Dr. D has a new post up with regard to Thatcher. I lived through the Thatcher years, I left school just after she was elected in 1979. I always had a love/hate relationship with her policies. Would I vote for her today? Yes, I think I would.
There was never any reason to believe that governments – which are just small collections of individuals – would have the necessary wisdom to make better decisions than the market – a much larger collection of individuals.
Thatcher
This is pure Friedrich Hayek, and pure nonsense as an approach to economic governance in a properly-functioning democracy, but it served well in guiding the Conservatives toward their chosen constituency.
Now Dr. D will of course have an argument why he believes that this is the case.
The case for markets is twofold: firstly free exchange of goods and services is fulfilling in its own right; secondly under certain circumstances the distributions that result from free exchange cannot be unequivocally bettered.
In certain circumstances, there is no doubt, that free exchange cannot be bettered. Which implies that in certain circumstances, that it can.
These circumstances are quite restrictive: equality of initial resources and access to the market, complete information about the goods and services exchanged and clearly-formed preferences.
[i] Complete information: is not necessary. That is the function of prices, viz, discounted prices that allow for incomplete knowledge.
[ii] Equality and access, I agree are in this world, an unrealistic and probable impossibility. That however is not prohibitive to a solution via a market economy. Specilisation in production is the answer to this objection.
[iii] Clearly formed preferences: I’m not sure to what he is referring.
They sound unrealistic and they are – so, most of the time,
Incorrect. The market solves these problems [objections] every day.
to let the market decide is as much as a decision by government as to try to adjust or over-ride its outcome.
What a horribly confused sentence. I hope Dr. D can clarify.
Moreover, a government is only ‘a small collection of individuals’ in a dictatorship (whether of an elite based on political or economic power).
This whole sentence really tells you nothing, nor advances the argument forward.
An effective democracy, to a greater or lesser extent, involves all who vote or express an opinion that reaches policymakers –
In theory…this is true. However in reality it doesn’t quite work that way. A government duly elected with a majority, has the term in office whereby they can pass legislation without any recourse to the public who elected them. Government policy is even easier to implement as that is simply a desire of government that is only beholden to the rule of law. The law, can if necessary, be modified, by passing new legislation.
The point being, government holds huge power that cannot in the short-term be checked by the theory of ‘democracy’.
almost all those in fact who take part in the market. What is more, each individual has, in principle, equal weight in this process, whereas weighting in the market always occurs by wealth.
Errrr, no. Weighting in the market occurs via demand.
If we want better economic outcomes, therefore, we should look at least as much to improvements in the way democratic processes balance individual and collective voices as to ways of mimicking market mechanisms.
Well I agree with that.
ducati998 
Leave a comment