Narrating the Market Process. How Stories Can Promote the Economic Way of Thinking

Jason Douglas

My first encounter with the idea of the market as a process also happened to be one of my first encounters with serious economic theory. Having read little beyond some Smith, Marx, and Mill as a kind of general, philosophical background, I somehow found myself in a lecture delivered by an economist named Israel Kirzner, whom I had never before heard of but whom I understood to be a figure of some consequence. I came away from the lecture impressed by the degree to which Kirzner’s account of the economy seemed more like a description of how things worked in the actual marketplace than an attempt to gloss over variations and contingencies in pursuit of a tidy, theoretical model. Despite the fact that there was something compelling about a theory of the market that accounted for rather than assumed away the economy’s inherent messiness, I couldn’t, however, find a way to put all of the pieces together into a comprehensible whole. While the numerous elements—profit, opportunity, entrepreneurial function, alertness, consumer preference, ignorance, etc.—all seemed to make sense individually, it was difficult to come up with a simple and accessible way of describing the market process that reflected all of its essential features.

For a long time, I attributed my inability to construct for myself a satisfactory, comprehensive account of it all to deficiencies in my own knowledge, which was, no doubt, true to some extent. But as I read and reread more about market process theory, I noticed something peculiar about the overall shape of the discourse. Kirzner and virtually everyone else I read seemed to have only two ways of describing the market as a process; the market process is explained through price theory or through the history of economic thought. For example, in The Meaning of Market Process (Kirzner [1992] 1996), Kirzner produced an account of the market through its conceptual development, framed within the history of economic thought; and in Market Theory and the Price

System (Kirzner 1963), Kirzner delivered an account of the market through the technical framework of price theory. These are very fine and admirable books, but they also represent a certain kind of limitation in our options for accessing market process theory: you can study the market as a process through the specialized knowledge required for understanding the history of conceptual debates among economists that sometimes turn on very subtle distinctions, or you can study an economic theory of price in all its technical complexity. I’m sure there are important exceptions, but the point is, for the most part, market process theory is something written about by economists for other economists. We have a wealth of documentation on how economists understand or have come to understand the market as a process, but if it is such a basic and important part of understanding how the economy actually works, where is the account meant for everyone else? How can we explain the idea of the market as a process to those who aren’t familiar with the difference between Marshallian equilibrium and Hayekian disequilibrium? Or those who don’t see the conflict between neoclassical maximization and Misesian praxeology? How and to what degree has the idea of the market as a process been identified, recognized, and explained outside economics? Or, to put it yet another way, what does an account of the market process for the masses look like?

In this chapter I claim that stories and narrative can do essential work for communicating economic ideas to non-economists. Furthermore, I also claim that specific developments in the form of mid-twentieth century business novels align closely with the idea of the market as a process in particular. After outlining why disseminating disciplinary understanding beyond disciplinary boundaries is especially important for economics, I briefly sketch the essential features of existing approaches to similarly interdisciplinary projects. I will identify both the shared assumptions and the methodological deviations of my work from economic scholars who have drawn important insights from cultural studies and whom I draw upon in turn, such as Deirdre McCloskey ([1982] 1998), Peter Boettke (2005), Virgil Storr (Storr and Butkevich 2007), Tyler Cowen (1998, 2009), and Don Lavoie (Lavoie and Chamlee-Wright 2000). Having established the general features of my conceptual and methodological framework, I present a detailed analysis of the conceptual and formal parallels between Cameron Hawley’s 1955 business novel, Cash McCall (Hawley 1955), and the theory of the market process as documented and developed by Israel Kirzner.