Lindblom - The Market System - Afghan Journalists' Committee

Notes 285for mutually advantageous exchanges. That movement they seeas of enormous consequence for human welfare, and they understandablywish to distinguish it from further possible interchanges,in which some participants can benefit only by takingbenefits from others. So they call only the mutually advantageousmoves efficient and declare the other moves, in whichsome people gain at the expense of others, to be neither efficientnor inefficient but only equitable or inequitable. Hence prior determinationsare neither efficient nor inefficient, only equitableor not.For many purposes theirs is an excellent distinction. But forour purposes it is regrettable that economists wish to appropriatethe word “efficiency” for only the mutually advantageous interactions.The more common definition of efficiency—and the oneused throughout our analysis—says that a choice or allocation isefficient if the gains warrant the losses, no matter on whom thegains or losses fall. Thus we can say of a decision on land use, forexample, that we judge it to be efficient because the gains in recreationaluse of wilderness areas are worth the tax burdens imposedto support them, even if most taxpayers never visit the areas. Judgmentsof that kind are inescapable. Evaluations of the market systemcannot do without them, whatever the terminology.Chapter 13. Freedom?Advocates of the market system are, as I read and hear from them,more vocal on freedom than on efficiency as a market-system attribute.That may reflect their priorities, or it may simply meanthat freedom is easier to argue than efficiency. In any case, two ofthe most conspicuous of them make freedom their dominantvalue. The late Austrian economist Friedrich A. von Hayekreached his largest audience with Road to Serfdom (Chicago: Universityof Chicago Press, 1944). His more scholarly works soundedthe same theme, but with more sophistication. The University ofChicago economist Milton Friedman signaled his concern in histitles Capitalism and Freedom (Chicago: University of ChicagoPress, 1962) and Free to Choose: A Personal Statement (New York:Harcourt Brace Jovanovich, 1980). The quality of his analysis offreedom in the market system does not match Hayek’s nor thequality of Friedman’s brilliant work in monetary theory.