Saturday, 4 December 2010

The Market Experience

I've just finished reading The Market Experience, which I highly recommend to anyone with a month or two of reading time to spare (if you're as slow as me!). Imagine every half-idea you have had about how markets affect individuals - for example whether they make them more selfish, materialistic etc - Lane went and dug out whatever evidence he could find. As a result I found myself repeatedly challenged to re-examine some of my assumptions about markets.

The book is, or should be, challenging to both Left and Right. Lane explores a lot of psychological research, and argues that (above a certain level of income) increases in wealth don't make much difference to happiness, or satisfaction with life. Other things can have a much bigger affect on us. This is challenging for the Left, because it means - if the goal is to increase happiness - a focus on greater economic equality doesn't make a lot of sense (though there are political arguments for this).

Lane provides a really good overview of how experience in the market helps us develop. The ability to make choices and see responses to our actions is important in developing a sense of self-direction. Obviously this development could occur under different systems, but at least on these grounds the market can be seen to at least facilitate development rather than inhibit it.

He also takes issue with the idea that work is something we wouldn't normally undertake were it not for the money we receive in return. In fact many of us derive a great deal of satisfaction from work, especially when we are self-directed and believe we are advancing. Notably he also reviews the literature on the negative impact of rewards and concludes that it is a widespread, if minor, issue. In part contingent rewards are damaging because they frequently undermine the sense of self-direction.

The upshot of the study is that Lane argues that there should be a reorientation away from a consumer economy to a producer economy. This is based on the belief that we achieve more through work than through consumption.

All in all it is a great book, and it has led me off in lots of other directions. It came out in 1990, so much has changed since and there may well be areas where the book might be challenged. But overall it's a fantastic resource for understanding markets and how they affect people.

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