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May 01, 2009



"the failure to make these distinctions ...": you are suggesting that The Left is stupid. You took your time.


Market failure is a key part of a well functioning market. What isn't good is a false boon encouraged by government directed investment.

Frank Owen and his Paint Brush

I think RobW misunderstands the precise meaning of "Market Failure" - it's where any one of a number of factors breaks the assumptions behind the theory that a competitive market is efficient at allocating resources. It doesn't mean simply that sometimes, businesses or markets for a particular good "fail".

In terms of assets - have you considered the patented Frank Owen's Paintbrush "National Land Share scheme"? http://frankowenspaintbrush.wordpress.com/2009/04/25/land-the-last-economic-taboo/

Leigh Caldwell

I agree with your core point - markets are not intrinsically inequitable. Unfortunately however, you may have hit on the problem with your final question; have a read of Tim Harford's article today which purports to answer it.


Will Davies

Isn't one of the problems with current ownership practices that they allow too great a role for markets? It is the tradeability of companies and capital that allows ownership to become centralised to the extent that it does. If you want to make dispersal of assets stick, you need to somehow entrench them as use value not exchange value.

Equally, it is the belief that Fred Goodwins are only accountable to stock markets that gives them the freedom to behave as they do (the fact that this accountability utterly failed shareholders in Goodwin's case is another matter altogether).

Alderson Warm-Fork

I think what you say is true, but that markets also have an inherent tendency to magnify inequalities - though not necessarily more so than private ownership in general.

My thinking is that in any competitive private-property system, that property serves both as a major goal of people's striving, and as a major tool by which they seek it. This double role sets up a sort of positive feedback which will increase inequalities, because the more wealth someone has, the more able they will be to increase that wealth.

This involves a lot of different things. More money means more leisure time to select good opportunities, better grooming and turning out, better educational opportunities, better health, healthcare focused on prevention rather than cure, more ability to bribe, more ability to travel to strategic meetings, more ability to invest for the future, more comfort to enable calmer and more considered decisions, and, as you point out, more ability to get credit.

As you say, this is all ways that inequalities can be magnified, not created, but some small inequalities will always be presented, due to luck or connections or asymmetric knowledge or personal talent or anything else, and in a market they might well be prone to self-reinforce over time.


Hi Chris; like your Blog.

You seem very hostile to "The Left" who ever they may be?

Surely the simple point about Markets is they work via greed!

The Bible and the Pope say the love of money is the root of all evil; and K Marx may say he does not buy this Religion Bag, but we all know he really agrees that the Love of money is the root of all evil.

The Market God is based on the idea that self Love produces a public good by an "invisible hand" but where is the proof of that?

Surely a Socialist state must overide self interest, ( greed to ordinary folk ) and no allocation based on mere private gain can be a final arbiter. So if Sir fred or Ronaldo are getting too much money/ have too much power, a Socialist State must overpower them to promote the Public good.

The problem with "New Labour" to my mind is they are far too friendly to the Rich rather than opposing their Class interests.

PS. You may not like Ronaldo but he does not oppress any one!

john cramer

You leave crime out of this. surely this is worthy of consideration in its own right. It has a goodly turnover , fullfills market demands , pay little or no tax and justifies the police.
And merit is its own reward quite often.


"The poor will always be with us" is a realistic working assumption for our lifetimes and beyond. The joy of economic growth powered by markets is that the poor are now of the order of 9% of our society when they used to be 90%; and our poor of today are very much better off than the poor of two or three centuries ago.

For the future, it is evident and sufficient that the marginal poor person need not stay poor. I shall be content (if I should experience an after-life in which I am interested in economic welfare) if our political process constrains and enables markets to work well enough to reduce poverty below 1% a century from now in Britain, and into single figure percentages for the world as a whole.

Is there any plausible way of getting that result without worldwide vigorous markets?

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