Home
Fazit – das Wirtschaftsblog

Fazit - das Wirtschaftsblog

Das Faszinierendste aus Wirtschaft und Finanzen. Prägnant beschrieben und kenntnisreich analysiert von Autoren der F.A.Z. und der Sonntagszeitung.

Markets, the Theory of the Firm, and Paul Krugman

| 7 Lesermeinungen

Is the existence of companies a problem for free-market believers? Paul Krugman says so. But why should it?

Mark Thoma points to Paul Krugman’s latest thoughts about free markets and companies:

We may live in a market sea, but that sea is dotted with many islands that we call firms, some of them quite large, within which decisions are made not via markets but via hierarchy — even, you might say, via central planning. Clearly, there are some things you don’t want to leave up to the market — the market itself is telling us that, by creating those islands of planning and hierarchy. (…)

The thing is, however, that for a free-market true believer the recognition that some things are best not left up to markets should be a disturbing notion.

Why should it? Nobody ever doubted that there are benefits to stable work relations, to “command-and-control” and to having co-workers instead of ever-changing trading partners.

The important question is: Who is to say when markets are better and when companies are better? It might be best to leave this decision to the people whom it concernes. A.k.a. “the market”.

__________________________________________________________

English blog posts can be found at http://www.fazitblog.de/english, an RSS feed is available at http://www.fazitblog.de/english/rss. Social Media:

Fazit-Blog English Twitter account Fazit-Blog at Facebook Fazit-Blog at Google Plus

The author’s Social Media profiles:
Patrick Bernau at Twitter Patrick Bernau at Facebook Patrick Bernau at Google Plus

2

7 Lesermeinungen

  1. Free market without companies?
    Companies and Consumers are both parties on the market, within a free as well as within a leaded economy.

  2. Consider Krugman's U.S. Adversaries: the Problems of Translation
    Of course, the existence of companies in market economies is no argument against markets. The theory of the firm (transaction costs, enforcement costs, and some others) clearly shows that. And Krugman knows that.

    Krugman writes this way because his adversaries are “the Republicans” in the U.S., whose study of the market economy ended way before covering the theory of market failure. These prototypical “Republicans” typically argue that the market is “always” right (and that government regulation is always wrong), be it in health care, in environmental economics, in labor relations, in everything. But, these same Republicans worship big business. So, what Krugman does, is play his imagined adversaries against themselves: big business, which you adore, proves that markets are not always right! Bong! It is thus a slightly polemical argument.

    That’s all. Krugman does not argue against the German tradition of ordo-liberalism; in a German environment he would definitely argue differently.

    Here we have it again: the problems of translation, not just of words or sentences but of whole controversies.

  3. Verteidigung von Zentralplanung
    Man muss diese Aeusserungen im Zusammenhang mit Krugmans allgemeiner Einstellung betrachten. Krugman ist mehr ein politischer Aktivist als ein Oekonomist und versucht in allen seinen Betraegen die Vorzuege zentralistischer Planung zu predigen, was natuerlich indirekt auch einem Beschaeftigungsprogram fuer Oekonomen gleichkommt.

    Es handelt sich um einen ungerechtfertigten Vergleich, denn ein Unternehmen hat ein definiertes Ziel der Gewinnmaximierung und bei Versagen kann es liquidiert werden. Eine Gesellschaft zentralplanerisch zu planen und manipulieren erzeugt jedoch eine nicht vergleichbare Dynamik, da bei einem Fehler zwar negative Auswirkungen fuer ein entsprechendes Land die Folgen sein duerften, es aber eher fraglich ist, dass man solch einen Staat aufloesen resp. eliminieren kann.

    Zentralplanerische Manipulationen durch staatliche Institutionen erzeugen ein Umfeld, in welchem Leistung immer weniger eine Rolle spielt, sondern die Faehigkeit die Regeln zu seinen Gunsten zu beeinflussen eine immer hoehere Bedeutung einnimmt. Hierbei handelt sich um inhaerente Eigenschaften der Menschen, welche zwecks Zukunftssicherung versuchen, sich immer in eine vorteilhafte Situation zu manoevrieren.

    Freiheitliches Gedankengut schreibt keineswegs einen “Freien Markt” vor, sondern erkennt aufgrund dieser menschlichen Eigenschaften, dass der Freie Markt grundsaetzlich und langfristig betrachtet wohl das beste Resultat fuer die meisten Menschen produziert.

  4. tautological Argument
    Your argument is tautological. Markets say when markets are better; does not contain any information. Krugman says: Firms are not organized like markets but they work efficient. That contains some more information. Markets are not generally the most efficient way of an institutional organisation.

    • Tautology
      “Firms are not organized like markets but they work efficient” – this is not Krugman’s point; this is what we have known for years (apart from many exceptions, when firms do not work efficient).
      Krugman’s new argument is that efficient companies generally spoke against markets. Which is not necessarily the case, as I wanted to point out. You /can/ make a consistent argument in favor of markets, even if it is tautological (just like reality).

    • Re: Tautology
      While I think that generally you are doing great work on this page, I think on this occasion you are not citing him correctly: I think Wolfgang Schlage has a more accurate perception of Krugmans intentions in this case, especially when looking at how Krugman continues his post:
      “Clearly, there are SOME things you don’t want to leave up to the market — the market itself is telling us that, by creating those islands of planning and hierarchy.

      Now, why exactly that’s true — why some things are better done through market mechanisms, while others are better done through at least a bit of command-and-control — is a deep issue. Oliver Williamson (pdf) got a Nobel for helping elucidate some aspects of that issue (although that may not mean much to you, considering some of the people who’ve gotten Nobels)… “(my emphasis)

      So I really think that Krugman basically agrees with you about the economics, but he does think that there are people who doubt “that there are benefits to stable work relations, to “command-and-control” and to having co-workers instead of ever-changing trading partners.”. His aim is to change their perception (or rather, as he is probably preaching to the choir, whip up support ;) )

    • Not so sure
      My main point is this sentence.

      “The thing is, however, that for a free-market true believer the recognition that some things are best not left up to markets should be a disturbing notion.”

      I doubt this.

Kommentare sind deaktiviert.