money-market fund, type of mutual fund that invests in high-yielding, short-term money-market instruments, such as U.S. government securities, commercial paper, and certificates of deposit. Returns of money-market funds usually parallel the movement of short-term interest rates. Some funds buy only U.S. government securities, such as Treasury bills, while general-purpose funds invest in various types of short-term paper. They became enormously popular with investors in the early 1980s because of their high yields, relative safety, and high liquidity. Investment in money-market funds soared from $20 billion in the late 1970s to over $150 billion in the early 1980s. Much of the growth came at the expense of banks and thrift institutions. With the recession of the late 1980s and early 1990s, interest rates (and, temporarily, the popularity of the funds) dropped. By 1999 more than $800 billion was invested in U.S. money-market funds.

market research, organized use of sample surveys, polls, focus groups, and other techniques to study market characteristics (e.g., ages and incomes of consumers; consumer attitudes) and improve the efficiency of sales and distribution. Development of new products, opening of new markets, measurement of advertising effectiveness, and knowledge of business competitors are among its basic aims. Developed in the United States in the early 20th cent., the field expanded rapidly after World War II, spreading to Europe and Japan.

market gardening, cultivation, on suburban land of high value, of vegetables and flowers for the supply of nearby cities. Heavy fertilizing and the planting of successive crops are employed to obtain continuous returns from the acreage. Sales are to greengrocers and florists, principally through commission agents. See truck farming.

futures market, a commodity exchange where contracts for the future delivery of grain, livestock, and precious metals are bought and sold. Speculation in futures serves to protect both the developers and the users of the commodities from unfavorable and unpredictable price fluctuations. The U.S. futures market now includes Treasury bills and government guaranteed mortgages, or Ginnie Maes, thereby allowing speculation on changes in future interest rates. See commodity market.

commodity market, organized traders' exchange in which standardized, graded products are bought and sold. Worldwide, there are 48 major commodity exchanges that trade over 96 commodities, ranging from wheat and cotton to silver and oil. Most trading is done in futures contracts, that is, agreements to deliver goods at a set time in the future for a price established at the time of the agreement. Futures trading allows both hedging to protect against serious losses in a declining market and speculation for gain in a rising market. For example, a seller may sign a contract agreeing to deliver grain in two months at a set price. If the grain market declines at the end of two months, the seller will still get the higher price quoted in the futures contract. If the market rises, however, speculators buying grain stand to profit by paying the lower contract price for the grain and reselling it at the higher market price. Spot contracts, a less widely used form of trading, call for immediate delivery of a specified commodity and are often used to obtain the goods necessary to fulfill a futures contract. An independent U.S. regulatory agency, the Commodity Futures Trading Commission was established in 1974 to regulate commodity markets. In 1982, the Chicago Mercantile Exchange introduced a futures contract for Standard & Poor's 500 U.S. companies that allows investors to speculate on the future prices of those stocks. Trading of S&P 500 and other financial futures has broken down some of the barriers that once separated stock, bond, and commodity markets and made it easier for investors to hedge their stock investments. Critics charge that the futures trading at the commodity markets in Chicago has made stock prices more volatile. The Chicago Board of Trade is the largest futures and options exchange in the United States, the largest in the world is Eurex, an electronic European exchange.

black market, the selling or buying of commodities at prices above the legal ceiling or beyond the amount allotted to a customer in countries that have placed restrictions on sales and prices. Such trading was common during World War II wherever the demand and the means of payment exceeded the available supply. Most of the warring countries attempted to equalize distribution of scarce commodities by rationing and price fixing. In the United States black-market transactions were carried on extensively in meat, sugar, tires, and gasoline. In Great Britain, where clothing and liquor were rationed, these were popular black-market commodities. In the United States, rationing terminated at the end of the war, but a black market in automobiles and building materials continued while the scarcity lasted. In the decades following World War II, as the countries of Eastern Europe were trying to industrialize their economies, extensive black-market operations developed because of a scarcity of consumer goods. Black marketing is also common in exchange of foreign for domestic currency, typically in those countries that have set the official exchange value of domestic currency too high in terms of the purchasing power of foreign money. Black-market money activities also grow when holders of domestic currency are anxious to convert it into foreign currency through a fear that the former is losing its purchasing power as a result of inflation. See also bootlegging.

