Skip to main content
Log in

The market as a social space: On the meaningful extraeconomic conversations that can occur in markets

  • Published:
The Review of Austrian Economics Aims and scope Submit manuscript

Abstract

Prominent economic sociologist Richard Swedberg has argued that economists have failed to develop a theory of the market that recognizes it as a “social phenomenon in its own right.” While this may be true of mainstream economics, the Austrian school’s theory of the market is much richer than the standard view. For Austrians, the market has always been a central concern. And Austrians have always argued that the market is a social structure where both exchange and competition occurs. Still, Austrians give little more than scant attention to the noneconomic sociality that occurs in markets. The market, however, is both a conversation and an arena where meaningful conversations can occur. This paper is an effort to focus attention on the market as a social space where social activity (beyond competition and exchange) takes place and where noneconomic relationships and economic relationships develop.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

Notes

  1. Recall that Mises (1949: 257) insisted that the market is “not a place, a thing, or a collective entity” but that instead it is “a process.”

  2. I describe these “conversations that express more than bid–ask” which often occur in markets as “extraeconomic” or “noncatallactic” interactions. Admittedly, the line between economic and extraeconomic phenomena is somewhat fuzzy and constantly shifting. Still, following Weber (1949), I believe that it is useful to distinguish between economic phenomena and what he termed “economically conditioned” phenomena, and contend that this distinction reflects the views of both economists and others about what the focus of our discipline is and, in fact, should be.

  3. See Ikeda (2002; 2006, unpublished manuscript) and Lewis (2006, unpublished manuscript) discussions of the key role played by trust in the market.

  4. Ikeda’s (2006, unpublished manuscript) discussion of the key distinction between confidence and trust is relevant here.

  5. Note that the concern here is not just about theoretical aesthetics. Instead, as stated earlier, the goal is to expand our theoretical framework so that we will be able to evaluate the claims made by Gudeman and others about the social harms wrought by an expanding market sphere. Focusing on the extraeconomic relationships that can occur in markets is also an important first step in evaluating Rothbard’s provocative claim that markets are more essential for friendships than friendships are for markets.

  6. I do not mean to suggest that economic relationships are not real or that business contacts are not meaningful. On the contrary, I believe that they often can be. They are not, however, the only real relationships and meaningful contacts that occur in markets. Indeed, real relationships that are not merely commercial relationships and meaningful contacts that cannot be reduced to mere business contacts are also developed and nurtured in markets.

  7. Bourdieu (1985, 1989) has developed a notion of social space that is quite distinct from Lefebvre’s.

  8. By constructed, Lefebvre does not mean that they are physically produced; although, obviously, they typically are materially made places. Instead, he means that they are conceptually and socially constructed and designated as social sites of this or that type. As such, beaches, lakes, and mountains can similarly be thought of as social spaces. These spaces serve as sites where we go to relax and play, as spaces to which we escape.

  9. As Lefebvre (1991, 191) writes, “Social space can never escape its basic duality … Is not social space always, and simultaneously, both a field of action (offering its extension to the deployment of projects and practical intentions) and a basis of action (a set of places whence energies derive and whither energies are directed)?”

  10. The literature on social capital comes close to approaching the more complete picture of the link between social relationships and markets that I’m suggesting here. Unfortunately, because it is principally concerned with how social capital can be profitably employed in the market and other contexts, many of the writings on social capital commit the same sin of omission as Granovetter. Consider, for instance, Coleman’s foundational piece, “Social capital in the creation of human capital” (2000). In that article, Coleman uses the example of the wholesale diamond market in New York City to illustrate his point that preexisting social relations enable actors to achieve ends that would otherwise be unattainable (ibid.: 16). While negotiating a sale, he recounts, diamond traders routinely give other merchants a bag of valuable diamonds to examine in private, at their leisure, without any formal guarantee that the buyers will not replace any of the stones in an effort to get a better deal. This practice, which is essential to the smooth functioning of the diamond wholesale market, is only possible, Coleman (ibid., 17) explains, because merchants belong to “essentially a closed community,” sharing ethnic, religious, family, and community ties. Being caught stealing a stone would cost a merchant not just a single trading partner but access to the entire trading network as well as “family, religious and community ties” (ibid.). In this way, social capital within this segment of the Jewish community in New York facilitates the wholesale diamond market in that city. Although Coleman is right to stress how social capital within this community serves as an important economic resource, he does not consider how important these repeated and trust-filled economic dealings are in sustaining that community. It is undoubtedly easier to trust that a potential son-in-law will prove reliable when you already have a fruitful economic relationship with him and his family.

