Functionalist Roles of Markets and Misers: Allen & Lee's Defense

Introduction: Perception and Economic Function

People have always formed attitudes toward particular individuals or phenomena in society based on two criteria: the benefits those individuals or phenomena provide, and the potential inconveniences they may cause. This is precisely the central thesis that Candace Allen and Dwight Lee confront and explore in their article In Defense of Markets and Misers. Adopting a functionalist perspective and departing from the prevailing opinion, Allen and Lee argue that markets and misers contribute to economic growth and development — albeit in an indirect manner. The authors employ an economic framework as their primary analytical tool to explain how markets and misers each play a vital role in the development of a nation's economy, particularly in lowering the prices of goods and commodities and increasing consumers' spending power.

The theoretical framework adopted in the analysis illustrates how society's seemingly straightforward, yet critical view of markets and misers shifts when examined from a different perspective. Allen and Lee choose to deviate from the common argument that markets exist only for profit and market dominance. Instead, they provide a functional view of markets as a vital mechanism for compensating for decreases and losses of economic wealth caused by government activity. Similarly, they discuss how misers — though widely regarded as non-contributors to a nation's economy — perform a surprisingly essential function that increases society's purchasing power by lowering the price of commodities. These macro- and microeconomic perspectives, applied to markets and misers respectively, reflect how both serve as "balancing forces" that seek to stabilize the adverse effects of two social components generally considered beneficial: the government and philanthropists.