Friday, July 16, 2010

Markets are not democratic

Individuals influence the provision and exchange of commodities mainly through "exit" not "voice" (Hirschman 1970). The counterpart to the customer's freedom to exit a trading relationship is the owner's freedom to say "take it or leave it". The customer has no voice, no right to directly participate in the design of the product or to determine how it is marketed. Where the good being sold is embodied in the person, voice may be alienated to the buyer. Employment contracts in capitalist firms that are unmediated by union negotiation or professional standards place the worker in the same voiceless position as the customer.


Fraternal activities express a valuation of participants as equals engaged in a common cooperative project. In the democratic tradition this project is collective self rule. The political freedom of a citizen is the freedom to participate equally with fellow citizens in deciding the laws and policies that govern them all. This freedom demands that citizens have the goods they need, such as education, to participate effectively in self-government...The ideal of democratic freedom conflicts with market norms. First, citizens exercise their freedom in a democracy through voice, not just exit. Their freedom is the power to take the initiative in shaping the background conditions of their interactions and the content of the goods they provide in common. It is a freedom to participate in democratic activities, not just to leave the country if they disagree with the government. Second, an ideal democracy distributes goods in accordance with public principles, not in accordance with unexamined wants [e.g. consumer preferences]. Decisions must be justified in publicly acceptable terms. Third, the goods provided by the public are provided on a non-exclusive basis. Everyone, not just those who pay, has access to them.
-Elizabeth Anderson, from her excellent Value in Ethics and Economics (HUP)

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