If one interprets the word “desirable” to mean ethically good outcomes, there is little that need be said. There is no good reason to believe that the outcomes of market economies are ethically good, nor is there any good reason to believe that they will be ethically bad. Ultimately, ethical questions of this kind cannot be addressed, let alone resolved, by economic analysis, so in our capacity as economists we must remain agnostic on this. It is worth noting that several attempts have been made to argue that the processes of market economies – as opposed to outcomes – are morally desirable. Arguments of this kind are usually made by asserting that market mechanisms tend to promote individual liberties and freedoms which are taken to be ethically desirable. This appeared to underlie the attachment to market mechanisms that became known in the 1970’s and 1980’s as Thatcherism and Reaganism.

A second interpretation of desirability may be in terms of economic efficiency. Here economists have much to say. We have shown throughout this book that market processes have the potential to generate efficient allocations of resources. But our discussions in this chapter lead to the conclusion that this is not inevitable. Markets do “fail” in a number of ways, particularly when it comes to interactions with the environment and anti-competitive behaviour. A prima facie case exists, therefore, for government intervention. But we also noted that government intervention in the economy can result in efficiency failures. Whether such intervention is warranted in any particular instance is something that has to be decided by an analysis of the relative advantages of intervention in that case.