KiKi asked in Social ScienceEconomics · 10 years ago

One of the core values of capitalism that allows the free market to achieve efficiency is?

earnings.

trading.

revenues.

incentives.

profits.

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  • 10 years ago
    Favorite Answer

    None of the above. Capitalist markets are NOT efficient. Even financial markets, long thought to be efficient turn out not to be. (The Great Recession and last year's flash crash are NOT what you'd expect from an efficient market)

    http://rajivsethi.blogspot.com/2010/05/james-tobin...

    And then there are all the other markets which everyone knows are not efficient: housing, used cars, health care, education, etc.

    The fact is, that no real market satisfies the requirements for efficiency:

    http://delong.typepad.com/sdj/2010/12/what-do-econ...

    Add to the pot that no capitalist market is really competitive. (As Adam Smith noted:

    "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices" - The Wealth Of Nations, Book IV Chapter VIII, para. c27.

    so even if competitive markets were efficient, capitalist markets, without some external agency to force competition and prevent cartels, etc., would not be.

  • Anonymous
    10 years ago

    trading

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