The Market: Cornerstone or Stumbling Block?

There are markets, and there is the Market. Markets are networks of people who come together to exchange one thing for another. The Market is the cornerstone of a belief system whose biggest proponent has been the University of Chicago. Chicago: Hog Butcher for the World, according to Carl Sandburg in 1912, whose economy was revitalized in the 1970s by the City’s commodity exchanges and their esoteric flacks in Hyde Park.

Market value theory is to economics what “universal grammar” is to Chomskian linguistics: a hypothesis that the human brain wants to trade in organized markets, where the syntax of our behavior generates a fair valuation of the resources and goods that we are trading, which we call “price.”

This view has considerable romantic appeal, but it does not explain an inalienable dimension of market behavior: cheating. The stunning barrage of evidence that the Market is being willfully and systematically dismantled–the rigging of mutual fund pricing, credit ratings and now LIBOR–is positive if it causes us to reflect critically on our false belief in the power of the Market to protect us from ourselves.