Lindblom - The Market System - Afghan Journalists' Committee

172 What To Make of ItA second conclusion then, is that the prior determinationsoperating at any time are not efficient. They are whatthey are largely by historical accident and by laws governinginheritance, themselves not subjected to a weighing ofbenefits against cost.From the two conclusions we can draw a major inferenceabout market efficiency. Given an existing set of priordeterminations, market interactions at most give participantsopportunities to make efficient decisions on how touse whatever skills and assets have already been allocatedthem. They do not permit people to erase or escape from theinefficiencies of prior determinations. In that sense, marketefficiency is too little and too late. It kicks in when earlierdecisions not made with an eye to efficiency have alreadylargely determined the results. In its dependence on priordeterminations, the market system is like a car with an efficientengine that can operate only with a fuel that must betowed behind in quantities that degrade the performance ofthe engine.Think again of the traders in the gym to whom a donorallocates objects and skills that the beneficiary can eitheruse or try to trade for something better. The donor makes noattempt to suit the gift to the recipient; there is no attemptat efficient choice. When the participants have finishedtheir trading, each will be better off as a result of it, or atleast not worse off; and we may be tempted to call the outcomeconsequently efficient. Nevertheless, the result oroutcome may be wholly unsuited to the wants or needs ofparticipants because of the pattern of the original gifts. Theoriginal allocation by the donor was arbitrary, not efficient,and trading can improve it only to a degree.One may be tempted to allege a critical difference betweenthe hypothetical game and the real world of markets.