IDEAS home Printed from https://ideas.repec.org/a/eis/articl/215jackson.html
   My bibliography  Save this article

Markets and the Meaning of Flexibility

Author

Listed:
  • W A Jackson

Abstract

Markets are reputed to be more flexible than other economic arrangements, although 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.

Suggested Citation

  • W A Jackson, 2015. "Markets and the Meaning of Flexibility," Economic Issues Journal Articles, Economic Issues, vol. 20(2), pages 45-65, September.
    • Handle: RePEc:eis:articl:215jackson
    as

    Download full text from publisher

    File URL: http://www.economicissues.org.uk/Files/2015/215jackson.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Robert E. Prasch, 1996. "In Defense of the Minimum Wage," Journal of Economic Issues, Taylor & Francis Journals, vol. 30(2), pages 391-397, June.
    2. Angel Asensio & Dany Lang & Sébastien Charles, 2012. "Post Keynesian modeling: where are we, and where are we going to?," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 34(3), pages 393-412.
    3. William T. Dickens & Lorenz Goette & Erica L. Groshen & Steinar Holden & Julian Messina & Mark E. Schweitzer & Jarkko Turunen & Melanie E. Ward, 2007. "How Wages Change: Micro Evidence from the International Wage Flexibility Project," Journal of Economic Perspectives, American Economic Association, vol. 21(2), pages 195-214, Spring.
    4. Holden Steinar & Wulfsberg Fredrik, 2008. "Downward Nominal Wage Rigidity in the OECD," The B.E. Journal of Macroeconomics, De Gruyter, vol. 8(1), pages 1-50, April.
    5. Eckehard Rosenbaum, 2000. "What is a Market? On the Methodology of a Contested Concept," Review of Social Economy, Taylor & Francis Journals, vol. 58(4), pages 455-482.
    6. William A. Jackson, 2007. "On the social structure of markets," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 31(2), pages 235-253, March.
    7. Mark Bils & Peter J. Klenow, 2004. "Some Evidence on the Importance of Sticky Prices," Journal of Political Economy, University of Chicago Press, vol. 112(5), pages 947-985, October.
    8. Makoto Itoh & Costas Lapavitsas, 1999. "Political Economy of Money and Finance," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-37578-9, October.
    9. Robert E. Prasch, 2008. "How Markets Work," Books, Edward Elgar Publishing, number 12941.
    10. Herndon, Jill Boylston, 2002. "Health insurer monopsony power: the all-or-none model," Journal of Health Economics, Elsevier, vol. 21(2), pages 197-206, March.
    11. Frederic S. Mishkin, 2011. "Over the Cliff: From the Subprime to the Global Financial Crisis," Journal of Economic Perspectives, American Economic Association, vol. 25(1), pages 49-70, Winter.
    12. Richard Goode, 1994. "Gardiner Means on Administered Prices and Administrative Inflation," Journal of Economic Issues, Taylor & Francis Journals, vol. 28(1), pages 173-186, March.
    13. George A. Akerlof, 1982. "Labor Contracts as Partial Gift Exchange," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 97(4), pages 543-569.
    14. Alan Kirman, 2006. "Demand Theory and General Equilibrium: From Explanation to Introspection, a Journey down the Wrong Road," History of Political Economy, Duke University Press, vol. 38(5), pages 246-280, Supplemen.
    15. Marc Lavoie, 2009. "Introduction to Post-Keynesian Economics," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-23548-9, October.
    16. Richard Ruggles, 1955. "The Nature of Price Flexibility and the Determinants of Relative Price Changes in the Economy," NBER Chapters, in: Business Concentration and Price Policy, pages 441-505, National Bureau of Economic Research, Inc.
    17. James Crotty, 2009. "Structural causes of the global financial crisis: a critical assessment of the 'new financial architecture'," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 33(4), pages 563-580, July.
    18. Jules Backman, 1940. "The Causes of Price Inflexibility," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 54(3), pages 474-489.
    19. Alessandro Barattieri & Susanto Basu & Peter Gottschalk, 2014. "Some Evidence on the Importance of Sticky Wages," American Economic Journal: Macroeconomics, American Economic Association, vol. 6(1), pages 70-101, January.
    20. Michael Waldman, 2003. "Durable Goods Theory for Real World Markets," Journal of Economic Perspectives, American Economic Association, vol. 17(1), pages 131-154, Winter.
