If America's most cherished beliefs were Olympic Gods, free enterprise market capitalism would be Zeus.
Here is a Very Basic Question
Does a healthy economic system serve the thoughtful needs of a healthy society or does an unhealthy society serve the ill conceived needs of an unhealthy economic system? How a person responds to this question will reveal a great deal about one's world view. Please take a pauzy to think about it.
The economy of the United States puts out eighteen trillion dollars a year of products and services and certainly trillions more that don't show up in the official statistics. It produces an unbelievably wide range of services and merchandise, good and not so good.
Economic efficiency is a principle that explains a great deal about the mainstream economy, including external costs, popular culture, urban land use, industrial agriculture and United States Foreign Policy Doctrine.
Market Capitalism is the dominant economic system, world wide. It comes in a number of flavors depending on local factors - history and culture.
The United States has its own version of Market Capitalism. Both Democrats and Republicans are fully on board with only modest differences between them, on details. Both would agree the natural world is there to be used for human benefit and humans are at the top of the global who's who. Both give some thought to environmental and public health impacts of doing business as long as they don't interfere much with economic performance.
One can find all manner of think tanks, pundits, bloggers and non profits specifically interested in the economic system. Championing, defending and maligning the mainstream economic system is a big deal to a lot of people. How this economy functions IS a big deal.
Let's take a look at a set of values, ideals and principle cherished by advocates of Market Capitalism. To start out, I will only describe them with no comment or analysis. As we proceed from simple definitions to how these ideas look in the real world to the impacts of this economic system, this important part of Notes should come into focus.
Let's start with Economic Efficiency 101. This principle is at the top of the U.S. Economy Pyramid.
Economic efficiency is a principle that describes the relationship between inputs and outputs, ranging in scale from a single product to the entire economic system.
These next two quotes come from Paul Heyne, a now deceased professor of Economics, at the University of Washington. http://www.econlib.org/library/Enc/Efficiency.html
“Thus, economic efficiency is measured not by the relationship between the physical quantities of ends and means, but by the relationship between the value of the ends and the value of the means.”
“Economic efficiency makes use of monetary evaluations. It refers to the relationship between the monetary value of ends and the monetary value of means. The valuations that count are, consequently, the valuations of those who are willing and able to support their preferences by offering money.”
Simply, whatever generates the highest price in relation to inputs is the most economically efficient. Essentially, nothing is worth anything until it has a price tag on it. Some items are not difficult to price, other items are impossible to put a price on and trying to do so would and does lead to disagreements.
This way of determining value provides a strong incentive to reduce the cost of inputs and reducing the cost of production while charging a price as high as the market will bear.
Please keep both the strict definition of economic efficiency and the simple comments in mind.
Here is a list of ideals of Market Capitalism, compiled by http://freemarketprinciples.com/principles.php
1] Limited Government: "Governments are instituted only to secure individual rights, deriving their just powers from the consent of the governed."
2] Equal Justice Under Law: "Government must treat everyone equally; neither rewarding failure nor punishing success."
3] Subsidiarity: "Government authority must reside at the lowest feasible level."
4] Spontaneous Order: "When individual rights are respected, unregulated competition will maximize economic benefit for society by providing the most goods and services possible at the lowest cost."
5] Property Rights: "Private ownership is the most efficient way to sustainably utilize resources."
6] The Golden Rule: "Deal with others honestly and require honesty in return."
Next, I would like to make some comments that will lead to taking a look at these ideals and principles in the real world. I will copy the quote and then comment.