Let the Market Determine?

Seems a long time since we've debated the notion of the market on here...and even when we did, the 'market' debate was probably indirectly related to some other issue. If memory serves, the issue tends to be whether government imperatives or the market should dictate certain trends (like environmental regulation, say). The market, and for whatever reason it tended to be the GOPers in the room arguing this, is the great thing on which we ought to rely...to set policy, show what people will and won't accept, and so on. Should we require reduced air emissions? ban smoking in public restaurants? mandate health care? Opponents of government intervention generally cite the market as a better policy setter than agency staff.

Oddly enough, this morning the whole whether-or-not-the-market-adequately-reflects-reality debate came back to me, after all these years, while reading a slate article on the blu-ray vs hd-dvd war. I am re-convinced that theories relying on the market are rubbish!

This passage sums up why:

Even worse, the Pittsburgh Post-Gazette and BusinessWeek reported that Sony, perhaps having learned its lesson from the Betamax debacle, paid Warner Bros. between $400 million and $500 million to go with Blu-ray. Sony hadn't won because it offered the HD-buying public any other tangible advantage. It took down Toshiba because it knew whom to pay off.

Reckon I'll have to dig up the actual discussions we've had that go back to market theory. Or maybe I'll just read up on my Posner. In any event - the point here is that the market is hardly, in reality, a place of rational decision-making. Indeed, that's pretty much agreed upon all around...moreover, though, examples like the above point to the bigger problem of market-reliance: the market is rigged. It's a false display.