Markets and ‘markets’

Talking about Social Policy Bonds I find that some people are initially put off by the concept’s reliance on markets. They associate markets with big business and its largely successful efforts to manipulate the social and political agenda in its own interests. So let me quote Chomsky:

Only economists talk about markets. Business can’t tolerate markets. They don’t want markets in which informed consumers make rational choices. What they want is deluded consumers who will make irrational choices. That’s what hundreds of billions of dollars in advertising are spent on. You don’t get any information about the product.

There is a huge difference between big business and government on the one hand, and small businesses and natural persons (as distinct from corporate bodies) on the other. Big business and government are suspicious of markets, which depend for their vitality on numerous decisions made by people and firms acting diversely and responsively within ethical and legislative bounds. They don’t fully trust markets because they cannot fully control them. But they do try:

Large companies are less and less about making something for a specific market and increasingly about manipulating the arrangements behind such makings. Harvey Molotch, Where stuff comes from, Routledge, 2003 (page 204)

When they are not corrupted or distorted, markets are the best way of allocating our scarce resources: all the evidence of history as well as economic theory supports this.

Markets do get a bad press, because they are often corrupted and distorted. But Social Policy Bonds offer a way in which market forces can be channelled directly into achieving social and environmental goals.

● An article about Climate Stability Bonds appeared in yesterday's Dominion Post (Wellington).