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Contractarianisms and markets

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  • Vanderschraaf, Peter

Abstract

I propose that Hume understands a market as a coordination regime where exchange is supported by moral rules traders must follow. For Hume a complete description of a market includes the institutions that support honest trade, institutions that come at a cost for the market traders. Hume's conception of a market is a special case of his conventionalist contractarianism, where a social contract is based upon a mutual advantage criterion requiring that all bound by the terms of this contract recognize that one serves one's own interests by abiding by its terms given that the others also abide by its terms. I discuss the contrasting position of David Gauthier, who argues that an ideally competitive market is a morally free zone and who uses such a market as a starting point for his rational choice-based contractarian theory. While Hume's view of a market as a coordination regime reflects actual markets more realistically than Gauthier's view, I argue that Hume can employ an isomorphism argument structurally similar to an isomorphism argument I attribute to Gauthier for the purposes of giving a normative analysis of a market.

Suggested Citation

  • Vanderschraaf, Peter, 2021. "Contractarianisms and markets," Journal of Economic Behavior & Organization, Elsevier, vol. 181(C), pages 270-287.
    • Handle: RePEc:eee:jeborg:v:181:y:2021:i:c:p:270-287
    DOI: 10.1016/j.jebo.2020.11.019
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