Dear sirs:

I have long since felt that the traditional economic approach to the concept of the market is simply wrong, and that is the main cause of so many other wrongs related to the consideration of markets, in science and in politics.

The problem is ontological, and stems from the fact that, while economists and social scientists carefully avoid to build up a thorough, philosophically strong definition of what a market is, we all tend to treat it as if it were some sort of entity (thence, for example, the idea of "market failure" as if markets were some kind of beings capable of having goals and acting upon them, and therefore of failing or succeeding, which definitely they are not).

Markets are not entities, and as such they are not liable to be good or bad, guilty or innocent of anything; they are basically bunches of relations among agents, individual or collective. Some of these agents are more or less independent, and many others dependent or subordinate in widely varied degrees; the goods or evils of their operation depend solely on the quality of the agents and of the rules, formal or informal, that govern their relationships.

Some of these rules are "spontaneous" agreements between agents, emerging from short or long term situations of power and convenience, and some other are fixed or variable impositions coming from established structures of power, be it a government, the mafia or a monopolist. This is a fact that every business person with normal IQ and some experience knows; she or he will surely include any power relations that can be identified as relevant into any business project or plan. Power in markets (and influence, perhaps a somewhat benign variant), is alike to the bodies of the relativity theory, that deflect the trajectory of everything that passes nearby. The phenomenon is universal, no way to escape; and it is bigger or smaller just depending on how massive the body is, and how close to it you happen to be gliding. Too close and you are finished, independently of your fitness and all the other virtues you may have.

So, what is the market, and what can we expect of it? First, what do you see or feel when you go "into" the market? You have agents (buyers and sellers), you have things (products) and performances (services), you have a subjective concept of value and an objective (and generally not equivalent) fact of price annexed to each of these last two, and you have subjective interchanges (negotiations) and objective ones (transactions). You can imagine all this stuff operating in some sort of a cycle, continuously connecting ends to new starts in an infinite chain.

The above described are the elements of that elusive idea that we call "market", but obviously they are not "the market". In a command economy, where all the relevant decisions are taken by a supreme agent, you have agents, products, services, value, price, and even negotiations and transactions (although most of these ones will be political rather than economical), and still you do not have a market.

What makes those elements to operate like a market is the conjunction of two things: information, and the freedom to act economically upon it.

Information is the key to the concept of market, and I am tempted at times to think that, in the very end, it is "the market" (although I assume the philosophical weaknesses of this statement in case I dared to yield to the temptation). Of course, for each agent, it is far from being "complete" information (the sole idea of anything like complete information looks ridiculous to any sane business practitioner), but it will surely consist of a lot of data about plenty of things relevant which are within the reach of that particular agent to know, including, of course, the different powers and influences, individual and collective, and the rules and impositions, legal or not, that will inevitably deflect the results from economically pristine and orthodox expectations (in which, needless to say, no business person believes).

What we business people do believe is that, based in that incomplete and often biased and full of bad news information that, after all our effort, is the best we can obtain, we must have the freedom to make our decisions on organization, production and transactions as far as they are within the law, as well as consumers must have the freedom to choose what we make or serve, or reject it and buy anything else, or even sue us for incompetent or swindler. And, of course, the citizens must have the freedom to make and enforce "the law", including those norms aimed to reduce monopolistic practices and crude exercises of power, through whatever democratic channels they constitutionally have provided themselves, and make sure that to the maximum extent possible, that public law known by everybody will the one and only that will govern the relationships within the economic domain.

So, in conclusion, if we strip the market naked, what do we see that must be preserved as indispensable public goods? Two things: the veracity and abundance of information, and the freedom of acting upon that information. All norms and regulations, whatever their purpose and technical acuity, must take care to keep and increase the quality and quantity of public information about the elements of the market and their operation, and punish the various ways of hiding or deforming it. For an example, what would have been better, to put in the public domain the fact that x and y financial institutions were taking risky policies about mortgages and let the informed agents to act by themselves, or wait for the catastrophe to occur, force everybody to bear the costs, and thereafter cry for regulation, which by the way will be inevitably biased, and as cryptic to the public as the subprime stuff was, and therefore will be useless as information?

And also, it is necessary to preserve the freedom of the billions of agents to make their own zillions of decisions upon that information. If the quality of what we can know is good, I am not afraid of what mistakes some of us may commit; better decisions will come in due time to correct them. There is no way that some thousands of economists and politicians know better than billions of common citizens about their own affairs, provided bad behavior is adequately punished and truth is preserved as the ultimate social currency.