Last week, the most farsighted market players were flabbergasted, even as they comprehended that they were witnessing a capitulation to some kind of greater truth?that Wall Street had got caught up in a pyramid scheme of its own devising.
That’s Nick Paumgarten in The New Yorker . He puts it more succinctly than anyone I’ve read so far. But I’ve yet to read an informed commentator who doesn’t say pretty much that. Here, luckily, the market is too small and the players too few for a comparable efflorescence of bullshit. But we’re taking our share of the damage, both directly, in the collapse of slick imitators like Babcock and Brown, and in what matters much more, the collapse of confidence in market values. So we have perfectly sound companies with actual products and no significant debt trading at price-earnings ratios that translate to no future earnings, ever.
In Australia we ought to be furious, both with the initiators of all this and with their local avatars. But we’re not. For most people, it seems, the operations of the market are like weather, uncontrollable, or nuclear physics, unintelligible.The professional commentators are too cool – or too frightened – to get angry.
A good deal of this represents generalised apathy about the workings of the world, but some of it surely is down to an education system for which the operations of the market are either sacred or shameful. Our economics departments teach the theology, our commerce departments (much more popular nowadays) teach the rituals. Over in humanities the market economy is what kinky sex used to be, a shameful practice that we don’t talk about. (Kinky sex, of course, is now a burgeoning area of study.)
It was good to be reminded this week of a more generous vision.
For more than half a century [John Kenneth] Galbraith argued that the truly important economic issues must be evaluated through the lens of economics, politics, sociology, law, ideology and history simultaneously, that the work of economics is far messier than the blackboard mathematical models that claim hegemony, and that economic analysis and prescription must always keep front and center both the factors of power and the narratives societies use to tell their economic stories.
_ Richard Parker, John Kenneth Galbraith, 2005, p. 653
OK so that’s one busy lens in the metaphor, but it’s times like these that remind us that the market is not the forbidden turf on which only specialists may walk: it’s a common.
