis – try the entry in Wikipedia:

“In 1981 Shiller published an article in the American Economic Review titled ‘Do stock prices move too much to be justified by subsequent changes in dividends?’ He challenged the efficient markets model, which at that time was the dominant view in the economics profession. Shiller argued that in a rational stock market, investors would base stock prices on the expected receipt of future dividends, discounted to a present value. He examined the performance of the U.S. stock market since the 1920s, and considered the kinds of expectations of future dividends and discount rates that could justify the wide range of variation experienced in the stock market. Shiller concluded that the volatility of the stock market was greater than could plausibly be explained by any rational view of the future.”
http://en.wikipedia.org/wiki/Robert_J._Shiller

That critique was devastating. In 2000, he famously diagnosed Irrational Exuberance in stock market prices and warned of steep declines in prices as the bubble subsided.

@15 Ian
Sadly insurance companies that adopt a non-market policy go bust. Credit unions and mutual savings are good if you can get someone competent to run them for nothing or peanuts.

@18 John77

Isn’t that all a bit ‘have your cake and eat it’?

Perhaps the markets do it best because they work as they do – to get the good you have to accept some of the bad. If the markets are simply an expression of those in it, and those in it are the ones making such things as insurance & savings work, then it seems a bit rich for people to be constantly implying how evil the market economy is.

@20: “Perhaps the markets do it best because they work as they do – to get the good you have to accept some of the bad.”

Like socialism, capitalism also comes in 57 different varieties.

There are different varieties of capital markets – for example the financial capital markets in America and Britain or the bank-based capital market in, say, Germany. There is also the European model of the Social Market Economy, the historic roots of which go back to Bismarck, first chancellor of the German empire, who has the credits for creating a state-pension scheme as well as a social insurance scheme for healthcare costs. There is the German institution of Mitbestimmung (co-determination) for workers’ representatives to sit on company boards. There’s a literature on whether the Anglo-American common law traditions – which have relatively strong protection for creditor rights – or the Napoleonic or Germanic law codes are more conducive of economic growth and prosperity.

And there is that elusive question of whether a combination of a nation’s traditions, culture and institutions fosters “trust” – from Francis Fukuyama: “people who do not trust one another will end up cooperating only under a system of formal rules and regulations, which have to be negotiated, agreed to, litigated and enforced, sometimes by coercive means. . . Widespread distrust in a society . . . imposes a kind of tax on all forms of economic activity, a tax that high-trust societies do not have to pay.” [Francis Fukuyama: Trust (Penguin Books, 1996). p. 27]

Compare the FT on 13 December 2010: “Meanwhile, the level of distrust in politicians has soared. Some 40 per cent ‘almost never’ trust government to put the national interest first, compared with 11 per cent in 1987. And in 1983, 90 per cent believed banks to be well run. Now only 19 per cent do, their reputation below that of even the press.”

The markets, in all their manifestations, basically constitute a gigantic game. It is a game which has a morality, too, and that morality is defined by the rules of the game. The rules are pretty simple – make money, and keep making money, and for all commercial entities that can be refined down to maximise profit, minimise loss. Markets do not respond to need or desire, but to buying power; markets do not exist to enrich lives or protect the weak or educate or provide healthcare or build houses and roads. It is, as another pointed out, the aggregate of a myriad transactions and decisions, all of which are predicated on the simple rules mentioned above.

Therefore, the motivations, aims and ambitions of those most committed to modern globalised markets are not to be trusted. Money flows must be stringently re-regulated, currency exchange markets similarly so, and derivative markets – the economic equivalent of AIDS – should be dismantled and such financial instruments outlawed. Once such measures have been taken, we might be on the road to a safer, more democratic world.