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I'm not sure what one project demonstrates, even if we take a news report at face value. There also are many successes; we're using one now to discuss this. >

I'm not sure what one project demonstrates, even if we take a news report at face value. There also are many successes; we're using one now to discuss this. > €1.2bn could solve any number of problems. And in a free market that's how the resources would be put to use. Solving human problems. Instead, there's a grand spectacle. I think this argument idealizes the "free market". * There is plenty of waste and spectacle there too -- look at other news headlines, or just remember our recent financial crisis * The 'free market' doesn't exist. First, it's an amalgam of an incredible number and diversity of people and organizations. Second, it's not free; I was trying to think of examples of social goods not funded at all by taxpayers (for the point below), but it's hard to name any. And many 'free market' companies get tax breaks and other support from government (EDIT: including laws and regulations made in their favor). * The marketplace does not care prioritize solving human problems; it prioritizes money and power. Sometimes that happens to solve problems (discovering a new vaccine, clean energy), sometimes it happens to cause them (increasing the cost of vaccines, climate change), sometimes it's just money for money's sake (slashing a ms off response time in computerized securities trading).

Multics 12y ago
It's an example. It's the cost of the success that's the issue. Financial crisis == moral hazard. And, come on! There's an economic theory that predicted the crisis, and explains it. I.e. ABCT (Austrian business cycle theory). My point being, it's not as clear cut when there's 'crony capitalism' and other market distortions. 'Free', as in freedom! Everyone knows the 'free market' is made up of individuals. Or groups of individuals, such as a firm, which is formed to reduce transaction costs -- as per Coase's description in his Nobel winning (1991) The Nature of the Firm (1937). Money is a medium of exchange. We use it to trade. And by definition: when people trade freely, they are both better off (otherwise they wouldn't trade!). Money also has the functions of 1) store of wealth 2) unit of account. But that's by the by. Problems are always going to occur, but because humans are motivated to solve the problems, solutions are found. And a profound way to facilitate such solutions is a market-based economy.
- voronoff 12y ago
  "when people trade freely, they are both better off (otherwise they wouldn't trade!)" isn't true. Instead, it's that both people think that they are better off when they make the trade. A subtle distinction but also the most important criticism of a purely free market.
  - Multics 12y ago
    Value is subjective. A.K.A, the subjective theory of value. Without subjectivity, there's no marginal utility. And that takes us back to classical economics. I.e pre-marginal revolution.
    - voronoff 12y ago
      I'm not talking about the subjectivity of value at all, though I can see how that might be unclear. I'm talking about the assumption of perfect information that is inherent in your statement.
      - Multics 12y ago
        In situations of asymmetrical information, there can be market solutions. Such as warranties. The information, or the lack thereof is also reflected in the price.
- nmrm 12y ago
  > There's an economic theory that predicted the crisis, and explains it. I.e. ABCT No. People who like the theory saw real world events that kind of sort of looks like ABCT could explain them, and then made a post facto observation. Unless Mises et al. made some sort of prediction based upon at the time non-existent financial instruments, ABCT did not predict the 2008 sub-prime financial collapse. Period. To the extent that ABCT predicted anything, it was a "something bad will happen; not sure when!" with the preconditions in play since about 1980. Color me unimpressed; I bet some random fortune teller got more accurate than that on accident. Now, maybe some economic philosophers who likes the model applied it, which provided the basis their prediction of actual real world events. I don't know. But then, proponents of regulation predicted the collapse as well. In fact, a lot of people accurately predicted the (actual) collapse, and to various degrees the cascade effects. > it's not as clear cut when there's 'crony capitalism' and other market distortions. "Oh yes, if only the world met all of our Axioms. Then everything would be grand!" said every failed political economic project ever. > Problems are always going to occur, but because humans are motivated to solve the problems, solutions are found. And as it turns out, lots of times those people are working in government funded research labs and universities, or applying research funded in those labs and universities. You'll excuse us mere mortals for drawing such wildly wrong conclusions from something as banal as observation! You see, it's just that we've lost our list Axioms and now our only reference point is reality... perhaps you could lend us your map to drill on?

Multics 12y ago

It's an example. It's the cost of the success that's the issue. Financial crisis == moral hazard. And, come on! There's an economic theory that predicted the crisis, and explains it. I.e. ABCT (Austrian business cycle theory). My point being, it's not as clear cut when there's 'crony capitalism' and other market distortions. 'Free', as in freedom! Everyone knows the 'free market' is made up of individuals. Or groups of individuals, such as a firm, which is formed to reduce transaction costs -- as per Coase's description in his Nobel winning (1991) The Nature of the Firm (1937). Money is a medium of exchange. We use it to trade. And by definition: when people trade freely, they are both better off (otherwise they wouldn't trade!). Money also has the functions of 1) store of wealth 2) unit of account. But that's by the by. Problems are always going to occur, but because humans are motivated to solve the problems, solutions are found. And a profound way to facilitate such solutions is a market-based economy.

voronoff 12y ago
"when people trade freely, they are both better off (otherwise they wouldn't trade!)" isn't true. Instead, it's that both people think that they are better off when they make the trade. A subtle distinction but also the most important criticism of a purely free market.
- Multics 12y ago
  Value is subjective. A.K.A, the subjective theory of value. Without subjectivity, there's no marginal utility. And that takes us back to classical economics. I.e pre-marginal revolution.
  - voronoff 12y ago
    I'm not talking about the subjectivity of value at all, though I can see how that might be unclear. I'm talking about the assumption of perfect information that is inherent in your statement.
    - Multics 12y ago
      In situations of asymmetrical information, there can be market solutions. Such as warranties. The information, or the lack thereof is also reflected in the price.
nmrm 12y ago
> There's an economic theory that predicted the crisis, and explains it. I.e. ABCT No. People who like the theory saw real world events that kind of sort of looks like ABCT could explain them, and then made a post facto observation. Unless Mises et al. made some sort of prediction based upon at the time non-existent financial instruments, ABCT did not predict the 2008 sub-prime financial collapse. Period. To the extent that ABCT predicted anything, it was a "something bad will happen; not sure when!" with the preconditions in play since about 1980. Color me unimpressed; I bet some random fortune teller got more accurate than that on accident. Now, maybe some economic philosophers who likes the model applied it, which provided the basis their prediction of actual real world events. I don't know. But then, proponents of regulation predicted the collapse as well. In fact, a lot of people accurately predicted the (actual) collapse, and to various degrees the cascade effects. > it's not as clear cut when there's 'crony capitalism' and other market distortions. "Oh yes, if only the world met all of our Axioms. Then everything would be grand!" said every failed political economic project ever. > Problems are always going to occur, but because humans are motivated to solve the problems, solutions are found. And as it turns out, lots of times those people are working in government funded research labs and universities, or applying research funded in those labs and universities. You'll excuse us mere mortals for drawing such wildly wrong conclusions from something as banal as observation! You see, it's just that we've lost our list Axioms and now our only reference point is reality... perhaps you could lend us your map to drill on?