The Market Process as Nonviolent Action.

• Author: Alshamy, Yahya

Market process theory explores the sequence through which the knowledge and expectations of economic actors lead toward coordination and cooperation (Mises [1920] 1935, [1949] 1996; Hayek 1948; Kirzner 1973, 1992, 1997; Boettke and Prychitko 1998). Nonviolent action is a broad category of behaviors that can result in change (political, economic, or social) through peaceful actions (Sharp 1973, 1994, 2005, 2013; Ackerman and Kruegler 1994; Ackerman and DuVall 2000; Chenoweth and Stephan 2011). Scholars have explored each of these areas separately, but the connection between the two has not been studied to date. This paper fills this gap by exploring the link between the market process and nonviolent action.

Market process theorists tend to focus on the market as a coordination-generating mechanism. Although this is essential to understanding market processes, they neglect how disequilibrating nonviolent action and markets are intricately entwined. Moreover, they tend to overlook the social and moral influence of markets toward more peaceful arrangements (one exception being Storr and Choi 2019). On the other hand, scholars of nonviolent action focus their analysis of nonviolence in nonmarket contexts--e.g., nonviolent social movements to bring about political change. In limiting their analysis to nonmarket contexts, they, too, have neglected the crucial role that markets play as venues of practicing nonviolent action and as forces of peace making both within societies and between heterogeneous societies. Moreover, they perpetuate an unfortunate legacy of nonviolent action scholarship: that it historically has had antagonistic undertones toward market processes.

In illuminating the connection between the market process and nonviolent action more clearly, we contribute to both strands of literature. We advance market process theory by bringing its interaction with nonviolent action and its peace-building potential to the forefront. We advance existing scholarship on nonviolent action by extending the insights of this research to market contexts. In doing so we highlight the unique character of nonviolent action in markets.

Scholars of nonviolent action typically frame nonviolent action in instrumental terms, whereby people purposefully choose to adopt nonviolent techniques as a means to achieve a predetermined end. For example, the use of public speeches, protests, and the displaying of symbols (e.g., flags, posters) to signal group solidarity among a resistance group are specific means aimed at a predetermined end. In market contexts, nonviolent action can also be instrumental. For instance, buyers can organize voluntary, nonviolent boycotts against certain products or sellers. Similarly, laborers can voluntarily refuse to offer their labor to employers as an intentional means to achieve their shared end.

However, there is another unique aspect of nonviolent action in markets that scholars of civil resistance neglect. Market interactions require a baseline of peace to exist but also nurture cultures of peace between participants. This necessity contributes to a broader order of non-instrumental nonviolence not intended by the individual participants. This observation is simply an extension of the logic of spontaneous order that is widely appreciated by market process theorists.

F. A. Hayek (1948, 87) referred to the "marvel" of the market, which refers to the ability of markets to generate overall order without a central planner. He discussed this marvel in the context of resource allocations. We emphasize a different, yet related, aspect of this marvel--that market interactions contribute to a broader order of nonviolence grounded in cultures of peace. Order refers to the coordination of activities between people pursuing their own diverse ends. Cultures of peace include "lifeways, patterns of belief, values, behavior, and accompanying institutional arrangements that promote mutual caring and well-being" (Boulding 2000, 1).

We proceed as follows: The next section discusses the theoretical connections between market process theory and nonviolent action. Section 3 presents illustrations of nonviolence in the market process. Section 4 concludes.

The Market Process and Nonviolent Action

Market Process Theory

A market refers to a space where exchanges between buyers and sellers occur. Markets can be physical spaces (e.g., a local farmers' market) or conceptual spaces (e.g., the financial market). Buyers and sellers enter a market with hopes and expectations. Buyers enter the market to secure goods or services from a seller. Analogously, sellers enter the market hoping to sell their goods or services to buyers. Both parties can estimate the prices they wish to pay or receive. Successful transactions, however, are not guaranteed. Buyers may be frustrated due to a failure to find someone offering the desired good or service at the desired price. Sellers may be frustrated by a failure to find willing buyers of their goods or services at the desired price. Market process theory attempts to explain how coordination emerges between people with disparate expectations and ends. Emphasis is placed on the open-ended sequence of adjustments made due to learning and discovery. This theory emphasizes four aspects of markets.

