... These sorts of statements are often the start of an intellectual swindle, which goes.
Markets are great, under some conditions (no externalities, perfect information, commodity-like products).
Those conditions often fail in practice.
Therefore, in practice we often need government.
The swindle is that (3) implicitly assumes that whenever markets fail, government is the solution. But no theory of government is used to back this assumption.
He continues:
Consider the following matrix:
noncoercive coercive centralized large private organizations government decentralized markets criminal groups (?)
... I am interested in the conditions that make it better to be in the top right quadrant than in the top left quadrant. That is, when do you need to move from central planning by private organizations, from which an individual may opt out, to central planning by a government?
The point is obviously that if decentralization fails because, e.g. you have externalities, why do you need the single, monopoly government to intervene rather than some other large organization which may compete with other large organizations to solve the externality?
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