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自由市场设想的结束

Jan 8, 2020 Diane Coyle

剑桥—2020年代将是抹除“把问题留给市场去解决”这一概念的最后一个10年。这一观念至今已存在了大约40个年头，已然给社会和环境造成了不可计量的破坏。

我们之所以有自信这么说，是因为数字经济的本质。长期以来的经济理论认为，企业/个人通过自身行为实现理论/“实用效用”的最大化，从而为社会创造最大价值，但这个经济理论未曾站得住脚。若真如此，那么企业扩展自身规模的意义是什么？广告商又何必使用社会压力来控制消费者？然而，在一个数字化的时代中，已经不再是某一方依赖于另一方，而是相互依存的关系。

以如今世界上遍地开花的数字平台为例。全球范围内之所以只有寥寥数个数字平台领导者，一个原因是网络效应的存在：一个平台匹配食客口味与餐厅的水平更高，或帮助用户与其他用户沟通的能力更强，拥有的用户数量就越多，平台就越能给用户带来利益。随着平台的逐渐扩张，平台给每个人所带来的利益也往往加速增长。

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Per Kurowski Jan 12, 2020

“The deregulation of financial markets resulted in the 2008 global financial crisis”
Not really, it was the missregulation of banks with risk weighted capital requirements, that caused that crisis
https://subprimeregulations.blogspot.com/2016/09/if-ever-allowed-following-would-be-my.html
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Ian Maitland Jan 12, 2020

It is tiresome to hear the same old slogans endlessly repeated.

Take the "damaging economic policies since the 1980s." You'd never guess that Coyle was referring to a golden age. As Angus Deaton put it, “[l]ife is better now than at almost any time in history. More people are richer and fewer people live in dire poverty. Lives are longer and parents no longer routinely watch a quarter of their children die"? Obviously we were doing some things right.

Maybe Coyle is thinking about the advanced economies. But in the US, the 1970s were nothing to write home about. Remember? The declinists and doomsayers were proclaiming the end of the American era? Seen in that perspective, the US's performance has been pretty good.

As for "the increased concentration of many sectors of the economy," no one is saying it shouldn't be watched. But the trick is the word "economy." Coyle means national or domestic markets. But globalization has created a world economy, so increased scale or domestic concentration are no longer meaningful measures of competitiveness or its lack.

Coyle blames Milton Friedman for "overpaid executives." But a better explanation is the shift to performance based compensation like stock options. And that shift was driven in large part by a populist outcry about executives who got fat pay packages even if their corporations underperformed.

It's false that Friedman "encouraged overpaid executives to ignore the environmental and social damage caused by their businesses." He expressly said that government is in a better position to regulate environmental harms. And the recent era has seen enormous progress on that front with the huge exception of climate change which poses global collective action problems which have defied solution. Coyle is out to a free lunch if she thinks that dispersed corporations can solve problems like climate change.

In markets, if firms do not recognize the consequences of their actions for others, they go out of business. How do corporations make profits if not by serving their stakeholders? Why don't the Coyles of this world see that?
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Mircea Zaharia Jan 12, 2020

I do not agree with you!Free market capitalism have assured that continuous world economic growth.
Free access to global informatic data stimulates individuals to participate to economic proces.Those large companies which lead economic worldwide are thw result of laisez-faire and atract small small firms into suply chain,thus creating new jobs.
This development of data interconections doesn't reduce individualism but,on contrary,one give the chance to a broader community member to become economic active,entrepreneurs.
When economic metrics will be descending,then left wing capitalism will be politically ,on public election,voted!Excuse my English language level,I live in Romania!
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Daniel Williams Jan 11, 2020

There are basically two options, with Europe (somewhat) in the middle. One is America, and the other is China.

Today, the largest market failure that exists is the onset of potentially runaway climate change due to the continued use of fossil fuels. We can see that this is a market failure because the costs associated with climate impacts (that we are guaranteed to experience) are already far beyond the cost of initiating policy measures that would mitigate them. In the US, free-market capitalism allows social democracy to be bought, and capitalism within politics has ensured that a meaningful shift away from fossil energy is not a priority at a federal level (although on a state-by-state basis this may be different).

As climate impacts increase, costs will rise to the point that the US is in danger of what it looks like today - an all out war waged against the poor, by the rich. Taxes and other levers exist more or less to facilitate the transfer of wealth in one direction, and if such a system were allowed to proliferate, our planet would rapidly disintegrate under the weight of its own market-led corruption.