Southern Common Market: see Mercosur.

Common Market of the South: see Mercosur.

Common Market: see European Economic Community.

Central American Common Market (CACM), trade organization envisioned by a 1960 treaty between Guatemala, Honduras, Nicaragua, and El Salvador. The treaty established (1961) a secretariat for Central American economic integration, which Costa Rica joined in 1963; Panama now has observer status in some areas. By 1970 trade between member nations had risen more than tenfold over 1960 levels, and imports doubled and a common tariff was established for 98% of the trade with nonmember countries. However, the 1969 war between El Salvador and Honduras led to the latter's effective withdrawal, and the political turmoil in Central America during the 1970s and 80s left the organization moribund. The 1990s saw a revival of the organization, but its ultimate place with respect to the Central American Free Trade Agreement (signed 2004, and including the Dominican Republic and the United States) and the proposed (2001) Free Trade Area of the Americas is unclear.

Caribbean Community and Common Market (CARICOM), organization founded by the Treaty of Chaguaramas (Trinidad; 1973, revised 2001) and including Antigua and Barbuda, Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Haiti (suspended 2004-6), Jamaica, Montserrat, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Suriname, and Trinidad and Tobago. Anguilla, Bermuda, the British Virgin Islands, the Cayman Islands, and the Turks and Caicos Islands are associate members. Its purpose is to promote economic integration and development, especially in less-developed areas of the region. Besides managing a common market, CARICOM formulates policies regarding health, education, labor, science and technology, tourism, foreign policy, and the environment. CARICOM's headquarters are in Georgetown, Guyana. In 2005 the organization established the Caribbean Court of Justice, which functions for participating nations as a final court of appeals and as a court of original jurisdiction for settling disputes among CARICOM nations. In 2006 Caricom inaugurated its single market and economy when six of its members participated in the establishment of a CARICOM single market. The establishment of a single economy for participating nations is planned for 2008. Other affiliated institutions include the Caribbean Development Bank, the Univ. of Guyana, and the Univ. of the West Indies.

Economic event in the U.S. that precipitated the Great Depression. The U.S. stock market expanded rapidly in the late 1920s and reached a peak in August 1929, when prices began to decline while speculation increased. On October 18 the stock market began to fall precipitously. On the first day of real panic, October 24, known as “Black Thursday,” a record 12,894,650 shares were traded. Banks and investment companies bought large blocks of stock to stem the panic, but on October 29, “Black Tuesday,” 16 million shares were traded and prices collapsed. The crash began a 10-year economic slump that affected all the Western industrialized countries.

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or stock market or(in continental Europe) Bourse

Organized market for the sale and purchase of securities (see security) such as stocks and bonds. Trading is done in various ways: it may occur on a continuous auction basis, it may involve brokers buying from and selling to dealers in certain types of stock, or it may be conducted through specialists in a particular stock. Some stock exchanges, such as the New York Stock Exchange (NYSE), sell seats (the right to trade) to a limited number of members who must meet eligibility requirements. Stocks must likewise meet and maintain certain requirements or risk being delisted. Stock exchanges differ from country to country in eligibility requirements and in the degree to which the government participates in their management. The London Stock Exchange, for example, is an independent institution, free from government regulation. In Europe, members of the exchanges are often appointed by government officials and have semigovernmental status. In the U.S., stock exchanges are not directly run by the government but are regulated by law. Technological developments have greatly influenced the nature of trading. In a traditional full-service brokerage, a customer placed an order with a broker or member of a stock exchange, who in turn passed it on to a specialist on the floor of the exchange, who then concluded the transaction. By the 21st century, increased access to the Internet and the proliferation of electronic communications networks (ECNs) altered the investment world. Through e-trading, the customer enters an order directly on-line, and software automatically matches orders to achieve the best price available without the intervention of specialists or market makers. In effect, the ECN is a stock exchange for off-the-floor trading.

