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> even thought markets have been proven time and again to be self-harming and unstable unless closely regulated to limit social harm, inequality, exploitation,

> even thought markets have been proven time and again to be self-harming and unstable unless closely regulated to limit social harm, inequality, exploitation, and the development of monopolies - it's not going to be positive about this idea. Damming the concept of “markets” as “self-harming” and “unstable” is an asinine statement. Of course not every instantiation of a market is flawless and without trade offs. Any sufficiently large-scale social system is rife with weird second order effects. We can only analyze the efficacy of markets by comparing them against their alternative. Ironically – given one of your complaints about markets is monopolism – the most common alternative to markets is monopolism by the government. Yet, governments suffer from the same bureaucratically-induced problems that you are attributing to organizations operating in markets. Indeed, they have it worse because they don’t have the external pressure of competition to keep their bad behavior in check. Accountability in the public sector is significantly worse than in the private sector. History is filled with state-owned monopolies that failed to adapt to changing situations and degrade into obsolescence while still bleeding the public of money. Every social system over-produces some things and under-produces other things, in constantly shifting proportions as time goes on. Of all systems, sufficiently competitive markets are the best at dynamically adjusting to minimize both surpluses and shortages. State-owned monopolies are truly abysmal at matching supply and demand. There’s textbooks worth of material as to why this is the case. And perhaps, you may be referring to some notion of “totally free markets”. But there are no totally free markets. All markets are subject to the formal laws of their various operating jurisdictions and the norms that come from operating in society. The great thing about markets is that when a company does bad things, the public usually can switch providers, thus punishing bad behavior. There are notable counter examples where there isn’t consumer choice, but those organizations get dragged in the media and are forced to change in the court of public opinion. So, to be honest, I don’t know what you’re on about. What’s the fairyland alternative to “markets”?

