Can Markets Be Expected to Prevent Themselves from Self Destruction

Introduction Even if competitive commercialises have shown themselves to be the most economic organizational form for creating economic efficiency, the question of how they can keep down destructive influence from agents with opportunistic motives remains unresolved. Different institutional approaches have argued that to be efficient, markets need to be embedded in a set of formal and informal institutions. Because such institutions entrust in the long run make all market agents better off, they are labeled efficient institutions. Contrary to what is argued in neoclassical economics, it is unlikely that such institutions will be created endogenously by market agents because the institutions are to be understood as received public goods. Moreover, if such institutions have been established, we should expect market agents to mettle a collective action problem when sustaining them, leading to the death of the institutions. What would happen is that if left to themselves, markets should be understood as inherently self-destructive.

The main goal of this article is to provide such an account statement based primarily on insights from theories about corruption and the render of public goods that have emanated from theories about the importance of institutions for understanding the transformation in valued social outcomes. About the causes of the financial crisis, the well-known(a) financial speculator and philanthropist George Soros has stated the following: in that respect are two features that I think deserve to be pointed out. One is that the financial system as we know it actually collapsed. . . . The other feature is that the financial system collapsed of its own weight. This contradicted the reign view about financial markets, namely that they tend toward labyrinthine sense, and that equilibrium is disturbed by extraneous forces, outside shocks. Those disturbances were supposed to advance in a random fashion. Markets... If you want to get a full essay, order it on our website: Orderessay

Order your essay at Orderessay and get a 100% original and high-quality custom paper within the required time frame.