Subjectivism implies making a distinction between your preferences and the preferences of those who you're studying. It therefore necessitates a degree of realism and humility when conducting analysis. For example I dislike Asda, and usually shop at Sainsbury's. I prefer the aesthetic feeling, the layout, the range of products, the relative simplicity and the architecture. But it would be arrogant, elitist, and analytically naive for me to believe that if the Asda across the road is busier it represents some form of market failure. As Paul Piccone said:
“The market is a democratic institution aggregating the decision of whomever participates in it. When all is said and done, complaints about the market are nothing but complaints about the people themselves”
When markets generate outcomes that contradict my personal tastes*, one of two things might be happening:
- There is some form of distortion that prevents the market from working effectively
- There is a fundamental clash in preferences, and entrepreneurs are merely responding to the greater demand
It's my impression that many people use the first argument when the second is more appropriate, and rely upon faulty neoclassical theory when doing so. As I've said many times, the argument in favour of free markets does not rest upon an assumption of perfect competition, and the argument that markets fail due to asymmetric information, lack of firms, degree of market power comes from a position of ignorance. It should also be obvious that most economists accept statement 1 - it's the investigation of these distortions that constitute our job - but it's widely agreed that government intervention is a greater source of distortion than any natural state of affairs.
What annoys me is those who use argument 1 to cover for argument 2, when that stems from snobbery. In other words, if I complain about the "distortions" that give Asda an advantage over Sainsbury's (or indeed smaller supermarkets), and use economic reasons to mask the underlying problem of me not respecting the pressing needs of other people. I might patronise Asda shoppers by arguing that they don't have full information. I might insult them by advocating some form of "aesthetic tax" where the majority should fund the pursuits of the elite (and then patronise them further by subsidising their participation).
The supermarket debate would be a lot more pleasant if we could all agree that some people don't mind shopping at Asda, and whether you think they're "wrong" to do so is irrelevant. This way we might be able to strip away the rhetoric and expose the snobs who claim to be for "the man on the street" but are actually his opponent. I am in favour of market outcomes that reflect consumer choice, as opposed to market outcomes that reflect my choice. It would be hypocritical to profess to be on the side of the people, whilst preventing their freedom to choose.
As an example of my point, consider Asda's parent company, the equally loathed Wal-Mart. This is an organisation that has provided so much value to ordinary people that if it were a non-profit it would be viewed as a triumph of humanity.
The left panel shows customers queuing for 3 hours just to shop at a new Wal-Mart, and the right panel shows an area of land that politicians are preventing Wal-Mart from building upon (via Russ Roberts). Whilst bureaucrats wrangle about what the land *should* be used for, it's pretty obvious that this is harming ordinary people. It was 2006 when Wal-Mart were finally granted the ability to operate in Chicago, and as Russ Roberts reported at the time:
FIFTEEN THOUSAND people applied for the 400 jobs.
Again, I'm not a fan of Wal-Mart. I'd prefer to shop at Wegmans and/or Target any day of the week but that's only because I can afford to. When I lived in Liverpool Kwik Save was mint. The one thing I try not to do is argue - with a straight face - that those people that queue up just to shop at Wal-Mart are fools. I respect their choices.
*Note that I'm conceding ground even to accept this point, since market outcomes are diverse and multifaceted. The whole purpose of niche products is to cater to minority preferences. The good thing about cultural diversity is the choice we have over the types of community we wish to live in. Markets will never deliver precisely what we want because it's the interaction of supply and demand that generates social order.