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Trading in stocks and bonds that does not take place on stock exchanges. Such trading occurs most often in the U.S., where requirements for listing stocks on the exchanges are strict. Schedules of fees for buying and selling securities are not fixed in the over-the-counter market, and dealers derive their profits from the markup of their selling price over the price they paid. Many bond issues and preferred-stock issues, including U.S. government bonds, are listed on the New York Stock Exchange but have their chief market over-the-counter. Other U.S. government securities, as well as state and municipal bonds, are traded over-the-counter exclusively. Institutional investors such as mutual funds often trade over-the-counter because they are given volume discounts not offered on the exchanges. The regulation of the over-the-counter market is carried out largely by the National Association of Securities Dealers, created by Congress in 1939 to establish rules of conduct and protect members and investors from abuses. Seealso NASDAQ.

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Any of the purchases and sales of government securities and commercial paper by a central bank in an effort to regulate the money supply and credit conditions. Open market operations can also be used to stabilize the prices of government securities. When the central bank buys securities on the open market, it increases the reserves of commercial banks, making it possible for them to expand their loans and investments. It also increases the price of government securities, equivalent to reducing their interest rates, and decreases interest rates generally, thus encouraging investment. If the central bank sells securities, the effects are reversed. Open market operations are usually performed with short-term government securities such as treasury bills.

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Set of institutions, conventions, and practices whose aim is to facilitate the lending and borrowing of money on a short-term basis. The money market is, therefore, different from the capital market, which is concerned with medium- and long-term credit. The transactions that occur on the money market involve not only banknotes but assets that can be turned into cash at short notice, such as short-term government securities and bills of exchange. Though the details and mechanism of the money market vary greatly from country to country, in all cases its basic function is to enable those with surplus short-term funds to lend and those with the need for short-term credit to borrow. This function is accomplished through middlemen who provide their services for a profit. In most countries the government plays a major role in the money market, acting both as a lender and borrower and often using its position to influence the money supply and interest rates according to its monetary policy. The U.S. money market covers financial instruments ranging from bills of exchange and government securities to funds from clearinghouses and certificates of deposit. In addition, the Federal Reserve System provides considerable short-term credit directly to the banking system. The international money market facilitates the borrowing, lending, and exchange of currencies between countries.

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Study of the requirements of specific markets, the acceptability of products, and methods of developing and exploiting new markets. Various strategies are used for market research: past sales may be projected forward; surveys may be made of consumer attitudes and product preferences; and new or altered products may be introduced experimentally into designated test-market areas. Formal market research dates back to the 1920s in Germany and the 1930s in Sweden and France. After World War II, U.S. firms led in the use and refinement of market-research techniques, which spread throughout much of Western Europe and Japan.

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Means by which buyers and sellers are brought into contact with each other and goods and services are exchanged. The term originally referred to a place where products were bought and sold; today a market is any arena, however abstract or far-reaching, in which buyers and sellers make transactions. The commodity exchanges in London and New York, for example, are international markets in which dealers communicate by telephone and computer links as well as through direct contact. Markets trade not only in tangible commodities such as grain and livestock but also in financial instruments such as securities and currencies. Classical economists developed the theory of perfect competition, in which they imagined free markets as places where large numbers of buyers and sellers communicated easily with each other and traded in commodities that were readily transferable; prices in such markets were determined only by supply and demand. Since the 1930s, economists have focused more often on the theory of imperfect competition, in which supply and demand are not the only factors that influence the operations of the market. In imperfect competition the number of sellers or buyers is limited, rival products are differentiated (by design, quality, brand name, etc.), and various obstacles hinder new producers' entry into the market.

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Semiskilled or unskilled workers who move from one region to another, offering their services on a temporary, usually seasonal, basis. In North America, migrant labour is generally employed in agriculture and moves seasonally from south to north following the harvest. In Europe and the Middle East, migrant labour usually involves urban rather than agricultural employment and calls for longer periods of residence. The migrant labour market is often disorganized and exploitative. Many workers are supervised by middlemen such as labour contractors and crew leaders, who recruit and transport them and dispense their pay. Labourers commonly endure long hours, low wages, poor working conditions, and substandard housing. In some countries, child labour is widespread among migrant labourers, and even in the U.S. those children who do not work often do not go to school, since schools are usually open only to local residents. Workers willing to accept employment on these terms are usually driven by even worse conditions in their home countries. Labour organizing is made difficult by mobility and by low rates of literacy and political participation, though some migrant labourers in the U.S. have been unionized. Seealso Cesar Chavez.

