"There is genius, dynamism and innovation in capitalism. Unfortunately, standard market theory does not properly allow it to be unlocked." argue Will Hutton and Philippe Schneider.
The market failure argument is frequently deployed by policymakers to justify (or not) cases of state intervention into the market, in many cases, to help rectify social ills.
However, many economists' understanding of government intervention or public activity which is not organised along market principles is that it is most likely to be hopeless or ineffective simply because it is prompted by government and not by markets.
Whilst acknowledging that Intervention may be good in that it promotes the public or citizen interest or social solidarity, they do not see that it is justifiable or desired and the eventual outcome is likely to be self-defeating.
In this provocation, Will Hutton & Philippe Schneider challenge this view on three grounds; that government is not so ineffective on a priori grounds as has been portrayed, that inequalities created by markets are economically inefficient, need to be corrected and the only agency is the state, and that public and social values do have intrinsic worth whose pursuit by governments is perfectly reasonable even if it were true that they are always inefficient - which they are not.
Published
November 2008
Author
Will Hutton and Philippe Schneider
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