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Market and Society: How do they relate, and contribute to welfare?


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  • Dolfsma, W.A.
  • Finch, J.
  • McMaster, R.


This paper discusses how markets and society relate to each other. We present and discuss three views: markets as separate, markets as embedded, and markets as impure. One’s stance on the contribution of markets to welfare hinges on the conceptualization of market and other spheres in society. If, for instance, one perceives of the economy (the economic domain) as an all-encompassing sphere or as a sphere totally separate from others, then one would believe markets necessarily contribute to welfare. Markets are presumed to be ubiquitous in mainstream economics; the orthodox view is that of the ‘market as separate’. Indeed, Frank Hahn notably conceded that neoclassical economics does not describe markets, but ‘conjures’ them up. Mainstream conceptions of the market are functionalist – in the appropriate conditions the market is an efficiency conduit, and hence wealth and welfare generating. Creating these appropriate conditions then drives policy, such as the provision of health care, and tends to produce a one size fits all approach. This paper argues that this is an overly restrictive conceptualization of markets, and is an inadequate basis for conceptualizing the potential effects of markets. Conceptualizing the market as impure and embedded must be added. We contribute to this discussion by developing the concepts of ‘boundaries’ separating spheres. Such an approach broadens the notion of welfare and well-being beyond the monetized parameters of economic orthodoxy.

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Bibliographic Info

Paper provided by Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam in its series ERIM Report Series Research in Management with number ERS-2004-105-ORG.

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Date of creation: 14 Dec 2004
Date of revision:
Handle: RePEc:ems:eureri:1824

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Postal: RSM Erasmus University & Erasmus School of Economics, PoBox 1738, 3000 DR Rotterdam
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Keywords: health care; market; market as separate; markets as embedded; markets as impure; society;

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  1. Light, Donald W., 2001. "Managed competition, governmentality and institutional response in the United Kingdom," Social Science & Medicine, Elsevier, vol. 52(8), pages 1167-1181, April.
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Cited by:
  1. Wilfred Dolfsma & Rene Eijk & Albert Jolink, 2009. "On a Source of Social Capital: Gift Exchange," Journal of Business Ethics, Springer, vol. 89(3), pages 315-329, October.
  2. Wicks, Rick, 2008. "A Model of Dynamic Balance among the Three Spheres of Society – Markets, Governments, and Communities – Applied to Understanding the Relative Importance of Social Capital and Social Goods," Working Papers in Economics 292, University of Gothenburg, Department of Economics, revised 01 Jan 2009.
  3. David George, 2006. "Social class and social identity," Review of Social Economy, Taylor & Francis Journals, vol. 64(4), pages 429-445.
  4. Dolfsma, W.A. & McMaster, R. & Finch, J., 2005. "Institutions, Institutional Change, Language, and Searle," ERIM Report Series Research in Management ERS-2005-067-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.


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