Abstract and Keywords
Under conditions of imperfect knowledge a price system is essential for signalling information about surplus and shortage of particular goods, relative to demand. A profit system is essential to give individuals an incentive to respond to changing prices. Accordingly, any attempt to produce according to a central plan — however rational this may seem in theory — will destroy both information and incentives. Prosperity presupposes markets. Yet it would be wrong to identify the market with pure capitalism, in which the exercise of property rights may lead to deep inequality. If we are concerned with both efficiency and justice we must determine how far we can depart from capitalist forms of the free market, in the name of justice, without losing ‘too much’ of its efficiency advantages. The complex topic is: Justice must be balanced against efficiency and perhaps other values. How this is to be achieved forms an important part of the present discussion.
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