STUDY OF "MARKETS"

Study of markets

The study of actual existing markets made up of persons interacting in space and place in diverse ways is widely seen as an antidote to abstract and all-encompassing concepts of “the market” and has historical precendent in the works of Ferdinand Braudel and Karl Polanyi. The latter term is now generally used in two ways. First, to denote the abstract mechanisms whereby supply and demand confront each other and deals are made. In its place, reference to markets reflects ordinary experience and the places, processes and institutions in which exchanges occurs.^[1] Second, the market is often used to signify an integrated, all-encompassing and cohesive capitalist world economy. A widespread trend in economic history and sociology is skeptical of the idea that it is possible to develop a theory to capture an essence or unifying thread to markets. ^[2]. For economic geographers, reference to regional, local, or commodity specific markets can serve to undermine assumptions of global integration, and highlight geographic variations in the structures, institutions, histories, path dependencies, forms of interaction and modes of self-understanding of agents in different spheres of market exchange ^[3] Reference to actual markets can show capitalism not as a totalizing force or completely encompassing mode of economic activity, but rather as “a set of economic practices scattered over a landscape, rather than a systemic concentration of power” ^[4]

C. B. Macpherson identifies an underlying model of the market underlying Anglo-American liberal-democratic political economy and philosophy in the seventeenth and eighteenth centuries: Persons are cast as self-interested individuals, who enter into contractual relations with other such individuals, concerning the exchange of goods or personal capacities cast as commodities, with the motive of maximizing pecuniary interest. The state and its governance systems are cast as outside of this framework.^[5]). This model came to dominant economic thinking in the later nineteenth century, as economists such as Ricardo, Mill, Jevons, Walras and later neo-classical economics shifted from reference to geographically located marketplaces to an abstract “market” ^[6]. This tradition is continued in contemporary neoliberalism, where the market is held up as optimal for wealth creation and human freedom, and the states’ role imagined as minimal, reduced to that of upholding and keeping stable property rights, contract, and money supply. This allowed for boilerplate economic and institutional restructuring under structural adjustment and post-Communist reconstruction. ^[7]

Similar formalism occurs in a wide variety of social democratic and Marxist discourses that situate political action as antagonistic to the market. In particular, commodification theorists such as Georg Lukacs insist that market relations necessarily lead to undue exploitation of labour and so need to be opposed in toto. ,^[8]). Pierre Bourdieu has suggested the market model is becoming self-realizing, in virtue of its wide acceptance in national and international institutions through the 1990s. ^[9]). The formalist conception faces a number of insuperable difficulties, concerning the putatively global scope of the market to cover the entire Earth, in terms of penetration of particular economies, and in terms of whether particular claims about the subjects (individuals with pecuniary interest), objects (commodities), and modes of exchange (transactions) apply to any actually existing markets.

A central theme of empirical analyses is the variation and proliferation of types of markets since the rise of capitalism and global scale economies. The Regulation School stresses the ways in which developed capitalist countries have implemented varying degrees and types of environmental, economic, and social regulation, taxation and public spending, fiscal policy and government provisioning of goods, all of which have transformed markets in uneven and geographical varied ways and created a variety of mixed economies. Drawing on concepts of institutional variance and path dependency, varieties of capitalism theorists (such as Hall and Soskice) identify two dominant modes of economic ordering in the developed capitalist countries, “coordinated market economies” such as Germany and Japan, and an Anglo-American “liberal market economies”. However, such approaches imply that the Anglo-American liberal market economies in fact operate in a matter close to the abstract notion of “the market”. While Anglo-American countries have seen increasing introduction of neo-liberal forms of economic ordering, this has not lead to simple convergence, but rather a variety of hybrid institutional orderings. ^[10]. Rather, a variety of new markets have emerged, such as for carbon trading or rights to pollute. In some cases, such as emerging markets for water, different forms of privatization of different aspects of previously state run infrastructure have created hybrid private-public formations and graded degrees of commodification, commercialization and privatization ^[11]

Problematic for market formalism is the relationship between formal capitalist economic processes and a variety of alternative forms, ranging from semi-feudal and peasant economies widely operative in many developing economies, to informal markets, barter systems, worker cooperatives, or illegal trades that occur in most developed countries. Practices of incorporation of non-Western peoples into global markets in the nineteenth and twentieth century did not merely result in the quashing of former social economic institutions. Rather, various modes of articulation arose between transformed and hybridized local traditions and social practices and the emergence world economy. So called capitalist markets in fact include and depend on a wide range of geographically situated economic practices that do not follow the market model. Economies are thus hybrids of market and non-market elements^[12]

