This teaching session began when John the Baptist sent two disciples to question Jesus. Luke 7:15-19 (ESV)
And the dead man sat up and began to speak, and Jesus gave him to his mother. Fear seized them all, and they glorified God, saying, “A great prophet has arisen among us!” and “God has visited his people!” And this report about him spread through the whole of Judea and all the surrounding country. The disciples of John reported all these things to him. And John, calling two of his disciples to him, sent them to the Lord, saying, “Are you the one who is to come, or shall we look for another?”
Jesus answers the men by saying He was fulfilling Isaiah 29:18 and 35:5-6. Luke 7:24-27 (ESV):
When John's messengers had gone, Jesus began to speak to the crowds concerning John: “What did you go out into the wilderness to see? A reed shaken by the wind? What then did you go out to see? A man dressed in soft clothing? Behold, those who are dressed in splendid clothing and live in luxury are in kings' courts. What then did you go out to see? A prophet? Yes, I tell you, and more than a prophet. This is he of whom it is written,
'Behold, I send my messenger before your face,
who will prepare your way before you.'
So Jesus affirms that John is a prophet who fulfilled Malachi 3:1. It's interesting to think that John may have been in Herod's prison at the time (see Mark 6). If so, John would have wondered about his cousin who wasn't in the wilderness, eating locusts and wearing rough leather, but living it up in the towns of Galilee, going to weddings and spending time with sinners. He naturally would have been worried that he had not proclaimed a radical renewal of Judaism, but introduced the people to a heretic. And probably the crowd had the same question.
Luke 7:31-35 (ESV):
“To what then shall I compare the people of this generation, and what are they like? They are like children sitting in the marketplace and calling to one another,
'We played the flute for you, and you did not dance;
we sang a dirge, and you did not weep.'
For John the Baptist has come eating no bread and drinking no wine, and you say, ‘He has a demon.’ The Son of Man has come eating and drinking, and you say, ‘Look at him! A glutton and a drunkard, a friend of tax collectors and sinners!’ Yet wisdom is justified by all her children.”
The parenthetical remark in verses 29 and 30 makes clear that the religious leaders had rejected John's baptism and were also generally opposed to Jesus too. So Jesus compares them to children in the marketplace who are not satisfied. Neither the ascetic John nor the hedonist Jesus pleased them. They could not see past the surface of either man to the wisdom underneath.
But who are the children in the marketplace? Sadly, they are still with us, I believe. I'm reminded of riding the Metro in Mexico City and seeing street urchins playing electric guitar with tiny, portable amps, or banging on makeshift, cardboard-box drums, or playing pop songs on beat-up flutes. They didn't care what they played as long as someone would give money to their toddler sibling who was wandering around the car with a hat or a bucket begging for spare change. I believe Jesus had these sorts of desperate, pathetic, poor-as-dirt, abused children in mind.
So the parable is a double condemnation:
The people are as fickle as children who will do anything to get a bit of money.
The society allows children to be in such desperate conditions that they must beg just to stay alive.
John Piper, in a sermon about Romans 1:18-22 said:
God warns with his wrath and he woos with his kindness. He speaks both languages: severity and tenderness. Do you recall how Jesus interpreted the coming of John the Baptist as a severe, leather-girded, locus-eating, desert-living, adultery-condemning prophet, on the one hand, and his own coming as a party-going, wine-making, child-healing, sin-forgiving savior, on the other hand? He said, "We played the flute for you, and you did not dance; we sang a dirge, and you did not mourn." Instead, you said, "John has a demon and Jesus is a glutton" (Matthew 11:17). The gospel came with both languages, but they would not hear.