13 - The limits of the market
Published online by Cambridge University Press: 20 March 2010
Summary
Market failure
The market does not always succeed in accomplishing even those ends for which it is, so to speak, designed. It sometimes fails to utilize, or leaves underutilized, the human and nonhuman resources available. It does not always provide a livelihood for those capable of working and making a productive contribution. When the market fails, it leaves us less well off than we might be, although its purpose is to make us better off.
We cannot always count on the market to assure adequate levels of capital accumulation and economic growth. The market will stimulate economic progress, but it often does so unevenly. Some benefit, some do not. Some nations grow, others stagnate. Market successes often leave failures in their wake. Creation of the new can destroy the old. The human costs are often substantial.
When we live in a market economy, we depend on it for our livelihood. Some, however, lack the opportunity, education, character, intelligence, motivation, or skills needed to make their way in the market. For those lacking the qualities needed to participate fully, the market has nothing to offer but poverty and a sense of being left out. The market takes no responsibility for those left out; and in a sense it is not responsible. But even though the market may not be responsible, society is. Society decides collectively what use it will make of the market and how far it will go in making livelihood depend on exchange.
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- Wealth and FreedomAn Introduction to Political Economy, pp. 163 - 173Publisher: Cambridge University PressPrint publication year: 1995