<abstract xmlns="http://www.w3.org/1999/xhtml"><p>We develop a critique of government interventionism based on the Misesian calculation argument against socialism. If private property rights and relative prices based on supply and demand are necessary for successful economic coordination, then conventional market failure theories cannot be sustained. Government interventionism based on the idea of correcting “market failures” is analytically just a milder form of socialist central planning. Between the two, there are only differences in degree, not in kind. We criticize several public choice and law and economics scholars for disregarding this Misesian angle in their market failure theories. In our view they are reducible to arguments based on a fallacious political economy while perpetuating false neoclassical economic analysis of market failure theorists. We claim that government interventionism is just a milder form of socialist central planning. Therefore, the traditional arguments against the efficiency of central planning also apply to government interventions aiming at fixing market failures. In particular, we maintain that governments face the “knowledge problem”, which means that they cannot determine the optimal allocation of resources. In section two of this paper we discuss market failure and economic calculation. Section three is given over to our claim that the “Nirvana fallacy” is itself fallacious. The burden of section four is to address Coase and consequences. We conclude in section five.</p></abstract>

We develop a critique of government interventionism based on the Misesian calculation argument against socialism. If private property rights and relative prices based on supply and demand are necessary for successful economic coordination, then conventional market failure theories cannot be sustained. Government interventionism based on the idea of correcting “market failures” is analytically just a milder form of socialist central planning. Between the two, there are only differences in degree, not in kind. We criticize several public choice and law and economics scholars for disregarding this Misesian angle in their market failure theories. In our view they are reducible to arguments based on a fallacious political economy while perpetuating false neoclassical economic analysis of market failure theorists. We claim that government interventionism is just a milder form of socialist central planning. Therefore, the traditional arguments against the efficiency of central planning also apply to government interventions aiming at fixing market failures. In particular, we maintain that governments face the “knowledge problem”, which means that they cannot determine the optimal allocation of resources. In section two of this paper we discuss market failure and economic calculation. Section three is given over to our claim that the “Nirvana fallacy” is itself fallacious. The burden of section four is to address Coase and consequences. We conclude in section five.

Private Property Rights, Government Interventionism and Welfare Economics

Harold E. Wirth Eminent Scholar Endowed Chair and Professor of Economics at Loyola University New Orleans

Review of Economic Perspectives

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

{"article-title":"Private Property Rights, Government Interventionism and Welfare Economics"}

We develop a critique of government interventionism based on the Misesian calculation argument against socialism. If private property rights and relative...

Private Property Rights, Government Interventionism and Welfare Economics

Published Online: Dec 21, 2019

Page range: 365 - 397

Received: Jun 07, 2019

Accepted: Nov 15, 2019

DOI: https://doi.org/10.2478/revecp-2019-0019

Keywords
Government failure, market failure, prices, private property rights, subjectivism, socialism, public choice

© 2019 Ivan Jankovic et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Private Property Rights, Government Interventionism and Welfare Economics

Published Online: Dec 21, 2019

Page range: 365 - 397

Received: Jun 07, 2019

Accepted: Nov 15, 2019

DOI: https://doi.org/10.2478/revecp-2019-0019

KeywordsGovernment failure, market failure, prices, private property rights, subjectivism, socialism, public choice

© 2019 Ivan Jankovic et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Keywords
Government failure, market failure, prices, private property rights, subjectivism, socialism, public choice