Saturday 5 March 2011

The Market Can't be Trusted to Run Everything

It's easy for us all to say things like, "The market is the best way to deal with climate change." But maybe there are some things we shouldn't put the raw, naked economy in charge of.  What if, hypothetically, we let the market make the call about whether or not to allow slavery?  Would that be a good idea? Well, we tried that, and we wound up with a bunch of people enslaved.  Slavery made excellent economic sense.  Labour prices were low, margins got nice and wide, and tobacco, sugar, cotton, and other crops were cheap and widely available.  There was a cost, however, that became so unpalatable that the practice was dropped.  There are costs to the unchecked use of fossil fuels as well, but they just haven't become distasteful enough to create change.  The market cannot make moral decisions.  We must decide what the market gets to play with.

1 comment:

  1. Indeed! Self-regulating markets are a myth. Adam Smith's "invisible hand" is a fallacy that may have been applicable in the 18th Century, but is worthless in the modern market, where in most cases we have moved far beyond interpersonal transactions and tangible reputational consequences. His notion that as long as people look out for their own self interest everyone will benefit (because no-one would want to damage their own reputation and thus lose existing or potential customers) is no longer applicable in the world of global markets, as there is ALWAYS someone who has not heard of you, so you may as well be a bastard. Another sucker will come along shortly.

    As to climate change, one would think that business people would recognize that if they support climate change initiatives they have a chance to have one of the most pervasive domestic technologies on the planet (fossil fuel powered automobiles) declared obsolete, and have a customer base legally required to abandon it. Neither societal values nor physical infrastructure is not going to change quickly enough to allow us to simply drop personal powered transportation, so every driver in the world would essentially be told that they MUST purchase a new product. If I were an entrepreneur and had the knowhow and equipment to build that product, I would be giddy at the prospect of the millions (if not billions) of new customers.

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