Lindblom - The Market System - Afghan Journalists' Committee

4 Market System AscendantWhat Is This Market System?We need first to draw a distinction between market systemand market. Although not all societies embrace or contain amarket system, all existing societies make use of markets.Walking down a street in either Maoist China or the USSR,a visitor would have seen markets for haircuts, bicyclerepair, and consumer commodities. An observant visitorwould soon also have found markets (perhaps more blackthan legal) for raw materials and machines. Whenever peoplefrequently pay other people to do something—sing asong or dig coal—those interchanges constitute markets.Yet despite the commonalty of such interchanges in MaoistChina and the Soviet Union, these societies were not calledmarket systems, because a market system exists only whenmarkets proliferate and link with each other in a particularway. Just as a basket of parts does not make a computer untilthey are assembled or used in a particular way, so an assortmentof markets does not make a market system untilthey are employed in a particular way—specifically to organizeor coordinate many of the activities of a society.The market system organizes or coordinates activitiesnot through governmental planning but through the mutualinteractions of buyers and sellers. To establish a marketsystem it is not enough that people buy and sell. Alsorequired is that their purchases and sales, not central authorities,coordinate the society. This gives us a definition of themarket system sufficient for our immediate purposes: it is asystem of societywide coordination of human activities notby central command but by mutual interactions in the formof transactions.I find it useful to contrast the market system with an-