A ridiculous claim? Let's see.
There is no doubt the market system does many important things very effectively. It gets rid of inefficient firms quickly with no argument, it has a powerful tendency to drive prices down, it adjusts supply to demand, it prompts initiative and innovation, and gets capital invested in risky ventures which often end up providing valuable products. And, you would add, there is no acceptable alternative way; everybody knows socialism doesn't work.
The question is however, could there not be an alternative base for an economic system which did these things but did not have the huge faults this system has. "Faults?" I hear you ask. "What faults?'
Fault 1. The market does not and cannot take into account in any way needs, justice, rights, the welfare of future generations, or the sustainability of the environment. In a market scarce things mostly go to those who can pay more for them. Those who own resources will sell them for the highest price they can get, and richer people can pay higher prices. Poor people have little or no "effective demand". Need or justice is totally irrelevant and cannot influence the outcome.
That is why one-third of the world's grain production, more than 600 million tonnes every year, is fed to animals in rich countries, while around 850 million people are hungry. That is why the rich countries take 75% of the world's resource output and consume resources at a per capita rate that is 15-20 times that of the poorest half of the world's people.
We have the sense not to allow market forces to have any role in the biggest sector of the economy. Most work occurs within households, where we practice pure Marxist communism. We all contribute according to our capacity to do so and we receive according to our needs. If the market determined what happened mum would only sell dinners to dad, because he has most money, and the kids and grandma would starve.
Fault 2. Even worse is the fact that market forces ensure that the wrong things are developed. For example in the Third World where there is obviously an urgent need for development of simple farms and businesses whereby the abundant and idle labour could be producing basic necessities for the majority of people who are very poor, very little development of this kind occurs. Just about all investment goes into developing farms and factories to export to rich countries. Why? Simply because in the market system these are the purposes that will yield most return on investment. Investors will never maximise their profits developing industries to produce what is most needed, because the most urgent needs are felt by poor people and it is always much more profitable to produce what relatively rich people want. (See, TSW: Third World Development.)
Even the most impoverished Third World countries have the basic resources of land, rainfall, labour, traditional knowledge and skills to meet basic needs and provide a good quality of life, (for an impressive illustration of the alternative see TSW: The Chikukwa Project) but in a market system those resources must remain idle until some corporation thinks it can make better profits using them than it can make anywhere else in the world. The conditions the IMF and World Bank put on loans to indebted Third World countries explicitly prevent them from devoting substantial resources to urgent needs.
Fault 3:The market makes labour and money into commodities. There are many things that should not be bought and sold, including children, the decisions of politicians, New York's Central Park, and prison sentences. When labour is treated as a commodity, a mere input to production the owner of capital can buy if and when he wishes, many people are left unemployed. A good society would make sure everyone had a livelihood, the capacity to contribute to the producing that needs to be carried out, self-respect and security, and freedom from the destructive psychological effects of unemployment. Only uncivilized societies have unemployment; it is very easily avoided.
Fault 4. The market system inevitably transfers much wealth to the wealthy. Firstly, they can get an income without working for it, just by investing/lending money, or leaving it in a bank. Because rich people have a lot of surplus money to lend they receive far more interest than poor people, who are often in debt and paying interest on loans. Margrit Kennedy estimates that because all aspects of the production process involve borrowed capital on which interest must be paid, the compounding results in more than 40% of every price we pay going to those who have lent capital.
More importantly the market system results in the loss of assets when debt cannot be repaid. A buyer who cannot keep up his payments will probably have the house "repossessed" by the lender, at A considerably lower price than he undertook to pay for it. This mechanism is at its most vicious in the international arena where a country that cannot pay its debts will be forced by its creditors to sell (to rich people) its vital assets such as public power generators, railways, water supply systems … at bargain basement prices. Greece today provides a text book example case.
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