Tuesday, October 13, 2009

Markets aren't everything...? (!)

marjorie says...

A fabulously straight delivery given to us on Forbes.com--with the insightful news that "Markets Aren't Everything"--, about the work of the duo who won the Nobel for Economics (parenthetical commentary belongs to me):

The common theme underlying the prize this year is that markets do not solve all problems of resource allocation and incentives well or even at all. That is not a new idea. (!) What is important is that people and societies find ways through organizational structures and arrangements, political and other institutions, values, incentives and recognition, and the careful management of information, to solve these problems. Professors Ostrom and Williamson have led the development of this increasingly important part of economics. In reading their work, you are impressed that economics is not really fundamentally about markets, but about resource allocation and distribution problems. Markets appear because they operate effectively to handle a subset of these resource allocation challenges. Alternative creative institutional arrangements have been devised and refined over time to deal with those that markets handle imperfectly.

Isn't this another way of saying that capitalism has to be mitigated through the government or other social formations?

Now that economists have won the Nobel for confirming this, can we stop having that debate?

Something tells me, no.

Hat Tip to John Fleck.