Tuesday, November 29, 2011

The Most Important Market Failure

There is only one, but crucial market failure whose existence I acknowledge. The market system has manifestly failed to save the consuming public, their liberty and property from the ubiquitous incursions of the state. In other words, it has failed to deliver an efficient allocation of goods and services by failing to defend the smooth functioning of its allocative procedures against the distortionary infuences of the institutional apparatuses of aggression and coercion. This is not said in jest. This is serious. The question of how to rectify this state of affairs is perhaps the only worthwhile question in market failure theory. More than that, it is perhaps one of the few really worthwhile questions in the social sciences in general. And I am far from sure whether economics is necessarily the main discipline one should look up to for solutions in this context.

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