ABSTRACT
One of the most dangerous and damaging intellectual mistakes left-leaning people make is to confuse capitalism and markets. Friedrich Hayek's analysis of knowledge and markets is part of a critique of the once-popular socialist claim that eliminating private property and competitive markets in favor of Government planning and income redistribution could produce a just society. His insight has gradually become the accepted wisdom of a large part of the analytical Left, which has fully acknowledged that there is no viable alternative to markets, or to private property, as basic building blocks for a modern economy. The upshot of the idea and reality of efficiency wages is that wages cannot balance the supply and demand for labor, with the consequence that unemployment is a regular feature of a market economy. The chapter explores insights into the links between various forms of market failure by exploring the problem of health insurance further.
