Fatal flaws in the libertarian conception of the market

Abstract

Schonsheck argues that libertarians typically begin the argument about the just distribution of commodities with assumptions about the origins of market itself, and the origins of its participants. These presumptions are wholly unwarranted; neither the market, nor they themselves, could exist without the fine-tuned sacri fices of others. Furthermore, the continuing crisis in financial markets worldwide exposed an array of failures in “rational market theory.” Rational market theory’s sole mechanism for assuring the ef ficiency of the market, and the rectitude of the participants, is “market discipline,” administered in the context of “counterparty surveillance.” But counterparty surveillance was made impossible, since the markets were opaque. Additionally, some bad actors were permitted to make themselves invulnerable to market discipline. In consequence, intelligent regulation of the market is essential.