rStar 5y ago
> So, to be honest, I don’t know what you’re on about. What’s the fairyland alternative to “markets”? idk, whatever we have right now?
- CityOfThrowaway 5y ago
  Most of our global economic activity is governed by markets. We also happen to have the largest, wealthiest, and healthiest human population in history right now. So I agree with you, but also not sure where you’re disagreeing.
js8 5y ago
> We can only analyze the efficacy of markets by comparing them against their alternative. No, it can also be done theoretically, by actually computing the costs of production (required to sustain certain level of consumption) from something like Leontief matrix. And then comparing with reality. It hasn't been done, mostly because the required data are private, but it is possible to do in principle, and I would argue that it would be very instructional for any society to do such a calculation (and make the result publicly available). > What’s the fairyland alternative to “markets”? There are many alternatives, but you have to understand that almost nobody wants to replace markets as a whole. So the replacement is always partial. Socialism supporters oppose capitalism, which is defined by two characteristics - (1) labour markets and (2) capital mostly privately owned. (Let's now put aside that free market and property ownership are actually completely orthogonal concepts.) You can have a system which mostly gets rid of either one or both of these. For example, you replace (1) with worker cooperatives based on democratic control and replace (2) with a national investment fund that is again under shared ownership of the citizens. Both of these have been tried and work.. Does such a system replace all markets? No, but it replaces the chunk (labour market) that is considered the most contentious.
- logicchains 5y ago
  >No, it can also be done theoretically, by actually computing the costs of production (required to sustain certain level of consumption) from something like Leontief matrix. And then comparing with reality. It hasn't been done, mostly because the required data are private, but it is possible to do in principle, and I would argue that it would be very instructional for any society to do such a calculation (and make the result publicly available). No it can't. Value (in the sense generally used in economics) can only be known through people's revealed preferences, and it's not possible to reveal people's preferences without giving them the chance to express them in a market. Markets require people to sacrifice money/labor/time to purchase things, which gives a much more meaningful measure of those things being valued than if people were just asked, surveyed or whatever and didn't have to put their money where their mouths were.
  - js8 5y ago
onethought 5y ago
But all the major market instabilities have been solved by government bailouts even in the current way of things. So they are provenly unstable and require government propping them up constantly with public money. I think you are the one espousing fairyland. Without the private gain public loss “market” we have now, half the market would have died in 2008 and the other half would have died last year…
- s3tz 5y ago
  This is implying that externalities of bad government policies (ie encouraging high home owner rates) weren't the main cause of the market needing a bail out.
  - dgb23 5y ago
    That’s what made the money worthless in the first place yes. Badly regulated markets. The financial market then made the problem orders of magnitude worse. Again, not enough regulation. It’s so weird how a story of greedy investors turned out to be the fault of the government in the end. “You set it in place, we simply had to bite!”
- ryan93 5y ago
  By saying half the market would die die you mean GDP would have been cut in half without a bailout in 2008?
  - scott_w 5y ago
    Obviously that’s hyperbole but I did have a look and industrial activity in the USA declined by 46%. Global trade dropped by 70%. GDP itself dropped by about 30%, from what I could find. By contrast, the Great Recession of 2008 saw a GDP drop of 4.3%. So, yes, without government bailouts, markets can fail _catastrophically_
    - ryan93 5y ago
      30% was a lot higher than I realized.
refurb 5y ago
Agreed. There is this attempt at an “ah ha! I found a market failure!” and people extrapolate that to “capitalism is a failure and the source of all our problems”. This of course ignores the incredible reduction in worldwide poverty over the past 50 years due to capitalism.
- anoncake 5y ago
  In unrelated news, there has been tremendous technological progress in the past 50 years.
  - refurb 5y ago
    Brought to you by capitalism or at least funded by governments who get their dollars from capitalist systems.
    - anoncake 5y ago
      Of course research at some point involves the economy and therefore the economic system that happens to be dominant. Most countries have little use for Dollars by the way, preferring their own currencies.
      - imtringued 5y ago
        >Most countries have little use for Dollars by the way, preferring their own currencies. Their citizens have little use for dollars. Their foreign exchange reserve hoards them.
        anoncake 5y ago
        The American usage of "dollars" as a synonym for "money" when the topic is not specifically a dollar-using country is just nationalist bullshit.
      - refurb 5y ago
        “Happen to be dominant.” You mean the ones that haven’t failed? And this may surprise you, but plenty of country still use “dollars” that aren’t American. But you already knew that.
paulryanrogers 5y ago
The truth doesn't have to be entirely one or the other. Markets can be good and regulation can be good at the same time. And both can have risks for bad outcomes as well. It's interesting how folks on one extreme will point out every fault of the other, with their own reasons explaining away critiques of their favorite side. > The great thing about markets is that when a company does bad things, the public usually can switch providers, thus punishing bad behavior. This puts a lot of trust in people being well informed and having enough energy to react. We live in a complex world, and it's nearly impossible for consumers to each vote with their wallets on every aspect of life. In theory I could vet every food, drug, and hardware supplier personally before buying anything. But I'd rather have the most safety critical stuff regulated before it can be offered for sale.
dnautics 5y ago
I mean the thing is even a fully govenment-run, centralized economy, is a market. Each individual decides, is it worth continuing to do the shit they tell me to do? Or should I resist and suffer whatever coercion the state brings down on me. That's a choice, and thus it's an exchange (In the banal case, I exchange my labor in return for political favour; in the extreme case: I exchange my labor in return for not going to a gulag). Maybe not a "free" one, but it is a market nonetheless and most criticisms of market failure apply, with adjustments, to such a system, too.
- mananaysiempre 5y ago
  You are describing individual workers in a planned economy, but a market description applies from the point of view of the planner as well: goods still have rates of substitution and thus cost in every way that matters, regardless of whether you choose to measure it in dollars or kilograms of wheat; closing your eyes and pretending they don’t is only going to make your plan less efficient. In fact, when Kantorovich tried to figure out how to make one more efficient (resulting in both a Stalin Prize and a Nobel Memorial Prize in economics, but no shifts in the Soviet bureaucracy), the free parameters of his model ended up being prices even if no pieces of paper with signatures of bankers were changing hands. Which is not to say a market is a good thing in any specific implementation. What it is, in this degree of generality, is inevitable. That a (more or less) free exchange of tokens of value is a good way to achieve the optimum is an additional assumption that needs separate justification, but seems to be plausible so far, or at least lacking in shattering disproof. Still, there is a hell of a lot of distance between these and any particular Western country in the year of our Lord 2021. Going from being dissatisfied with the latter to rejecting the former is like immediately blaming the compiler when your home-grown TLS implementation gets hacked. I mean, compilers bugs do exist, but that giant ASN.1 serializer looks mighty suspicious. (Tax code, antitrust enforcement, employees’ rights, need I continue?)
  - indigo945 5y ago
    I think your argument actually also touches on something that I see as a fault in recent Western socialist or socialist-aligned movements, which is that market forces and capitalism are often improperly separated. There is often a large focus on how the market is evil, even when it's discussed in a language that decries them as problems of capitalism; for example, people might blame problems such as high rents on capitalism, and then imagine that nationalizing real estate companies will fix it, which it of course most likely won't. So, kind of coming at this from the other side, I do agree that a clear separation is necessary when talking about capitalism vs socialism on the one hand, and market economies vs planned economies on the other hand. But then you have to explain: what is the difference between a market economy and a planned economy, in an age where economic planning in China takes prices and market forces into account, while in the West, a company like Amazon, operating within the market, is so large that it has to do demand planning akin to the Soviet bureaucracy, lest they over- or under-order produce? Which of these societies is truly "more market"? I think that the market can indeed be a very valuable system to reduce all kinds of inefficiencies. But at the same time, changes in tax code or antitrust enforcement will not alter capitalism's natural tendency toward monopolization, which ultimately turns everything into a planned economy anyhow. So in my opinion, the question is about how to effectively use the positive effects of the market, while also avoiding the less-positive effects that private enterprise has on society at large. And it seems to me like Kantorovich may have been closer to finding an answer than HFT yuppies at wall street will ever be.
Ar-Curunir 5y ago
> The great thing about markets is that when a company does bad things, the public usually can switch providers, thus punishing bad behavior. There are notable counter examples where there isn’t consumer choice, but those organizations get dragged in the media and are forced to change in the court of public opinion. Err yeah, like Amazon and Google and Disney and Comcast and $INSERT_MEGACORP_HERE totally don't buy out competitors, or use dominance in one field to buy dominance in another field.

