The September 3rd edition of The Wall Street Journal has an article that reports the answers of several Nobel economists to a variety of questions. It’s an interesting read (paid subscription required).
One question was “In what sphere of life, if any, do you think it most important to limit the influence of market forces?”
A sample of answers includes Milton Friedman’s cryptic reply “Self-ownership of human beings” (by which I assume he means that people ought not be permitted to sell or to gift themselves into slavery).
Lawrence Klein argues that market failures and corruption are responsible for what he calls the “skewness of the income and wealth distributions both within and among national economies.”
William Sharpe: “Extreme concentration of economic and political power.”
Joseph Stiglitz: “Economists’ usual list begins with distribution of income. There is no reason to believe that the distribution of income that emerges out of market processes is desirable or acceptable. Unbridled market forces without any role of government might lead to a large number of people living under subsistence. This is an area for government to do something. We know that unbridled economic forces can lead to big booms and big recessions. We need to do something about that. We know that a market can lead to pollution — and there’s an important role for government there. We know that there will be under-investment in public goods. As we think about the innovation economy, we should remember that most of the innovation in the private sector is based on research financed by the government, such as its role in developing the Internet.”
[Footnote from Boudreaux: What evidence does Stiglitz rely upon for his conclusion that "most of the innovation in the private sector is based on research financed by the government"?]
Robert Solow: “In the advanced economies, I would say: To avoid mass unemployment, poverty and widening inequality.”
Note the concern with income distribution.
But note now my colleague Vernon Smith’s splendid answer: “None, because ‘markets’ are about recognizing that information is dispersed in all social systems, and that the problem of society is to find, devise and discover institutions that incentivize and enable people to make the right decisions without anyone having to tell them what to do. The idea that market forces should be limited stems from a fundamental error in beliefs about markets. This is the wrong question.”
Vernon is also the only Nobel economist who answered the question “Who was the most important economist of the 20th century besides you” with — “Hayek.”