If we understood markets like we understand a chair there would be no economic crises.

Well, maybe there would be no unwanted economic crises.

Try unexpected, because one man's economic crisis can very well be another man's creative disruption of a very large market.

To support your idea of market not being top-down, just picture an actual market and compare it to a big box store.

A big box store is top-down. Your entire shopping experience: the layout, products, pricing, etc... is the result of careful planning by a single company, with a well defined hierarchy. A market is much more organic, with independent sellers.

Markets are a way of getting things done without planning. Or rather, it depends on how widely you like to use the term "market." Languages aren't planned, but they still constantly evolve and develop to suit our needs... You can call that a market (some do) but I think that's a bad choice of words. A literal market is a very abstract metaphor for the process that creates language and calling it a "market" creates a tendency to think that quid-quo-pro relations between buyers and sellers are the canonical building blocks of emergent systems. That's dangerously limiting.

Suburbs though, and built environments generally are an example of how "markets" are the extremely different from eachother depending on what they're made of.

Suburbs are generally an example (imo) of markets grafting on economic branches (the houses, mostly) onto a (mostly) centrally planned trunk, roads, infrastructures, schools, parks, etc. Suburbs take a lot of infrastructure, and at least historically it's had been a push mechanism. Planners plan/build the services required to create demand for housing rather than pre-existing residents creating demand for services.

Big city real estate markets are very often characterized by (a) land scarcity making them attractive long term investment markets and (b) a basically stationary supply side. Supply reacts so slowly/weakly to price changes that the only thing way to equilibrium is prices... usually upward. The price of housing becomes the maximum people can pay, often the maximum a bank is willing to loan.

This is completely different to the market for services, the market for manufactured goods and such.

We do a lot of planning, whether deliberately or not. Even under the most ardent anti-matket systems (eg Maoist China in the 50s-60s) we do a lot of "market." It's basically unavoidable.

However, we are absolutely terrible at intentionally planning for emergence. Creating the planned infrastructure onto which unplanned emergence can occur. We don't even have the right terms to discuss it.

Whether we like that ideologically/politically or not, or whether we're good at it... it's a big part of how society and economy evolve.

The fairly arbitrary and made up^ corporate laws, IP laws and such are a very good example. Change them and we totally change the shape of the economy. They weren't planned though, they're designed by historical arbitrariness.

Philosophically, imo, a whole lot boils down to our inability to grapple with "not sure." Hard science can. We don't know if string theory is true. This is one of the great cultural achievements of science because it isn't part of human nature.

^In the sense that if we re-ran history, we'd expect totally different outcomes.

Intentionally planning for emergence is sort of a lost art these days. The most famous example is the Manhattan grid, where at its conception there were no zoning limits and it was lines on a map with no infrastructure built, it just kind of filled in by itself and constantly changed over the years (Midtown, for example, was originally a low-slung wealthy neighborhood for people escaping the crowded downtown area)

Part of the “problem” is that we demand so much in modern services which need to be placed ahead of time; this is not the 1800s where you could hoist up a tenement with no plumbing and electricity, no fire, police, hospital or schools to be seen.

There’s plenty of centralized planning in markets. Corporations are planning all the time.

some utopian idea of 'the market' resembles bottom-up processes yes. But the modern market (and given that the author chose to use chips as an example) does not.

The modern economy is to a very high degree planned, mind you not only by the state, but by corporations. The corporation itself is a top-down designed entity, internally displacing markets.

Everything that enables modern productivity gains occured in the context of streamlining, designing, and ordering production. The shift-worker at the conveyor belt at a 400k population company isn't exactly comparable to the medieval merchant on the local bazaar.

And I suspect that the author is implicitly critizing this, but there's a reason why this development took place. Even if the rigidly designed chair doesn't appear to be innovative, top-down design actually is. Even ardent capitalists like Schumpeter recognised that there is more inherent dynamism in large monopolies than there is in some natural, unordered market. You can't go to the moon by climing up trees as the saying goes, and that's why nature without design never made it there. The nation state, the modern company and all those institutions won because the incrementalism found in bottom-up design is inherently limited.

A particular corporation is top-down or at least it would like to be. But many corporations competing and cooperating is basically an ecosystem.

Meaningful markets account for a relatively small portion of modern economies.

Companies hate to compete and avoid doing so whenever possible. This can be as simple as ISP’s avoiding investment in areas with an existing ISP to complex backroom deals.

Internally, companies have full on top down planning just like governments. At larger companies this often results in silly levels of inefficiency.

> Internally, companies have full on top down planning just like governments. At larger companies this often results in silly levels of inefficiency.

This leads to Coase's transaction cost theory of the firm.