    21. Beckert, Jens, 2007. "The social order of markets," MPIfG Discussion Paper 07/15, Max Planck Institute for the Study of Societies.
    22. Paul Downward, 1999. "Pricing Theory in Post Keynesian Economics," Books, Edward Elgar Publishing, number 1457.
    23. William A. Jackson, 2007. "Economic Flexibility: A Structural Analysis," Chapters, in: Stavros Ioannides & Klaus Nielsen (ed.), Economics and the Social Sciences, chapter 9, Edward Elgar Publishing.
    24. Joseph E. Pluta, 2010. "Evolutionary Alternatives to Equilibrium Economics," American Journal of Economics and Sociology, Wiley Blackwell, vol. 69(4), pages 1155-1177, October.
    25. Deborah M. Figart & Ellen Mutari, 2000. "Work Time Regimes in Europe: Can Flexibility and Gender Equity Coexist?," Journal of Economic Issues, Taylor & Francis Journals, vol. 34(4), pages 847-871, December.
    26. John M. Connor, 2007. "Price-fixing Overcharges: Legal and Economic Evidence," Research in Law and Economics, in: Research in Law and Economics, pages 59-153, Emerald Group Publishing Limited.
    27. Means, Gardiner C, 1972. "The Administered-Price Thesis Reconfirmed," American Economic Review, American Economic Association, vol. 62(3), pages 292-306, June.
    28. repec:eme:rlwe11:s0193-5895(06)22004-9 is not listed on IDEAS
    29. Bruno Tinel, 2012. "Labour, labour power and the division of labour," Chapters, in: Ben Fine & Alfredo Saad-Filho & Marco Boffo (ed.), The Elgar Companion to Marxist Economics, chapter 30, pages 187-193, Edward Elgar Publishing.
    30. Bruno Tinel, 2012. "Labour, labour power and the division of labour," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00678290, HAL.
    31. Marianthi Leontaridi, 1998. "Segmented Labour Markets: Theory and Evidence," Journal of Economic Surveys, Wiley Blackwell, vol. 12(1), pages 103-109, February.
    32. Fabiani, Silvia & Loupias, Claire & Martins, Fernando & Sabbatini, Roberto (ed.), 2007. "Pricing Decisions in the Euro Area: How Firms Set Prices and Why," OUP Catalogue, Oxford University Press, number 9780195309287.
    33. Amit Bhaduri, 2011. "A contribution to the theory of financial fragility and crisis," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 35(6), pages 995-1014.
    34. Frederic Lee & Steve Keen, 2004. "The Incoherent Emperor: A Heterodox Critique of Neoclassical Microeconomic Theory," Review of Social Economy, Taylor & Francis Journals, vol. 62(2), pages 169-199.
    35. Bruce E. Kaufman, 2007. "The impossibility of a perfectly competitive labour market," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 31(5), pages 775-787, September.
    36. William A. Jackson, 2003. "Social Structure in Economic Theory," Journal of Economic Issues, Taylor & Francis Journals, vol. 37(3), pages 727-746, September.
    37. repec:bla:jecsur:v:12:y:1998:i:1:p:63-101 is not listed on IDEAS
    38. De Leeuw, A. C. J. & Volberda, H. W., 1996. "On the concept of flexibility: A dual control perspective," Omega, Elsevier, vol. 24(2), pages 121-139, April.
    39. Robert L. Steiner, 2001. "A Dual-Stage View of the Consumer Goods Economy," Journal of Economic Issues, Taylor & Francis Journals, vol. 35(1), pages 27-44, March.
    40. Paul Dobson & Michael Waterson, 1999. "Retailer power: recent developments and policy implications," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 14(28), pages 134-164.
    41. Stuart Glosser & Lonnie Golden, 2005. "Is labour becoming more or less flexible? Changing dynamic behaviour and asymmetries of labour input in US manufacturing," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 29(4), pages 535-557, July.
    42. John B. Davis & Wilfred Dolfsma (ed.), 2008. "The Elgar Companion to Social Economics," Books, Edward Elgar Publishing, number 3765.
    43. Bruno Tinel, 2012. "Labour, labour power and the division of labour," Post-Print halshs-00678290, HAL.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jackson, William A., 2024. "The Ethics of Price Variation," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 53(2), pages 201-215.
    2. Mangku Purnomo & Fenna Otten & Heiko Faust, 2018. "Indonesian Traditional Market Flexibility Amidst State Promoted Market Competition," Social Sciences, MDPI, vol. 7(11), pages 1-17, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jackson, William A., 2013. "The Desocialising of Economic Theory," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 40(9), pages 809-825.
