warm regards
Benjamin Beckwith

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I said:

These circumstances [superiority of market outcomes] are quite restrictive: equality of initial resources and access to the market, complete information about the goods and services exchanged and clearly-formed preferences.

ducati998 said:

[i] Complete information: is not necessary. That is the function of prices, viz, discounted prices that allow for incomplete knowledge.
[ii] Equality and access, I agree are in this world, an unrealistic and probable impossibility. That however is not prohibitive to a solution via a market economy. Specilisation in production is the answer to this objection.
[iii] Clearly formed preferences: I’m not sure to what he is referring.

I said:

They sound unrealistic and they are – so, most of the time,

he said:

Incorrect. The market solves these problems [objections] every day.

I said:

to let the market decide is as much as a decision by government as to try to adjust or over-ride its outcome.

he said:

What a horribly confused sentence. I hope Dr. D can clarify.

Prices can be discounted for known risk, they cannot be (usefully) discounted for lack of information – particularly if that lack goes unrecognised! We are dealing with Knightian or Keynesian uncertainty here. I don’t quite see how specialisation in production can overcome a lack of resources to produce or exchange. If preferences are irrational, changed by social or market interaction or are time inconsistent then the theoretical total welfare superiority of market outcomes disappears. For that reason, by ‘favouring’ market outcomes, the government is favouring those groups who tend to benfit from market distortions as opposed to those who benefit from government ‘distortions’.

I said:

An effective democracy, to a greater or lesser extent, involves all who vote or express an opinion that reaches policymakers –

he said:

In theory…this is true. However in reality it doesn’t quite work that way. A government duly elected with a majority, has the term in office whereby they can pass legislation without any recourse to the public who elected them. Government policy is even easier to implement as that is simply a desire of government that is only beholden to the rule of law. The law, can if necessary, be modified, by passing new legislation.

The point being, government holds huge power that cannot in the short-term be checked by the theory of ‘democracy’.

I said:

almost all those in fact who take part in the market. What is more, each individual has, in principle, equal weight in this process, whereas weighting in the market always occurs by wealth.

he said:

Errrr, no. Weighting in the market occurs via demand.

I said:

If we want better economic outcomes, therefore, we should look at least as much to improvements in the way democratic processes balance individual and collective voices as to ways of mimicking market mechanisms.

he said:

Well I agree with that.

I don’t believe democracy is so monolithic – it certainly needn’t be. Less centralisation, more responsiveness should be the aim. Demand depends on having the resources (i.e.: wealth) to exercise it.