By the same authors

Markets and the meaning of flexibility

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JournalEconomic Issues
DatePublished - Sep 2015
Issue number2
Volume20
Number of pages21
Pages (from-to)45-65
Original languageEnglish

Abstract

Markets are reputed to be more flexible than other economic arrangements, though the meaning of flexibility remains vague. For orthodox economists, it has a narrow interpretation based on relative price movements within equilibrating markets, leading to allocative efficiency. For heterodox economists and other social scientists, it goes beyond market-clearing equilibrium to take in price setting, non price adjustments and the institutional background. This paper examines the meaning of flexibility as applied to markets and evaluates the main alternative views. The orthodox approach, which informs most economic commentary, offers a deceptive story of a complete market system with rapid price changes. Actual economies are flexible not through prices alone but through various adjustment methods.

    Research areas

  • markets, flexibility, price setting, relational trade, economic evolution

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