ABSTRACT
The common wisdom is that market capitalism “has been an enormous success.” According to conventional wisdom, free markets are practically flawless, acquiring an almost divine aura. Markets are incapable of ameliorating such distortions and the social problems they create. The incarceration rate is also a sign that people are unable to find their place in the legal labor market. Persistent and endemic poverty indicates that the market economy leaves many people struggling. Markets are incapable of creating their institutional structure, which includes the political system, ideology, law, and unwritten norms that govern the behavior of market participants. Markets would not function at all without sufficient laws and appropriate institutions that are created for the most part by government. Markets are also ineffective at providing safe products, since safety is a difficult-to-ascertain, intangible attribute of the goods and because there is a psychological bias toward the present on the part of both producers and consumers.
