In my view people should be very suspicious of anyone who claims either that markets always fail or that markets never fail. Both of these extreme views are wrong. These views amount to ideologies. Since this is somewhat off topic, rather than elaborate on this issue here, I will simply recomend the following links to posts at my own blog. I have a post on market failures. I also have a series of three posts on the differences between economists, extreme pro-market ideologues and extreme anti-market ideologues. The links to these posts are provided below.

http://economicsgeek.blogspot.com/2006/10/what-is-market-failure.html

http://economicsgeek.blogspot.com/2006/10/difference-between-economists.html

http://economicsgeek.blogspot.com/2006/10/difference-between-economists-extreme.html

http://economicsgeek.blogspot.com/2006/10/economics-versus-ideology-once-again.html

Regards,

Damien.

What about things the market won’t provide, equitably … Classic FM, the CSIRO ?

What about setting rules for providers of services such as child care, finance broking ?

What about setting rules for health + safety, pollution etc where the market may not know what a company is doing ?

Tom - Presumably, because sex is a lot more pleasurable than the years of bureaucracy required to adopt a child from overseas. But I was never claiming that people have children to prove they are altruistic, just that they would not do it if they were consumed with the financial self-interest that people like Cox say is spread by the market.

When someone says “the market will decide [how much your house or car is worth]” it is a shorthand for saying “people out there will decide how much they want to pay for it [and if you ask too much they won't buy]“.

So what is the problem about markets that governments are supposed to fix up?

As Andrew wrote, the increasing dependence of the voluntary sector on government support is a worry for the future.

With the unemployed, there is possibly some cause - the long-term unemployed probably have lower average levels of social competence than the general population. But there is effect here in reduced opportunities to meet people at work and not being able to afford to go to things.

Russell - I’m not saying that personal gain doesn’t come into it; it is about harnessing self-interest for mutually beneficial purpose. Most state action is a zero-sum redistribution; for every winner there is a loser. This is one reason why state action does not produce the social cohesion that Eva believes it will.

To say that people working longer hours are more connected similarly doesn’t tell us about the quality and effects of their connectedness. Statistics on trust might show an increase but probably so are sales of home security devices and the number of people signing pre-nuptial agreements. How do you balance these things?

You aren’t serious in claiming that markets are “fundamentally an other-person orientated institution, which promote co-operation with customers ” ? Personal gain has nothing to do with it ? My mother lives in a suburb that has one small shopping centre, and no other shops, and bad public transport. She, and many of her neighbours, are too old to drive. There used to be a small supermarket, a fruit shop and a butcher. Until the supermarket changed hands, and the new owner expanded his fruit, veg and meat section and lowered his prices enough to put the other two out of business. Now prices have gone up, and up - but there’s no competition, no alternative. So “other-person orientated” doesn’t mean “for the benefit of other people”, it just means working out how to make the most money out of them, including changing their options.