Helpful here is J. K. Gibson-Graham’s complex topology of the diversity of contemporary market economies describing different types of transactions, labour, and economic agents. Transactions can occur in underground markets (such as for marijuana) or be artificially protected (such as for patents). They can cover the sale of public goods under privatization schemes to co-operative exchanges and occur under varying degrees of monopoly power and state regulation. Likewise, there are a wide variety of economic agents, which engage in different types of transactions on different terms: One cannot assume the practices of a religious kindergarten, multinational corporation, state enterprise, or community-based cooperative can be subsumed under the same logic of calculability (pp. 53-78). This emphasis on proliferation can also be contrasted with continuing scholarly attempts to show underlying cohesive and structural similarities to different markets. ^[13]

A prominent entry point for challenging the market model’s applicability concerns exchange transactions and the homo economicus assumption of self-interest maximization. There are now a number of streams of economic sociological analysis of markets focusing on the role of the social in transactions, and the ways transactions involve social networks and relations of trust, cooperation and other bonds. ^[13]. Economic geographers in turn draw attention to the ways in exchange transactions occur against the backdrop of institutional, social and geographic processes, including class relations, uneven development, and historically contingent path dependencies ^[14]. A useful schema is provided by Michel Callon’s concept of framing: Each economic act or transaction occurs against, incorporates and also re-performs a geographically and cultural specific complex of social histories, institutional arrangements, rules and connections. These network relations are simultaneously bracketed, so that persons and transactions may be disentangled from thick social bonds. The character of calculability is imposed upon agents as they come to work in markets and are “formatted” as calculative agencies. Market exchanges contain a history of struggle and contestation that produced actors predisposed to exchange under certain sets of rules. As such market transactions can never be disembedded from social and geographic relations and there is no sense to talking of degrees of embeddedness and disembeddeness ^[15].

An emerging theme worthy of further study is the interrelationship, interpenetrability and variations of concepts of persons, commodities, and modes of exchange under particular market formations. This is most pronounced in recent movement towards post-structuralist theorizing that draws on Foucault and Actor Network Theory and stress relational aspects of personhood, and dependence and integration into networks and practical systems. Commodity network approaches further both deconstruct and show alternatives to the market models concept of commodities. Here, both researchers and market actors are understood as reframing commodities in terms of processes and social and ecological relationships. Rather than a mere objectification of things traded, the complex network relationships of exchange in different markets calls on agents to alternatively deconstruct or “get with” the fetish of commodities. ^[16] Gibson-Graham thus read a variety of alternative markets, for fair trade and organic foods, or those using Local Exchange Trading Systems as not only contributing to proliferation, but also forging new modes of ethical exchange and economic subjectivities.

Most markets are regulated by state wide laws and regulations. While barter markets exist, most markets use currency or some other form of money.

NOTES ON "MARKET"

Notes

1. ^ Callon, M. (1998) "Introduction: The Embeddedness of Economic Markets in Economics." In The Laws of the Markets, edited by Michel Callon. Basic Blackwell/The Sociological Review pp 1-57 1998, p.2).
2. ^ Swedberg, Richard (1994) “Markets as Social Structures” The Handbook of Economic Sociology. Ed. Neil Smelser and Richard Swedberg. Princeton University Press. 255-2821994, p. 258)
3. ^ Peck, J. (2005) “Economic Geographies in Space” Economic Geography 81(2) 129-175.
4. ^ (Gibson-Graham, J.K. (2006) Postcapitalist Politics. University of Minnesota Press,. p.2).
5. ^ (MacPherson, C.B. (1962) The Political Theory of Possessive Individualism: From Hobbes to Locke. Oxford Clarendon Press. p.3
6. ^ (Swedberg, 1994, p. 258
7. ^ Harvey, David (2005) A Short History of Neoliberalism Oxford University Press.
8. ^ Lukács, Georg. (1971) History and Class Consciousness. Trans. Rodney Livingstone. Merlin Press. London.p. 87
9. ^ Bourdieu, Pierre (1999) Acts of Resistance: Against the Tyranny of the Market. The New Press.p. 95
10. ^ Peck, supra, p. 154)
11. ^ Bakker, Karen (2005) “Neoliberalizing Nature?: Market Environmentalism in water supply in England and Wales” Annals of the Association of American Geographers 95 (3), 542-565
12. ^ (Mitchell, Timothy (2002) Rule of Experts. University of California Pressp. 270; Gibson-Graham 2006, supra pp. 53-78)
13. ^ ^{a b} Swedberg, 1994, p. 267
14. ^ Martin, Ron (2000) “Institutional Approaches in Economic Geography” Handbook of Economic Geography. Ed. Eric Sheppard and Trevor J. Barnes. Blackwell Publishers.Peck, 2005
15. ^ Callon, 1998; Mitchell, 2002, p. 291,
16. ^ Hughes, Alex (2005) “Geographies of Exchange and Circulation: alternative trading spaces” Progress in Human Geography

