Is the market an efficient distributor of goods and services? For me, the answer is
an unequivocal 'No.' The market isn't particularly efficient and the reasons
for that are very simple. First of all, and most basic, a market is not a place
where we count the costs and benefits of things and decide to do those where the
benefits are greater than the costs and to not do those where the costs are
greater than the benefits. That's the fairy tale told to students that's never
true. Why not? Because many of the costs of doing
business are not costs that the business has to pay and therefore they're not
counted by the business and therefore the decisions the business made don't
take into account all the costs. The simplest example comes from ecology. It
may be very profitable for a laundry to exist in a community where the money
they charge to clean our clothes is greater than the cost to clean our
clothes. What nobody counts, not you, not me, and not that business, is the
smokestack above the laundry that emits into the air all kinds of particulate
matter from burning whatever they burn, oil, gas. Those little pieces, they have
all kinds of effects in the community but they're not the problem of a
capitalist business. Let me give you some lists: people breathe them in and they
get emphysema, they get lung disease, they have to go to the doctor more often. But
those particulates, those pieces, they also interact with the tire in your car
so you have to replace the tire more often. They also interact with the paint
on your house so you have to paint it more often. I could go on and on. Who pays
for all of that? You do. I do. Medical bills,
tire costs, paint costs. But the company that causes the problem doesn't have to.
If we added all the costs that that laundry really
costs the economy we live in, we wouldn't put the laundry there because the costs,
if you really add them up, are greater than the profits. And worse, the costs are
borne by all of us. The profits are only in the hands of whoever owns the company.
That's undemocratic. That's unfair. But it's inefficient because an efficiency
calculus, if we could actually do it, would say not to put that laundry there.
So markets don't get you efficiency. Well what do markets do? They distribute
things in a very particular way. If things are scarce, if there's not enough
ice cream cones for all of us to get one, I'm gonna go to the guy who's selling
the ice cream cones and I'm gonna say "You're charging how much?" "$3" he says. Good
he said "I'll give you four because I want to get one and I know they're
scarce". But the guy standing next to me, he understands the game, he offers five,
and the woman next to him offers six, you see where this is going. The price of
cones will go up until it's so high that lots of people who wanted the cones
can't afford them anymore. Or to say the same thing simply: markets allocate
scarce goods and services to those with the most money. That's what they do. That
isn't efficient. That isn't moral.That isn't ethical. I ask all of you to take
whatever morals or ethics you have and ask yourself the question, is
distributing scarce goods to the people with the most money the best moral way
to do it? If there isn't enough milk to go around should an older person who
doesn't need it but has the money get it while a child who needs it to grow is
denied it? You really want to do that? You really want to endorse that? No,
markets are not efficient. Markets are a way to make sure the economy serves
first and foremost those who are the richest within it. And believe me, they'll
use the market first and foremost to stay the richest,
so that the market serves what they want the market to do. Don't be fooled.
The market is not a neutral efficiency mechanism. It is a highly partisan, biased,
service to the rich.