Review of Matthew Watson, The Market

Review of The Market by Matthew Watson (Agenda Publishing 2018)

Reviewed by William Davies


Ever since Marx, critical theory has employed various techniques for unmasking free market capitalism. Terms such as ‘ideology’, ‘commodity fetishism’, ‘fictitious commodities’, ‘reification’ and ‘hegemony’ are staples of critical political economy, all providing ways of understanding the deception that occurs when ideas become mistaken for real things. Materialism and critical realism of various forms seek to disentangle theories about the world from its actual mechanics. The perennial risk with such an epistemology is that it presumes the reality it is intent on uncovering.

With a shorter lineage, post-structuralist approaches have dealt with the same problem differently, studying how ideas and theories are themselves materials, which are put to work as techniques of governing and calculating. The role of statistics, accounting, marketing and economics in the constitution of everyday market reality has been studied extensively since the 1980s, building on the work of Michel Foucault and Michel Callon in particular. The risk here is that, in refusing to do any unmasking, there is a loss of any critical politics.

Matthew Watson’s The Market sits outside both of these traditions, and in doing so achieves a less obvious type of critical perspective. The question he begins with is one that Marxists and post-structuralists are already very familiar with, namely of how ‘the market’ has become a thing in everyday political life. How is it that entire political programmes can be abandoned or ruined, because they have offended some ghostly force called ‘the market’? The definite article is key to Watson’s question because, while we can debate the reality and mechanics of markets all we like, ‘the market’ has taken on a rhetorical power in our politics that suggests it has been (in Watson’s terms) “thingified”. We’ve granted it some kind of reality and force. But why, when and how did this happen?

Watson’s way into this question is to note that there is an entirely separate way of talking about markets, which is what he terms ‘the market concept’ as it has developed in the history of economics. He stresses that what economists mean by ‘the market’ (as concept) is very different from what politicians mean when they invoke ‘the market’ as some autonomous agent. However, because the distinction goes under-appreciated, there has been too much slippage from one to the other. Ideas and theories forged over the history of economics have allowed or helped (or at least, not hindered) ‘the market’ to become “thingified”. Our language is out of joint, and the result is that public policy has become imprisoned by threats of how ‘the market’ might behave. Watson’s response is to carry out a genealogy of the market concept, so as to indicate how economists allowed their worldview to become so abstracted from empirical reality.

Watson’s history is built around three concepts of the market: the ‘descriptive’ one that is found in the work of Adam Smith, the ‘analytical’ one that was synthesised in the work of Alfred Marshall, and the ‘formal’ one that was first proposed by Leon Walras. The book takes us on a journey of increasing abstraction and mathematical complexity, such that the lived realities of markets gradually disappear from view altogether. The task for economics, by this account, is to get back to Smith – not the Smith of legend (Watson is gently dismissive of how such luminaries as Paul Samuelson and George Stigler have sought to appropriate Smith), but the one in The Theory of Moral Sentiments and The Wealth of Nations.

What is striking about Watson’s portrayal of Smith’s thought is that it is barely recognisable as economics, and utterly alien to the abstract mathematical study of prices that came to dominate economics over the twentieth century. Watson reminds us that, to the extent that Smith celebrated markets at all, it was their potential (rarely fulfilled) to achieve mutual sympathy and equality that he emphasised. For markets to be ‘free’ in a Smithian sense, policy-makers and market actors themselves must uphold strict norms and regulations on the terms of exchange, such that they achieve a type of moral symmetry between the two parties concerned. While such perfect equality of agency might seem an unrealistic outcome to pursue in a global capitalist market, there is a psychological and moral realism in Smith’s work that we can all relate to: we know how it feels to consider the welfare of others, indeed we factor this into our decisions all the time. The fact that we don’t apply the same ethical standards to all areas of social and political life is partly because we’ve been repeatedly told that ‘the market’ (in an ideological sense) won’t stand for it.

Watson demonstrates that Smith’s work is messy and lacking in generalisable economic theories. There are markets and observations, but little concept of the market. The historical narrative he extends from Smith through to the present is of how economists gradually opted for generalisability over descriptive validity, with power and normativity getting eliminated from the discipline in the process. Some of this history is familiar, but what’s intriguing about Watson’s telling of it is how accidental many of the key steps come to appear, and how misleading some of economists’ own telling of their history has been. Insisting that economics progresses like a natural science, economists have come to assume that there is nothing to learn from their discipline’s past. The fact that economics tells its own history so badly is therefore a serious problem, resulting in a blindness to how concepts have mutated in meaning and gradually lost empirical content.