Trade

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This article is about the economical mechanism. For other uses, see Trade (disambiguation).

Trade is the willing exchange of goods, services, or both. Trade is also called commerce. A mechanism that allows trade is called a market. The original form of trade was barter, the direct exchange of goods and services. Modern traders instead generally negotiate through a medium of exchange, such as money. As a result, buying can be separated from selling, or earning. The invention of money (and later credit, paper money and non-physical money) greatly simplified and promoted trade. Trade between two traders is called bilateral trade, while trade between more than two traders is called multilateral trade.

Trade exists for many reasons. Due to specialization and division of labor, most people concentrate on a small aspect of production, trading for other products. Trade exists between regions because different regions have a comparative advantage in the production of some tradable commodity, or because different regions' size allows for the benefits of mass production. As such, trade at market prices between locations benefits both locations.

Trading can also refer to the action performed by traders and other market agents in the financial markets.

Contents [hide] 1 History of trade 1.1 Development of money 1.2 Current trends 1.2.1 Doha rounds 1.2.2 China 2 International trade 3 Organization of trade 3.1 International organizations 3.1.1 Free trade areas 4 References 5 External links

HISTORY OF TRADE

History of trade

Part of a series on Trade routes

Amber Road · Hærvejen . Incense Route

Kamboja-Dvaravati Route . King's Highway

Roman-India routes . Royal Road

Silk Road · Spice Route . Tea route

Varangians to the Greeks · Via Maris

Triangular trade .Volga trade route

Trans-Saharan trade . Salt Route

Hanseatic League . Grand Trunk Road

Trade originated with the start of communication in prehistoric times. Trading was the main facility of prehistoric people, who bartered goods and services from each other before the innovation of the modern day currency. Peter Watson dates the history of long-distance commerce from circa 150,000 years ago.^[1]

Trade is believed to have taken place throughout much of recorded human history. There is evidence of the exchange of obsidian and flint during the stone age. Materials used for creating jewelry were traded with Egypt since 3000 BC. Long-range trade routes first appeared in the 3rd millennium BC, when Sumerians in Mesopotamia traded with the Harappan civilization of the Indus Valley. The Phoenicians were noted sea traders, traveling across the Mediterranean Sea, and as far north as Britain for sources of tin to manufacture bronze. For this purpose they established trade colonies the Greeks called emporia. From the beginning of Greek civilization until the fall of the Roman empire in the 5th century, a financially lucrative trade brought valuable spice to Europe from the far east, including China. Roman commerce allowed its empire to flourish and endure. The Roman empire produced a stable and secure transportation network that enabled the shipment of trade goods without fear of significant piracy.

The fall of the Roman empire, and the succeeding Dark Ages brought instability to Western Europe and a near collapse of the trade network. Nevertheless some trade did occur. For instance, Radhanites were a medieval guild or group (the precise meaning of the word is lost to history) of Jewish merchants who traded between the Christians in Europe and the Muslims of the Near East.

The Sogdians dominated the East-West trade route known as the Silk Road after the 4th century AD up to the 8th century AD, with Suyab and Talas ranking among their main centeres in the north. They were the main caravan merchants of Central Asia.

From the 8th to the 11th century, the Vikings and Varangians traded as they sailed from and to Scandinavia. Vikings sailed to Western Europe, while Varangians to Russia. The Hanseatic League was an alliance of trading cities that maintained a trade monopoly over most of Northern Europe and the Baltic, between the 13th and 17th centuries.

