What Cognitive Science Can Tell Us About "Markets"
The Problem of Metaphors in Economic Thinking
"Market" is one of the most central concepts in economics and policy discourse. Yet, "market" is a simplistic metaphor. The basic idea of this metaphor is that the overall economic order equals or strongly resembles what “market” originally meant: farmers markets or trading posts. Economists might reply that "market" is merely a word, its meaning and reference in economics detached from its etymological source. But we will see that this is not the case.
In the following sections, I will explore how research in cognitive science has discovered the importance of metaphors for our thinking and the problems that arise from metaphorical thinking—in particular semantic framing. In this context I will examine the pervasive use of the “market” metaphor and its implications on economic thinking and policy. I will argue that the “market” metaphor subtly influences us to perceive economic activities primarily as trade, overshadowing the aspects of production and the intricacies of economic planning.
Metaphors in Cognitive Science
George Lakoff and Mark Johnson famously argued that much of our ordinary thinking is structured by metaphors (Lakoff & Johnson, 1980). Their seminal work in cognitive linguistics had significant influence, spawning a blossoming research paradigm, and influencing related work on analogical reasoning and model-based thinking, also applied to the sciences (Nersessian, 2008).
Importantly, you do not have to buy into the entire research paradigm described above in order to follow my argument. For my argument to hold, it is sufficient that some concepts, particularly those we clearly use metaphorically, have semantic framing effects. These semantic framing effects unconsciously and subtly influence the way we think about the domain to which the metaphor refers. For instance, using the metaphor of "argument as war" influences how we perceive and engage in debates, framing them as battles to be won rather than discussions to understand differing perspectives (Lakoff & Johnson, 1980).
Markets as Metaphor
The “market” metaphor has become so pervasive in economic and ordinary thinking that we no longer realize it is a metaphor. We mistake it for the actual thing. However, what "market" is supposed to metaphorically refer to is an economic system, structure, or order. "Market" is a metaphorical concept to explain these things; it is not the thing itself.
Now, the economic idea of a market is that it is a self-regulating price mechanism determined by supply and demand. I have discussed this idea elsewhere. Here, instead, I focus on the semantic framing that comes with markets.
As Silja Graupe and Theresa Steffestun (2016) have shown, standard economic textbooks often use the “market” metaphor uncritically, promoting a simplistic view that obscures the complexities and nuances of real economic systems for ideological purposes—similar in spirit to research by Deirdre McCloskey (1998) that shows that “market” is merely a rhetorical device.
Here, I want to add to this research, and show how the semantic framing that comes with the “market” metaphor makes us think of economic organization in terms of trade rather than production, and how the metaphor "nudges" us into neglecting the complex planning that comes with economic activity.
No Production, Just Trade
To understand the “market” metaphor, it is helpful to consider the following: Different words for "market" are "trading post" or "trading node." Indeed, "trading post" and "trading node" are both better concepts than "market" because they show what markets really are: physical places where people trade goods for money, other goods, or services.
That is extremely significant: Adam Smith, when he used the term market, thought about economic activity as trade rather than production (Smith, 1776). According to the semantic framing of the "market" metaphor, products are already showcased on market stands, only for the purpose of trading. Where these products come from, how they were produced, transported, and warehoused finds no recognition in the "market" metaphor.
In that sense, the “market” metaphor "nudges" us to conceive of economic activity as trade rather than production via semantic framing. This is evident in dominant economic accounts today, which are essentially reduced to the neo-classical school in the neo-liberal vein. The value of things is reduced to what people are willing to trade for them, markedly different from theories that ground value in production, innovation, labor, or organizational capabilities (Marx, 1867; Schumpeter, 1934; Polanyi, 1944).
No Planning, No Time—Just Instantaneous Availability
Proponents of markets stress that markets are self-organized. They do not require planning to run—to the contrary, they are superior to planning, so the argument goes. That makes sense against the metaphor of "market."
If you are visiting a market, and you and the other customers have well communicated with the traders what you want to see on their shelves, and the traders are only beholden to their customers, then a market seems to be a good way to go about things.
Now, set aside for the moment that these goods must be produced, invented, transported, and so forth. The “metaphor” makes us believe through semantic framing that there is no time involved in market interactions. You want a thing; you get it.
Naturally, anyone producing goods for a trading post must engage in considerable planning concerning both the nature of the products and the methods of their production, all tailored to meet the demands of selling. For example, a farmer needs to plan the planting and harvesting schedules months in advance to meet market demands. Likewise, customer wishes can take, if feasible or profitable for the producer, long times of restructuring production. For instance, a tech company might take years to develop a new product in response to market demand.
That is, selling goods requires, among other things, significant planning over long periods of time by producers and sellers alike. That makes sense. If you want to open a business, you have to do a lot of thinking and planning on how your business will unfold over time.
These complex dynamics of time and planning are not present in the “market” metaphor. Rather, the “market” metaphor presumes that the right products are there at the right time for the right customers.
Ideological Implications
It’s possible that "market" is just a very bad metaphor for economic structure. Yet, if we are a bit more skeptical, we could also ponder the idea that the “market” metaphor is an attempt to make us think of economic activity as "uncoordinated" (i.e., unplanned and decentralized) trade rather than a rationally planned activity based on production and innovation.
Be that as it may, the metaphor of "market" does more harm than good. Even if economists claim that their models of markets have nothing to do with the metaphor, we can evaluate this claim on two grounds.
First, do economic theories that use the term "market" have the same implications as those semantically framed by the "market" metaphor? Second, do the policy suggestions made by economists using the concept of "market" carry the same semantic framing implications as the "market" metaphor?
I think it is safe to say that the answer to both questions is "yes." While this is not conclusive proof, it should still give us pause to think about semantic framing in economics.
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References
Graupe, S., & Steffestun, T. (2018). “The market deals out profits and losses” – How Standard Economic Textbooks Promote Uncritical Thinking in Metaphors. JSSE - Journal of Social Science Education, 17(3), 5–18. https://doi.org/10.4119/jsse-877
Lakoff, G., & Johnson, M. (1980). Metaphors We Live By. University of Chicago Press.
Marx, K. (1996). Capital: A Critique of Political Economy, Volume I. In K. Marx & F. Engels, Collected Works (Vol. 35). Lawrence & Wishart.
McCloskey, D. N. (1998). The Rhetoric of Economics (2nd ed.). University of Wisconsin Press.
Nersessian, N. J. (2008). Creating Scientific Concepts. MIT Press.
Polanyi, K. (1944/2001). The Great Transformation. The Political and Economic Origins of our Time. Beacon Press.
Schumpeter, J. A. (1934/2021). The Theory of Economic Development. Routledge.
Smith, A. (1776/2008). An Inquiry into the Nature and Causes of the Wealth of Nations. Oxford University Press.
© 2024 Alexander Jeuk for the text. For image see caption.