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Meadowcroft on "Markets, Discovery, and Social Problems" (from Accepting the Invisible Hand)

Mark D. White

Today we continue our preview of Accepting the Invisible Hand: Market-Based Approaches to Social-Economic Problems with Chapter 2, "Markets, Discovery, and Social Problems," by John Meadowcroft. (Chapter 1 is mine, discussed here, and the preface was posted here.)

In his chapter, Meadowcroft  argues that markets provide a more nuanced and flexible response to social problems than does government action:

...the solutions produced by markets are more likely to reflect individual preferences and the trade-offs people are willing to make to reconcile competing demands on the use of scarce resources, than the exclusive, one-size-fits-all solutions produced by political decision-making. (p. 23)

 After discussing the universal social problem of coordinating economic activity, Meadowcroft turns to problems he terms "socially constructed," not to imply that such dilemmas are any less important, but merely that they are a result of societal judgments. For instance, his first example is smoking regulation, which is a response to a problem which did not "exist" fifty years ago when smoking was considered less dangerous:

For much of the twentieth century smoking in enclosed public places was commonplace and uncontroversial, but following the discovery of the risks associated with secondhand smoke, and campaigns by public health advocacy groups to publicize those risks, smoking in enclosed public places has become “problematized.” (p. 27)

He then argues that relegating the response to demands for no-smoking areas to owners of businesses (such as bars and restaurants) results in a solution more tailor-made for each unique group of consumers than do blanket bans and regulations:

This political response... is an exclusive, all-or-nothing solution that reflects the preferences of those of nonsmokers unwilling to countenance the presence of smokers in the bars and restaurants they frequent, as well as, perhaps, elite political actors who derive utility from a ban, perhaps from a belief that they are altruistically helping others. (pp. 30-1)

This reinforces his point that

The market process involved the discovery of a range of accommodations between the smoking and nonsmoking patrons of bars and restaurants. This outcome will not satisfy those who have a predetermined view of the correct solution to the problem of secondhand smoke. (p. 31)

Meadowcroft than makes a similar case with respect to education, before delving into the various public choice arguments detailing why government solutions to social problems stemming from the decisions of elected representatives are often problematic, drawing from the work of Anthony Downs, Gordon Tullock, and James Buchanan. (He also addresses libertarian paternalism and Nudge, a popular topic at this blog!)

Meadowcroft concludes with this exceptionally well-crafted statement:

It may be difficult for people with a fixed view of the causes of and solutions to social problems to accept that solutions should emerge spontaneously from a heuristic and intersubjective process driven by individual choices. Indeed, acceptance of such a proposition would require many people to adopt an entirely different worldview. But respect for the integrity and autonomy of individuals and the maximization of well-being require that policymakers confront the reality of economic and political solutions to social problems and accept the market as the most effective and efficacious means of ameliorating social problems. (p. 38)


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