Vasco da Gama restarted the European Spice trade in 1498. Prior to his sailing around Africa, the flow of spice into Europe was controlled by Islamic powers, especially Egypt. The spice trade was of major economic importance and helped spur the Age of Exploration. Spices brought to Europe from distant lands were some of the most valuable commodities for their weight, sometimes rivaling gold.

In the 16th century, Holland was the centre of free trade, imposing no exchange controls, and advocating the free movement of goods. Trade in the East Indies was dominated by Portugal in the 16th century, the Netherlands in the 17th century, and the British in the 18th century. The Spanish Empire developed regular trade links across both the Atlantic and the Pacific Oceans.

In 1776, Adam Smith published the paper An Inquiry into the Nature and Causes of the Wealth of Nations. It criticised Mercantilism, and argued that economic specialisation could benefit nations just as much as firms. Since the division of labour was restricted by the size of the market, he said that countries having access to larger markets would be able to divide labour more efficiently and thereby become more productive. Smith said that he considered all rationalisations of import and export controls "dupery", which hurt the trading nation at the expense of specific industries.

In 1799, the Dutch East India Company, formerly the world's largest company, became bankrupt, partly due to the rise of competitive free trade.

In 1817, David Ricardo, James Mill and Robert Torrens showed that free trade would benefit the industrially weak as well as the strong, in the famous theory of comparative advantage. In Principles of Political Economy and Taxation Ricardo advanced the doctrine still considered the most counterintuitive in economics:

When an inefficient producer sends the merchandise it produces best to a country able to produce it more efficiently, both countries benefit.

The ascendancy of free trade was primarily based on national advantage in the mid 19th century. That is, the calculation made was whether it was in any particular country's self-interest to open its borders to imports.

John Stuart Mill proved that a country with monopoly pricing power on the international market could manipulate the terms of trade through maintaining tariffs, and that the response to this might be reciprocity in trade policy. Ricardo and others had suggested this earlier. This was taken as evidence against the universal doctrine of free trade, as it was believed that more of the economic surplus of trade would accrue to a country following reciprocal, rather than completely free, trade policies. This was followed within a few years by the infant industry scenario developed by Mill promoting the theory that government had the "duty" to protect young industries, although only for a time necessary for them to develop full capacity. This became the policy in many countries attempting to industrialise and out-compete English exporters. Milton Friedman later continued this vein of thought, showing that in a few circumstances tariffs might be beneficial to the host country; but never for the world at large.^[2]

The Great Depression was a major economic recession that ran from 1929 to the late 1930s. During this period, there was a great drop in trade and other economic indicators.

The lack of free trade was considered by many as a principal cause of the depression. Only during the World War II the recession ended in United States. Also during the war, in 1944, 44 countries signed the Bretton Woods Agreement, intended to prevent national trade barriers, to avoid depressions. It set up rules and institutions to regulate the international political economy: the International Monetary Fund and the International Bank for Reconstruction and Development (later divided into the World Bank and Bank for International Settlements). These organisations became operational in 1946 after enough countries ratified the agreement. In 1947, 23 countries agreed to the General Agreement on Tariffs and Trade to promote free trade.

Free trade advanced further in the late 20th century and early 2000s:

• 1992 European Union lifted barriers to internal trade in goods and labour.
• January 1, 1994 the North American Free Trade Agreement (NAFTA) took effect
• 1994 The GATT Marrakech Agreement specified formation of the WTO.
• January 1, 1995 World Trade Organization was created to facilitate free trade, by mandating mutual most favoured nation trading status between all signatories.
• EC was transformed into the European Union, which accomplished the Economic and Monnetary Union (EMU) in 2002, through introducing the Euro , and creating this way a real single market between 13 member states as of January 1, 2007.
• 2005, the Central American Free Trade Agreement was signed; It includes the United States and the Dominican Republic.

Development of Money

Development of money

Main article: History of money

The first instances of money were objects with intrinsic value. This is called commodity money and includes any commonly-available commodity that has intrinsic value; historical examples include pigs, rare seashells, whale's teeth, and (often) cattle. In medieval Iraq, bread was used as an early form of money. In Mexico under Montezuma cocoa beans were money. [1]

Roman denarius

Currency was introduced as a standardised money to facilitate a wider exchange of goods and services. This first stage of currency, where metals were used to represent stored value, and symbols to represent commodities, formed the basis of trade in the Fertile Crescent for over 1500 years.

