Monday, March 29, 2010

A moveable sandwich

Justin Fox, Financial Times:

It can no longer be argued with a straight face that markets will, on their own, arrive at something close to an economically optimal result -- a belief that helped drive deregulation over the past few decades. Yet it is not as if anyone else would do a better job than markets at setting prices and allocating capital. They would probably do worse.

In that case, it's doubly important that we never try!

Just imagine if someone came up with "a good idea" that addressed material needs in a rational way. Like, if people didn't have enough food, you could give them some. In other words, food that was originally in one location -- for example, behind a wall, or "down the street" -- could be moved nearer to one hungry person's stomach -- deposited into their hands, for example.

This wouldn't be accomplished through a market mechanism so much as on the basis that hungry people exist, food exists -- and you are trying to bridge that physical boundary between the two. In this respect, it is not unlike the "astronaut" and "space" in the engineering challenges it poses to the best of human minds.

In the longer term, you might try to set up some kind of "system" in which people grow their own food, and then eat the very same food after the fact, so they aren't always dependent on somebody else for this kind of "eating technology." Eating, widely regarded as the best remedy for not eating, would then become accepted as something everyone does on a daily basis.

Naturally, if someone came up with an idea that sophisticated, they would probably fare badly. For one thing, they might want for lack of an exchange system primed on the preferences of those with plenty of food, who might say unkind things, or be otherwise unsupportive. "When I give food to the poor, they call me a saint. When I ask why the poor have no food, they call me a communist," in the words of just such a soul, who left the CSR luncheon with hurt feelings.

Most important, however, is the lesson that in trying we sometimes fail, whereas in failing, and failing on a daily basis, it becomes normal not to try. And that is what we must keep doing as best we can, if we never want to come up with a good idea.


almostinfamous said...

dear lord, please deliver us from the dried and tattered fig leaf of CSR.


"Yet it is not as if anyone else would do a better job than markets at setting prices and allocating capital. They would probably do worse."

This must be a joke, the only other explanation being they must have salted this guy away for ages. I can smell the Mankiw from a thousand miles away. what a rotten essay overall, even by FT standards.

JRB said...

HBR, buddy.

Anonymous said...

"markets" are a purely natural phenomenon. they grow like trees. the appearance of contract law, property law, labor law, international trade agreements, etc., etc., plus the swoosh of trillions of dollars sloshing around, well, that's all epiphenomena. that society has a "choice" about "markets," that markets are "social creations," that's the real delusion.
J. Fox is just giving out a memo to the staff to remind them of that fact.

Jack Crow said...

E.M. Wood (paraphrase): There were markets before capitalism. There is no capitalism without markets.