  11. Greater connectivity in the sense that you have more media available for communication. More selective in the sense that you are better able to connect with precisely the kinds of people that you wish to build relationships with. Note also that the market also facilitates communication links that connect and promote exchanges between disparate and diverse communities. The Internet, for instance, allows for discussion across borders and across populations. I am grateful to Chris Coyne for helping me to focus on this point.

  12. I am grateful to T. Clark Durant for helping me to appreciate this point. The Londoner who has American and Japanese colleagues and customers evolves certain social skills and habits as a result. This is also certainly true of the Londoner who has lived and worked in the United States and Japan for some time.

  13. See Coyne’s After War (2007) for a convincing discussion of how a commitment to free trade on the part of Western democracies like the United States is more likely to bring about successful transformations in weak and failed states than is military intervention. As he suggests, since trade in goods across cultures also involves cultural exchanges, then free trade has the potential to sow the seeds of tolerance, understanding, and a willingness to agree to disagree that are necessary for global peace. Similarly, Bender (2002: 228) writing about the marketplace in ancient Greece notes that “the agora stimulated citizens to recognize the presence of others, persons with different needs and rights to be respected. It was a place for representation of difference in a way that implied common affiliation in a collective … The work of such a space is to enhance the capacity for tolerance and recognition in a world of difference.”

References

  • Bender, T. (2002). The unfinished city: New York and the metropolitan idea. New York: The New Press.

    Google Scholar 

  • Boettke, P. J., & Storr, V. H. (2002). Post classical political economy: Polity, society and economy in Weber, Mises and Hayek. American Journal of Economics and Sociology, 61, 161–191.

    Article  Google Scholar 

  • Bourdieu, P. (1985). The social space and the genesis of groups. Theory and Society, 14, 723–744.

    Article  Google Scholar 

  • Bourdieu, P. (1989). Social space and symbolic power. Sociological Theory, 7, 14–25.

    Article  Google Scholar 

  • Chamlee-Wright, E. (1997). The cultural foundations of economic development: Urban female entrepreneurship in Ghana. New York: Routledge.

    Google Scholar 

  • Clark, G. (1994). Onions are my husband: Survival and accumulation by West African market women. Chicago: The University of Chicago Press.

    Google Scholar 

  • Coleman, J. S. (2000). Social capital in the creation of human capital. In P. Dasgupta, & I. Serageldin (Eds.) Social capital: A multifaceted perspective. Washington: The World Bank.

    Google Scholar 

  • Coyne, C. J. (2007). After war: The political economy of exporting democracy. Stanford: Stanford University Press.

    Google Scholar 

  • Gottdiener, M. (1993). A Marx for our time: Henri Lefebvre and the production of space. Social Theory, 11, 129–134.

    Article  Google Scholar 

  • Granovetter, M. (2004). Economic action and social structure: The problem of embeddedness. In F. Dobbin (Ed.) The new economic sociology: A reader. Princeton: Princeton University Press.

    Google Scholar 

  • Gudeman, S. (1992). Remodeling the house of economics: Culture and innovation. American Ethnologist, 19, 141–154.

    Article  Google Scholar 

  • Gudeman, S. (2001). The anthropology of economy. Malden: Blackwell.

    Google Scholar 

  • Gudeman, S. (2005). Realism, relativism and reason: What’s economic anthropology all about? In S. Löfving (Ed.) Peopled economies. Uppsala, Sweden: Interface.

    Google Scholar 

  • Gudeman, S., & Rivera, A. (1990). Conversations in Columbia: The domestic economy in life and text. Cambridge: Cambridge University Press.

    Google Scholar 

  • Hayek, F. A. (1948). Individualism and economic order. Chicago: The University of Chicago Press.

    Google Scholar 

  • Hodson, R. (1997). Group relations at work. Solidarity, conflict, and relations with management. Work and Occupations: An International Sociological Journal, 24, 426–452.

    Article  Google Scholar 

  • Horwitz, S. (1995). Monetary exchange as an extra-linguistic social communication process. In D. L. Prychitko (Ed.) Individuals, institutions, interpretations. Burlington: Ashgate.

