How Markets Impact Our Lives

The importance of markets in our lives is vast, especially as we are all considered consumers today and it often feels that our number one priority in life as a good citizen is to consume. If we are not buying new products all the time, we are told our economy is going to go into a recession. We are encouraged to spend rather than to save (especially since the Federal Reserve drove interest rates down to near 0% for so long, which meant that savers were essentially losing value over time because the rate of inflation was higher than the interest they were earning on their savings). So markets really dictate our thought processes, our actions (we work long hours all week in order to be able to spend and have the kind of consumerist life expected of us). The markets, meanwhile, take on a life of their own for the economy, intertwining as they do and supporting one another. What happens in the commodities market will have an impact on the stock market, and what happens in the bond market will impact equities and vice versa. Markets are useful in that they allow us to trade and to obtain things that we might not otherwise have access to—but at some point, trading became an end in and of itself: instead of trading in order to obtain something useful, trading became an enterprise by which traders sought to capitalize wholly on mismatches (i.e., identifying inequalities in the marketplace and exploiting them through trade). That development has almost certainly led to marketplaces being somewhat more dangerous and manipulated than were trading limited to people and places where trading was not done solely for profiteering.

I believe deciding whether there should be more or less markets is not something that can really be gauged: markets arise as needed, and if they are not sanctioned by the state, they emerge under cover—i.e., the black market. For example, trading human organs is something that is done in the black market. People trade on the black market to escape oversight of the state and this will condition will always exist. I cannot think of anything that is traded in the commercial sphere that I feel should be removed: the more push from the state, anyway, will only result in more business for the black market.
I think markets have a positive and a negative impact on my life. On the positive side, they allow me to make money from trading on the stock market, and they allow me to obtain goods that I otherwise would not have access to. On the negative side, I feel that I become more and more focused on consumption and end up buying things I don’t even need. Instead of saving, I spend and run up my credit cards and get into debt and then look back on my purchases and wonder what possessed me in the first place to ever want to make them.

One thing about the reading I do not understand is why Adam Smith’s brand of economics ever caught on in the first place. I think the explanation that I can come up with is that Adam Smith’s economic ideas developed out of the new era of society that resulted from the substantial break with the Old World that had existed in Europe prior to the Protestant Reformation. With the Reformation and the new wealth that was pouring into Europe from trade came a new modern society that was focused on materialism and profits and consumption, and the economic system that followed was based on this concept that society could be governed by economics. In my view, I feel it should be the other way around—that society’s values and principles are what govern society and that economic effects are systems are just an extension of these values and principles rather than the supposed overseer of these values, as often seems the case with our concept of the supposedly “free market” system we love to tout.