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Is there a such thing as market failure?

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Bogart posted on Thu, Oct 25 2012 12:04 PM

I read this article from the Freeman Online about market failure and that we should use markets anyway.  I posted a response arguing first that markets are just bunches of trades and not thinking beings.  They can not have a purpose.

http://www.thefreemanonline.org/columns/thoughts-on-freedom/klinging-to-reality/

I also argued that the listed causes of market failure are not really causes but either parts of reality or directly caused by force.

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I think all accusations of market failure boil down to accusations of reality not meeting one's expectations. But reality is in no way obligated to do so.

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Non parit potestas ipsius auctoritatem.

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There has been some fairly thorough discussion on this here. It depends heavily upon what one means, there are certainly cases which would be considered failures from the point of view of Mises' concept of "consumer's sovereignty", but by Rothbard's concept of "Individual Sovereignty" then the only way that market failure could result is if an interaction was forceful and fraudulent and/or this situation wasn't rectified.

 

At last those coming came and they never looked back With blinding stars in their eyes but all they saw was black...
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Answered (Not Verified) xahrx replied on Thu, Oct 25 2012 2:14 PM

Market failure, as mentioned, usually means something happened that people don't want, or say they don't want but demonstrate via their actions that they do want.  Basically they're trying to apply a categorical judgement of "This is what should have happened" to a marginal system that simply reflects the result of the actions of all its constituent actors.  If morality is their complaint of failure, their true argument is with the immoral people who created the result.  If scarcity is their complaint of failure, their true argument is with people who don't agree with them as to what most urgently requires production resources.  In the end claims of  'market failure' are rhetorical attempts to garner support for market interventions.

"I was just in the bathroom getting ready to leave the house, if you must know, and a sudden wave of admiration for the cotton swab came over me." - Anonymous
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