In a market economy, relations between people appear as relations between things, so a good's price seems to belong to the good rather than to the work and social arrangements behind it.
Marx set it out in the first volume of Capital in 1867: a coat's value looks like a fact about the coat, when it records the labour of the tailor and the conditions of that labour. Buyers see the product and its price, and the people who made it drop out of view.
In practice
- A shopper compares two T-shirts by price and fabric, and nothing on either label says who sewed it or what they were paid.
- A trader speaks of the coffee market's mood as though the market were a person, and the growers never enter the conversation.
- Possible explanations
- One explanation is distance: long supply chains separate producers from consumers, so the only information that travels is the price. Another is that markets coordinate through prices precisely so that participants need not know one another, which makes the relations invisible by design.
- In its favour
- Describes a real feature of how goods are perceived, and underlies later movements for supply-chain transparency, fair-trade labelling and ethical sourcing.
- Against it
- Many economists reply that prices condense information usefully and that the invisibility is the market's strength rather than a mystification. The concept is tied to the labour theory of value, which most economists reject.
- Standing
- Disputed along the line between Marxian and mainstream economics. Compare Hayek's knowledge problem, which reads the same invisibility as the market's great advantage.
- Further reading
- Wikipedia
- Subject
- Economics & Incentives
- Essay
- The theories behind every argument about money