Do you believe in market failure?
I do.
"I'm not a fan of Murray Rothbard." -- David D. Friedman
Like Walter Block, I believe public roads actually experience a shortage, leading to "traffic jams" for the most part. Hence, there is a greater need for tolling, etc.
But you are all missing Friedman's point: even assuming public roads, there is a better outcome than what results from individual decision-making; that is, individual rationality does not lead to group rationality.
Neoclassical:But you are all missing Friedman's point: even assuming public roads, there is a better outcome than what results from individual decision-making; that is, individual rationality does not lead to group rationality.
Sure, I agree with that. Or at least that individual rationality does not have to lead to group rationality. However, that isn't a market failure. Every case of what you are calling market failure is an opportunity for an entrepreneur to alleviate something that is bothering the group by coordinating the individuals. For his efforts, he makes a profit.
If this bit here I quoted is the summation of your position, I think you need a term other than market failure to describe it.
Totally different question.
Neoclassical: do you believe in 'society's failure'? If so: can you give me a definition of it and a example to apply it too?
The state is not the enemy. The idea of the state is.
do you believe in 'society's failure'? If so: can you give me a definition of it and a example to apply it too?
The free market is simply the process whereby civil society makes voluntary exchanges. Market failure is society failure.
"I cannot prove, but am prepared to affirm, that if you take care of clarity in reasoning, most good causes will take care of themselves, while some bad ones are taken care of as a matter of course." -Anthony de Jasay
But what if participants all agree that gains (even if subjective) could have been better given a different, realizable outcome
Again nonesense sorry. If everyone had agreed on a superior method of employing resources then those methods would have been employed in the first place by people individually choosing them. Since people didn't choose those alternative means however we could never argue that they thought it was superior. Human action has revealed people's preferences, and they lie in conflict with your own. Thats your problem, not ours.
Why should we allow the confused and confusing label 'market failure' to stand?
We shouldn't. But the communist that made it up certainly thought he should.
Biased Physicist: "The laws of physics do not make monopole magnets. Ah, I shall call this Physics Failure."
"We shouldn't. But the communist that made it up certainly thought he should"
What can you do when you have economist after economist insisting that there are market failures. From light towers, to dams, to money, all the way to health insurance. It never ends.
DD5: "We shouldn't. But the communist that made it up certainly thought he should" What can you do when you have economist after economist insisting that there are market failures. From light towers, to dams, to money, all the way to health insurance. It never ends.
Have you heard about the Canadian census discussion? Recently a Canadian economist declared that markets fail in information, because markets can't provide businesses with the information census can (our long form census asks things like, how do you get to work, do you drive or do you sit on the passenger seat!) It's kind of like saying the markets can't provide for goblins, they have failed!
AJ:Sure, such as sitting here typing. However, I don't think it's controversial that law enforcement is coercive. I'm not sure your intent here. I don't mean NAP-violating (nor do I mean NAP-non-violating). I mean coercive in the everyday sense of "forceful and possibly violent" (leaving aside whether such force or violence is "justified").
It’s one thing to distinguish between actual violence and non-actual violence*: e.g., respectively, a store owner being shot by a robber for resisting, versus the store owner handing over the money without resisting. This distinction is useful for economic theory and is non-normative.
*Interpret this as “non-(actual violence)” rather than “(non-actual) violence”.
For the most part, both law enforcement and you sitting there typing fall in the category of “non-actual violence,” but you say that one is coercive and the other is not. This presupposes a definition of what an “ordinary” sphere of action is for each person – we can see this from the fact that it’s possible to create a parallel argument that both actions are coercive:
The only way to break the symmetry – the only way we can say that X is not coercive – is if we say that “living in a world where you’re not doing X” is not “really” an action. But on what non-arbitrary basis can we make this distinction?
The reason why I’m harping on the precise definition of “coercion” is because I’m wondering how there can be coercion without it being ipso facto government (albeit on a small scale).
Zavoi, that's an interesting point and I suppose you're right. All action is coercive. Even one's very existence is coercive. Just like the concept of liberty, the concept of coercion vs. non-coercion breaks down outside the statist context (and perhaps even within it).
