Lindblom - The Market System - Afghan Journalists' Committee

Inefficiencies 153At first glance, spillover benefits seem an obviousbonus, a happy accidental efficiency. But in principle, noless than for spillover burdens, they reveal a shortcoming inmarket efficiency. They represent gains that could be enlargedif they were taken into account by parties to thetransaction, as, by definition, they are not. They consequentlyrepresent opportunities wasted. Hence an efficienttraining program would call for more training than will beprovided by the enterprises, each of which understandablydoes not take spillover benefits into account when decidingon training programs for its own employees. Governmentaloccupational training programs are a response to such ashortfall.Spillover benefits and burdens almost certainly do notsimply cancel out—plus against minus. If through marketneglect of spillover burdens the earth loses its forests or theatmosphere its ozone, or if scientific laboratories unwittinglyunleash a deadly pestilence, what spillover benefitscan offset these disasters? On this count alone I suspect thatthe coming decades will see a slow-moving but drastic reconsiderationof the market system.Transaction TerminationIt takes two to tango, and it takes at least two to create amarket interaction, each acting voluntarily. But it takesonly one party to dissolve a market interaction, and the dissolutionimposes or forces a burden or cost on the otherparty. It is a burden not taken into account by the decisionmaker, whose decision is consequently inefficient. This isnot a spillover to a bystander, to persons not party to atransaction, but a loss imposed by one party to a transactionon the other party.