Markets: designed or organically-grown?
June 15, 2007
Brayden King refers to the topic of market design in a post in Orgtheory. I completely agree with Brayden that the question of are (or to what extent) markets ‘designed’ or are they the outcome of ‘organic’, unintended growth is central to economic sociologists. After all, the question of how markets come about has been echoing in sociology since Polanyi.
Nevertheless, I think that juxtaposing ‘design’ and ‘organic growth’ as if they were counterparts in a zero-sum game is a bit misleading. Yes, there are many actors who would like to affect the structure of markets – financial regulators, accountants, trading firms, to name but a few – and given the opportunity these actors would be happy to design markets so that they would fit their needs optimally. Of course, such ambitions remain unfulfilled, and this is because markets are networks of heterogeneous actors. Regulators and traders, for example, do not necessarily hold similar, or even compatible, worldviews. Consequently, the different actors promote very different, sometimes conflicting agendas. So, the overall result in the market ecosystem is of organic growth. However, this does not mean that design attempts are diminished there. On the contrary, the overall effect is a result of constant interaction among actors, many of whom try as best as they can to design the market.
A similar situation can be found in markets whose evolution was affected by performativity. The fact that actors took into consideration economic theories and as a result those theories became an inherent part of the market does not mean that performativity equals design (of course, Brayden does not claim so). Nevertheless, reckoning the force of performativity can help us to shed more light on the tension between agents’ ambitions and actions (‘design’) and the outcome of those actions (the ‘organic growth’). When the market’s heterogeneous network includes actors who promote, or serve as conduits for expert knowledge (e.g. economists, management accountants, risk managers, computer systems designers) it is possible that other actors would adopt the knowledge and practice it, even when they do not agree with the underlying agenda of the actors presenting that knowledge. So, in such markets the interaction among the actors would be affected, (maybe even mediated) by those limited areas of acceptance in the midst of an otherwise competitive and conflict-ridden environment. Hence, performativity-affected markets may look more ‘designed’ than ‘organically grown’…