Natural and political markets

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Natural and political markets

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Title: Natural and political markets
organizing the transfer of technology and knowledge
Author: Tryggestad, Kjell
Abstract: The aim of this work is to conduct a theoretical and empirical investigation of how the market institution performs in the context of technology and knowledge transfer. The notion of political markets, first introduced by Adam Smith, is extended to the artifacts of technology and their associated factor markets. The paper develops the notion of political markets by drawing upon an empirical case that reconstructs the chain of events related to the transfer of flexible manufacturing systems (FMS). The case account for the various actors and institutions involved in the technology transfer, including the firms on both sides of the market, the government, the engineering-scientists, the economists, the union representatives and the machinists. It is argued that Natural markets is a special case of political markets in which technologies and hybrid entities and identities produce both the Natural market as well as its master – the pure technological relations. Neither the Natural market, nor Homo economicus can be brought into existence without pure technological relations. The existence of the latter is a necessary condition for the existence of the two former, as has already been recognized by neoclassical economics. The present work makes a constructive contribution to neoclassical economics in this respect, by describing and analyzing all the work of purification that enters into the task of bringing the necessary conditions into existence. Indeed, the process of purification that brings purified 3 technologies, natural markets and rational identities like homo economicus into existence, require huge investments, as do their maintenance. Technical knowledge turned out to be no exception. As the case suggests, technical knowledge was not just a given condition, but became a produced outcome. Yet, the process of knowledge production continued, transforming given technical knowledge in unexpected ways. Technical knowledge also became a negotiated outcome during the transfer of FMS. Hence, when market transaction takes place, knowledge it self can be transformed, and with it, the conditions for conducting the market transaction. So, the notion of political markets proposed here, suggests that knowledge can be both premises as well as an outcome of market transaction – as knowledge, its status and distribution - can be negotiated in the process. Instead of criticizing Homo economicus and (neo) classical economics, the notion of political markets thus proposed imply a constructive contribution to economics, notably to the core of neo classical economics: Through out this paper, it is argued with reference to both theory and own empirical fieldwork, that neoclassical economics participate in the successful purification of technological relations. Yet, in order to provide for an explanation of such a successful outcome, it is not enough to account for economists among themselves. As has already been suggested by Callon (1998) and the associated work on the anthropology of markets, also such material associations as computer based calculations and simulations of the macro-economy must be brought into the explanation. In more specific terms, the puzzling ‘residual’ in the neoclassical production function can be explained by now also taking into account the many subtle ways economics itself interfere in making up the residual. Neoclassical economics only have to refine their production function by adding to it the significance of material associations such as computer based calculations and simulations of the macro-economy. Done properly, a revised macro-economic model would emerge, capable of handling ‘market failures’ in new ways. Instead of attributing all failures to the market and no failures to technology, a more symmetric distribution of failures between the two entities would be allowed for. Further more, each time a ‘residual’ emerges from applying the revised model, it is no longer simply due to ‘technical change’ but also due to ‘market failures’. Hence, such a revised macro-economic model not only allow neoclassical economics to maintain the distinction between technology and the market but also allows for the flexibility of including those entities previously excluded, that is, the material associations and inscriptions that participates in making up the distinctions between the two.
URI: http://hdl.handle.net/10398/6676
Date: 2004-01-27

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