Several disciplines, among them economics, political economy, philosophy, ethics, and, as of the late twentieth century, sociology, anthropology, and geography, rely on the notion of a market to establish a nexus between those who wish to purchase a commodity and those seeking its sale at a mutually acceptable price or exchange value. While specialists in the latter three fields concern themselves with markets in the sense of trading places observable in the less developed economies of the world, modern economists are principally concerned with an explanation of pricing under different market conditions. For the philosophers of Greece, in particular Aristotle, exchanging an article for money was considered “unnatural.” In Politics he observed that there is a double way of using every article. “There is its wear as a shoe and there is its use as an article of exchange” (I.9, 1977, pp. 39–41). The “natural” use of an article is for consumption, while its exchange for money is an improper or “unnatural” use. Clearly, the distinction the philosophers made between value in use and value in exchange in a market is a reflection of the contempt they had for mercantile activities.
The influence of the Greek philosophers on intellectual thought and human behavior was eclipsed by the fall of the Roman Empire in 476 CE. Their teachings were not rediscovered until translations were made from Aramaic sources by early Christian scholars in the twelfth and thirteenth centuries. Church scholars (the Scholastics) reinterpreted Greek ethics and philosophy to meld them with the Catholic Church’s doctrines, including that of the “just price” as the market outcome that results from the moral behavior of both buyers and sellers, so that the resulting exchange value serves the common good. The central role of the “just price” derives from the papal bull Unam Sanctum (1302), enunciated by Pope Boniface VIII, which not only reflects the authority of Christian doctrine, but also implies the political priority of the state, vis-à-vis the family and the individual. Throughout the Middle Ages the dominant perspective about human behavior was that it should be guided by the goal of salvation.
By the mid-sixteenth century Church doctrines were challenged by the rise of nation-states and divine-right monarchies in England, France, Spain, and Holland. Their belief was that a nation’s stock of gold was an index of its wealth and power, which led several of their thinkers to a theory of foreign trade that identified a favorable balance of trade (i.e., an export surplus) as the cause of national wealth. Merchant activity in foreign trade was thus accorded social status above artisans and manufacturers, while agricultural labor placed last. Interest in trade also promoted quantitative concepts and techniques, such as William Petty’s Political Arithmetic (1690), to explain social phenomena. The logic of explaining prices in terms of the physical costs of producing goods thus replaced the subjective perspective inherent in the medieval notion of just price and its counterpart, the “just wage.” The rise of the European nation state is thus intimately related to the development of political economy, and ultimately of capitalism.
The view of the market that followed in the eighteenth century originated in the Scottish Enlightenment and was envisioned as the outcome of multiple individual choices adapting to evolutionary changes to promote maximum happiness for the greatest number of individuals. This optimistic vision underlies Francis Hutcheson’s (1694–1746) System of Moral Philosophy (published posthumously in 1755), whose teachings influenced David Hume’s natural order philosophy, which explored its beneficence to human freedom and happiness that is fully manifested in a market economy. Hume’s work greatly influenced Adam Smith, whose Theory of Moral Sentiments (1759) explores the complementarity between sympathy and self interest that is central to the functioning of a market economy: In The Wealth of Nations Smith observes, “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their self interest” ( 1977 Vol. 1, p. 10). Thus, Smith viewed the functioning of markets as the outcome, on the one hand, of the innate capability of humans to engage in moral behavior socially, while also serving their self interest.
Smith’s starting point in The Wealth of Nations (1776) was to link the functioning of the economy to the division of productive labor as the basis for economic progress in raising the economy’s standard of living. Increasing division of productive labor (by which Smith means labor that results in a vendible product), favors the expansion of markets, encouraging still further division of labor, while promoting a larger proportion of productive workers in the population. The market price of every commodity oscillates in accordance with the proportion actually brought to the market. Thus, the market price tends to converge to a price that pays the wages of labor (at their natural or subsistence level, the profits of capitalists (which competition pressures toward zero), and the rent of land (which tends to increase as population growth necessitates the use of inferior soils). The increasing division of labor enhances productivity and thereby ensures economic progress, broadens markets, and enhances the well being of each of the three great social classes: laborers, capitalists, and landlords.
