{"id":32266,"date":"2018-03-13T07:18:16","date_gmt":"2018-03-13T12:18:16","guid":{"rendered":"http:\/\/olduvai.ca\/?p=32266"},"modified":"2018-03-13T07:19:04","modified_gmt":"2018-03-13T12:19:04","slug":"the-limits-of-free-markets-both-economic-and-intellectual","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=32266","title":{"rendered":"The Limits of Free Markets, Both Economic and Intellectual"},"content":{"rendered":"

The Limits of Free Markets, Both Economic and Intellectual<\/a><\/h3>\n
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Both in economics and speech, the market is a powerful metaphor.\u00a0 Free economic markets are efficient, and produce the greatest good for the greatest number of people by the fair interplay of sellers and buyers.\u00a0 The marketplace of ideas is supposed to produce truth, and maximize free inquiry of ideas through the competition or rival ideas.\u00a0 Both marketplaces are supposed to support contrasting forms of individual freedom.\u00a0 Except the truth is that neither work in practice compared to theory, fixing their externalities and preventing one from corrupting the other\u00a0 is challenge and task of contemporary western politics.<\/p>\n

The market is a metaphor of modern western politics.\u00a0 Belief in the efficiency of economic free markets dates at least to Adam Smith\u2019s 1776 The Wealth of Nations<\/em>.\u00a0 For some economists, free markets maximize individual freedom producing both what is called Pareto efficiency (no one can be made better off without someone being made worse off) and Kaldor-Hicks efficiency (overall greatest net wealth for a society).\u00a0 Government regulation interferes with economic markets, damaging both individual freedom and both forms of efficiency.\u00a0 Market fundamentalism in the guise of contemporary Republican or neo-liberal politics, ascribes to this belief.<\/p>\n

Yet there are limits to this economic market fundamentalism.\u00a0 The same Adam Smith who wrote The Wealth of Nations<\/em> also penned The Theory of Moral Sentiments<\/em> and argued how economic markets are circumscribed by ethical values and virtues.\u00a0 The Wealth of Nations in book five recognizes an important role for the government investing in infrastructure.\u00a0 Later on, other economists have described unregulated markets as producing externalities such as pollution or monopolies.\u00a0 Others see externalities to include the mal-distributions of wealth and income in the world or racial and gender discrimination.\u00a0 Economic markets are also\u00a0 plagued by problems such as free riders or collective goods.\u00a0 These problems necessitate government action.\u00a0 Even Milton Friedman recognized the need of the government to enforce the rules of the marketplace against force and fraud so that it would work properly.<\/p>\n

The point is markets are not architectonic.\u00a0 Markets are not inherently self-regulating or natural.\u00a0 Karl Polany\u2019s 1944 The Great Transformation<\/em> made this point.\u00a0 It took enormous state power to construct and maintain market capitalism. The logic of both capitalism and human nature is often against free markets, wanting to produce collusion, monopolies, or engage in rent-seeking behavior or political action to favor oneself.\u00a0 Pure self-interest left on its own, as Nobel Prize economist Kenneth Arrow pointed out, cannot be aggregated to produce collective goods for a society.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The Limits of Free Markets, Both Economic and Intellectual Both in economics and speech, the market is a powerful metaphor.\u00a0 Free economic markets are efficient, and produce the greatest good for the greatest number of people by the fair interplay of sellers and buyers.\u00a0 The marketplace of ideas is supposed to produce truth, and maximize […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[9157,5493,19258,335,379,506,2530],"class_list":["post-32266","post","type-post","status-publish","format-standard","hentry","category-economics","tag-adam-smith","tag-counterpunch","tag-david-schultz","tag-free-markets","tag-government","tag-markets","tag-regulations"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/32266","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=32266"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/32266\/revisions"}],"predecessor-version":[{"id":32267,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/32266\/revisions\/32267"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=32266"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=32266"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=32266"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}