ACTG 2010 Lecture Notes - Lecture 5: Classical Liberalism, Pareto Efficiency, Living Wage
12 Jul 2016
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Document Summary
Markets and the role of ethics in capitalism. Freedom in markets is critically important, more so than the outcomes associated with different economic theories. Used examples such as russia: standards of living worser than under communist rule, but public not willing to vote it back because of the economic inefficiencies and denial of freedom. Pareto optimality , a situation in which the utility of no one can be raised without reducing the utility of someone else arrow-debreu theorem. Efficiency results do not say anything about equality of outcomes but both must be considered. Role of markets must also consider what they are allowed to do. If groups are too politically powerful and influential it will limit the market. Need for critical scrutiny of the role of markets. Public discussion of markets is crucial as good public policy cannot be established through some predetermined formula or attitude.