Notwithstanding the optimism inherent in the invisible hand doctrine, the thesis that market wage rates tend toward the subsistence levels anticipated the pessimistic worldview of the nineteenth century that led Thomas Carlyle (1795–1881) to describe political economy as the “dismal science” (Critical and Miscellaneous Essays 1849, p. 84). While Smith attributed downward pressure on wages to the relatively greater bargaining power of employers, many who followed him, the English Economist Thomas Robert Malthus among them, attributed the tendency toward subsistence wages to the combined effect of population growth and rising food costs in consequence of diminishing returns. Classical thinkers were thus fully cognizant that the market allocates income shares among workers, capitalists and landowners, as well as goods among households. These forces led the English economist David Ricardo to offer the theory of comparative advantage to explain the gains inherent in international trade, which encourages improvements in productive technology and international division of labor, which will enhance worker productivity and the rate of profit, and help the working class to participate in the gains from trade.
The advent of the “marginal revolution” led by William Stanley Jevons in England, Carl Menger in Austria, and Leon Walras in Switzerland (who published almost simultaneously in the 1870s), introduced a subjective perspective as an alternate to the classical cost of production view of exchange value, which predicated values on the utilities that consumers placed on their purchase. Because it is their objective to maximize their total utilities, consumers reallocate their commodity holdings until they achieve a set of values that represents an equilibrium state from which no further improvement is possible. This is the vision that led subsequently, principally in the work of Leon Walras (1834–1910) and Vilfred Pareto (1848–1923), who jointly founded the Lausanne School in the twentieth century, that when viewing an economy in its entirety there is a tendency for all of its sectors to move toward simultaneous (i.e., general) supply and demand equilibriums in each of its commodity and factor markets. This is an outcome that lends itself toward representation in a group of simultaneous equations from which Walras demonstrated that it is possible to derive a mathematical solution for market outcomes, given the necessary data. In practice, of course, markets establish actual quantities and prices through the interaction of demand and supply.
An alternative to explaining market outcomes exclusively in terms of marginal utility, which built on the mature classical tradition of John Stuart Mill, and which is known as neoclassicism, emerged in England with the publication of Alfred Marshall’s Principles of Economics (1890). Its distinguishing feature is its eclecticism, which joined marginal utility as underlying the demand side of market behavior (which he pioneered independently of the English economist and logician William Stanley Jevons [1835–1882]), with the classical cost of production explanation of the supply prices of output. By maintaining the interaction of demand (or utility) and supply (or cost or production) in determining prices, Marshall emphasized the central importance of the time periods during which competitive industries are able to make adjustments to consumer demands. In the short run, when inventory has already been produced, costs of production are relatively less important in setting prices than are consumer demands. The short run, during which investment in fixed plant and resources are in place, outputs can be varied by changing inputs of labor and raw material so that costs of production become equally important as demand in establishing prices. In this period the number of firms in an industry becomes expanded or contracted in response to profits or losses, so that in the long run, when all inputs are variable, competitive prices will tend toward equality with the costs of production incurred in response to consumer demands. Thus, Marshall’s focus (unlike the French economist Léon Walras’s [1834–1910] general equilibrium) for explaining prices was on “short causal chains” of partial equilibrium to explain what happens in commodity and factor markets.
With the publication of Marshall’s eighth edition of Principles of Economics in 1920, the basic supply and demand framework for conceptualizing market behavior and outcomes, along with the vision of economics as a moral science, was established in the United Kingdom and the United States. The only important addition was the subsequent recognition by scholars Edward Chamberlin and Joan Robinson that the commodities sold in most markets are fundamentally differentiated from competing products via advertising, packaging, design, and sales locales. The latter give individual firms a degree of control over selling prices that renders their markets monopolistically competitive. In other industries, the increasing returns that are inherent in large scale production cause firms to expand so that a few large firms (i.e., oligopolies, many of which are multinational firms) dominate markets in which prices deviate from competitive cost of production prices in consequence of both product differentiation and competition among few (rather than many) large firms. Globalization and electronic communication, along with the apparent widespread political preference for privatization and profit driven decision making, suggests an emerging overlap in the behaviors and outcomes in markets worldwide.