    2. Jósef Sigurdsson & Rannveig Sigurdardottir, 2011. "Evidence of Nominal Wage Rigidity and Wage Setting from Icelandic Microdata," Economics wp55, Department of Economics, Central bank of Iceland.
    3. Fernando Martins, 2013. "Survey evidence on price and wage rigidities in Portugal," Working Papers w201312, Banco de Portugal, Economics and Research Department.
    4. Fernando Martins, 2015. "What Survey Data Reveal about Price and Wage Rigidity in Portugal," LABOUR, CEIS, vol. 29(3), pages 291-309, September.
    5. Gyun Cheol Gu, 2015. "Why Have U.S. Prices Become Independent of Business Cycles?," Metroeconomica, Wiley Blackwell, vol. 66(4), pages 661-685, November.
    6. Luca Gambetti & Julián Messina, 2018. "Evolving Wage Cyclicality in Latin America," The World Bank Economic Review, World Bank, vol. 32(3), pages 709-726.
    7. Furlanetto, Francesco, 2011. "Fiscal stimulus and the role of wage rigidity," Journal of Economic Dynamics and Control, Elsevier, vol. 35(4), pages 512-527, April.
    8. Emi Nakamura & Jón Steinsson, 2013. "Price Rigidity: Microeconomic Evidence and Macroeconomic Implications," Annual Review of Economics, Annual Reviews, vol. 5(1), pages 133-163, May.
    9. Iwasaki, Yuto & Muto, Ichiro & Shintani, Mototsugu, 2021. "Missing wage inflation? Estimating the natural rate of unemployment in a nonlinear DSGE model," European Economic Review, Elsevier, vol. 132(C).
    10. Barbara Annicchiarico & Alessandra Pelloni, 2014. "Productivity growth and volatility: how important are wage and price rigidities?," Oxford Economic Papers, Oxford University Press, vol. 66(1), pages 306-324, January.
    11. William A. Jackson, 2024. "Markets as dualistic, semi-decentralized organizations," Review of Evolutionary Political Economy, Springer, vol. 5(1), pages 153-172, June.
    12. Mary C. Daly & Bart Hobijn, 2014. "Downward Nominal Wage Rigidities Bend the Phillips Curve," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 46(S2), pages 51-93, October.
    13. Sanvi Avouyi-Dovi & Denis Fougère & Erwan Gautier, 2013. "Wage Rigidity, Collective Bargaining, and the Minimum Wage: Evidence from French Agreement Data," The Review of Economics and Statistics, MIT Press, vol. 95(4), pages 1337-1351, October.
    14. Andrés Blanco & Bernardo Diaz de Astarloa & Andres Drenik & Christian Moser & Danilo R. Trupkin, 2022. "The evolution of the earnings distribution in a volatile economy: Evidence from Argentina," Quantitative Economics, Econometric Society, vol. 13(4), pages 1361-1403, November.
    15. Baqaee, David Rezza, 2020. "Asymmetric inflation expectations, downward rigidity of wages, and asymmetric business cycles," Journal of Monetary Economics, Elsevier, vol. 114(C), pages 174-193.
    16. Jan Babecký & Philip Du Caju & Theodora Kosma & Martina Lawless & Julián Messina & Tairi Rõõm, 2010. "Downward Nominal and Real Wage Rigidity: Survey Evidence from European Firms," Scandinavian Journal of Economics, Wiley Blackwell, vol. 112(4), pages 884-910, December.
    17. Marotzke Petra & Anderton Robert & Bairrao Ana & Berson Clémence & Tóth Peter, 2020. "Asymmetric wage adjustment and employment in European firms," The B.E. Journal of Macroeconomics, De Gruyter, vol. 20(2), pages 1-25, June.
    18. Hervé Le Bihan & Jérémi Montornès & Thomas Heckel, 2012. "Sticky Wages: Evidence from Quarterly Microeconomic Data," American Economic Journal: Macroeconomics, American Economic Association, vol. 4(3), pages 1-32, July.
    19. Jordi Galí, 2015. "Introduction," Introductory Chapters, in: Monetary Policy, Inflation, and the Business Cycle: An Introduction to the New Keynesian Framework and Its Applications Second edition, volume 1, Princeton University Press.
    20. Kim, Jinill & Ruge-Murcia, Francisco J., 2011. "Monetary policy when wages are downwardly rigid: Friedman meets Tobin," Journal of Economic Dynamics and Control, Elsevier, vol. 35(12), pages 2064-2077.

    More about this item

    JEL classification:

    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary; Modern Monetary Theory;
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eis:articl:215jackson. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dan Wheatley (email available below). General contact details of provider: https://edirc.repec.org/data/bsntuuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.