The Complex Market: Communications of Exchange, Observing Competitors, and Prices

Abstract

This paper proceeds from the observation that social theory has made tremendous progress in understanding markets but has not yet come up with a proposal regarding how to link the instructive albeit occasionally contradicting concepts found therein. By analysing the present concepts in terms of their merits, compatibilities, and contradictions, we attempt to link and integrate the various existing insights in order to understand modern markets and their high complexity and dynamics. Therefore, we argue that more attention needs to be devoted to the disorder (or noise) that is being introduced in modern markets. We define the specific form of disorder on which modern markets rely as a recursive set of mutual observations in the form of competition on both sides of the market. These observations result in the projection of an inescapable and indecipherable audience and become effective through the formation of prices – processes by which complexity in modern markets increases and decreases at the same time.

Keywords

• market
• systems theory
• economic system
• complexity
• observation theory