Calculation and Knowledge

The Free Market 21, no. 2 (February 2003)

Proponents of markets often note that there is no such thing as a free lunch.

Many of the most interesting issues in economics derive from a lesser-known category of alleged market failure: so-called asymmetric information. The problem of asymmetric information is simple. Different people know different things about economic goods. However, rather than indicting a need for government intervention, asymmetries in information make the free operation of markets all the more important.

Given the economics of the cycle, writes Sean Corrigan, there are no easy choices. Standing the path of recovery are huge, perhaps unprecedented, imbalances, record indebtedness perched atop still-overblown asset prices, the ire of powerful vested interests, and a blind dedication to a whole pharmacopoeia of quack remedies and misdiagnoses.

Capitalism (the free economy) is constantly being criticized, and it usually comes down to opposition to, and resentment against, the merchant class. However, the arguments and examples that people use against business under capitalism are not only illogical but also inaccurate. 

Gore's remarks come at a curious time, his party having suffered some terrible electoral defeats in the last election cycle. A proposal to create a Canadian-like system in Oregon was defeated 80-20 at the polls. Yet there are reasons why the socialist idea remains popular.

When intellectuals teach the children of nonintellectuals to hate their own civilization, and regard its achievements as acts of villainy, writes Steven Yates, they only invite waves of understandable anti-intellectual reaction.

For a few billion dollars, you might expect to be able to bribe some small third world country into cleaning up its act, to defend the property rights of its citizens, to provide a stable currency, and to establish a non-interventionist economic and foreign policy. Not so, writes Mark Thornton.

Special-interest-group pleading often tries to hide behind supposedly economic arguments. It is important to debunk such arguments as they arise so that the interest group politics can be seen for what it is. In the spirit of Bastiat's Economic Sophisms, Gene Callahan offers the following.

The combination of collapsed pensions and accounting scandal is operating like the collapse of a dam, unleashing a torrent, not of water, but of hatred--hatred of capitalism and its most visible and valuable representatives: big businessmen. George Reisman counters propaganda with analysis.  
 

Contrary to popular thinking, the stock market does not have causative powers as far as economic activity is concerned. The prices of stocks only reflect individuals' assessments of economic reality. And while individuals can change their evaluations of economic facts, writes Frank Shostak, they cannot alter the facts themselves.