    Google Scholar 

  • Ikeda, S. (1994). Market processes. In P. J. Boettke (Ed.) The Elgar companion to Austrian economics. Northampton: Elgar.

    Google Scholar 

  • Ikeda, S. (2002). The role of “social capital” in the market process. Journal des Economistes ed des Etudes Humaines, 12, 229–240.

    Google Scholar 

  • Kelly, M. (2000). Demystification: A dialogue between Barthes and Lefebvre. Yale French Studies, 98, 79–97.

    Article  Google Scholar 

  • Lefebvre, H. (1991). The production of space. Malden: Blackwell.

    Google Scholar 

  • Lie, J. (1997). Sociology of markets. Annual Review of Sociology, 23, 341–360.

    Article  Google Scholar 

  • Löfving, S. (2005). Peopled economies: Conversations with Stephen Gudeman. Uppsala, Sweden: Interface.

    Google Scholar 

  • Mises, L. (1949). Human action: A treatise on economics. Third revised edition. San Francisco: Fox & Wilkes.

    Google Scholar 

  • Pierce, C. A., Byrne, D., & Aguinis, H. (1996). Attraction in organizations: A model of workplace romance. Journal of Organizational Behavior, 17, 5–32.

    Article  Google Scholar 

  • Price, L. L., & Arnould, E. J. (1999). Commercial friendships: Service provider–client relationships in context. Journal of Marketing, 63, 38–56.

    Article  Google Scholar 

  • Robertson, C. (1974). Economic woman in Africa: Profit-making techniques of Accra market women. The Journal of Modern African Studies, 12, 657–664.

    Article  Google Scholar 

  • Robertson, C. (1983). The death of Makola and other tragedies. Canadian Journal of African Studies/Revue Canadienne des Études Africaines, 17, 469–495.

    Article  Google Scholar 

  • Rothbard, M. N. (1993). Man, Economy and State: A Treatise on Economic Principles. Auburn: Ludwig von Mises Institute First published in 1962.

    Google Scholar 

  • Soja, E. W. (1989). Postmodern geographies: The reassertion of space in critical social theory. New York: Verso.

    Google Scholar 

  • Swedberg, R. (1991). Major traditions of economic sociology. Annual Review of Sociology, 17, 251–276.

    Article  Google Scholar 

  • Swedberg, R. (1994). Markets as social structures. In N. Smelser, & R. Swedberg (Eds.) The handbook of economic sociology. Princeton: Princeton University Press.

    Google Scholar 

  • Swedberg, R. (1998). Max Weber and the idea of economic sociology. Princeton: Princeton University Press.

    Google Scholar 

  • Weber, M. (1947). The theory of social and economic organization. New York: The Free Press.

    Google Scholar 

  • Weber, M. (1949). The methodology of the social sciences. New York: The Free Press.

    Google Scholar 

  • Weber, M. (1978). Economy and society: An outline of interpretive sociology, two volumes. Berkeley: University of California Press.

    Google Scholar 

  • Weber, M. (1998). The Protestant ethic and the spirit of capitalism. Los Angeles: Roxbury First published in 1930.

    Google Scholar 

  • Weber, M. (1999). Essays in economic sociology. Princeton: Princeton University Press.

    Google Scholar 

  • Williams, C. L., Giuffre, P. A., & Dellinger, K. (1999). Sexuality in the workplace: Organizational control, sexual harassment, and the pursuit of pleasure. Annual Review of Sociology, 25, 73–93.

    Article  Google Scholar 

  • Zavella, P. (1985). ‘Abnormal intimacy’: The varying work networks of Chicana cannery workers. Feminist Studies, 11, 541–557.

    Article  Google Scholar 

Download references

Acknowledgements

I am grateful to Paul Lewis, Emily Chamlee-Wright, Stephen Gudeman, Sanford Ikeda, Chris Coyne, Nicola Virgill-Rolle, John Rolle, T. Clark Durant, and the participants in New York University’s Colloquium on Market Institutions and Economic Processes and the Mercatus Center Graduate Student Paper Workshop for the comments on earlier drafts of this paper. The standard disclaimer applies.

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Virgil Henry Storr.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Storr, V.H. The market as a social space: On the meaningful extraeconomic conversations that can occur in markets. Rev Austrian Econ 21, 135–150 (2008). https://doi.org/10.1007/s11138-007-0034-0

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11138-007-0034-0

Keywords

JEL codes

Navigation