The failure of market failure: Towards a 21st century Keynesianism
Author:
Will Hutton and Philippe Schneider
Year published:
November 2008
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Introduction
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.
Will Hutton is executive vice chair of The Work Foundation. Will began his career as a stockbroker and investment analyst, before working in BBC TV and radio as a producer and reporter. Prior to joining The Work Foundation, Will spent four years as editor in chief of the Observer and he continues to write a weekly column for the paper. Will has written several best-selling economic books including The World We're In, The State We're In, The State to Come, The Stakeholding Society and On The Edge with Anthony Giddens. In addition, he won the Political Journalist of the Year award in 1993. Other roles Will performs outside The Work Foundation include: Governor of the London School of Economics; Honorary Fellow, Mansfield College, Oxford; Visiting Professor, Manchester University Business School and Bristol University and is a member of the Scott Trust. He is also a Fellow of the Sunningdale Institute. Will's book, The Writing on the Wall: China and the West in the 21st Century, was published in the UK in January 2007 by Little, Brown.
Philippe Schneider has worked with Will Hutton on ‘Writing on the Wall: China and the West in the 21st Century' and was a Visiting Fellow at NESTA. He holds British, French and American citizenship, speaks Mandarin and supports Southampton football club.
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