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The Political Economy of the Environment

In the “Market System: What It Is, How It Works, and What to Make of It,” Charles Lindblom

defines the market system as a “system of societywide coordination of human activities not by

central command but by mutual interactions in the forms of transactions” (Lindblom 2001; p. 4).

Such system of social coordination functions “with a range and a precision beyond that of any

other system, institution, or social process” (Lindblom 2001; p. 14). Lindblom aims to better and

further our understanding of the market system – in the process, exploring its mechanism,

efficiency, historical connection with democracy and freedom, and social reach. Critically,
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Lindblom aims to scrutinize the discriminating processes of the market system, elite control,

hostility towards popular democracy, and limited efficiency. Lindblom summarizes his

overarching thesis as one which aims to determine the “place for the market system in the future

of any society” (Lindblom 2001; p. 14).

I argue that the central thesis driving The Market System is the undermining of the “political

phenomenon” of popular consensus in favor of the market system.1 Lindblom is, undoubtedly,

dispassionate in his analysis of the market system, but it is clear, through his assessment of the

market efficiency, prior determination, elite control, and relationship with democracy, that

Lindblom constructs a case against the market system.

Efficiency
Externalities or spillovers are costs or benefits that affects those parties that did not choose to

bear such costs/benefits of the transaction. Efficiency is defined through “the relation of valued

output to valued inputs” (Lindblom 2001; p. 163). Market system inherently encourages

evaluation of “valued output” in narrow terms of personal gains/profits. The spillover effect of

industries, for instance, in terms of air pollution, is rendered as an externality, to be incurred by

the society as a whole and not by those profiting off such business. While the market system

disregards the spillover cost as irrelevant in terms of calculating efficiency, as it is not incurred

by the participating parties, such narrow conception of “valued inputs/output” results in short-

sighted appraisal of the market’s efficiency. Such spillover inefficiencies are enormous, which

have reached “critical magnitude,” and pose the very real possibility of “impoverish[ing] or

bring[ing] an end to human life on Earth” (Lindblom 2001; p. 148). Therefore, it conceives

1 Lindblom 2001; p. 12
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economic interests solely in terms of short-term monetary gains, while undermining important

values adhering to justice, bioethics, and morality.

Prior Determination
Lindblom assesses the market’s claim to efficiency through what he calls as the “prior

determination” problem. The market is inherently dependent on the society’s underlying

distribution of skills which are historically determined and regulated through custom and law.

The pattern of outputs in any market system is a result of both “the market transactions and the

prior determinations taken together” (Lindblom 2001; p. 171). Such prior determinations are

shaped through “historical accidents and by laws governing inheritance” (Lindblom 2001; p.

172). Since the allocation of skills and resources are not weighed against considerations of

efficiency, it undermines market’s claim to efficiency and perpetuates a system of historical

injustices and inequalities. Moreover, it subverts market’s claim to meritocracy and democracy’s

commitment to justice and equality.

Democracy
The Market System assumes a specific conception of a liberal and popular democracy. While the

assumption is not problematic, it is important to identify it as a working assumption of

Lindblom’s argument. Lindblom pits this version of democracy and popular control against the

market system. Lindblom argues that the elected representatives of the state and the managerial

elite of large enterprises and corporations, in effect, exercise political power, often divorced from

the interests of the “masses.” The state, through mechanisms of prior determination, property

rights, physical infrastructure, and monetary system, provides the “dance floor” for the market’s

dance.2 Large corporations and enterprises have become indispensable for the economies of most

democracies; thus, wielding enormous influence over the political elites, and subsequently, the
2 Lindblom 2001; p. 42
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masses. Such a position “enables them to extract from the state a variety of benefits, often at

great cost to everyone else” (Lindblom 2001; p. 63). The privileged position is further enhanced

and sustained through the ownership of newspapers and broadcasting stations by the market

elites, with the “intention to control” (Lindblom 2001; p. 213).

The practical manifestation of such a system results in an “assault on the mind” of the public

where distraction and obfuscation form the largely unilateral communication from the elites to

the masses, shaping and even controlling their market choices. Lindblom views it as a systematic

subversion of “respect for truth or honesty long argued to be a requirement of civilized society”

(Lindblom 2001; p. 220). The vertical framework of communication naturalizes the values of the

market system among the masses.

