Lindblom - The Market System - Afghan Journalists' Committee

11InefficienciesSome attributes of the market system point to great exceptionsor limits to its claims to efficiency in the productionof services and goods. I shall not attempt the whole list, formany have already been mentioned and some are too familiarto need discussion. Let us look with a cool mind at themost fundamental—and most illuminating. These are inefficienciesthat stir strong emotions and rhetorical excess.SpilloversPerhaps the most telling market inefficiency is that, althoughefficiency requires that all benefits and costs beweighed regardless of where they fall, market participantsweigh only their own. Of course, most individual participantsweigh costs and benefits for members of their families.Nonetheless, each market participant, whether anindividual or an enterprise, typically weighs benefits andcosts narrowly, pursuing what is conventionally called selfinterest,or profit. If as a consequence the establishment ofan airport goes far to ruin surrounding neighborhoods forwhom the noise is intolerable, we can hardly call the decisionto establish efficient. Spillovers are so obviously a majorinefficiency of market systems that one wonders how itcan be that their significance is still widely denied in somequarters.Think again of the traders in the gym. The exchangesthrough which A and B each benefit and which we conse-