<< And just why are we interested one way or the other
in efficient financial markets? Will that give us better
health care? Will that guarantee safe and free abortions
without moral hassle? Will that eliminate police murders
of citizens? Please explain. >>
OK, I will do so. We are concerned about efficient allocation of capital (not using this term in the technical Marxian sense), whether this is through markets or by authoritative means, because we need a way to decide how to use our scarce resources without throwing them away. In a world without abundance, in the sense that we cannot have everything we want, we have to be concerned about what our choices will cost us. If we decide to spend more money or resources on health care, pay for abortions or any other medical procedure, we will have less money or resources for other things. It is important to know how much less--that is, what the cost is. Otherwise we will end up with two sorts of bad results:
1) We will not be able to strike a reasonably optimal balance for everything we want, because we will find that we do not have the money or resources for them. We want, after all, better health care, better housing, more and better food, etc., and every allocation we make to something takes away from something else.
I do not say that we have a zero sum economy, or would under socialism. We may choose to invest in ways that makes the total amount of resources grow. But still, we have to decide the optimal level of investment. After all, what we invest, we cannot immediately spend on something else.
2) We will waste our efforts. By waste, I mean that we will put our resources and efforts into things that we do not want, that do not benefit us socially, that cost working people time that they might better spend, literally, doing nothing. If we decide, for example, that we want better health care and therefore we must spend X dollars (or whatever the measure of the amount of resources we use), but in fact we get no better health care for that amount, given the way we spend it, than we would if we had spent X-n, then the difference is wasted. We will have sacrificed it to no purpose.
I realize that talk of efficiency and financial markets (or other mechanism of resource allocation) drives people on the left crazy. They associate this talk with the worst sort of cruel right wing injustice. And it is true that much cruel right wing injustice is defended in those terms. But if we are serious about ever actually having working people run the economy, we had better start caring about efficiency, waste, and fiscal accountability.
Doing so does not mean that we cannot decide to subsidize losing enterprises or projects in the name of some higher value than efficiency. But if we do not know what the subsidy costs us, we will not be able to do so indefinitely, because we will go broke, and on the way, we will rob working people of the efforts and resources they need to get things they want.
Will knowledge of costs help with police brutality? Probably not directly. But taking steps to reduce or eliminate police brutality, like every other choice of resource allocation we might make, is costly. It cannot hurt, and can only help, to know what these steps would cost us.
It is for reasons like this that I think Hayek will be a great hero to a future socialist society.
--jks