Introduction
Markets and society is a topic that has triggered hot debate over the last couple of years in the social sciences scene. The relationship between the two is explained in theories, some of which were developed by Thomas Hobbes, David Hume and Adam Smith. These economists made major contributions in their times. The market is said to have notable contributions to the welfare or well-being of the society.
It is important to note that the welfare of an individual can be conceptualized in terms of materials; therefore, market and society contribute to welfare and well- being of individuals. Well-being can result from domains that are outside the market domain.
In addition, there are some accomplishments within the market that are likely to contribute to the well–being, but they are not captured in welfare. However, well -being of individual will not be possible if they embrace luxurious life. They need to work hard so as to have a good living. Success in the market is all about hard work but not luxury (Hume, 1767).
Markets have the ability to make new forms of authority in the society. This is because markets, as mentioned earlier, have the ability to exact some form of control. Markets can influence what is happening in the institutions, the forces of demand and supply, as well as deciding the management of firms. Theories are the main principles upon which markets operate (Hann & Hart 2009).
These theories were developed by a number of theorists long ago, but they have constantly been improved and enhanced to reflect today’s business environment. This essay gives an explanation and a critical evaluation of how markets create new forms of authority. In the discussion, the essay focuses on institutions, forces of demand and supply, as well as organizational management.
Forms of authority in institutions
Institutions have various forms of authority, and they have their own ways of developing and enforcing policies. In the recent past, most institutions have been highly dependent on the economy for their performance. The economy, on the other hand, has a direct relationship with the market performance.
As a result, the performance of the market will be reflected on the performance of institutions, both in the private sector and the public sector. The market is, in most cases, dictated by the prices that exist during a particular time. On the other hand, the authority controls the organizational hierarchy (Fleischacker 2004).
The market has a significant influence on today’s politics. For instance, in the England, the unity between David Cameron and Nick Clegg was formed at a time when the economy of the country was not at its best. It was a gamble for the two leaders, where no one knew what the outcome of the coalition would be. Many people thought that the power sharing deal would not succeed.
However, the two have stood against the odds and they are faring well. Their major objective was to reduce the deficit in the country as a step towards improving the economy and the markets in England (Gray, 2010). This bid led to the creation of an authority by the market that aimed its efforts at reducing public spending.
If the public spending is reduced, this may have a negative effect on the market since many people will not spend on buying goods and services. Clegg was a supporter of market liberalism. Together with other economists such as Chris Huhne, Vince Cable, Clegg made contributions to the essays that talked about market liberalism (Gray, 2010).
This group of economists aimed at affirming a version of liberalism that they believed had been lost. Liberalism supports free markets, as well as a small government. It also favours the freedom of lifestyle as well as the commitment to civil liberties. In liberalism, markets do not emphasize on the traditional hierarchies. This is an indication of how market can create authority in government institutions (Gray, 2010).
Commerce is everywhere and it has an influence in all institutions, whether they are governmental or non- governmental, public or private (Montesquieu, Cohler, Miller and Stone, 1989). The issue of commerce and its influence in the society, as well as in authority can be traced back to the time of classical theories. The classical theories were developed by a number of theorists, including Adam Smith and Karl Marx among others.
However, people have been said to value money, and in the process they tend to embrace virtues. Many evils have been associated with money. This has especially been on the rise during the recent times of globalization and increased competition in the market. Money has an influence on authority in that the top officials have work to do to ensure that the evil acts are reduced or eradicated (Montesquieu et al. 1989).
In China, the economy became a force during the year 2001 at a time when America was experiencing economic bubbles. The economy later came under scrutiny in China, as well as abroad. There were claims that the reforms in China at the time were aimed at creating a socialist market economy.
Many people in China decided to join commercial ventures, and it was claimed that money went on to replace Marxism and become like the China’s god. The economy of China was influenced by its growing market, both within and outside the country. The demand for China products was increasing rapidly, making China an economic powerhouse.
As a result of the social market economy where people were focused on making money, other vices in the system such as corruption as well as erosion of moral basis of the society started to increase. The level of inequality also went up. This called for the authority to take action and try to control the situation (Arrighi 2007).
In the traditional European, commerce was not given much attention as it is now. People were focused on the pursuit for good society. This could be seen in the traditions of the classical Greece as well as the traditions of Christianity (Muller 2007). However, this changed when the society started focusing on market and abandoning the pursuit of good society.
When capitalism came in, the virtues of the society started fading away. Hence, commerce can be viewed as having brought negative issues in the society but on the other hand, it has improved the welfare of individuals (Hann & Hart 2009). Generally, the modern society has really changed as a result of capitalism.
Most people tend to focus so much on commerce rather than the issue that affect the society. The western nations are especially said to have become highly capitalistic (Trigilia & Wiley InterScience, 2002).
Supply and Demand
The forces of demand and supply are the ones that dictate the economy of any nation. In a free market, the forces are free regulating. The law of demand indicates that ‘as the demand of a commodity or a service increases, the price also increases’. In a similar manner, ‘the price of the commodity or the service decreases as the demand decreases’.
On the other hand, the law of supply indicates that ‘as the supply of a product or a service increases, the price goes down’. If the ‘supply decreases, the price goes up’. These laws are true only when all other factors are kept constant. Demand and supply have the ability to dictate the activity of the market.
Demand and supply dynamics should be allowed to take control of a free market. These laws create authority in the market. In some instances, the government can directly or indirectly intervene in the free market and influence the law of demand and supply.