On the other hand, China is by far the largest investor in renewable technologies, such as solar, wind and transport, and has a number of policies that are conscious of the threat of climate impacts going forward. Although China has in effect only industrialized within the last 40 years, it is also rapidly approaching a point where much of its energy system is now shifting to renewables, battery transport, fuel cells and other technologies. A major component of this is the use of advanced electricity infrastructure, which will expand under the belt and road initiative, and allow a much higher regional use of zero-carbon energy as grids become balanced via the use of long-distance transmission. The contrasts strongly with the US, whose infrastructure and infrastructural spending is aged, and chronically underfunded. China is also developing its own national carbon pricing system, which follows a European model, and will encompass the majority of its emissions.

One of Europe's most important objectives going forward will be to decarbonise the gas network; and most of this will be via hydrogen. The routes and market indicators are explored in detail in my book.

The problem we face is that we know the system we have could lead to costs that are ultimately unaffordable for society, and could pose an existential risk as temperatures increase. Sea level is probably the biggest threat, with 2m now predicted on a BAU pathway.

The real question today is not whether policy is required, but how much; and while many economists might argue that market-led policy measures are sufficient to decarbonise the global economy before systemic collapse becomes a tangible possibility, the real answer is that shifting away from oil and gas is going to take more than policy signalling, CO2 standards etc, in many industries.

Governments are going to have to put in place the infrastructure investments that are required to enable a zero-carbon economy to take hold, and they are going to have to stop funding fossil energy companies (via subsidies and annual 're-financing'); who themselves support a vast financial industry, thus in effect existing as a proxy for shareholder capitalism itself.

I discuss these issues and more, and importantly I explore the policy scenarios that are necessary from both an economic and more importantly technical basis, in my book 'Planet Zero Carbon - A Policy Playbook for the Energy Transition'. The book will be out this summer.

The book explores all related themes in detail, with the focus being on meaningful answers and strategies that are either in existence or are inevitable as the transition gains momentum.
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Mauricio Duran-Loriga Jan 11, 2020

Wake up. Sound money was abolished 1971. Free market was ultimatelykilled in 2008.

That same free market and that same individualism that brought the Industrial revolution, antibiotics, instant communications, to name just 3...

Interventionism has always brought quantum leaps... backwards! In every country and in every time frame.

Maybe your cigs are way too loaded. Lighten up...
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Manuel Moldes Jan 10, 2020

Dear sirs:
I have long since felt that the traditional economic approach to the concept of the market is simply wrong, and that is the main cause of so many other wrongs related to the consideration of markets, in science and in politics.
The problem is ontological, and stems from the fact that, while economists and social scientists carefully avoid to build up a thorough, philosophically strong definition of what a market is, we all tend to treat it as if it were some sort of entity (thence, for example, the idea of "market failure" as if markets were some kind of beings capable of having goals and acting upon them, and therefore of failing or succeeding, which definitely they are not).
Markets are not entities, and as such they are not liable to be good or bad, guilty or innocent of anything; they are basically bunches of relations among agents, individual or collective. Some of these agents are more or less independent, and many others dependent or subordinate in widely varied degrees; the goods or evils of their operation depend solely on the quality of the agents and of the rules, formal or informal, that govern their relationships.
Some of these rules are "spontaneous" agreements between agents, emerging from short or long term situations of power and convenience, and some other are fixed or variable impositions coming from established structures of power, be it a government, the mafia or a monopolist. This is a fact that every business person with normal IQ and some experience knows; she or he will surely include any power relations that can be identified as relevant into any business project or plan. Power in markets (and influence, perhaps a somewhat benign variant), is alike to the bodies of the relativity theory, that deflect the trajectory of everything that passes nearby. The phenomenon is universal, no way to escape; and it is bigger or smaller just depending on how massive the body is, and how close to it you happen to be gliding. Too close and you are finished, independently of your fitness and all the other virtues you may have.
So, what is the market, and what can we expect of it? First, what do you see or feel when you go "into" the market? You have agents (buyers and sellers), you have things (products) and performances (services), you have a subjective concept of value and an objective (and generally not equivalent) fact of price annexed to each of these last two, and you have subjective interchanges (negotiations) and objective ones (transactions). You can imagine all this stuff operating in some sort of a cycle, continuously connecting ends to new starts in an infinite chain.
The above described are the elements of that elusive idea that we call "market", but obviously they are not "the market". In a command economy, where all the relevant decisions are taken by a supreme agent, you have agents, products, services, value, price, and even negotiations and transactions (although most of these ones will be political rather than economical), and still you do not have a market.
What makes those elements to operate like a market is the conjunction of two things: information, and the freedom to act economically upon it.
Information is the key to the concept of market, and I am tempted at times to think that, in the very end, it is "the market" (although I assume the philosophical weaknesses of this statement in case I dared to yield to the temptation). Of course, for each agent, it is far from being "complete" information (the sole idea of anything like complete information looks ridiculous to any sane business practitioner), but it will surely consist of a lot of data about plenty of things relevant which are within the reach of that particular agent to know, including, of course, the different powers and influences, individual and collective, and the rules and impositions, legal or not, that will inevitably deflect the results from economically pristine and orthodox expectations (in which, needless to say, no business person believes).
What we business people do believe is that, based in that incomplete and often biased and full of bad news information that, after all our effort, is the best we can obtain, we must have the freedom to make our decisions on organization, production and transactions as far as they are within the law, as well as consumers must have the freedom to choose what we make or serve, or reject it and buy anything else, or even sue us for incompetent or swindler. And, of course, the citizens must have the freedom to make and enforce "the law", including those norms aimed to reduce monopolistic practices and crude exercises of power, through whatever democratic channels they constitutionally have provided themselves, and make sure that to the maximum extent possible, that public law known by everybody will the one and only that will govern the relationships within the economic domain.
So, in conclusion, if we strip the market naked, what do we see that must be preserved as indispensable public goods? Two things: the veracity and abundance of information, and the freedom of acting upon that information. All norms and regulations, whatever their purpose and technical acuity, must take care to keep and increase the quality and quantity of public information about the elements of the market and their operation, and punish the various ways of hiding or deforming it. For an example, what would have been better, to put in the public domain the fact that x and y financial institutions were taking risky policies about mortgages and let the informed agents to act by themselves, or wait for the catastrophe to occur, force everybody to bear the costs, and thereafter cry for regulation, which by the way will be inevitably biased, and as cryptic to the public as the subprime stuff was, and therefore will be useless as information?
And also, it is necessary to preserve the freedom of the billions of agents to make their own zillions of decisions upon that information. If the quality of what we can know is good, I am not afraid of what mistakes some of us may commit; better decisions will come in due time to correct them. There is no way that some thousands of economists and politicians know better than billions of common citizens about their own affairs, provided bad behavior is adequately punished and truth is preserved as the ultimate social currency.
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Michael Public Jan 9, 2020

