Externalities - Economics and Ecology: United for a Sustainable World - page 80

The Nature of Markets
To begin, an exchange economy has certain characteristics. The term
exchange economy refers to an economic order, wherein the bulk of economic
activity occurs through the free (unrestricted) buying and selling of valu-
able goods and services. The important point for most economists is that
all transactions on the part of sellers (suppliers) and buyers (demanders)
are voluntary. All purchases and sales of goods and services, including
selling one's own labor by accepting a job, are entered into voluntarily
and presumably with the expectation of improving one's economic status
or well-being. It is assumed that an individual will be happier, or better
off, after the transaction, and that a business firm will be more profitable.
Profitability on the part of a firm is, of course, the equivalent of consumer
satisfaction for the individual. It is that which the economic actor seeks to
optimize. In this manner, pursuing one's own self-interest through market
activity (whether a buyer or seller, a demander or supplier, a business or an
individual) can be said to optimize well-being for the society as a whole.
In other words, pursuing one's own self-interest is what is best for the
entire system—the convenient and happy upshot of Adam Smith's famous
“Invisible Hand.”
Before going further, we can note parenthetically an initial value bias . The
driving forces behind this notion are freedom to act without constraints of
any kind (from either government or private interests), along with the pre-
sumption that the goal is the maximization of one's own self-interest (lack of
altruism). It becomes clear that both a conservative and libertarian philoso-
phy would be attracted by such economic premises.
This helps explain why the concept of freedom is so often touted as support
for free markets . In truth, freedom is much more than just a free market, but
apologists tend to equate the two, because that allows for seemingly strong
cultural or social support for their ideological biases. Of course, absolute
freedom never exists, because everything is constrained by its relationship
to everything else (including every market), which means that we are always
operating under constraints of one type or another. Much social strife, espe-
cially in these days of culture wars , could be lessened if everyone maintained
their conscious awareness of this irrefutable fact.
We need dwell no further on the often-heard accusation that economics
ends up an innately conservative discipline, but an important point, made
earlier in this work, should be reiterated. The contention that economic anal-
ysis is value free is a complete falsehood. To be sure, the rules of mathemat-
ics and logic are predominant once one chooses to enter into the system and
employ the analytical tools (e.g., to become an economist, or perhaps even a
business person). Everything follows from facts and assumptions, and the
methodology becomes all technique. However, the all-important value judg-
ments are made in advance by choosing to accept unrestricted wealth and