There is, however, an important difference between economies that have become privatized since the decline of communism in 1989 in the former Soviet bloc, and American and Western European capitalism. The transition from collectivism to market-oriented decision making has been accompanied by reductions in output, increased unemployment, and rising prices.
SEE ALSO Economics, Classical; Economics, Neoclassical; Market Clearinghouse; Market Economy
Aristotle. 1977. Politics. Trans. H. Rackham. Loeb Classic Library, Vol. 21. Cambridge MA: Harvard University Press.
Bromley, R. J. 1974. Periodic Markets, Daily Markets, and Fairs: A Bibliography. Melbourne: Produced by the Dept. of Geography, Monash University, for the International Geographical Union Working Group on Market Distribution Systems.
Carlyle, Thomas. 1849. Critical and Miscellaneous Essays. Philadelphia: Carey and Hart.
Marshall, Alfred.  1920. Principles of Economics. 8th ed. London: Macmillan.
Petty, William. 1899. Political Arithmetic. Vol. 11 of The Economic Writings of Sir William Petty, ed. Charles Hall. Fairfield, NJ: Augustus M. Kelley.
Rima, Ingrid H. 2000. Development of Economic Analysis. 6th ed. London and New York: Routledge.
Smith, Adam.  1982. The Theory of Moral Sentiments. 6th ed. Eds. D. D. Raphael and E. L. MacFre. Indianapolis, IN: Liberty Press.
Smith, Adam.  1977. The Wealth of Nations. New York: Everyman’s Library.
"Markets." International Encyclopedia of the Social Sciences. . Encyclopedia.com. (January 17, 2019). https://www.encyclopedia.com/social-sciences/applied-and-social-sciences-magazines/markets
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Manorial lords levied a rent on each stall-holder in exchange for the right to trade on a particular day of the week. Markets usually served the population within about 10 or 12 miles, which was as far as a laden horse-drawn cart could journey to and fro in a day, whilst allowing time to trade. However, some markets became famous for the sales of special produce, drawing merchants from further afield.
Markets usually took place in the main streets where traders erected their stalls or pens for animals or other livestock. Such streets often show their function by their spaciousness and were given names such as Market Place, Market Street. Other places carried names such as Butter and Hen Cross, Cattle Market, Haymarket, or Lace Market. In larger towns, markets were held in different locations on different days. During the Middle Ages, the naves of many parish churches frequently served as covered markets. However, the unseemly conduct of some traders led to the discontinuation of this practice and the erection of special market halls.
By the 20th cent. markets had become associated with the sale of either fresh local produce or cheap mass-produced goods.
Ian John Ernest Keil
"markets." The Oxford Companion to British History. . Encyclopedia.com. (January 17, 2019). https://www.encyclopedia.com/history/encyclopedias-almanacs-transcripts-and-maps/markets
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Markets, defined as physical locations at which individual vendors come together to sell foodstuffs and other commodities, appeared around the world as one of the earliest organizational models for commercial exchange. Through the early modern period, Europe's markets operated as key urban institutions for the distribution of food, while functioning in symbiotic relationship to local and longer distance supply networks, demographic expansion or contraction, and to other commercial entities such as shops, rural fairs, and more formalized exchange houses, or bourses.
The long nineteenth century was a particularly crucial period in the history of Europe's markets. In the regions most transformed by the processes of industrialization and urbanization, markets grew dramatically in size and number. Other forces such as the revolutionary movements of the century, the process of municipalization, and the consolidation of the urban bourgeoisie contributed to greater levels of public intervention in the management and rationalization of food market trade. While eastern Europe experienced less frequent and significant changes in the nature and organizational strategies of markets through the nineteenth century, western Europe was more generally characterized by a flurry of new urban market hall construction beginning in the 1850s. Quite a number of these structures, though unprecedented in scale, complexity, and attention to aesthetic detail, had only a relatively brief heyday; on the eve of World War I, many of the biggest retail market halls in western Europe had been eclipsed by larger high street shops, department stores, cooperatives, and chain or multiple operations. In many southern European cities, urban market halls proved more enduring institutions for food retailing through the early and mid-twentieth centuries.
