The "market" seems to be regarded (by the media
and business) as a benignly neutral "mechanism"
with no agenda (unlike governments). Those who quote Adam
Smith's notion of the market's "invisible hand"
(usually without having read Smith's Wealth of Nations)
sometimes imply that the market is infallible.
Charles Hampden-Turner and Fons Trompenaars argue, in
The Seven Cultures of Capitalism (Piatkus; 1994) that
"market" economics can't be adequately explained
by impersonal market forces. The authors criticise
the way the market is revered as some kind of neutral arbiter
"out there". They describe the classical economic
doctrine of profitable self-interest within such a "free
market", as "perhaps the world's leading example
of cultural bias and historical circumstance disguised as
a principle of science". To "leave it to
market forces" doesn't mean letting an impersonal mechanism
of allocation operate; it means letting cultural preferences
The authors accordingly focus on the cultural biases of the
countries they review (UK, USA, Japan, Germany, France, Sweden,
and Holland). This cultural analysis is fruitful in economic
insights. For example:
"Competitiveness" means something different
in each culture. In Britain it means short-term profit (which
is increased by screwing everyone except the shareholders).
However, obsession with profit is not a common factor in successful
economies. German, Swedish and Dutch companies compete (so
Hampden-Turner and Trompenaars claim) at least partly to benefit
customers, employees and community, and, "the Japanese
see capitalism as a system in which communities serve customers,
rather than one in which individuals extract profits".
In Holland, Sweden and Japan, business success is
seen as a choice for idealists and those dedicated to aesthetics.
It's viewed as something integral to the community. In the
UK and US, idealists are put off by the emphasis on making
a quick profit regardless of larger visions.
In US and UK companies, people seem to be in a hurry.
The "don't waste time", race-against- the-clock
attitude leads to short-termism and widespread anxiety among
employees. This tendency can be traced back to the Puritan
ethic: "The Puritans were not, like those of other
religious persuasions, awaiting the afterlife in quiet contemplation.
They had God's earthly kingdom to build and, given seventeenth
and eighteenth-century life expectancies, a perilously short
time in which to build it".
Monetarism (the Thatcherite economic orthodoxy) may
have been adopted more for its appeal to certain cultural
preferences than for its practical effectiveness. Monetarism
models the economy on clean, precise mechanistic metaphors.
Governments can pull certain levers (eg interest rate) to
get predictable effects, without actually having to get their
hands dirty in the real world of business. This has historically
appealed to the cultural values of the "gentlemen"
ruling classes in England, Hampden-Turner suggests.
So, as an expression of cultural preferences/values
(and not an impersonal, universal mechanism of allocation),
how can a market can be more neutral/benign
than an elected government? Of course, in the real world,
government is a long way from being truly "democratic."
But let's be consistent in our comparisons: in the real world,
also, the economy is a long way from being a "free market".
is a free market economy" >