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Association of workers in a particular trade, industry, or plant, formed to obtain improvements in pay, benefits, and working conditions through collective action. The first fraternal and self-help associations of labourers appeared in Britain in the 18th century, and the era of modern labour unions began in Britain, Europe, and the U.S. in the 19th century. The movement met with hostility from employers and governments, and union organizers were regularly prosecuted. British unionism received its legal foundation in the Trade-Union Act of 1871. In the U.S. the same effect was achieved more slowly through a series of court decisions that whittled away at the use of injunctions and conspiracy laws against unions. The founding of the American Federation of Labor (AFL) in 1886 marked the beginning of a successful, large-scale labour movement in the U.S. The unions brought together in the AFL were craft unions, which represented workers skilled in a particular craft or trade. Only a few early labour organizers argued in favour of industrial unions, which would represent all workers, skilled or unskilled, in a single industry. The Congress of Industrial Organizations (CIO) was founded by unions expelled from the AFL for attempting to organize unskilled workers, and by 1941 it had assured the success of industrial unionism by organizing the steel and automotive industries (see AFL-CIO). The use of collective bargaining to settle wages, working conditions, and disputes is standard in all noncommunist industrial countries, though union organization varies from country to country. In Britain, labour unions displayed a strong inclination to political activity that culminated in the formation of the Labour Party in 1906. In France, too, the major unions became highly politicized; the Confédération Générale du Travail (formed in 1895) was allied with the Communist Party for many years, while the Confédération Française Démocratique du Travail is more moderate politically. Japan developed a form of union organization known as enterprise unionism, which represents workers in a single plant or multiplant enterprise rather than within a craft or industry.

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Body of law that applies to matters such as employment, wages, conditions of work, labour unions, and labour-management relations. Laws intended to protect workers, including children, from abusive employment practices were not enacted in significant numbers until the late 19th century in Europe and slightly later in the U.S. In Asia and Africa, labour legislation did not emerge until the 1940s and '50s. Employment laws cover matters such as hiring, training, advancement, and unemployment compensation. Wage laws cover the forms and methods of payment, pay rates, social security, pensions, and other matters. Legislation on working conditions regulates hours, rest periods, vacations, child labour, equality in the workplace, and health and safety. Laws on trade unions and labour-management relations address the status of unions, the rights and obligations of workers' and employers' organizations, collective bargaining agreements, and rules for settling strikes and other disputes. Seealso arbitration; mediation.

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Study of how workers are allocated among jobs, how their rates of pay are determined, and how their efficiency is affected by various factors. The labour force of a country includes all those who work for gain in any capacity as well as those who are unemployed but seeking work. Many factors influence how workers are utilized and how much they are paid, including qualities of the labour force itself (such as health, level of education, distribution of special training and skills, and degree of mobility), structural characteristics of the economy (e.g., proportions of heavy manufacturing, technology, and service industries), and institutional factors (including the extent and power of labour unions and employers' associations and the presence of minimum-wage laws). Miscellaneous factors such as custom and variations in the business cycle are also considered. Certain general trends are widely accepted by labour economists; for instance, wage levels tend to be higher in jobs that involve high risk, in industries that require higher levels of education or training, in economies that have high proportions of such industries, and in industries that are heavily unionized.

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In economics, the general body of wage earners. In classical economics, labour is one of the three factors of production, along with capital and land. Labour can also be used to describe work performed, including any valuable service rendered by a human agent in the production of wealth, other than accumulating and providing capital. Labour is performed for the sake of its product or, in modern economic life, for the sake of a share of the aggregate product of the community's industry. The price per unit of time, or wage rate, commanded by a particular kind of labour in the market depends on a number of variables, such as the technical efficiency of the worker, the demand for that person's particular skills, and the supply of similarly skilled workers. Other variables include training, experience, intelligence, social status, prospects for advancement, and relative difficulty of the work. All these factors make it impossible for economists to assign a standard value to labour. Instead, economists often quantify labour hours according to the quantity and value of the goods or services produced.

