Uncertainty and the Limits of Markets

Center for the History of Political Economy at Duke University Working Paper

34 Pages Posted: 20 Jul 2020

See all articles by Roni Hirsch

Roni Hirsch

Harvard University - Edmond J. Safra Center for Ethics

Date Written: June 26, 2020

Abstract

The article considers the place of the neoclassical equilibrium model as the basis for current views of markets as fair, efficient, or both. It also points to three threats the model poses for democracy and justice: it ignores the problem of inequality, it suppresses the socio-economic significance of uncertainty, and it conceals its own tradeoff between certainty and equality. Instead, the article lays out Frank Knight’s critical assessment of real markets, which rely on the tacit agreement between a handful of “daring” entrepreneurs and the “risk-averse” masses to bear the uncertainties of business-life in return for a substantially larger share of its direction and rewards. Knight’s influential conclusion, that this agreement mandates a nonmeritocratic social inequality and substantively divides humanity into leaders and followers, should be critically examined.

Keywords: Frank Knight, inequality, uncertainty

Suggested Citation

Hirsch, Roni, Uncertainty and the Limits of Markets (June 26, 2020). Center for the History of Political Economy at Duke University Working Paper, Available at SSRN: https://ssrn.com/abstract=3636385 or http://dx.doi.org/10.2139/ssrn.3636385

Roni Hirsch (Contact Author)

Harvard University - Edmond J. Safra Center for Ethics ( email )

124 Mount Auburn Street
Suite 520N
Cambridge, MA 02138
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
58
Abstract Views
332
rank
419,233
PlumX Metrics