Month: March 2014

Are Labour Market Markets?

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Last Monday, Prof. Steve Fleetwood from the University of West England was so kind to be the speaker at the final Critical Realist Workshop of this term; sadly the next one will be in October, which means a long waiting time. At the end of his presentation, Prof. Fleetwood faced three interesting questions. In this post, I want to develop a few thoughts on them.

Prof. Fleetwood talked about his current work on defining labour markets [LM], what they are and why the conception of LM in neoclassical economics is useless, because orthodox economists basically don’t know what they’re doing. The reason, he said, lies in the missing understanding of underlying socio-economic phenomena. While institutions are acknowledged as being somewhat influential in orthodox economics, they remain separated from LMs. Hence, LMs are some kind of entities, yet the mainstream fails to really define what they actually are. Prof. Fleetwood referred to chess as an analogy for this separation; chess would then be separated but influenced by chess rules.

Instead, Prof. Fleetwood suggests defining LMs as emergent mechanism of socio-economic phenomena [SEP]. This included a longer differentiation of SEPs, of course, but as I want to limit my text to the questions I won’t delve too deep into it. However, a few words on emergence and mechanisms. As far as I understood, mechanism is meant to be a particular, causal, systematic process-configuration of these SEPs and emergence carries the notion that LMs are irreducible to the underlying SEPs.

What are the questions now from this kind of definition of LMs? The first question was, whether or not LMs are everything. The second question was where the locality is in this, because people go to some physical places to search for work (job centre?). And the final question asked whether or not we can call this emergent process a market, because markets will always have the notion of neoclassical demand and supply functions.

My thoughts on the first question resolve around the issue of boundaries, is it possible to find SEPs that aren’t related to the emergence of LMs? I would argue that this is possible; while contract law is important for the emergence of LMs, traffic law isn’t, at least in my view. Therefore, LMs are not everywhere. However, one could argue that there are secondary influences, indirectly responsible for the emergence of LMs by, for instance, defining the social status of the labour force. In this case, one might argue that LMs are in fact everywhere and everything. This would, of course, also apply for every other entity or mechanism that emerges from SEP, rendering the attempt to define different things somewhat pointless? 

What about the second question about locality? Do we need to consider physical space and time in this emerging mechanism called LM? I think the physical space and time are secondary. Sure, job searchers may have to go to a job centre, somewhere located, at a specific time to actually search a job but this doesn’t mean to be important for the LM itself. These specific conditions are very much interchangeable, the UK LM doesn’t change when all job centres burn down and are rebuild two miles down the road. They remain ‘places’ to go for the job search but are not necessarily bound to a physical position. However, space and time still matter, but more in a trivial Kantian sense. Space and time are then a priori constituents for everything. It doesn’t matter where the job centre it but it matters that the job centre is somewhere at one point in time. Likewise, emerging entities, such as LMs, and the underlying SEPs themselves cannot exist without space and time a priori existing. But that is quite trivial I think.

The final question is whether LMs in this definition can still be called market, because markets have this burden of being associated with supply and demand, and exchange, in the orthodox sense. Prof. Fleetwood agreed that it is difficult to speak of a market, although he said it remains a market due to the commodification of labour force which still takes place. I don’t think the notion of supply and demand gets lost with his attempt to define LMs. After all, supply and demand are just a heuristic devise, a very superficial one thought, which does not rely on the usual orthodox methodological individualism. It only shows that there is a supply of labour force, while Prof. Fleetwood tries to show why and how this supply is constituted. That doesn’t change the fact that there are, in some sense, agents looking for a job and organisations offering them. His research, in my view, only adds a description of, basically, everything that has an influence in defining such agents, organisations and rules, practices etc. that constitute the exchange taking place in a LM.