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Specialization in the production process. Complex jobs can usually be less expensively completed by a large number of people each performing a small number of specialized tasks than by one person attempting to complete the entire job. The idea that specialization reduces costs, and thereby the price the consumer pays, is embedded in the principle of comparative advantage. Division of labour is the basic principle underlying the assembly line in mass production systems. See Émile Durkheim.

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Employment of boys and girls in occupations deemed unfit for children. Such labour is strictly controlled in many countries as a result of the effective enforcement of laws passed in the 20th century (e.g., the United Nations Declaration of the Rights of the Child in 1959). In developing nations the use of child labour is still common. Restrictive legislation has proved ineffective in impoverished societies with few schools, although some improvements have resulted from global activism, such as boycotts of multinational firms alleged to be exploiting child labour abroad.

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Commercial contracts calling for the purchase or sale of specified quantities of a good at specified future dates. The good in question may be grain, livestock, precious metals, or financial instruments such as treasury bills. Up until the time the contract calls for the delivery of the good, the contract is subject to speculation. Futures contracts originated in the trade in agricultural commodities; for example, American grain farmers were able to sell their harvest in advance on the Chicago Board of Trade, a commodity exchange.

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or free-market economy or free-enterprise system

Economic system in which most of the means of production are privately owned, and production is guided and income distributed largely through the operation of markets. Capitalism has been dominant in the Western world since the end of mercantilism. It was fostered by the Reformation, which sanctioned hard work and frugality, and by the rise of industry during the Industrial Revolution, especially the English textile industry (16th–18th centuries). Unlike earlier systems, capitalism used the excess of production over consumption to enlarge productive capacity rather than investing it in economically unproductive enterprises such as palaces or cathedrals. The strong national states of the mercantilist era provided the social conditions, such as uniform monetary systems and legal codes, necessary for the rise of capitalism. The ideology of classical capitalism was expressed in Adam Smith's Wealth of Nations (1776), and Smith's free-market theories were widely adopted in the 19th century. In the 20th century the Great Depression effectively ended laissez-faire economics in most countries, but the demise of the state-run command economies of eastern Europe and the former Soviet Union (see communism) and the adoption of some free-market principles in China left capitalism unrivaled (if not untroubled) by the beginning of the 21st century.

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In securities and commodities trading, a rising market. A bull is an investor who expects prices to rise and, on this assumption, buys a security or commodity in hopes of reselling it later for a profit. A bullish market is one in which prices are expected to rise. Seealso bear market.

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or limited obligation bond

Bond issued by a municipality, state, or public agency authorized to build, acquire, or improve a revenue-producing property such as a waterworks, electric generating plant, or railroad. Unlike general-obligation bonds, which are repaid through a variety of tax sources, revenue bonds are payable from specified revenues only, usually the revenues from the facility for which the bond was originally issued. Revenue bonds typically pay interest rates higher than those of general-obligation bonds. The separation of the revenue bond obligation from a municipality's other bond obligations allows the municipality to circumvent legislated debt limits.

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Electrostatic attraction between oppositely charged ions in a chemical compound. Such a bond forms when one or more electrons are transferred from one neutral atom (typically a metal, which becomes a cation) to another (typically a nonmetallic element or group, which becomes an anion). The two types of ion are held together by electrostatic forces in a solid that does not comprise neutral molecules as such; rather, each ion has neighbours of the opposite charge in an ordered overall crystalline structure. When, for example, crystals of common salt (sodium chloride, NaCl) are dissolved in water, they dissociate (see dissociation) into two kinds of ions in equal numbers, sodium cations (Na⁺) and chloride anions (Cl⁻). Seealso bonding; covalent bond.

