Tuesday, August 17, 2010

The Real Power of the Market

Often the phrase "the market" is described as a god-like entity by its supporters (of which I am probably guilty) and a false god by its opponents. The always interesting Tyler Cowen puts it best in his Big Think interview:
So I think for the most part, markets and capitalists’ wealth help people become more of what they are, that’s something, in most cases, entirely acceptable. There are exceptions. There are people who are psychotics. And in a market economy, they can buy a gun, whereas back in the Stone Age, they only had a club and that make society worse. That’s a case where markets, I wouldn’t say they corrupted the psychotic, but they help a corrupted person be more destructive, but if you look at the world as a whole, do you see more production or do you see more destruction in market economies? I think it’s pretty clear what the answer is. You see a lot more production, you see a lot more cooperation, you see a lot more people striving after noble ends even if it’s just for their own happiness and the happiness of their families.
How does the market do it? Through the organization of its components, primarily human beings. This inherent market structure is shown in this video posted by the other writer of Marginal Revolution, Alex Tabarrok:

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