Challenging the Presumption in Favor of Markets

There is a pervasive presumption in the literature on political economy that substantial use of competitive markets is appropriate and necessary for organizing economic activity. Markets, however, are undemocratic, inefficient, and incentivize anti-social behavior. These short-comings are often minimized or accepted as necessary evils because of the belief that there is no alternative to market structures. This belief is mistaken. Sophisticated alternative models of economic organization, such as participatory economics, have been proposed which are substantially more consistent with important social values. We contend that in light of these alternatives, the presumption in favor of markets should be reversed and market proponents should carry the burden of proof of demonstrating why, given their numerous shortcomings, markets should continue to occupy a privileged position as the default mode of economic organization.JEL classification: A13, L10, P16