Editing Market economy (section)

== Criticism ==
The economist [[Joseph Stiglitz]] argues that markets suffer from informational inefficiency and the presumed efficiency of markets stems from the faulty assumptions of [[Neoclassical economics|neoclassical]] welfare economics, particularly the assumption of perfect and costless information and related incentive problems. Neoclassical economics assumes static equilibrium and efficient markets require that there be no non-[[Convexity (finance)|convexities]], even though nonconvexities are pervasive in modern economies. Stiglitz's critique applies to both existing models of capitalism and to hypothetical models of market socialism. However, Stiglitz does not advocate replacing markets, but instead states that there is a significant role for [[Economic interventionism|government intervention]] to boost the efficiency of markets and to address the pervasive market failures that exist in contemporary economies.<ref>{{cite book |last= Michie|first= Jonathan | author-link = Jonathan Michie|title= Reader's Guide to the Social Sciences |publisher= Routledge|year=2001|isbn= 978-1579580919|page =1012 |quote=Stiglitz criticizes the first and second welfare theorems for being based on the assumptions of complete markets (including a full set of futures and risk markets) and perfect and costless information, which are simply not true. Incentives are dubious too. Thus, capitalist markets are also not efficient and there is some role for government intervention. The ability to decentralize using the price system requires that there be no nonconvexities, but nonconvexities are pervasive.}}</ref> A fair market economy is in fact a [[Martingale (probability theory)|martingale]] or a [[Brownian motion]] model and for a participant competitor in such a model there is no more than 50% of success chances at any given moment. Due to the [[fractal]] nature of any fair market and being market participants subject to the law of [[competition]] which impose reinvesting an increasing part of profits, the mean statistical chance of bankruptcy within the [[Half-life|half life]] of any participant is also 50%<ref>{{cite journal|last1=Podobnik|first1=Boris|last2=Horvatic|first2=Davor|last3=Petersen|first3=Alexander M.|last4=Urošević|first4=Branko|last5=Stanley|first5=H. Eugene|date=2010-10-26|title=Bankruptcy risk model and empirical tests|journal=Proceedings of the National Academy of Sciences of the United States of America|volume=107|issue=43|pages=18325–18330|doi=10.1073/pnas.1011942107|issn=0027-8424|pmc=2972955|pmid=20937903|arxiv=1011.2670|bibcode=2010PNAS..10718325P|doi-access=free}}</ref> and 100% whether an infinite sample of time is considered.

[[Robin Hahnel]] and [[Michael Albert]] claim that "markets inherently produce [[class division]]".<ref name='Comparison'/> Albert states that even if everyone started out with a [[balanced job complex]] (doing a mix of roles of varying creativity, responsibility and empowerment) in a market economy, class divisions would arise, arguing:
<blockquote>Without taking the argument that far, it is evident that in a market system with uneven distribution of empowering work, such as Economic Democracy, some workers will be more able than others to capture the benefits of economic gain. For example, if one worker designs cars and another builds them, the designer will use his cognitive skills more frequently than the builder. In the long term, the designer will become more adept at conceptual work than the builder, giving the former greater bargaining power in a firm over the distribution of income. A conceptual worker who is not satisfied with his income can threaten to work for a company that will pay him more. The effect is a class division between conceptual and manual laborers, and ultimately managers and workers, and a de facto labor market for conceptual workers.<ref name='Comparison'>{{cite news|first=Adam |last=Weiss |title=A Comparison of Economic Democracy and Participatory Economics |date=2005-05-04 |url=http://www.zmag.org/znet/viewArticle/6345 |archive-url=https://web.archive.org/web/20090402013013/http://www.zmag.org/znet/viewArticle/6345 |url-status=dead |archive-date=2009-04-02 |work=[[ZMag]] |access-date=2008-06-26 }}</ref></blockquote>

[[David McNally (professor)|David McNally]] argues in the [[Marxist]] tradition that the logic of the market inherently produces inequitable outcomes and leads to unequal exchanges, arguing that [[Adam Smith]]'s moral intent and moral philosophy espousing equal exchange was undermined by the practice of the free markets he championed. The development of the market economy involved coercion, exploitation and violence that Smith's moral philosophy could not countenance. McNally also criticizes market socialists for believing in the possibility of fair markets based on equal exchanges to be achieved by purging parasitical elements from the market economy such as [[private ownership]] of the [[means of production]]. McNally argues that [[market socialism]] is an oxymoron when [[socialism]] is defined as an end to [[Wage labor|wage-based labor]].<ref>{{cite book|last=McNally|first=David|title=Against the Market: Political Economy, Market Socialism and the Marxist Critique|publisher=Verso|year=1993|isbn=978-0860916062}}{{page needed|date=March 2022}}</ref>