Numismatists have examples of coins from the earliest large-scale societies, although these were initially unmarked lumps of precious metal.^[3]

Ancient Sparta minted coins from iron to discourage its citizens from engaging in foreign trade.

The system of commodity money in many instances evolved into a system of representative money. In this system, the material that constitutes the money itself had very little intrinsic value, but nonetheless such money achieves significant market value through scarcity or controlled supply.

Current trends

Current trends

[edit] Doha rounds

Main article: Doha round

The Doha round of World Trade Organization negotiations aims to lower barriers to trade around the world, with a focus on making trade fairer for developing countries. Talks have been hung over a divide between the rich, developed countries, and the major developing countries (represented by the G20). Agricultural subsidies are the most significant issue upon which agreement has been hardest to negotiate. By contrast, there was much agreement on trade facilitation and capacity building.

The Doha round began in Doha, Qatar, and negotiations have subsequently continued in: Cancún, Mexico; Geneva, Switzerland; and Paris, France and Hong Kong.

[edit] China

Beginning around 1978, the government of the People's Republic of China (PRC) began an experiment in economic reform. Previously the Communist nation had employed the Soviet-style centrally planned economy, with limited results. They would now utilise a more market-oriented economy, particularly in the so-called Special Economic Zones located in the Guangdong, Fujian, and Hainan.

This reform has been spectacularly successful. By 2004, the GDP of the nation has quadrupled since 2008 and foreign trade exceeded USD 1 trillion. As of 2005, China had become the 3rd largest exporter behind Germany and the United States. This occurred in spite of the backlash from the shootings following Tiananmen Square protests of 1989. In 2007, China's two-way trade totaled US$2,173.8 billion, and was $262.2 billion in surplus. Foreign exchange reserves, the largest in the world, topped $1.8 trillion in mid-2008.

In 1991 the PRC joined the Asia-Pacific Economic Cooperation group, a trade-promotion forum. More recently, in 2001 they also joined the World Trade Organization. See also: Economy of the People's Republic of China

International Trade

International trade

Main article: International trade

International Trade Series v • d • e

International trade

History of international trade

Political views

Fair trade

Trade justice

Free trade

Protectionism

Economic integration

Preferential trading area

Free trade area

Customs union

Common market

Economic and monetary union

Other

Trade pact

Trade bloc

Trade creation

Trade diversion

International trade is the exchange of goods and services across national borders. In most countries, it represents a significant part of GDP. While international trade has been present throughout much of history (see Silk Road, Amber Road), its economic, social, and political importance have increased in recent centuries, mainly because of Industrialisation, advanced transportation, globalisation, multinational corporations, and outsourcing. In fact, it is probably the increasing prevalence of international trade that is usually meant by the term "globalisation".

Empirical evidence for the success of trade can be seen in the contrast between countries such as South Korea, which adopted a policy of export-oriented industrialisation, and India, which historically had a more closed policy (although it has begun to open its economy, as of 2005). South Korea has done much better by economic criteria than India over the past fifty years, though its success also has to do with effective state institutions.

Trade sanctions against a specific country are sometimes imposed, in order to punish that country for some action. An embargo, a severe form of externally imposed isolation, is a blockade of all trade by one country on another. For example, the United States has had an embargo against Cuba for over 40 years.

Although there are usually few trade restrictions within countries, international trade is usually regulated by governmental quotas and restrictions, and often taxed by tariffs. Tariffs are usually on imports, but sometimes countries may impose export tariffs or subsidies. All of these are called trade barriers. If a government removes all trade barriers, a condition of free trade exists. A government that implements a protectionist policy establishes trade barriers.

The fair trade movement, also known as the trade justice movement, promotes the use of labour, environmental and social standards for the production of commodities, particularly those exported from the Third and Second Worlds to the First World. Such ideas have also sparked a debate on whether trade itself should be codified as a human right.^[4]

Standards may be voluntarily adhered to by importing firms, or enforced by governments through a combination of employment and commercial law. Proposed and practiced fair trade policies vary widely, ranging from the commonly adhered to prohibition of goods made using slave labour to minimum price support schemes such as those for coffee in the 1980s. Non-governmental organizations also play a role in promoting fair trade standards by serving as independent monitors of compliance with fairtrade labelling requirements.