Source: EconLog
by Kevin Corcoran
“Perfect markets make a nice fairy tale, but they don’t match reality. And few strawmen have been as repeatedly slain as the idea that the case for markets depends on market perfection, and thus the inevitable failure of real-world markets to match this textbook abstraction undercuts the argument for using markets. Some of the strongest defenders of the market system, like F. A. Hayek and Israel Kirzner, reject ideas like perfect markets, perfect information, perfect competition, and so forth. Their argument for the use of markets rests not on some abstract perfection of markets, but instead on the real-world dynamism inherent to the ongoing and evolving market process. Markets are useful not because in a market-driven world there are no $20 bills on the sidewalk. Markets are useful because they create the right environment for finding those $20 bills.” (10/02/24)