ECONOMY NOTES

A Definition of Markets:

Western economists tend to think of the market as a purely capitalist fact of life and often use the term as though it were synonymous with 'profit economy'. Yet from all we know of history, exchange--and hence a marketplace--sprang up earlier than, and independently of, profit.

For the market, properly speaking, is nothing more than an exchange network, a switchboard as it were, through which goods and services, like messages, are routed to their appropriate destinations. It is not inherently capitalist. Such a switchboard is just as essential to a socialist industrial society as it is to profit-motivated industrialism.

The market as a switchboard must exist whether trade is based on money or barter. It must exist whether or not profit is siphoned out of it, whether prices follow supply and demand or are fixed by the state, whether the system is planned or not, whether the means of production are private or public. It must exist even in a hypothetical economy of self-managed industrial firms in which the workers set their own wages high enough to eliminate profit as a category.

So overlooked is this essential fact, so closely has the market been identified with only one of its many variants (the profit-based, private-property model, in which prices reflect supply and demand), that there is not even a word in the conventional vocablulary of economics to express the multiplicity of its forms.

Semantics aside, however, the basic point remains: whereever producer and consumer are divorced, some mechanism is needed to mediate between them. This mechanism, whatever its form, is what we call the market.

-- Toffler, Alvin: The Third Wave (1980: pp. 53-54)

A Description of Micromarkets

(Niche Economics, Free trade, Demassified Markets, Superdistribution)

AT: Some years ago after a dinner in Bogotá, Colombia, our host offered us fruit. It was delicious. He said, you know, this is the only place in the world, here outside Bogotá, where this is grown. You can't get this anywhere else. And it occured to me: You can't supply the world with that fruit, but you could supply a suburb of Chicago.

Why isn't it possible for microproducts--small-scale trade--to take place? The answer is the cost of finding the market and connecting it to the product is very high, and that is a cost that computers and databases are going to drive down.

PS: There is a food company in LA that does this--Frieda's. Frieda Kaplan introduced kiwis to America, and her whole business is finding those little produce items around the world, the small niche produce, and finding a market here and there. They have very elaborate computer systems now for managing this whole process.

AT: Okay. Now, multiply that to pharmaceuticals, food, products of all different kinds. To make that work you've got to drive down the cost of the money system. For the inefficiency of a money exchange system makes money very expensive, quite apart from interest.

We need to create micro invesment. Microcapital is what we call it. You should be able to link microcapital to microtrade to micromarkets to microtechnologies, and get a global economic system which is much more finely granulated that the coarse system that we have now.

-- Alvin Toffler and Peter Schwartz in the November 1993 issue of Wired

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