Some Thoughts About the Theory of Market Failures



I am currently reading professor Gabriel Zanotti’s very interesting book “La Economía de La Acción Humana” (The Economics of Human Action) where he completes an important task: An in depth epistemological organization of the principal economic theorems according to to the teachings of Ludwig von Mises.

Among the different theorems that professor Zanotti lists, one in particular caught my attention. I quote the following:

“The Market tends to spontaneously coordinate Supply & Demand expectations through the price system”. [1]

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Consumer Safety: Government regulators don’t need more power

Consumer Safety: Government regulators don’t need more power

The past 10 years have seen spectacular events that are still unraveling in most powerful nations. We have seen how the U.S. economy is experienced anemic growth and struggled to recover from the worst recession seen since the Great Depression of the 1930’s and  how Europe is faced a Sovereign Debt Crisis that is threatening the political union and the overall well being of the Western European population. Financial Markets are in a constant mode of volatility, and any errors by policymakers are immediately shown with fatal results. What is more curious, and unfortunately, it has taken by surprise to most economists and political leaders, is that for the most part, these events have been preceded by grave errors in Corporate Social Responsibility. Scandals such as Enron, WorldCom, Bernie Madoff’s Ponzi scheme and issues related in consumer products such as drug and meat safety have unleashed a series of attacks to “unfettered” free markets and capitalism, pushing for more regulations and more State interference, with the pretense of protecting the consumer from evil speculators and the “wild swings” of the market economy. The purpose of this essay is to analyze how a complete belief in overregulation and interference in markets is the problem, and therefore dismantle the outcry for more state interference.

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