Individuals Control the Market

COMMENTARY

THE earthquake in San Francisco evoked heroism. But when stock prices went tumbling on Wall Street the week before, the response was very different. An analyst at Dreyfus Corporation, for example, saw a silver lining. ``IBM is having problems, no question,'' this analyst said. ``But it is also looking to reduce it's staff by another 1,000 people. General Motors is looking to close plants.''

A Boston bartender who owns shares in Anheuser-Busch saw more good news. ``I feel if the market's down, people will still buy Bud,'' this individual told the Boston Herald. ``People are still going to drink. I don't care.''

The most revealing part was the language by which the media described the ``crash.'' It was the language of natural disaster, of events beyond human agency or control.

``Stock Market Braces for a Crucial Test,'' declared the Wall Street Journal headline the Monday after the Friday plunge. ``Wall Street braced for a wave of selling today,'' exclaimed the Boston Herald the same day.

``Brace'' is what people do for hurricanes, floods - and yes, earthquakes like the one that hit shortly thereafter.

In the mental world called ``economics,'' the ``market'' is a force of nature, governed by laws all its own.

We can unleash this force as we would water from a dam. We can channel it like a rushing river (though the political Right would oppose such ``planning,'' except when it means cash in the pocket in the form of capital-gains tax breaks and the like). But in the end the market rules, and we must submit meekly to its whims.

There is a massive tautology here, a word trick of the first order. The market is simply people who buy and sell stock. It could be you or me or the people next door.

Primarily, it is the big institutions on Wall Street that do most of the trading these days. The point seems rudimental, but it is the key to the whole problem.

The language of the marketplace suggests a universe in which individual responsibility does not exist.

The buck passes from the individuals who are the market, to ``market forces'' that are beyond anyone's control. Conservative financiers who huff about responsibility and a decline in moral fiber shrink into the corners when their own time comes to stand up and be counted.

``Out there somewhere is higher inflation and higher interest rates,'' an analyst for Drexel Burnham Lambert told the New York Times. ``And when those things emerge, the market is going to be extremely vulnerable.''

But there's no inflation and higher interest rates ``out there.'' There's only people who might decide to raise the prices of products and money.

The most brazen excuse came from Jude Wanniski, the publicist for supply-side economics.

Wanniski wrote in the Wall Street Journal that minutes after the stock market closed he called Sen. Bill Bradley of New Jersey and ``cheerfully informed him that he and his fellow Democrats were to blame.''

Their crime: not promptly enacting a capitalgains tax cut to reward the traders who were bringing the market down.

It was hardly flattering to these traders to describe them in effect as petulant three-year-olds, who, deprived of a new sweet from Washington, took revenge on the entire economy.

But by its very shamelessness, Wanniski's charge pushes the question to its ultimate absurdity.

There is no ``cause'' of stock-market tumbles, as scientists use that word. There is no law that requires traders to panic when, say, the financing for a proposed airline buyout falls through. (Just as there was no law requiring them to bid up prices in anticipation of such buyouts in the first place.)

There is only a consensus, and we should subject this consensus to the moral criteria that applies in other realms of life.

If rescue workers had declined to dig through the rubble of the Bay Bridge, we would not shrug it off as the result of ``behavioral forces,'' or as a rational ``hedge'' against the risk of further collapse. We would expect them to do better.

We should expect stock traders to do better too. The economic bridge won't collapse unless they collapse it. Market forces won't prevent it, because those forces are themselves, and will be no more benevolent than the traders themselves are.

It is as though a little boy proclaimed to the elementary school principal, ``I didn't break the window, sir. My behavior did it.''

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