Such “assault on the mind,” Lindblom argues, contributes towards the historical connection

between the market system and democracy.3 Both the political and market elites function to

perpetuate the status quo, and in effect, protect and further their entrenched interests through

“teaching mass allegiance to the market system” (Lindblom 2001; p. 233). Lindblom views

market system as enabling minimal democracy, but it “consequently began and still persist in a

deliberate “education” of the masses on the virtues of private property, private enterprise, elite

stewardship of society, hierarchy, inequality, or, in short, the supporting beliefs of a market

system” (Lindblom 2001; p. 234). The status quo is conceived of as one benefiting all among the

masses through deliberate propaganda.

The central thesis of Lindblom’s argument culminates when he states that “If genuine democracy

requires, by definition, at least a rough equality of political influence or power among citizens in

their attempts to control elites, then any significant economic inequality among citizens is an

3 Lindblom 2001; p. 230

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obstruction to democracy” (Lindblom 2001; p. 236). The market’s gross inefficiency emanating

from the prior determination problem and massive spillover effects contributes towards

economic inequality in the society. The system rests on a foundation created by historical

injustices and thefts (e.g. colonialism), while aggravating such inequalities by transferring the

spillover costs to the masses. The hegemonic control over the vertical nature of communication

in contemporary democratic societies entrench their narrow market values as the natural values

of democracy. Therefore, Lindblom’s central concern is the naturalization of market-system or

capitalist values among the masses and its inherent conflict with values of democracy, justice,

bioethics, equality, and morality.

Assessment
One of the main claims of Lindblom’s argument is the “assault on the mind” of the masses by

government and market elites through ownership of newspaper and broadcasting stations. While

Lindblom does not offer quantitative evidence in support of his claim, it is evident through facts.

In the U.S., only 6 corporations own 90% of all media outlets.4 Such concentration of ownership

demonstrates Lindblom’s argument that market elites have structured a vertical framework of

information and communication. Moreover, in the Manufacturing Consent by Noam Chomsky

and Edward Herman, the authors, through case studies, argue that mainstream media is corporate

owned and reflects, largely, such interests. The choice of topics and issues featured in the media,

its premises, and opinions expressed are all serve to perpetuate the state ideology, which in

Lindblom’s conception, is heavily influenced by market values.5

The idea is that the “assault on the mind” of the masses is the only reason sufficiently explaining

the fact that historically, no democracy has existed without the market system.6 The interests of
4 Lutz, A. (2012)
5 McGilvray 2014; p. 178
6 Lindblom 2001; p. 232
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the elites are too entrenched in the status quo to allow considerations of any alternatives. While I

find this point convincing, as expressed in the previous paragraph, I also think it employs

circular logic. The rise of the market system is due in large part to the active participation of the

masses, “renouncing the older virtues of personal autonomy and responsibility intrinsic to an

economy of small firms in favor of the vast material wealth produced by big ones” (Adelstein

2002; 289). It was the people who insisted on “bigness” long before the propaganda began. This

is not to argue that once established, the “assault on the mind” plays a crucial role in perpetuating

the system. It, however, fails to explain the uniformity of experiences of diverse forms of

democracies with the market system. Democracies with varying history, diversity, and economies

have all been historically tied with the market system, without exception. Not all cases of

socialization in to market values are equal. The naturalization of such values are bound to hold

strongly in some cases than in others. Democracies such as Sweden have pursued

redistributionist policies, contradicting the capitalist ethos. Therefore, it implies that socialization

has been achieved at least to the threshold in all democracies where any alternatives to it are

deemed “unnatural” and antithetical to democracy. If so, how did every democracy remain tied to

a system until that threshold was reached, assuming that socialization is a time-consuming

process.
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References

Adelstein, R. (2002). Review of the book Market System: What It Is, How It Works, and What to

Make of It, by Charles E. Lindblom. Constitutional Political Economy, 13. 287-292.

Lindblom, C. E. (2001). The market system: What it is, how it works, and what to make of it.

New Haven: Yale University Press.

Lutz, A. (2012) These 6 Corporations Control 90% Of The Media In America. Business Insider.

Retrieved from http://www.businessinsider.com/these-6-corporations-control-90-of-the-media-

in-america-2012-6?IR=T
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McGilvray, J. A. (2014). Chomsky: Language, mind, politics. Cambridge, UK: Polity Press.