My point in saying that even common law or natural order is coercive was to say that we cannot avoid coercion just because the state is gone. I think what you've done here is make a more thoroughgoing point along the same same lines. To wit, we cannot avoid coercion. It is a continuum if anything. We can just eliminate a major cause of coercion so that we are more free than before.
In fact to me I don't really see the point in always focusing on freedom, or the coercion actually happening to oneself. There are many other factors affecting human happiness. For me, the patents and regulations of the state preventing new technologies from arising is more onerous than anything else. Although this is caused by coercion, I don't feel (at this moment) any great coercion or interference in my own immediate personal affairs from the state, so that is not a huge issue for me. I actually care more about the state intervening in others' affairs more than my own. Some people just want to be left alone entirely and that is the big thing they care about, but for me I'd much rather suffer through taxes and TSA checkpoints than have to wait forever for new technologies like visual cortex scanning.
In other words, it seems the reason to eliminate the state is so that one can be, in sum total, more happy, fulfilled, etc. I hope this isn't getting too far off track from what you intended.
Why anarchy fails
AJ:My point in saying that even common law or natural order is coercive was to say that we cannot avoid coercion just because the state is gone. I think what you've done here is make a more thoroughgoing point along the same same lines. To wit, we cannot avoid coercion. It is a continuum if anything. We can just eliminate a major cause of coercion so that we are more free than before.
With the foregoing in mind: what exactly is a "government" (and conversely a "natural order")? Naïvely we might try to say that a "natural order" is what emerges in the absence of coercion (defined in some way), but then how can we speak of coercion in a natural order? (Wouldn't the fleer-spearers constitute a mini-government, a violation of the natural order?) On the other hand, if you try to broaden the scope of the term "natural order" to include the fleer-spearers, then you are faced with having to call the current situation (and any situation, for that matter) a "natural order" because it did, after all, emerge from somewhere. The state is a part of society; it does not exist over and above it.
It's a matter of degree - how much centralization? The less centralization, the more natural* the order.
*Natural (adj.) - of or pertaining to [the result or product of] a long history of intense competition on a rich marketplace**, culminating in a highly interconnected matrix of symbiotic, win-win relationships or interactions.
**"Marketplace" in the metaphorical sense where applicable. Market is also a matter of degree - how much coercion? Enough human-to-human coercion, institutionalized and you end up with a push toward centralization.
Nah, I'm loving these threads Neoclassical has started. Look at how much it's stimulated the group discussion
I'll second that
Dondoolee: Nah, I'm loving these threads Neoclassical has started. Look at how much it's stimulated the group discussion I'll second that
Third!
It certainly prevents group think.
I just listened to the first 20 minutes of David Friedman's speech at the Free State Project on Market Failure. I noticed a flaw in his arguments within first thirty seconds.
He points to the phalanx as being ripe for market failure. Yet he never defines what his goal is. In order to have failure, one must have a goal that was not achieved. It is implied however that the goal on the part of each individual was survival. On the basis of this he calculates that, if each warrior acted rationally, the whole army would flee.
In truth, he is neglecting the subjective theory of value. He neglects to consider that there are a myriad of different values or goals amongst each warrior in the phalanx, and that for many of them, survival ranks below other values. These other values might include defending their families from foreign invaders, conquering foreign lands (and thereby acquiring booty and rape), pleasing the military commander (who may have a cultivated a cult of personality around himself), or even the glory of the battle itself. Who is to say that survival should be the penultimate goal of the entire army? What of the individual who takes such pride in his courage that to seen fleeing in front of his warrior-brethren would cause him incalculably more pain than even death? Does he not exist in Friedman's world?
His argument is similar to that of environmentalists who deem oil spills to be examples of "market failure." Postulate a truly free market (far-fetched for sure, but bear with me here). While the incidents of oil spills would likely be drastically reduced, it is probably that there will still be some. Environmentalists will no doubt continue to deem these instances of "market failure" because of the markets failure to "protect the environment." But who is to say that "protecting the environment" is objectively the best goal or the only right goal? Consumers may very well derive more utility from the consumption of petroleum-based products than they lose from oil spills.
As a student of Roman history, I would point out one of their military maxims: A soldier who fears his officer more than he fears the enemy will not run. This is the basis of hierarchical, military discipline. Friedman utterly discounts such aspects of warfare in his simplistic analysis of the spearmen vs. the cavalry where survival is the number one goal of each and every soldier.