In the EconTalk podcast he has hosted since 2006 Russ Roberts engages experts on topics ranging from reimagining capitalism and property rights to the kindness of strangers and the popularity of Jane Austen. Following is a summary of the 71-minute episode in which he and Duke University’s Michael Munger compare their understanding of free markets. A deep and engaging conversational quality has won this podcast loyal listeners across the world.
MM: The argument for markets is not the perfection of markets or of the price mechanism. It’s the imperfection of the world, in which this is the best system for elaborating division of labour to foster specialisation. Of course division of labour also existed in Pharaonic Egypt. But in free markets you break out of the small command economy and don’t need to know the person that you’re buying things from. It cuts the transactions cost of impersonal exchange. There is no alternative system that increases the wealth of most people, most of the time, by more. Or that reduces poverty by more, not even close.
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Views expressed above are the author’s own.
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