Home
/
RELIGION & LIBERTY ONLINE
/
Every Market Form in a Single Chart
Every Market Form in a Single Chart
Jul 6, 2025 5:45 PM

Reading through the German economist Walter Eucken’s work The Foundation of Economics (1951), I came across one of the most helpful charts for economic analysis I have yet to find. In it, Eucken gives every possible form of market in a single table:

The Foundation of Economics, p. 158

Eucken adds four qualifications that are important to keep in mind:

“These forms of market are actual forms which have been or are to be found in actual economic life (often blended with one another, and existing alongside the forms of a centrally directed economy). They are not given a priori. They are discovered with their distinguishing characteristics by studying the planning data of those taking part in the market….”“Under each particular form of market a man can act according to different principles, for example, that of maximum net receipts or that of optimum output….”“Each of these forms of market can appear in four types: both open, both closed, or closed on either side only.”“Fixing of prices by the state occupies a special position, since it can follow any form of market and has different effects accordingly…. For example, the significance of coal prices being fixed by the state varies according to whether petitive, oligopolistic, or monopolistic supply, or some other form of market, exists, or whether both sides of the market are open, or whether the supply side is closed by an investment veto. Governmental price-fixing is to be treated as a variant of the different market forms and not as a special market form of its own.”

So, what does this amount to?

In the first place, Eucken emphasizes that these forms are determined through observation of actual market arrangements and interactions. Furthermore, in any given economy these forms will coexist along side one another.

Thus, in the United States, we have instances of semi-oligopolistic arrangements of supply petitive demand in the case of college textbooks, for example. Most textbooks are published by a few big publishers, who tend to exploit their position of privilege by publishing new editions every year to drive up sales prices and drive down resale prices. This is semi-oligopolistic because a professor may choose books of other or smaller publishers, or books of other formats, such as digital. Yet the place of prominence of a few textbook publishers and their sales practices affects the practices of everyone else involved.

At the same time, in the same country, we have a supply semi-monopoly in the case of the US Postal Service, who alone has the right to use citizens’ mailboxes. Competitors with no such exclusive privilege do exist (FedEx, UPS, and so on). Thus the USPS has a supply monopoly on mail delivery to one’s mailbox, but not on mail delivery in general.

In the second place, a wide variety of motivations may govern market actors — no form requires that a person be greedy or benevolent, for example. Though, I would add, the question of who is to benefit from a move from one to another does raise the question of motivation. Motivation may be various and undetermined, but that does not make it irrelevant.

Third, while the chart gives 25 different market arrangements, the number of actual forms is really 100. Both supply and demand can be either open or closed. “The ‘closed’ forms of supply and demand differ from the ‘open’ in a single but very important respect,” writes Eucken,

that is, the “closure” of supply and demand may be due to government prohibition or to the customs and opinions of the people.The closure can arise out of the general economic policy of the state or of a class or city, or it may be due to existing suppliers and demanders having a special interest to obstruct ers, or both these may work together.

By open and closed, here, Eucken refers to the possibility of petitors to enter the market, either on the supply or the demand side. If supply or demand is open, it means that new market actors can enter the market as suppliers or buyers, respectively. On the other hand, if either is closed, then new actors have a barrier to entry — this is the goal of cronyism, to close supply as much as possible to concentrate economic power in only panies.

Furthermore, it is worth noting that Eucken recognized borderline cases: “If the German craftsman in 1938 had to go through a particular process of training, pass a difficult examination, and fulfil [sic] certain personal requirements to be admitted to a firm, was this a case of ‘open’ supply? Usually the answer will be no.” We might add, then, the prefix semi- to open and closed, thus quadrupling our possible market forms again to a total of 400.

Last, in the midst of any of these arrangements, any given market may be affected by government price fixing.

For Christians seeking to make prudent economic policy prescriptions, keeping Eucken’s chart handy can prove invaluable. Furthermore, as Eucken notes elsewhere, the lowest price with the least es the closer one moves toward petition, or equilibrium. No doubt he would also add the benefit when both supply and demand are open. It is open supply that Joseph Schumpeter argued mitigated the effects of monopoly through the process of creative destruction. As such, petition best serves both suppliers and demanders. With the lowest prices at the least cost to businesses, petition best serves the poor in that goods are more affordable, choices more plentiful, and jobs more available in conditions of petition.

Thus, those concerned with social justice can use Eucken’s table like a map to guide them. It helps us locate any given market interaction within the form of market (or interdependent markets, as is always the case) involved in any economic exchange. Knowing where we are, we can better assess where any particular policy might take us. A move from semi-monopoly to oligopoly, or from closed to semi-closed, may not seem like a good move if one only looks at the consequence and does not consider the starting point. However, when both are kept in mind, one can see how such moves are in the direction of greater economic freedom.

The last lesson that I would offer from Eucken’s table is that mon labels of capitalism and socialism need more precise definition to be useful. As Eucken notes, actually existing economies tend to be mixed in reality and display a bination of market forms. Yet, China is munist and the United States is still capitalist. The main difference seems to be a preference for private (capitalism) vs. public (socialism) ownership. But we can find state monopolies in the US and open markets of private actors in China.

plication raises another question for me. Since nearly all, if not all, modern economies are mixed, where then is there room for advocating a “third way”? Either everyone already is practicing a third way economic system, or the difference is a general preference between binary options, such as private vs. public ownership as outlined above, leaving no discernible room for a third way. Those Christians who advocate various third way, “Christian” economics (as if economics is necessarily anti-Christian if not labeled as such) need to spend some time wrestling with the various actual market forms in existence, not simply abstractly (a priori) but as they currently function in the real world and within the real limits plicate their reform.