First, the market depends on the existence of property rights, which delineate how resources are used and owned. Property rights can be formal, codified in governance institutions, or informal, enforced by customary institutions. They include use rights, ensuring that property owners can decide how their property is used as long as it does not violate the property rights of others, and cash-flow rights, ensuring that the gains or losses from the asset's use accrue to the owner. Market process theorists emphasize the importance of property rights in economic calculation, which refers to the ability to gauge the expected value of resource uses among an array of technologically feasible alternatives (see Mises [1920] 1935; Hayek 1948; Vaughn 1980; Lavoie 1985; Boettke 1998).

Second, markets are shaped by the cultures they are embedded in (Storr 2013; Grube and Storr 2015). Culture refers to patterns of meaning historically transmitted and shared by group members (see Geertz 1973; Lavoie 1991; Chamlee-Wright 1997; Storr 2013). It is the backdrop against which people experience, process, and act in the world. Culture matters because it influences the types of formal and informal institutions feasible, both at a point in time and across time. Institutions informed by culture include formal property rights and informal institutions such as degrees of individualism, respect, trust, and other norms that underlie social relations (Granovetter 1974; Storr 2008, 2013). Culture influences markets in many ways: it delineates who can buy and sell, what items can be bought and sold, how market participants act with and toward one another, and what potential opportunities are noticed or ignored.

Third, the market process is driven by entrepreneurial discovery (Kirzner 1973) and judgment (Foss and Klein 2012). As Kirzner (1973, 73) notes, "What drives the market process is entrepreneurial boldness and imagination; what constitutes that process is the series of discoveries generated by that entrepreneurial boldness and alertness." Alertness entails an awareness of profit opportunities. Judgment entails reasoned action in pursuit of an opportunity in the face of uncertainty. Prices and profit and loss are central to this ongoing process. Market prices incentivize alertness to potential profit opportunities. Once a profit opportunity has been identified, the entrepreneur must pursue the conjecture by making judgments about the best way to secure and organize resources and production. The profit-and-loss mechanism tests the accuracy of a perceived profit opportunity. Prices and profit and loss provide feedback to entrepreneurs, and hard budget constraints give an incentive to act on that feedback.

Finally, the microlevel interactions between people constituting the market process generate a spontaneous order--an orderly arrangement resulting from purposive human action, but not design (Hayek 2013). In markets, each person pursues their ends and interacts with others doing the same. In doing so, they contribute to a broader order that is visible only if we step back and take a bird's-eye view of a market at a point in time. This order emerges without any planner; however, the individual participants may be aware of their contribution to the broader order. Spontaneous order in market contexts is a unique manifestation of voluntary and peaceful social cooperation and coordination without central planning and control.

Nonviolent Action and the Market Process

Nonviolent action is ubiquitous in both instrumental and non-instrumental forms throughout the market process. Property rights are at the foundation of exchange; voluntary exchange requires that the parties have rights over the traded good or service. As market process theory clarifies, these property rights facilitate coordination and the efficient use of resources. But property rights do something even more fundamental--they transform potentially violent interactions into peaceful interactions. As Armen Alchian (n.d., para. 8) noted, "The fundamental purpose of property rights, and their fundamental accomplishment, is that they eliminate destructive competition for control of economic resources. Well-defined and well-protected property rights replace competition by violence with competition by peaceful means." In other words, property rights over one's person and resources provide the definitional foundation for nonviolent interaction. Since markets are grounded in property rights, market interactions are inherently nonviolent. (1) The connection between nonviolent action and markets does not end here.

Because markets entail voluntary and peaceful actions by...