Efficiency: not wasting resources
Quite regardless of any other criticism that may be applied to the efficiency of markets, it must be noted that market transactions do not actually reflect the underlying resources, unless externalities are priced in. And since many externalities cannot be assigned a fair value through anything but a collective political decision, the efficiency of markets becomes inherently and inseparably entangled with political and regulatory systems.
Most of economics deals with the social efficiency gains by allowing freely negotiated exchanges of things between individual actors [my emphasis]
Thereby becoming, to a greater or lesser extent, inherently counterfactual right from the first axiom. In some cases, the error introduced by this simplification is negligible (in a well regulated market, where no non-state player has excessive market power, the state player(s) are democratically accountable and so on and so forth). In others (transnational corporations having budgets comparable to a mid-sized sovereign state, lack of effective regulation of cross-border capital flows, etc.), not so much.
To these two considerations must, of course, be added the information asymmetry issues raised by Stiglitz.
- Jake If you only spend 20 minutes of the rest of your life on economics, go spend them here.
It's a question of whether markets are BETTER able to minimize the biases toward the powerful and the crooked than other means of allocating resources.
There's a reason that the OECD capitalist countries are so powerful and have so much higher standards of living than the formerly (and currently) communist countries.
You mean apart from colonial militarism and outright theft?
You're being terribly naive if you really think that markets make people rich without any other factors.
While the OECD basks in its financial superiority, most - if not all - of the countries benefit from straightforward colonial resource extraction of both materials and labour from the rest of the world.