For instance, in the case of money market, the value of the currency increases as the demand increases. The value also decreases as the supply increases. The government may decide to increase the supply of currency to reduce the value and the cost of its imports (Strauss 2004).
Demand and supply can be influenced by a number of factors. Some of the factors include interest rates, inflation, economic, as well as political factors. The market of the currency can create forms of authority in that if its demand goes down, the government will be compelled to find ways of improving that demand.
On the other hand, the government may decide to reduce the cost of its exports by increasing the supply of its currency. This way, market demand and supply creates authorities whereby the policies of foreign exchange are changed. Demand and supply of any commodity or service has an upper hand in determining the authority to be adapted in a market.
It is important to note that in a competitive market, there is no individual who directly inflicts significant authority in the market. It is the market itself that creates its own authority (Strauss 2004). A competitive market is made up of many buyers and sellers, who compete for the best deals.
Sellers want to get the best prices in order to maximize their profits, while sellers thrive to get the lowest prices possible for high quality goods. Competitive markets work differently from other markets. However, they are easy to model. The model that describes these kinds of markets is the demand and supply model. This is a model that has the demand curve, the supply curve and shows the equilibrium price.
The forces of demand and supply have more authority in the society nowadays as compared to the past. This is especially more common in the wealthy nations. The western countries which are more industrialized as compared to other nations tend to have markets which are highly advanced and which are ruled by the forces of demand and supply (Smith & Bullock, 2007).
Who becomes the manager in the firm?
Management is said to be both an art and a science. Management is a science since one has to apply concepts as well as modules in managing any organization (Taylor 2012). Theories are also an important tool of management that the managers have to understand and apply effectively. Managers are faced with problems in their day-to-day duties, which they are required to solve through application of concepts and theory.
The problems that the managers face may result from the market situation in which they operate. Therefore, the market becomes an important aspect in determining the manager who is fit for an organization during a given time. Similarly, the market situation may present itself in a manner that the manager is not able to handle.
In such a case, the firm is likely to dismiss the manager and bring in a manager who can propel it forward. Therefore, the market creates a form of authority, whereby it is important in deciding the manager who takes over in the firm (Peeling 2005).
The market does not only create authority in deciding the manager who gets in the firm, it can also create authority on the labour required in the firm. For instance, if the market demand goes down, the firm does not have to produce large quantities of goods to avoid surplus and save on holding cost, as well as opportunity cost of keeping a large amount of stock (Peeling, 2005).
In addition, the firm may also want to cut on the amount of money spent on wages. The employee base may not be fully utilized when the demand is low. As a result, the firm may lay down some of its employees. On the other hand, if the demand is high the firm will have to produce more to meet the market demand.
The firm may, therefore, need to hire more employees. It is important to note that the manager in the firm should also have the knowledge and skills to help the organization meet the market demand.
The manager who gets into the firm should have the knowledge and power to help the organization achieve its objectives. This is one of the major criteria that the organization employs in finding a manager. The market today is characterized by high levels of unpredictability.
Despite this fact, managers are supposed and expected to be proactive. A manager who is not proactive will always be caught up by situations. Therefore, the market requires that the manager hired in the firm be knowledgeable and have the power to deal with the day-to-day problems.
Conclusion
Market has become significant in the society since it contributes to the welfare and well-being of the individuals. Markets have ways of creating new forms of authority. They create authority both within the organizations, as well as in institutions. Markets can create new forms of authority through the forces of demand and supply.
These studies were given important contributions by economists such as Adam Smith, Chris, Keynes and Karl Marx, among others. The economists explained how the market is controlled by the forces of demand and supply. A competitive market is one where the demand and supply are not influenced by any individual. The market can also create authority on the manager who reigns in the firm.
The manager should have the knowledge and power to help the organization achieve its objectives. He should be proactive to be in a position to deal with the situations that face the organization. The market dictates the number of employees to be hired, as well as the manager who fits perfectly for the job of managing the firm.
Reference List
Arrighi, G 2007, Marx in Detroit, Smith in Beijing, Adam Smith in Beijing: Lineages of the twenty-first century, Verso, London.
Gray, J 2010, Progressive, like the 1980s (Print version), vol 32, no. 20, pp. 3-7
Hann, CM & Hart, K 2009, Market and society: The great transformation today, Cambridge University Press, Cambridge.
Hume, D 1767, Essay II of the Refinements in the Arts, Essays and treatises on several subjects, Volume 1 Essays and treatises on several subjects, Essays and treatises on several subjects, Millar, London.
Montesquieu, CS, Cohler, AM, Miller, BC, & Stone, HS 1989, On the laws in their relation to commerce, considered in its nature and its distinctions, The spirit of the laws, Cambridge University Press, Cambridge.
Muller, JZ 2007, Historical Backdrop: Rights, Righteousness, and Virtue, The Mind and the Market: Capitalism in Western Thought, Knopf Doubleday Publishing Group, New York, NY
Peeling, N 2005, Brilliant manager: What the best managers know, do and say, Prentice Hall Pearson Education, New York, NY
Smith, A & Bullock, CJ 2007, Wealth of nations, Cosimo Classics, New York, NY
Strauss, H 2004, Demand and supply of aggregate exports of goods and services: Multivariate cointegration analyses for the United States, Canada, and Germany, Springer, Berlin.
Taylor, FW 2012, The principles of scientific management, The Floating Press, Auckland.
Trigilia, C & Wiley InterScience 2002, Economic sociology: State, market, and society in modern capitalism, Blackwell, Oxford.