Comments
Welcome to mreligion comments! Please keep conversations courteous and on-topic. To fosterproductive and respectful conversations, you may see comments from our Community Managers.
Sign up to post
Sort by
Show More Comments
RELIGION & LIBERTY ONLINE
Beyond Black and White: New Realities of Race In America – BUMPED: Video now available
Anthony Bradley delivers his remarks last Wednesday The 2006 Acton Lecture Series continued today with Anthony Bradley’s presentation of Beyond Black and White: New Realities of Race In America. Mr. Bradley is an Acton research fellow and assistant professor of Apologetics and Systematic Theology at Covenant Theological Seminary in St. Louis, Missouri. His lecture describes the new market trends which reflect the changing demographics in America. With a decline in population amongst whites, a stagnated black population, and the ever-increasing...
Environmental News Roundup
Juliet Eilperin, “Bush Pollution Curbs Are Rated Equal to Clinton’s: Science Panel Says Proposed Cap-and-Trade System Will Help Clean Air,” Washington Post, July 24, 2006: The report from the National Academy of Sciences, released yesterday, represents the latest effort to assess how best to reduce air pollution estimated to cause as many as 24,000 premature deaths each year. The panel concluded that an earlier Bush plan would have allowed pollution to increase over a dozen years, but it found that...
Connect the Energy Dots…
Today’s NYT editorializes: “a country that consumes one-quarter of the world’s oil supply while holding only 3 percent of the reserves will never be able to drill its way to lower oil prices, much less oil independence.” You’ll often hear plaint that Americans use more than their fair share of the world’s oil. We’re addicted to it, some say. After all, so goes the reasoning, we have less than one-half of one percent of the world’s population, but we “consume...
Potty-Mouthed President
The amount of media attention over the past week’s devoted to President Bush’s utterance of a “naughty” word has been incredible. Maureen Dowd uses it as just one more bit of proof supporting her depiction of the president as a frat-boy, who “has enshrined his immaturity and insularity, turning every environment he inhabits — no matter how decorous or serious — into fortable frat house.” She writes, “No matter what the trappings or the ceremonies require of the leader of...
Taking Games Seriously
An article in yesterday’s NYT, “Saving the World, One Video Game at a Time,” by Clive Thompson, gives a good overview of the current trend in the video game industry, especially by nonprofits and activist groups, to create “serious games,” a movement which “has some serious brain power behind it. It is a partnership between advocates and nonprofit groups that are searching for new ways to reach young people, and tech-savvy academics keen to explore video games’ educational potential.” “What...
Original Sin
Headline: It’s a Sin to Fly, Says Church Actually, "It’s a Sin to Fly, Screams Headline" would be more appropriate. Here’s what the Church (or rather, the Bishop of London) actually says: “Making selfish choices such as flying on holiday or buying a large car are a symptom of sin. Sin is not just a restricted list of moral mistakes. It is living a life turned in on itself where people ignore the consequences of their actions.” I think there’s...
Seek Dignity? Then, “You Gotta Shake Your MoneyMaker”
The Super MoneyMaker Pressure Pump No, we’re not talking about Elmore James’ Blues hit covered by the likes of George Thorogood, Fleetwood Mac and The Black Crowes nor its racy subject matter. Rather, it’s how members of the other oldest profession in Kenya and Tanzania power the irrigation pumps that extend both their growing season and range of crops. This foot-powered move beyond subsistence farming to much more profitable harvests, such as vegetables, is facilitated by the aptly named MoneyMaker series...
Secular Universities in Decline?
In his New York Times column this week, Peter Steinfels has an insightful analysis of an intriguing and provocative new book by C. John Sommerville, The Decline of the Secular University. Those who study the history of American academia are familiar with the story of the secularization of universities as recounted expertly by Christian scholars such as George Marsden (The Soul of the American University) and James Burtchaell (The Dying of the Light), who decry the shunting of religion from...
Federal Funding for the Humanities
Hunter Baker, blogging at his new home on the American Spectator Blog (recently added to our blogroll), responds to a post by James G. Poulos, which emphasizes President Bush’s “proposed emphasis on math and science education, to the patent detriment of the humanities.” Says Baker, “Although I am a faithful disciple of the humanities, I often fort in the fact that the majority of students won’t have much exposure to the offerings on hand. Better they remain busy with their...
More on Secularism and Universities
Just a brief note addition to Kevin’s post: the free article from May’s Touchstone magazine is Terence O. Moore’s feature, “Not Harvard Bound.” A key quote: The elite schools no mand the reverence and deference of red-state America. The parents and students of “flyover country” are starting to put their money where their morals are or where they believe truth is. There’s a discussion of Moore’s article at Touchstone‘s reader discussion site, Treaders. HT: Mere Comments ...
Related Classification
Copyright 2023-2025 - www.mreligion.com All Rights Reserved