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Force holding atoms in a molecule together as a specific, separate entity (as opposed to, e.g., colloidal aggregates; see bonding). In covalent bonds, two atoms share one or more pairs of valence electrons to give each atom the stability found in a noble gas. In single bonds (e.g., HsinglehorzbondH in molecular hydrogen), one electron pair is shared; in double bonds (e.g., OdoublehorzbondO in molecular oxygen or H₂CdoublehorzbondCH₂ in ethylene), two; in triple bonds (e.g., HCtriplehorzbondCH in acetylene), three. In coordinate covalent bonds, additional electron pairs are shared with another atom, usually forming a functional group, such as sulfate (SO₄) or phosphate (PO₄). The number of bonds and the atoms participating in each (including any additional paired electrons) give molecules their configuration; the slight negative and positive charges at the opposite ends of a covalent bond are the reason most molecules have some polarity (see electrophile; nucleophile). Carbon in organic compounds can have as many as four single bonds, each pointing to one vertex of a tetrahedron; as a result, certain molecules exist in mirror-image forms (see optical activity). Double bonds are rigid, leading to the possibility of geometric isomers (see isomerism). Some types of bonds, such as the amide linkages that join the amino acids in peptides and proteins (peptide bonds), are apparently single but have some double-bond characteristics because of the electronic structure of the participating atoms. The configurations of enzymes and their substrates, determined by their covalent bonds (particularly the peptide bonds) and hydrogen bonds, are crucial to the reactions they participate in, which are fundamental to all life. Seealso aromatic compound; compare ionic bond.

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In finance, loan contract issued by local, state, and national governments and by private corporations, specifying an obligation to return borrowed funds. The issuer promises to pay interest on the debt when due (usually semiannually) at a stipulated percentage of the face value and to redeem the face value of the bond at maturity in legal tender. Bonds usually indicate a debt of substantial size and are issued in more formal fashion than promissory notes, ordinarily under seal. Government bonds may be backed by taxes, or they may be revenue bonds, backed only by revenue from the specific project (toll roads, airports, etc.) to which they are committed. Bonds are rated based on the issuer's creditworthiness. The ratings, assigned by independent rating agencies, generally run from AAA to D; bonds with ratings from AAA to BBB are regarded as suitable for investment. Seealso junk bond.

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(born Jan. 14, 1940, Nashville, Tenn., U.S.) U.S. politician and civil-rights leader. The son of prominent educators, Bond graduated from Morehouse College. In 1960 he helped create the Student Nonviolent Coordinating Committee (SNCC). In 1965 he was elected to the Georgia legislature, but his support of a SNCC statement accusing the U.S. of violating international law in the Vietnam War caused the legislature to deny him his seat. He was twice reelected and was twice more refused entry. The U.S. Supreme Court ruled his exclusion unconstitutional in December 1966, and he assumed his seat in January 1967. He later served in the state senate (1975–87). In 1998 he became chairman of the NAACP.

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Trading in violation of publicly imposed regulations such as rationing laws, laws against the sale of certain goods, and official rates of exchange among currencies. Black-market activity is common in wartime, when scarce goods and services are often strictly rationed (see rationing). Black-market foreign-exchange transactions flourish in countries where convertible foreign currency is scarce and foreign exchange is tightly controlled.

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In securities and commodities trading, a declining market. A bear is an investor who expects prices to decline and, on this assumption, sells a borrowed security or commodity in the hope of buying it back later at a lower price, a speculative transaction called short-selling. Seealso bull market.

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later European Community (EC) known as the Common Market

Association of European countries designed to promote European economic unity. It was established by the Treaty of Rome in 1957 to develop the economies of the member states into a single common market and to build a political union of the states of western Europe. The EEC also sought to establish a single commercial policy toward nonmember countries, to coordinate transportation systems, agricultural policies, and general economic policies, to remove measures restricting free competition, and to assure the mobility of labour, capital, and entrepreneurship among member states. The liberalized trade policies it sponsored from the 1950s were highly successful in increasing trade and economic prosperity in western Europe. In 1967 its governing bodies were merged into the European Community. In 1993 the EEC was renamed the European Community (EC); it is now the principal organization within the European Union.

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