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Supply, Demand, and Objectivisation of Value
The basic function of the market is to transform subjective individual values into objective social values.
Supply and demand are the two components which determine objective value. Demand is the aggregation of all subjective desires for a given commodity, capable of holistically evala for individual material considerations. Supply is the macroscopic availability of a commodity accounting for location and temporality, also aggregating the subjective desirability of labour in the production of the commodity. The intersection of supply and demand produces an objective price – the ‘social value’ of a given commodity.
The only fundamental inputs for prices are subjective wants and needs – individual desires for a given commodity and a given form of labour – but the outputs (costs of commodities) have no conscious determination – they are purely objective.
The ontology of this objective value is based on mutual recognition. Prices are inviolate to the sceptical critique (the fundamental unprovability of any absolute truth), as their definition is contained within the realm of pure ideals. A price is as objective as the experience of consumption (the transformation of external thing-in-itself to purely ‘internal’ sensory information) and the experience of cost (the transformation of the sensory experience of labour into externally exchangeable value). As such, a market transaction is an exchange of subjectively valued, but internally absolute, experiences.
Objectification of Experience
Underpinning this system of exchange is currency. Aggregating desires into supply and demand creates a system of objective value, which is quantified by currency.
Currency, which practically acts as a medium of exchange, provides an objective ranking to every experience and decision. Decisions are no longer subjective – there are socially objective correct and incorrect options in any scenario.
Applying an objective numerical value to every experience completes the process of objectification. No expression of human consciousness is free from measurement and evaluation – abstract personal experience is transformed into a measurable social 'object,' ready to be bought and sold.
Morality and Value
Money, as a universal medium of exchange and store of value, becomes the most objective good. While individual definitions of good remain subjectivised – almost any faith or moral code is acceptable in bourgeois society – the method for ‘doing good’ is universalised in the acquisition and exchange of money.
The relationship between money and moral good is not one-sided. Money is universally exchangeable for a subjective good, and simultaneously the subjective good gives money its objective value. Without a deeper principle or desires, even the desire to continue living, money becomes empty, as insubstantial as the paper it is printed on.
As a social value is commodified and objectivised, its meaning beyond the expression of money dissolves and reverts into the simple logic of accumulation. The means of doing good therefore destroys its own end, endowing the market with an internal motive for consumption of external systems of value. Combined with its material tendencies (the tendency for the rate of profit to fall, the tendency to monopoly, etc.) his endows the market with an endless internal motive to consume external arts and cultures to give itself meaning.
Fundamental Market Ideology
Proponents of the free market generally hold that markets are the only natural response to scarcity. Hayek, a father of neoliberal political philosophy, writes that,
Like morality, law, language, and biological organisms, monetary institutions result from spontaneous order - and are similarly susceptible to variation and selection.
Friedrich Hayek, The Fatal Conceit, 1988
By claiming the spontaneity of the free market, Hayek elevates it above the trivialities of human rationality – the market can be no more ideological than biological or linguistic evolution. Furthermore, Hayek’s reference to a ‘spontaneously evolved morality’ applies an identical, natural-teleological conception of morality.
Furthermore, Hayek identifies the purpose of social morals with the market mechanism:
The question of how men came to adopt certain values or norms, and what effect these had on the evolution of their civilisation, is itself above all a factual one ... The tradition is the product of a process of selection from among irrational, or, rather, ‘unjustified’ beliefs which, without anyone's knowing or intending it, assisted the proliferation of those who followed them (with no necessary relationship to the reasons - as for example religious reasons - for which they were followed). The process of selection that shaped customs and morality could take account of more factual circumstances than individuals could perceive, and in consequence tradition is in some respects superior to, or ‘wiser’ than, human reason.
... by following the spontaneously generated moral traditions underlying the competitive market order (traditions which do not satisfy the canons or norms of rationality embraced by most socialists), we generate and garner greater knowledge and wealth than could ever be obtained or utilised in a centrally-directed economy whose adherents claim to proceed strictly in accordance with 'reason'.
... Like morality, law, language, and biological organisms, monetary institutions result from spontaneous order - and are similarly susceptible to variation and selection.
Friedrich Hayek, The Fatal Conceit, 1988
For Hayek, moral logic follows a Darwinian process of natural selection among competing individuals and societies. The purpose of morality for Hayek is therefore survival and propagation, and can only evolve subject to competition - moral development takes the same form as market development. The market is therefore a natural extension of biological and moral development into the realm of social production. Furthermore, all of these forces are greater than rationality, taking into account even unknown factors. The natural conclusion from this logic is obvious:
by following the spontaneously generated moral traditions underlying the competitive market order (traditions which do not satisfy the canons or norms of rationality embraced by most socialists), we generate and garner greater knowledge and wealth than could ever be obtained or utilised in a centrally-directed economy whose adherents claim to proceed strictly in accordance with 'reason'.
Friedrich Hayek, The Fatal Conceit, 1988
From Hayek, therefore, both the form and function of the market are necessarily optimal, and determined by a force greater than human reason itself – a force which necessarily defies rational understanding.
Similar conclusions can be found in the works of Adam Smith, the father of classical liberalism:
As every individual, therefore, endeavours as much as he can, both to employ his capital in the support of domestic industry, and so to direct that industry that its produce maybe of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally [does not] intend to promote the public interest ... he intends only his own gain; and he is in this led by an invisible hand to promote an end which was no part of his intention.
Adam Smith, The Wealth of Nations, 1776
Writing before the advent of many scientific discoveries like evolution, Smith cannot appeal directly to nature. Equivalently, however, he refers the benefits of the market to some greater being – the invisible hand – a pseudo-religious figure who acts through the market to promote the best possible outcome. Just like Hayek, Smith elevates the market above human consciousness or control by linking it to a divine benevolence.
By unifying markets with the natural force of human morality, or as an expression of a divine will, liberal economists obfuscate any attempt to challenge market logic on its own terms. Furthermore, they justify the application and enforcement of market imperatives even in cases where they contradict 'intuitive morality' - human compassion and long-term efficiency.
Therefore even in cases where individual subjects may have influence (they have not been directly objectified by market forces), their decisions are defined by market imperatives.
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