Communism has shown us that a state driven economy is a chimera. Capitalism has shown us that a business driven state is a chimera. (And, of course, Iran/Vatican has shown us that a cultural driven anything is a chimera.)

The solution may be a certain independence of each branch of society. Let business decide best how to make money, let the state decide best how to re-distribute gains made by business and other measures which are to be applied equally. Allow culture (education, press, sport, religion etc) its own identity insulated from both state and business.
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David Donald Jan 9, 2020

By stressing use of the term "market failure" Professor Coyle shows a remaining belief that somehow market action will get it right. She forgets that Paul Samuelson and Herbert Simon published their dissertations in the same year. We already had bounded rationality in front of us and chose emulation of Newtonian mathematics for the market instead. Professor Coyle should learn from lawyers, who know that people design plausible stories that suit their interests in order to advance those interests.

Economists were the 'lawyers' for a class of very aggressive people to take back control of the world in the late 20th century. Their stories allowed the reversal. While it is indeed useful to point out the untruth of the efficient market cult used to excuse the downsizing of public control and privileging of economic power, it is far from enough. As is evident in the debate about automation, artificial intelligence and job loss, we must ultimately decide that humans as such are a worthy purpose of social organization and abandon the centrality of efficiency, whether of market or production or allocation of resources and capital.
- Barry Rosenfeld Jan 13, 2020
  
  "Free market" economics is easy - just ignore externalities. Let's face it, there are few economists who are "experts" in anything, but many who are in the pay of vested interests. The prevailing narrative since the late Carter/early Reagan years is nothing more than"let destruction reign", whether or not it is of the "creative" kind.
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Prashant Kotak Jan 8, 2020

I contend, the underlying assumption of the ideas discussed here is of the existence of different chimeras. The myth of agency. And that humanity can transcend it's biological programming through sheer will - a big ask I would say. Until, that is, humanity transcends it's biological programming through hacking into it. Which is on it's way in any case. So I would happily take bets on none of the following working:

- '..the search for possible answers [to digital regulation] is underway..'.
I assert, you're not gonna find any, short of a high-surveillance dystopia. But out of curiosity, I ask: do you believe, for example, GDPR will work? As in, how is it policable? And more generally, how would you prevent *all* human data from proliferating, through osmosis, over time anyway?

- '..sharper analytical tools to direct the economy..'.
And what if the analytics tell you, that you are merely trying to curve-fit the past on the assumption that it will predict the future? If that worked, wouldn't every quant in the world already be rich beyond their dreams?

If that all sounds metaphysical and nihilistic, so be it.
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