rStar 5y ago

> So, to be honest, I don’t know what you’re on about. What’s the fairyland alternative to “markets”? idk, whatever we have right now?

CityOfThrowaway 5y ago
Most of our global economic activity is governed by markets. We also happen to have the largest, wealthiest, and healthiest human population in history right now. So I agree with you, but also not sure where you’re disagreeing.

js8 5y ago

> We can only analyze the efficacy of markets by comparing them against their alternative. No, it can also be done theoretically, by actually computing the costs of production (required to sustain certain level of consumption) from something like Leontief matrix. And then comparing with reality. It hasn't been done, mostly because the required data are private, but it is possible to do in principle, and I would argue that it would be very instructional for any society to do such a calculation (and make the result publicly available). > What’s the fairyland alternative to “markets”? There are many alternatives, but you have to understand that almost nobody wants to replace markets as a whole. So the replacement is always partial. Socialism supporters oppose capitalism, which is defined by two characteristics - (1) labour markets and (2) capital mostly privately owned. (Let's now put aside that free market and property ownership are actually completely orthogonal concepts.) You can have a system which mostly gets rid of either one or both of these. For example, you replace (1) with worker cooperatives based on democratic control and replace (2) with a national investment fund that is again under shared ownership of the citizens. Both of these have been tried and work.. Does such a system replace all markets? No, but it replaces the chunk (labour market) that is considered the most contentious.

logicchains 5y ago
>No, it can also be done theoretically, by actually computing the costs of production (required to sustain certain level of consumption) from something like Leontief matrix. And then comparing with reality. It hasn't been done, mostly because the required data are private, but it is possible to do in principle, and I would argue that it would be very instructional for any society to do such a calculation (and make the result publicly available). No it can't. Value (in the sense generally used in economics) can only be known through people's revealed preferences, and it's not possible to reveal people's preferences without giving them the chance to express them in a market. Markets require people to sacrifice money/labor/time to purchase things, which gives a much more meaningful measure of those things being valued than if people were just asked, surveyed or whatever and didn't have to put their money where their mouths were.
- js8 5y ago

onethought 5y ago

But all the major market instabilities have been solved by government bailouts even in the current way of things. So they are provenly unstable and require government propping them up constantly with public money. I think you are the one espousing fairyland. Without the private gain public loss “market” we have now, half the market would have died in 2008 and the other half would have died last year…

s3tz 5y ago
This is implying that externalities of bad government policies (ie encouraging high home owner rates) weren't the main cause of the market needing a bail out.
- dgb23 5y ago
  That’s what made the money worthless in the first place yes. Badly regulated markets. The financial market then made the problem orders of magnitude worse. Again, not enough regulation. It’s so weird how a story of greedy investors turned out to be the fault of the government in the end. “You set it in place, we simply had to bite!”
ryan93 5y ago
By saying half the market would die die you mean GDP would have been cut in half without a bailout in 2008?
- scott_w 5y ago
  Obviously that’s hyperbole but I did have a look and industrial activity in the USA declined by 46%. Global trade dropped by 70%. GDP itself dropped by about 30%, from what I could find. By contrast, the Great Recession of 2008 saw a GDP drop of 4.3%. So, yes, without government bailouts, markets can fail _catastrophically_
  - ryan93 5y ago
    30% was a lot higher than I realized.

refurb 5y ago

Agreed. There is this attempt at an “ah ha! I found a market failure!” and people extrapolate that to “capitalism is a failure and the source of all our problems”. This of course ignores the incredible reduction in worldwide poverty over the past 50 years due to capitalism.

