The end of the market: A psychoanalysis of law and economics

The perfect market is the end of all actual markets - it is their ideal form. In normative economics, actual markets are the means of achieving the end or ideal of the Perfect market. But this means that to achieve a perfect market would result in the end of all actual markets. Despite the centrality of the ideal of the perfect market in the subset of law and economics scholarship based on classical price theory there is surprisingly little literature on its parameters. in this Commentary, Professor Schroeder examines this literature in order to explicate the nature of this ideal. A careful examination reveals that the perfect market is not merely impossible to attain, it is also logically impossible. The perfect market is a strange world without time, space, objects, subjects - or market exchange. An empirically impossible ideal defines the actual by serving as that which the actual should be. In contrast, a logically impossible ideal defines the actual by serving as that which the actual is not. Accordingly unlike on empirically impossible ideal, the logically impassible perfect market cannot serve as an asymptote that actual markets might approach, because the perfect market is the death of the actual market. Professor Schroeder analyzes the ideal of the perfect market and the Cease Theorem through a feminist theory bared on the jurisprudence of G.W.F. Hegel and the psychoanalysis of Jacques Lacan. She suggests reasons for both the continuing appeal of this deadly ideal and the lack of meaningful discussion of its contours. in Lacanian terms, the perfect market is located in the psychic realm of the Real, while actual markets (like law and language) are located in the realm of the Symbolic. Transaction costs, as understood by the Cease Theorem serve a role parallel to Lacan's notion of castration - they are the "cut" that forever separates the actual market (the Symbolic) from the perfect market (the Real). ironically, then, it is only the presence of transaction costs that enables the market to function.