Editing Economic calculation problem (section)

=== Efficiency of markets ===
Some academics and economists argue that the claim a [[free market]] is an efficient, or even the most efficient, method of resource allocation is incorrect. [[Alexander Nove]] argued that Mises "tends to spoil his case by the implicit assumption that capitalism and optimum resource allocation go together" in Mises' "Economic Calculation in the Socialist Commonwealth". [[Joan Robinson]] argued that many prices in modern capitalism are effectively "administered prices" created by "quasi monopolies", thus challenging the connection between capital markets and rational resource allocation.<ref>{{cite book|first=Alec|last=Nove|author-link=Alexander Nove|editor=Noce, Alec |editor2=Nuti, D. M.|title=Socialist Economics: Selected Readings|year=1972|publisher=Penguin Books|location=Harmondsworth, Middlesex}}</ref>

Socialist [[market abolitionists]] argue that whilst advocates of [[capitalism]] and the [[Austrian School]] in particular recognize [[equilibrium price]]s do not exist in real life, they nonetheless claim that these prices can be used as a rational basis when this is not the case, hence markets are not efficient.<ref>{{cite book|editor-last=McKay|editor-first=Iain|title=An Anarchist FAQ|section=Is libertarian communism impossible?|publisher=[[AK Press]]|location=Stirling|year=2008|isbn=978-1-902593-90-6|oclc=182529204}}</ref><ref>{{cite book|editor-last=McKay|editor-first=Iain|title=An Anarchist FAQ|section=Does capitalism efficiently allocate resources?|publisher=[[AK Press]]|location=Stirling|year=2008|isbn=978-1-902593-90-6|oclc=182529204}}</ref> [[Robin Hahnel]] further argued that market inefficiencies, such as externalities and excess supply and demand, arise from buyers and sellers thoughtlessly maximizing their rational interests, which free markets inherently do not deter. Nonetheless, Hahnel commended current policies pursued by free market capitalist societies against these inefficiencies (e.g. [[Pigouvian tax]]es, antitrust laws etc.), as long as they are properly calculated and consistently enforced.<ref>[[Robin Hahnel|Hahnel, Robin]] (2007). "The Case Against Markets". ''Journal of Economic Issues''. '''41''' (4): 1139–1159.</ref>

[[Milton Friedman]] agreed that markets with monopolistic competition are not efficient, but he argued that it is easy to force monopolies to adopt competitive behavior by [[Free trade|exposing them to foreign rivals]].<ref>Friedman, Milton (1979). ''Free to Choose''. Secker and Warburg.</ref> [[Economic liberals]] and [[libertarian capitalists]] also argue that monopolies and big business are not generally the result of a free market, or that they never arise from a free market; rather, they say that such concentration is enabled by governmental grants of franchises or privileges.<ref>Rothbard, Murray (1972). [https://mises.org/daily/3735 "Capitalism versus Statism"] {{Webarchive|url=https://web.archive.org/web/20140919041644/https://mises.org/daily/3735 |date=2014-09-19 }}. ''Outside Looking In: Critiques of American Policies and Institutions, Left and Right''. New York: Harper and Row. pp. 60–74.</ref><ref>Grinder, Walter E. (1977). [https://mises.org/journals/jls/1_1/1_1_7.pdf "Toward a Theory of State Capitalism: Ultimate Decision-making and Class Structure"]. ''Journal of Libertarian Studies''. Pergamon Press. '''1''' (1): 59–79.</ref>  That said, [[Protectionism|protectionist]] economies can theoretically still foster competition as long as there is strong [[Customer switching|consumer switching]]. [[Joseph Schumpeter]] additionally argued that economic advancement, through innovation and investment, are often driven by large monopolies.<ref>{{cite book |last=Schumpeter |first=Joseph |title=Capitalism, Socialism and Democracy |publisher=Harper and Roe Publishers |year=1942 |location=New York |page=82}}</ref>