anoncake 5y ago
In unrelated news, there has been tremendous technological progress in the past 50 years.
- refurb 5y ago
  Brought to you by capitalism or at least funded by governments who get their dollars from capitalist systems.
  - anoncake 5y ago
    Of course research at some point involves the economy and therefore the economic system that happens to be dominant. Most countries have little use for Dollars by the way, preferring their own currencies.
    - imtringued 5y ago
      >Most countries have little use for Dollars by the way, preferring their own currencies. Their citizens have little use for dollars. Their foreign exchange reserve hoards them.
      - anoncake 5y ago
        The American usage of "dollars" as a synonym for "money" when the topic is not specifically a dollar-using country is just nationalist bullshit.
    - refurb 5y ago
      “Happen to be dominant.” You mean the ones that haven’t failed? And this may surprise you, but plenty of country still use “dollars” that aren’t American. But you already knew that.

paulryanrogers 5y ago

The truth doesn't have to be entirely one or the other. Markets can be good and regulation can be good at the same time. And both can have risks for bad outcomes as well. It's interesting how folks on one extreme will point out every fault of the other, with their own reasons explaining away critiques of their favorite side. > The great thing about markets is that when a company does bad things, the public usually can switch providers, thus punishing bad behavior. This puts a lot of trust in people being well informed and having enough energy to react. We live in a complex world, and it's nearly impossible for consumers to each vote with their wallets on every aspect of life. In theory I could vet every food, drug, and hardware supplier personally before buying anything. But I'd rather have the most safety critical stuff regulated before it can be offered for sale.

dnautics 5y ago

I mean the thing is even a fully govenment-run, centralized economy, is a market. Each individual decides, is it worth continuing to do the shit they tell me to do? Or should I resist and suffer whatever coercion the state brings down on me. That's a choice, and thus it's an exchange (In the banal case, I exchange my labor in return for political favour; in the extreme case: I exchange my labor in return for not going to a gulag). Maybe not a "free" one, but it is a market nonetheless and most criticisms of market failure apply, with adjustments, to such a system, too.

mananaysiempre 5y ago
You are describing individual workers in a planned economy, but a market description applies from the point of view of the planner as well: goods still have rates of substitution and thus cost in every way that matters, regardless of whether you choose to measure it in dollars or kilograms of wheat; closing your eyes and pretending they don’t is only going to make your plan less efficient. In fact, when Kantorovich tried to figure out how to make one more efficient (resulting in both a Stalin Prize and a Nobel Memorial Prize in economics, but no shifts in the Soviet bureaucracy), the free parameters of his model ended up being prices even if no pieces of paper with signatures of bankers were changing hands. Which is not to say a market is a good thing in any specific implementation. What it is, in this degree of generality, is inevitable. That a (more or less) free exchange of tokens of value is a good way to achieve the optimum is an additional assumption that needs separate justification, but seems to be plausible so far, or at least lacking in shattering disproof. Still, there is a hell of a lot of distance between these and any particular Western country in the year of our Lord 2021. Going from being dissatisfied with the latter to rejecting the former is like immediately blaming the compiler when your home-grown TLS implementation gets hacked. I mean, compilers bugs do exist, but that giant ASN.1 serializer looks mighty suspicious. (Tax code, antitrust enforcement, employees’ rights, need I continue?)
- indigo945 5y ago
  I think your argument actually also touches on something that I see as a fault in recent Western socialist or socialist-aligned movements, which is that market forces and capitalism are often improperly separated. There is often a large focus on how the market is evil, even when it's discussed in a language that decries them as problems of capitalism; for example, people might blame problems such as high rents on capitalism, and then imagine that nationalizing real estate companies will fix it, which it of course most likely won't. So, kind of coming at this from the other side, I do agree that a clear separation is necessary when talking about capitalism vs socialism on the one hand, and market economies vs planned economies on the other hand. But then you have to explain: what is the difference between a market economy and a planned economy, in an age where economic planning in China takes prices and market forces into account, while in the West, a company like Amazon, operating within the market, is so large that it has to do demand planning akin to the Soviet bureaucracy, lest they over- or under-order produce? Which of these societies is truly "more market"? I think that the market can indeed be a very valuable system to reduce all kinds of inefficiencies. But at the same time, changes in tax code or antitrust enforcement will not alter capitalism's natural tendency toward monopolization, which ultimately turns everything into a planned economy anyhow. So in my opinion, the question is about how to effectively use the positive effects of the market, while also avoiding the less-positive effects that private enterprise has on society at large. And it seems to me like Kantorovich may have been closer to finding an answer than HFT yuppies at wall street will ever be.

Ar-Curunir 5y ago

> The great thing about markets is that when a company does bad things, the public usually can switch providers, thus punishing bad behavior. There are notable counter examples where there isn’t consumer choice, but those organizations get dragged in the media and are forced to change in the court of public opinion. Err yeah, like Amazon and Google and Disney and Comcast and $INSERT_MEGACORP_HERE totally don't buy out competitors, or use dominance in one field to buy dominance in another field.