Not only in economics people often talks about markets in fairly different
circumstances. What does that mean? The Britannica Online Encyclopedia serves us
with the following definition:
“A market is a mean by which the exchange of goods and services takes place
as a result of buyers and sellers being in contact with one another, either directly
or through mediating agents or institutions.”1
What they call ‘means’ could also be named as a social arrangement. Analogously to
the physical location of a street market every other form of markets is a man-made
institution in order to organize trade. Thereby it is in addition to the right of own
property probably the most salient feature of every capitalist system.
But as long as markets are not natural but social constructs, they and the way they
are shaped have to be subjects of human monitoring. Although this seems self-
evident from an impartial point of view, free markets and their results are often taken
for granted by some economists. This article focuses on the results of markets, the
so called market outcomes. More precisely it is about the justice of market outcomes
with special attention to the ideology and thought of Neo-liberalism with respect to
this subject.
During this article I will continue along the following structure: First I will expose the
possibility of market failures and distinguish these failures into traditional market
failures and another form of undesirable market outcomes, the failures-of-market
outcomes. After that, we will devote attention to the upswing of the New Right and its
ideological background. After focusing on two extremely influential thinkers –
Friedrich von Hayek and Robert Nozick – we will examine the justice of free markets.
I will finally end up with a conclusion in which I resume the most important results
and give an overview about the implications.
[...]
Table of Contents
1. Introduction
2. Market Failure versus Failure-of-Market Outcome
3. Ideological Background
3.1 What is an Ideology?
3.2 New Right
3.2.1 Robert Nozick and the Libertarianism
3.2.2 Friedrich August von Hayek
4. About the Justice of Market Outcomes
4.1 Responsibility for intended/unintended outcomes
4.2 Inequality and Injustice
4.3 Negative versus positive Freedom
4.4 Social Justice as a rhetorical metaphor
5. Conclusion
Objectives and Topics
This paper examines the validity of neoliberal economic assumptions regarding free market outcomes and social justice. It questions whether markets alone can ensure equitable results or if distributive policy interventions are necessary.
- Analysis of market failures versus failures-of-market outcomes
- Examination of the ideological roots of the New Right
- Critique of libertarian views on property rights and entitlement
- Comparison of negative versus positive freedom in economic contexts
- Assessment of the moral dimension of social justice in modern society
Excerpt from the Book
3.1 What is an ideology?
Without exaggerating it can be said that every human being has an ideology. This is due to our fallibility and incompleteness of our existence. With our ideology we are looking for meaning in as well as giving it to life. With Roy Macridis we can say: “An ideology consists of ideas and beliefs through which we perceive the outside world [...] It is a medium through which we try to learn and comprehend the world: but it also generates emotions which hold people together.”
Ideologies thus point out what is valued and what is not. Contrarily to philosophy which aims for knowledge and wisdom, ideologies are related to action - they encourage people to political and social action and offer a theoretical framework for this. Among various features and functions there are two further aspects I would like to highlight in this context: Firstly the capability to rationalize and thereby protect hidden needs or interests, secondly the fact that ideologies seldom represent the “whole truth”. In most cases they just capture a part of the truth while pretending to possess a much larger part (of truth).
Summary of Chapters
1. Introduction: This chapter defines the scope of the paper, establishing the market as a social arrangement and introducing the focus on the justice of market outcomes.
2. Market Failure versus Failure-of-Market Outcome: The author distinguishes between traditional economic market failures and broader, undesirable societal outcomes that fall outside standard efficiency models.
3. Ideological Background: This section explores the definition of ideology and the historical emergence of the 'New Right' political movement, specifically focusing on the theories of Robert Nozick and Friedrich August von Hayek.
4. About the Justice of Market Outcomes: This chapter analyzes five core arguments used by the New Right to reject state intervention, subjecting them to a critical evaluation of moral responsibility and freedom.
5. Conclusion: The final chapter summarizes the findings, arguing that the neoliberal justification for free markets fails to account for the moral dimension of human existence and social justice.
Keywords
Market Failure, Failure-of-market Outcome, Ideology, New Right, Neoliberalism, Social Justice, Libertarianism, Robert Nozick, Friedrich August von Hayek, Redistribution, Entitlement Theory, Negative Freedom, Positive Freedom, Property Rights, Economic Policy
Frequently Asked Questions
What is the primary objective of this research paper?
The paper aims to challenge the neoliberal position that free markets naturally produce just outcomes by exploring the limitations of market efficiency and the necessity of social distributive policies.
What are the central themes discussed in this analysis?
The central themes include the distinction between market failures and societal "failures-of-market outcomes," the intellectual framework of the New Right, and the moral implications of justice in capitalist systems.
Which scientific methods or approaches are utilized?
The author utilizes a critical analytical approach, drawing on economic theories, political philosophy, and the arguments of thinkers like Raymond Plant, Robert Nozick, and F.A. Hayek to evaluate the validity of neoliberal economic assumptions.
What does the main body of the work cover?
The main body examines the ideological background of the New Right, investigates the relationship between inequality and injustice, and critically assesses the liberal definition of freedom versus state intervention.
What is the core argument regarding "failures-of-market outcomes"?
The author argues that even if a market is Pareto-efficient, it may produce outcomes that are socially undesirable; therefore, economics must incorporate a broader framework to address these moral and distributive concerns.
How does the author define the relationship between ideology and the market?
The author views ideologies as tools for rationalizing specific interests, noting that neoliberalism is not a neutral system but a policy program designed to justify market-driven outcomes through specific values like laissez-faire.
What is Nozick's "entitlement theory" and why is it critiqued?
Nozick’s theory argues that any legitimate acquisition leads to absolute property rights. The author critiques this by noting that it ignores moral intuitions about fairness and the potential for unfair initial conditions.
How does the paper differentiate between negative and positive freedom?
Negative freedom is defined as the mere absence of coercion, whereas positive freedom incorporates the individual's ability and resources to act, suggesting that true freedom requires more than just a lack of interference.
- Arbeit zitieren
- Simon Kehrer (Autor:in), 2007, Provide free markets just outcomes?, München, GRIN Verlag, https://www.hausarbeiten.de/document/114563
