The Advantages of Markets
Christopher Melenovsky, ed., The Routledge Companion to Philosophy, Politics, and Economics
17 Pages Posted: 5 Oct 2021
Date Written: August 1, 2021
Abstract
For much of the twentieth century, a lively debate raged between the advocates of capitalism and the advocates of socialism. Today, that debate is over, and the capitalists have won. No governments currently attempt to centrally plan their economies, and almost nobody – including most self-described socialists - thinks that it would be a good idea for them to do so. Regardless of their place on the political spectrum, virtually all economists and political theorists today grant that markets ought to play a significant, if not dominant, role in the organization of society’s economic activities. The purpose of this chapter is to survey the economic and moral advantages that have given rise to the ubiquity of markets. The paper begins with a discussion of the key terms “market” and “market economy.” It then turns to an examination of the economic advantages of markets, with special emphasis on their incentivizing and information-producing functions. The paper concludes with an examination of the moral advantages of markets, including a discussion of what Deirdre McCloskey has called the Great Enrichment, the effect of markets on poverty and inequality, and the relationship between markets and key moral concepts such as virtue, rights, and desert.
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