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Markets: Social or Economic Foundations? Essay


In capitalist economies, markets are dominant institutions. The modern capitalism is the consequence of expansion of markets as frameworks for the production and allocation of commodities. The question whether to engender market economies with societies elicits a heated sociological debate among early economic sociologists such as Max Weber and Swedberg. Structuring a market requires one to look into the forms of interactions involving buyers and sellers.

Markets vary in terms of regulatory frameworks. Some are open while others are not necessarily open to all actors. All in all, there is a philosophical understanding that markets are rooted in the essentially competitive and exchange nature of political, cultural, and socioeconomic factors.

Markets are social structures that continually expand over time to accommodate more actors and commodities. The relationships extend geographically. A growing body of scholarly work presents divergent discussions on the description of a market. While some portray the market as a free arena where buyers and sellers are unrestricted to acquire the goods and services they require, Max Weber presents a different perspective of the same concept.

The crucial element of a market is seen as the exchange of products and services among actors who have conflicting interests and abilities. Max Weber posits that the expansion of markets occurs at the same time with the limitations in its openness particularly for manufacturers and vendors as against workers and consumers. This paper examines the perception and conceptualisation of Max Weber on markets.

Social and Economic Basis of Markets

In his work of Economy and Society, Max Weber dedicates a brief section to the concept of markets. According to Max Weber (1978), a market exists where competition prevails for opportunities of exchange among prospective actors, who can be said to be pluralistic in nature. Max Weber identifies two principal components of a market namely the economic aspect of exchange and social action of competition (Swedberg & Weber 1998).

Many researchers reveal that social market economies form the framework for free and open societies. This aspect brings about solidarity in the market. However, economic systems greatly influence the prosperity of this underpinning to promote an even-handed social setting. Markets that are guided by social equality bring about fair competition amongst buyers and sellers. Nonetheless, Gane (2012) reveals that such markets should be controlled to prevent some players from exercising dominance. In this manner, the applied market strategies should promote the development of new products to motivate suppliers while creating a wide range of choices for consumers.

A market presents buyers involved in competition with equal opportunities to buy commodities regardless of their status quos. On the other hand, sellers engage in rivalry against each other as they determine their suitability to selling such commodities (Tribe 2012; Gane & Kalberg 2013). In this regard, Weber posits that the exchange of goods and services in the market takes place between the buyers willing to offer the highest prices to sellers who can give the lowest prices for various commodities of interest. This situation creates room for a struggle between buyers and sellers. Max Weber refers this scenario as haggling, which precedes the conclusion of the deal between the two parties.

It is critical to look at how Max Weber conceptualises the two forms of interactions between buyers and sellers, who are the primary parties in any market (Gane 2012). In Chapter 1 of his book ‘Economy and Society’, Max Weber defines competition as a formal non-violent phenomenon that permits people to gain control over things that others are struggling to have. Competition receives regulation in numerous ways (Weber 1978). On the other hand, exchange entails a compromise of interests on the part of those engaged in it in a way in which commodities or other forms of benefits pass in mutual compensation. This reciprocity implies that both parties of the exchange gain mutual benefit. This concept of reciprocity receives limited attention from Weber.

In the description of the market, Max Weber asserts that the inevitable type can be found in one specified locality (Tribe 2014). The interactions that comprise a market entail their physical assemblage in a single place as it happens in a local market where parties travel long distances to reach merchants (Gane & Kalberg 2013). Max Weber adds that competition for opportunities of exchange is not limited to a definite marketplace (Tribe 2014).

It can take place outside the market. For instance, an exchange involving a car succeeds an array of activities. First, the competition to sell the commodity starts long before its production. Activities preceding the sale of the car include financing of the manufacturing process, the hiring of workers in the production process, and marketing of the product among others (Gane & Kalberg 2013). This process contributes to identifying Max Weber’s conception of the market as being more economic than social. Long before the arrival of a product in the market, an array of opportunities for exchange takes place (Swedberg & Weber 1998).

Max Weber regards the market as an operational price-making mechanism that lacks socialism. As such, it is typically hard to have an entirely rational economy in a society where price-making mechanisms define the market. The formulation of market prices for products is underpinned by power and interests. Max Weber maintains that monetary prices are the consequence of conflicts of interest and compromises emanating from power constellations (Tribe 2012).

The price tells one how much an actor possesses certain interests and powers that allow them to gain access to a particular product in the market. Sellers and buyers exchange money and products based on diverse interests and power. Therefore, Max Weber depicts prices as instruments of calculation that estimate the quantifications of comparative chances in the haggling of interests (Gane & Kalberg 2013). Nonetheless, markets can be conceptualized as areas dominated by social interaction.

Markets provide a social platform and institutional order for the voluntary exchange of rights in commodities. Max Weber did not dwell too much on the social realm of markets. He only portrays the market as consisting of actors who compete for the rights of the exchange of goods and services. Competition stems from the prevalence of partly conflicting interests between the actors. A price struggle characterises the exchanges in capitalist markets (Weber 1978).

In Chapter 2 of the book ‘Economy and Society’, the economic rather than societal characteristic of the market comes out clearly. The economist talks about the aspect of regulation with a free market on one end and a regulated market on the other end of the spectrum (Swedberg & Weber 1998). Attention is paid to the examination of a controlled market where variables such as tradition, convention, and structures of interests are responsible for regulation.

Max Weber posits that the regulation of the market occurs based on the structure of interests and economic power. He adds that even in a free market, these two regulatory frameworks are visible. According to Swedberg and Weber (1998), the market has helped to create capitalist monopolies. However, the dramatic expansion of markets does not imply that they are the sole instruments that control economic processes in capitalist economies. Weber (1978) maintains that reciprocal exchange connections, hierarchical structures, and redistribution are persistent alongside markets.


Markets are structural arenas of social relationships guided by economic parameters. The debate on whether it is the social or economic foundation that defines markets evoked numerous sociological and economic studies. This paper presents Max Weber’s position of the market. He depicts the market as taking place on economic rather than social parameters. The market creates opportunities for exchange whereby buyers relate to sellers on the grounds of economic interests.

A struggle exists in the market in that only the buyer willing to offer the highest price exchanges with the vendor willing to offer the lowest price in the market. According to Weber, a market comprises two economic components including competition and exchange. The two elements are non-violent. A series of opportunities for economic exchanges and completion precedes market-based activities. Max Weber posits that transfers can take place even outside a market.

Further, he portrays markets as non-open places. The entry into the markets is regulated by forces of interests and power of the actors. In this vein, a market is not open to all, but it is a rather controlled environment. Access to information is not readily available to everyone. Additionally, the participation in markets is stratified. The class of interests and the conflicts determines who can gain access to market opportunities. Overall, Max Weber views the market as a phenomenon that comes into being as a result of sharing of interests that are economic in nature.


Gane, N & Kalberg, S 2013, ‘Presenting Max Weber’, Canadian Journal of Sociology, vol. 38 no. 3, pp.407-413.

Gane, N 2012, Max Weber and Contemporary Capitalism, Palgrave Macmillan, New York, NY.

Swedberg, R & Weber, M 1998, The Idea of Economic Sociology, Princeton, New Jersey, NJ.

Tribe, K 2012, ‘Max Weber: The Works’, Economy and Society, vol. 41 no. 2, p. 282-298.

Tribe, K 2014, ‘What is Social Economics?’, History of European Ideas, vol. 40 no. 5, pp. 714.

Weber, M 1978, Economy and Society: An Outline of Interpretive Sociology, University of California, Berkeley.

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IvyPanda. (2020) 'Markets: Social or Economic Foundations'. 6 September.

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