Monday, October 31, 2011

What Is The Greatest Weakness Of The Free Market?

What is the greatest weakness of the free market? In other words, even though the free market is the best means for prosperity and justice and peace it still is not without problems.

The market is merely the communication vehicle that conveys the imperfect knowledge that humans have in a world of uncertainty. Hence the greatest weakness is also its greatest strength. The free market is the best means of allowing the flow of knowledge - imperfect as it is - in a way that ameliorates the uncertainty in an optimal way.

All human intervention is a corruption since it adds another layer of the imperfect knowledge (due to the finite nature of human understanding) which, in turn, creates even more uncertainty. That is why the free market is best when it is unhampered.

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