market

Standard economics takes the market as point of departure for analysis, whereas EE explains the market as a result of the evolution of >order in the economic system. Both agree, of course, that the market is a special territory in networks with a number of >institutions that govern transactions, especially involving the use of money as medium of communication and as a standard of selective processes. Important process characteristics of markets are >competition and innovation.

The reach and scope of markets is a reflection of the order of the economic system. Frequently it is argued that the more inclusive the market system, the more efficient the economy. This is only true if competition is safeguarded and if there is a sound balance between competition in performance and competition for power. Hence, EE submits that the efficiency of markets is not a per se given, but depends on the peculiar embeddedness of the market into social and political structures. An important example for the application of such a view is the analysis of >innovation systems.

Furthermore, efficiency analysis cannot deal with the role of >novelty and hence, uncertainty, in market processes. EE therefore emphasizes the value foundations of market behavior, based on its conception of the >actor. A special emphasis is put on entrepreneurship in the market as well as in politics. For the analysis of market processes, this means that the role of expectations and implied rule-governed behavior is scrutinized. To reach more specific insights, EE can rely on many existing approaches in economics: For example, EE has a close relation with post-keynesian approaches in macroeconomics.

One of the favorite methods in EE to understand market dynamics are >simulation approaches. Simulation helps to understand the relation between innovation, market structure, profitability and productivity, without being forced to put this into the tight equilibrium framework of the standard models.

Basic References

The embeddedness of markets is scrutinized by
Jean-Philippe Platteau, Behind the Market Stage Where Real Societies Exist - Part I: The Role of Public and Private Order Institutions, and Part II: The Role of Moral Norms, in: Journal of Development Studies 30/3 + 4, pp 533-577, 753-817, 1994.

A classic on the different view of markets, if uncertainty is taken seriously by our theorizing, is

G.L.S., Shackle, Epistemics & Economics. A Critique of Economic Doctrines. Cambridge: Cambridge University Press, 1972.

Semantic Field
order
market   competition
simulation   entrepeneurship   innovation