Written by: Julie Dodge on February 1, 2014

I bought a new pair of glasses this week.

I used to wear contact lenses almost all of the time, but as my eyes have aged, and with the reality of my really bad eye sight, I pretty much stick to the glasses. My plan was to buy a box of contacts (six lenses total) as a backup for my glasses. I put in my order for the lenses at $47, and then went to the glasses department to pick out my new spectacles. As we were discussing the special type of lenses I need, we got to the price. The glasses, with the contact lenses, would total over $500.

But wait! If I ordered a year’s supply of contact lenses (24 lenses), the glasses would be half off, and I would save $91 (20%) on the total price.

Now, some people tell me that I’m fairly intelligent. But this pricing strategy makes no sense to me. If I buy what I don’t need and I will never use, I can save almost $100. If I am wasteful of resources, I can save cash money. And this isn’t some kind of special sale. At my healthcare provider group, if I buy one pair of glasses or a year’s supply of contacts, I will always get the second pair of glasses for half price.

It’s like going to McDonald’s and buying a cheeseburger meal. It’s cheaper to buy the value meal with two cheeseburgers, a medium french fry and soda, than to buy what I will actually eat – one cheeseburger, a small fry and medium soda. If we consume more, we pay less. I don’t quite understand the logic of this. It tells me that the cost to produce what I consume is clearly much less than the price, or else they wouldn’t be able to “sell” me more for less. I wonder why we don’t simply pay for the value of the product, and no more.

These are micro examples that there is something askew with our economy. Karl Polanyi’s The Great Transformation[i] suggests an explanation for why this is. Polanyi offers an historical overview of the development of the market economy, and argues that the idea of a self-regulating market is at best a Utopian idea, and at worst, destined to failure without appropriate political regulation. He argues that the economy must necessarily be embedded in society, and that any attempt to disembed it will have disastrous consequences on both people and our natural resources. As a child, I remember being taught that capitalism is dependent upon the service economy, that is, those people who work at the lowest levels. This was taught as a matter of fact: there will always be people at the top and people at the bottom. Polanyi argues that this attitude is a sort of callousness that relegates certain people to poverty, and sanctifies property over persons.

Again, returning to the basic principles of the market economy that I was taught in public school, prices are supposedly based on two elements: supply and demand, and competition. But the reality is, prices are set on what people will pay.  Or perhaps better stated, prices are set based on what corporations say people will pay. In the United States we have seen significant shifts in both the costs of goods and wages earned. Five years ago, I paid about $250 for a pair of glasses. Today that price has doubled. I recognize that this is a single example and hardly representative. It is my opinion that there is a certain sense of powerlessness and resulting apathy among many Americans as a result of this. If you need new glasses, you just have to find a way to pay for them. Perhaps another example of how prices in the United States don’t add up, you can also check out this video on healthcare costs. http://www.youtube.com/watch?v=qSjGouBmo0M

While prices increase, the value of wages has decreased. In the United States, the typical male worker earned $48,302 in 1978 (adjusted for today’s inflation). At the same time, the average person in the top 1% of earners made $393,682. By 2010, the typical male worker earned only $33,751 (30% less), while the typical person in the top 1% earned  $1,101,089 (280% more).[ii] Today, the richest 400 Americans have more wealth than the bottom 150 million Americans combined, or over half of the population.[iii]

I confess that much of Polanyi’s writing was complex and technical. I am not an economist. But I get the idea. The self-regulating market is a myth. We have tried to use political structures to regulate it at times, but those with the most power, often those with the most money, push back for less regulation. The cost? Millions more people live in poverty in DEVELOPED nations than even twenty years ago, and most people earn less money while paying more for goods and services. Natural resources are stripped without thought.[iv] Developing nations have limited opportunity to truly compete at a global level. And I am encouraged to eat more cheeseburgers and buy more than I need, just to save money.

I could leave this post as a relative soap box. I have not provided a thorough review of Polanyi’s work. But instead, I will add perhaps another reason as to why the notion of a self-regulating market is false. My reason is about people and our fallen nature. The self-regulating market can work if everyone behaves in an ethical manner, considers the cost of success against the consequence to people and resources, and is not profit driven. But therein is the rub. The market economy IS profit driven, which leads to greed and excess.  It is our sinful nature that leads us away from consideration of other people, away from our mandate to take care of creation, and into self indulgence.  The notion of a society in which all men and women are truly equal is a Kingdom notion, a heavenly notion. So do we throw our hands up and say that there’s nothing that we can do? By all means no! As believers we have a responsibility to speak up for those left out of society, to call out injustice, and to engage in public discourse and progressive change.

And I step off the soap box.

About the Author

Julie Dodge

Julie loves coffee and warm summer days. She is an Assistant Professor of Social Work at Concordia University, Portland, a consultant for non-profit organizations, and a leader at The Trinity Project.