| I feel like we are misunderstanding each other. With position I am talking about politcal position, witch is what it is all about. > The 'position' is that, in order to have an efficient market, one should not do things that cause market failure. "one should not" who is "one"? I dont understand what you mean. The goverment should defnetly not do things that cause market failure, and in my opinion the should do things against it either. > Saying that collusion can lead to market failure, and thus must be proscribed if one wishes to have an efficient market, is not propaganda. My point was to say that, its propaganda to say that free market people dont belive in market failure, nothing else. > It is the kind of thing that must be said, seemingly repeatedly, to illustrate the point that markets are not a magical solution to the allocation problem. Again, nobody is arguing for "perfect markets". This is what seemingly repeatedly has to be said. > However, moving from that to suggest that imposing controls such as anti-collusion regulations (along with a whole host of other measures to avoid market failure), is unnecessary, is unsubstantiated No it is not. Also you only addressed the first part of my argument. Its hard to argue the general case here, there is tons of litrature showing how for example anti-trust regulation was used to keep prices high. There are tons of cases where goverment was used to enforce cartels as well. So if the goverment task of managing cartels would not exists then there might be less cartels overall. > The foundation for why one might think that what you are saying is true (market theory) explicitly lays out the assumptions required for it to work, and you ignore these on a purely ideological basis. You might be surprised but there no just the walrasian standard model (or Arrow–Debreu). Also just because the make these assumition and the need to be true in there model does not mean that it is the same for the real world. You are assuming that the standard model used in econ 101 is reality. Well it is not, and everybody who studied economics a bit knows this. You need to bring in transaction costs, theory of the firm, information economics, you need to bring in instiutional economics, there needs to be a explaition market ajustment and so on. Also you need to model politcal economy, are you really so naive to assume that the correction of market failure is also just like in these models. A completly costless third party that only ever does anything when the model goes out of balance, interduce politcal economy into the mix, try modeling 'goverment failure' as well. Again, I feel I have to say this again, I do not make the argument that a market always is or always reaches generall equillibrum very fast(as in Arrow-Debreu). The simple idea that you seam to have is that any diffrence between Arrow-Debreu assumtions and the real world must be corrected is not woreable in practice, and I belive no economist would still try this. |
I was originally responding to adventured, who said "The free market has absolutely no position on collusion, except that force may not enter into economic transactions." I dispute both this statement as I understand it, with the argument I have already laid out, and also your current claim that the "free market political view" has no position on collusion.
On that, I don't think you can just claim to speak for everyone who considers themselves a proponent of free markets, and furthermore a lot of people who do so are very clear about the need for controls on those markets, mostly (it seems to me) with the aim of bringing them closer to the theoretical ideal.
> "one should not" who is "one"?
One here refers to anyone who is trying to engage in free market transactions, as opposed to someone who wants to distort a free market for their own ends. I apologise for my lack of clarity.
> My point was to say that, its propaganda to say that free market people dont belive in market failure, nothing else.
I understand that, however you are responding to a straw man - I didn't say that free market proponents don't believe in market failure, I said that they, meaning the most ardent supporters, believe that market failures are best resolved by the market - that regulators can't do better. You may wish to dispute this.
> ... Also just because the make these assumition and the need to be true in there model does not mean that it is the same for the real world. ... > ... You need to bring in transaction costs, theory of the firm, information economics, you need to bring in instiutional economics, there needs to be a explaition market ajustment and so on. Also you need to model politcal economy ...
I agree wholeheartedly with what you are saying here - it is indeed very difficult to model the economy, and the assumptions on which the models of principle lie most assuredly do not hold in the real world. I also share your understanding that most economists would not claim otherwise - they have much more pragmatic views of the economy.
Overall, I'm not sure I understand what your point is. Mine was originally that basic market theory gives a reason why collusion is bad, and has now been extended to include the notion that simply waving your hands and saying "I don't think regulation works" isn't an argument, for example:
> So if the goverment task of managing cartels would not exists then there might be less cartels overall.
Is a statement that is possibly true, and possibly false, it is not, however, a basis for decision making.