As had long been the case, Europe's late eighteenth century markets were mainly held in the open air. Unlike fairs, markets were characteristically urban institutions; towns and cities featured a range of such commercial gatherings that met on a daily, weekly, or sometimes more intermittent basis. Typically regulated by competing civil and religious authorities, individual vendors paid fees to operate stalls selling comestible and non-comestible oods while most markets involved some combination of retail and wholesale functions. Because shops typically sold a fairly narrow range of foodstuffs, and the facilities for food storage and preservation were limited in most urban households, marketing was one of the main everyday activities for married women from all but the highest-ranking families. At the upper end of the social orders of Europe, female servants assumed this important responsibility. Moreover, with market trade often constituting a relatively marginalized commercial specialization, it is not surprising that women worked in large numbers as vendors in most regions of Europe. So while the authorities governing market trade were overwhelmingly male, many men worked in market wholesaling, and family economy arrangements were a commonplace, markets were largely feminized commercial spaces characterized by intense and repeated social, economic, and cultural exchange among women.
The late eighteenth and early nineteenth century open-air urban marketplaces of Europe often acted as tinderboxes for revolutionary mobs. Women buying and selling food in the markets exchanged much more than money and provisions. They also traded information, news, and gossip, while asserting or confirming their place within the urban social order through displays of acquisitive power, dress, language, and gesturing. Such exchanges among women typically took place within formalized legal frameworks but also within the context of a common set of cultural ideas about fairness embodied in the concept of the moral economy. In times of food shortage and inflation, discontent among consumers could easily spill beyond the amorphous boundaries of open-air markets to spark demonstrations that led to wider-spread mobilizations and outbreaks of violence against public and ecclesiastic authority. Through the first half of the nineteenth century, the growing threat posed by revolutionary urban crowds compelled civil authorities to seize greater control over food marketing. Competing municipal, regional/departmental, royal, and emerging liberal-nationalist authorities exercised increasing degrees of power in regulating food market sales through Europe's Age of Revolution.
While continuing to serve as the premises for later public approaches to urban food retailing, concerns related to the maintenance of order constituted a key force driving the first phase of market expansion in nineteenth-century Europe. As long as fortifications continued to limit urban growth, legal markets could only expand where political authorities issued new patents and permits and increased the number of stalls and space along streets and squares devoted to market trade. The erosion of guild controls and the increasing liberalization of the economy through most of western Europe did much to facilitate this process. Every town or city that experienced significant population growth had little choice but to pursue a set of strategies that would facilitate the expansion of market trade. Yet, in response to such forces, markets in many locations across Europe became ever more crowded places occupying larger and larger portions of urban space. These circumstances meant that food markets remained centers of ongoing social tension. This despite the fact that increases in agricultural production and improved distribution of grains, combined with augmented policing, had helped to reduce incidents of bread rioting in much of Europe by midcentury.
In the second phase of market expansion in Europe, which dates from the mid-1850s to the end of the century, municipal authorities and private interests won out in the struggle for control of markets, and of urban food retailing more generally. With the demolition of urban fortifications and the extension of the rail network, cities throughout western Europe faced the challenge of providing urban services to newly built peripheral districts of varying social composition. Many municipal governments embraced ambitious market hall building programs as a part of their urban expansion and renovation endeavors. The Hausmannization of Paris and the building of Barcelona's Eixample are two of the best illustrations of this process of which market building constituted an important element. No less than broad boulevards, statues to national heroes, and monumental public buildings, the large-scale urban market halls of nineteenth-century Europe carried heavy symbolic loads. They were characterized in the press and through public ceremony and ritual as tangible evidence of the power of the state in its various guises, and of the commitment of urban authorities to the welfare of the population.
