“Market Failure” vs. Individualism
September 24, 2008
The term “market failure” implies an anti-individualistic premise. The market is nothing but the individuals interacting on it for purposes of trade and mutual cooperation according to the best judgment of their reasoning minds. To say that “the market has failed” is equivalent to saying that all or a significant portion of individuals on the market have failed. Of course, individual failures can happen since man’s rational faculty is not infallible. Just as an overindulgence when shopping can make you unable to pay your rent, so the misjudgments of a CEO can make a whole company crash.
However, the proponents of “market failure” do not only claim that people are fallible and can make mistakes — they deny that people can ever get it right (which is a non-sequitur). When they claim that “markets failed”, what they in effect say is this: The people who act on these markets are by their very nature incompetent to do so, their minds are immature and inherently unable to reach the right conclusions, and therefore it is necessary that someone wiser — the government — take care of them, tell them what is best for them, and superintend what they do. This is properly called the nanny state, since government bureaucrats under such a system indeed do regard their “fellow citizens” as unthinking little children that desperately need their guidance and disciplinatory measures.
Therefore, whenever you hear someone claiming that “markets failed”, you should remember that he is insulting your intelligence and questioning your ability to freely lead your own life according to your best rational judgment. The only appropriate reaction to any such attempt at putting you or anyone else under government tutelage is: to proudly reject it.
Entry Filed under: Politics. Tags: capitalism, individualism, market failure, nanny state, tutelage.
1.
haynesbe | December 30, 2008 at 7:38 pm
I think you are on to something here, but many of the people who cry “market failure” would say it is not that the individual is incompetent, but that the individual (often themselves, of course) is impotent in the face of “large multinational corporations” which have in inappropriate and “unfair” amount of power. I think too that the market “fails” for many people because their end goal for a market is neither the “efficient allocation of scarce resources” nor the existence of a mechanism for the exchange of the productive efforts of free men, but rather their goal is egalitarianism. And by that standard, the market does fail.
Just some thoughts. I like what you have to say. Thanks for writing.