At each stage of the history of the ‘market concept’, a major figure left some hypothesis or piece of terminology hanging in their work, often without much significance, only for it to be seized by a later reader and elevated to the keystone of an economic theory. ‘Supply’ and ‘demand’, for example, barely featured in Smith’s writing, but then became repurposed over the course of the ‘marginal revolution’ of the 1870s to become pivotal, eventually producing the famous graph of intersecting curves that economics students are introduced to as the foundation of neo-classical price theory. Leon Walras’s idea of ‘general equilibrium’ imagined a hypothetical situation in which all prices in an economy were perfectly set at the same time, a fascinating riddle that pushed economists further and further into mathematics, until eventually Walras’s hypothesis achieved its mathematical formulation in the work of Kenneth Arrow and Gerard Debreu in the 1950s. The rising influence of mathematics had profound, and largely unfortunate, implications for the direction of economics, as economists became increasingly concerned with making the maths work, even while this meant ever greater reduction in empirical sensitivity.

The ‘market concept’ comes to appear like a broom that’s had its handle replaced, and then its brush, raising the question of whether it’s really the same broom any longer. The introduction of graphs and then mathematics were initially intended to represent real market activity. But within a few decades, assumptions about behaviour were being tweaked to allow for mathematical progress, rather than for economic knowledge, until ‘the market concept’ was of a sui generis mathematical entity, without any recognisable humans involved. Graphical representations of price-setting were never designed to suggest that prices move autonomously, but that’s how it can appear, once you forget what the graph originally represented. Economists never planned to eliminate moral psychology or industrial sociology from their field; they did so because the formulae and models wouldn’t work if they didn’t.

In contrast to a historian such as Philip Mirowski, Watson is not out to vilify anyone. Nobody carries the blame for the gradual disappearance of economic reality from economic science. The Market is a forgiving book, which may even be setting out to offer economists a second chance, if only they’ll reflect a little on the peculiar situation they’ve got themselves in over the past 250 years (good luck with that one). The absence of social theory, such as the language of ‘performativity’ or ‘hegemony’, from the book is a kind of performativity of its own, meaning that the book could be quite easily picked up and read by an economist who’d never heard of Michel Callon or Antonio Gramsci. I suspect this is deliberate, and that this is an intervention that has been crafted to avoid causing offence, instead inviting dialogue with a discipline that has become famously allergic to historicism or interdisciplinarity. Watson brings a quality and quantity of scholarship to the ‘politics of economics’ that is largely missing from sociological and cultural critiques of economism. By resisting the more well-trodden critical paths, The Market achieves an authority on the history of economics that deserves to be recognised across numerous disciplines.

But there is nevertheless a slight question mark hanging over the theoretical analysis. Watson implies that the increasingly abstract academic concept of the market has played some role in the rhetorical and political rise of ‘the market’ as a force in public life. But he won’t name this role as such, indeed he is at pains to point out that economists are largely innocent of any political bias or culpability for free market reforms. In Watson’s account, the elevation, indeed deificiation, of ‘the market’ over recent decades is the work of regulators and its technocrats, and has little to do with Walras, Marshall or Arrow (let alone Smith). Political ideologues have referred to ‘the market’ as an alternative to any political discussion of actually existing capitalism. If economists have allowed them to, it’s because they no longer see actually existing capitalism as their subject matter.

Unlike scholars of ‘performativity’, who show how entire economic realities (such as ‘the economy’, in the work of Timothy Mitchell) are the work of economists, Watson wants only to “demonstrate how two incommensurable traditions [the conceptual and the ideological] of thinking about one word “market” have grown up side by side” (Watson, 2018: 130). And unlike historians of neoliberalism, such as Mirowski, there is little evidence in this account that economic ideas were deliberately intended to shape public policy or rhetoric. Watson notes that the fixation on modelling Walrasian ‘general equilibrium’ in post-War American economics was shaped by Cold War ideology, which sought to ground the argument for American capitalism in hard mathematics. But he’s cautious about running too far with any kind of causal narrative. Some of this gap could be filled by further historical work, on the intersecting genealogies of economics faculties and Treasury departments, as provided in Marion Fourcade’s Economists and Societies for example. One way or another, it cannot be a mere coincidence nor a simple misunderstanding that accounts for the fact that both economists and politicians fall back on reductive ideas of ‘the market’.

Ultimately, the problem as Watson presents it is that economics does nothing to resist the ideological abstraction of ‘the market’, because it is too beholden to its own separate mathematical version of it. Having eliminated power, inequality and disequilibrium from its toolkit (as much for arcane technical reasons as anything else), economics has nothing to say about the forms of exploitation, regulation, state intervention and hierarchy that shape actually existing markets, and which the political rhetoric of ‘the market’ conceals. From this perspective, it is not so much that capitalism needs unmasking; it just needs properly describing. The first step to escaping the political tyranny of ‘the market’ is simply to look anew at markets, their justices and injustices, and in doing so to become contemporaries of Adam Smith all over again.


William Davies is Reader in Political Economy at Goldsmiths, University of London. His writing is available at