While market hall building was all the rage in the last quarter of the nineteenth century in western Europe, open air markets did not face complete extinction. Some cities, such as London, mainly designated its new market halls for wholesaling purposes while continuing to permit customary street markets to take place on designated days to handle the bulk of retail sale in produce and some other items. Luxury foods, on the other hand, in London and elsewhere, were increasingly sold from shops. Grocers specializing in coffee, tea, chocolate, sugar, and the new pre-packaged and branded items expanded their lines to compete more handily with both open air and market hall vendors as the nineteenth century came to a close. Other forms of competition, such as the chain and the cooperative, played significant roles in eroding public market hall clientele in England and other parts of northern Europe by the end of the century.
Technologies such as the telephone, used by women to call in orders to grocers for home delivery, also undermined the customer base of market halls in cities such as Paris. The pattern in much of northwestern Europe in the decade preceding World War I featured a decline in the rate of large-scale retail market hall construction as well as a contraction in market sales alongside the growth of other types of competing food retailing enterprises. This was much less the case for southern Europe, and especially for cities such as Barcelona, where public market building and renovation projects continued until much later. Likewise, large numbers of open air markets worked by producer vendors in both eastern and western Europe continued to survive the competition posed by the expanding number of shops and stores, especially among a working-class consumer base.
By the early twentieth century, the flowering of consumerist culture, of branding, and of advertising, had acted to undermine the long-term survival of public retail markets in major cities such as Paris and Berlin, while taking place within markets themselves in many other highly urbanized regions. For women on the lowest rungs of the social orders of Europe, markets continued to constitute daily destinations in food shopping routines, and stall displays were often elaborately designed to appeal to popular consumerist fantasies. This was the case in parts of rural Britain, southwest Europe, and in some other areas of the Continent. With department stores and upscale high street shops generally beyond the socioeconomic reach of the urban poor, markets remained the main source for most food and cheap semi-durable manufactured goods in working and lower-middle class neighborhoods. While the historical literature on retailing and consumerism mainly focuses on non-food items sold in shops, galleries, and department stores, there is little doubt that the urban market halls of Europe were also transformed by such crucial economic and cultural developments. In early twentieth century Europe, urban markets faced new and sometimes fatal challenges to compete with other types of retailing enterprises. Yet significant numbers of food markets survived, and where they did so they remained centers for sociocultural exchange among women as well as sources for relatively inexpensive food and manufactured goods that were no less a part of consumer culture than the fare for sale at the fanciest department stores on the Continent.
Horowitz, Roger, Jeffrey M. Pilcher, and Sydney Watts. "Meat for the Multitudes: Market Culture in Paris, New York City, and Mexico City over the Long Nineteenth Century." American Historical Review 109 (October 2004): 1055–1083.
Lohmeier, Andrew. "Burgerliche Gesellschaft and Consumer Interests: The Berlin Public Market Hall Reform, 1867–1891." Business History Review 73 (spring 1999): 91–113.
Miller, Montserrat. "Mercats nou-centistes a Barcelona: Una interpretació dels seus origens i significant cultural." Revista de l'Alguer: Anuari academic de cultura catalana. 4 (December 1993): 93–106.
Schmiechen, James, and Kenneth Carls. The British Market Hall: A Social and Architectural History. New Haven, Conn., 1999.
Tangires, Helen. Public Markets and Civic Culture in Nineteenth-Century America. Baltimore, Md., 2003.
Thompson, Victoria E. The Virtuous Marketplace: Women and Men, Money and Politics in Paris, 1830–1870. Baltimore, Md., 2000.
"Markets." Encyclopedia of Modern Europe: Europe 1789-1914: Encyclopedia of the Age of Industry and Empire. . Encyclopedia.com. (January 17, 2019). https://www.encyclopedia.com/history/encyclopedias-almanacs-transcripts-and-maps/markets-0
"Markets." Encyclopedia of Modern Europe: Europe 1789-1914: Encyclopedia of the Age of Industry and Empire. . Retrieved January 17, 2019 from Encyclopedia.com: https://www.encyclopedia.com/history/encyclopedias-almanacs-transcripts-and-maps/markets-0