" for Coase the main reason to establish a firm is to avoid some of the transaction costs of using the price mechanism. These include discovering relevant prices (which can be reduced but not eliminated by purchasing this information through specialists), as well as the costs of negotiating and writing enforceable contracts for each transaction (which can be large if there is uncertainty). Moreover, contracts in an uncertain world will necessarily be incomplete and have to be frequently re-negotiated. The costs of haggling about division of surplus, particularly if there is asymmetric information and asset specificity, may be considerable."

https://en.wikipedia.org/wiki/Theory_of_the_firm#Transaction...

“Internally, companies have full on top down planning just like governments.”

They are basically run like communist states. 5 year plans, celebrating plan achievement and so on. It’s all there. The only difference is that their outside borders aren’t protected so they can’t become as delusional as a communist state can be.

> Meaningful markets account for a relatively small portion of modern economies.

There's no way that's true. Like, how many monopolies in America, say, can you even name? I've almost never in my entire life been in a situation when I literally only had one choice for a product or service, even in areas of so called natural monopolies.

Edit: Actually I can name some true monopolies: NBA, NFL, etc.

I would add, Patent protected drug companies, local electric company’s, railroads, water, cable TV, etc and arguably IP including Books, Movies, Games etc are true monopolies. Don’t forget governments as the Social Security, FBI, etc does not compete on an open market. Collectively, government spending is a huge portion of the economy.

OPEC (Oil) and De Beers (Diamonds) are not true monopolies, however they have enough control over supply to have pricing power.

But as I alluded to, Walmart’s 2.3 million employees don’t use markets internally to set prices for services. IT, Legal, HR, etc are not separate companies. Instead executives just allocate and get allocated money for a specific use.

It’s not obvious how you could measure such a wide range of hidden interactions collectively. But, market transactions have real overhead so it should be as not surprise it’s limited. After all your spouse will tell you to take out the trash rather than paying you to take out the trash.

That is not what monopolisation is:

https://www.ftc.gov/tips-advice/competition-guidance/guide-a...

> Markets are the opposite of top-down linear design.

Markets are but corporations are private bureaucracies. Some of them gigantic. All but a few managed like a dictatorship. Adam Smith lived in a world in which a single person producing goods and selling them on a free market was something at least thinkable. We've come a long way since then.

What? On the inside, yes, the company is structured. The market is not that corporation, though; the interaction of that bureaucratic entity with other entities is the market, and that interaction is far less artificially constrained.

More bottom-up = more robust != centrally planned economies. This is what socialists don't understand.

There are certainly spill over externalities that the free market hasn't yet curtailed (like pollution) but government coercion should be our last resort to solve problems

> More bottom-up = more robust != centrally planned economies. This is what socialists don't understand.

You are not even wrong.

http://www.infoshop.org/an-anarchist-faq-i-4-how-could-an-an...

https://en.wikipedia.org/wiki/Market_socialism

Markets are most certainly top down. Markets don't exist without the nation state because they rely on nation state technology like money. In fact markets are explicitly created by governments.

Even within a market there is top down planning. What gets produced is decided by makers who use the feedback of the market to change what they make. The consumers usually have no say about what gets made and how it's made outside the narrow, low information way of the spot trade.

In othet words, people would not have created markets sans their explicit imposition by states. They are not a bottom up structure because no sane person would participate in them if they didn't have to.

Prior to markets were webs of debt relations. See 'Debt the first 5000 years' by David Graeber.

> Markets don't exist without the nation state because they rely on nation state technology like money.

Both money and markets predate the nation-state.

Markets are just people trading with each other. You get that naturally in any society with a concept of private property. People participate in them because the alternative is producing everything themselves and no one has the necessary skills to produce everything they might want. Money similarly develops on its own once the market grows complex enough to make the barter system inconvenient and people begin to practice indirect exchange with small set of universally marketable goods rather than trading directly for items they intend to use themselves.

That isn't the alternative. The alternative is people get in debt with each other, which is what happened historically. People simply didn't spot trade with their neighbors. The spot trade is a property of state created markets.

Trading in debt isn't an alternative to markets, it's a market with debt as the currency. Regardless, the "spot trade" as you put it is also older than nation-states, not something they created.

I good book I suggest is Debt the First 5000 Years by David Graeber. It will blow your mind.

I've seen it, and didn't find it very convincing. Graeber presents some interesting anecdotes regarding selected ancient social conventions, which may or may not be accurate[1], but—in my opinion—even taken at face value they don't really support his conclusions regarding the nature of debt. Perhaps the book would seem more compelling to someone who already shares the author's worldview.

[1] https://www.bradford-delong.com/2014/12/2014-11-24-mo-ann-le...

>Markets don't exist without the nation state because they rely on nation state technology like money

That's not true at all, in many cases markets exist in spite of nation states (think silk road and every other black market).

All of those came about after money, taxes, and state created markets came about. They are part of the whole. If you get rid of the state, the black markets will go away because taxes and money will go away.