From: Chris.Holt@newcastle.ac.uk (Chris Holt)
Newsgroups: alt.philosophy.objectivism
Subject: Re: Evidence vs Faith
Date: 21 Jan 93 15:13:14 GMT
Organization: University of Newcastle upon Tyne, UK, NE1 7RU

robert@kohlrabi.tcs.com (Robert Blumen) writes:
>> Chris.Holt@newcastle.ac.uk (Chris Holt) writes:
>>
>> >Hee hee.  Then why do I have such faith in the free market, in
>> >limited circumstances?

>One is always reading about "faith in the free market"...
>Faith is usually taken to mean something beyond or outside of reason.
>People who have religious faith may offer various proofs of the existence
>of god, but their belief comes down to deciding to believe and what to
>believe for no reason at all.

Okay, it was a shorthand for "I believe that the free market model
used for predicting behaviour in various economic spheres leads to
results that correspond with observed data, so that its predictions
offer the best hope we have of estimating the future."  Faith in
the sense that we talk about faith in scientific theories.

>Most people I have met who hold free-market views, since they are in an
>intellectual minority, have had to exhaustively research these ideas inside
>and out, to convince themselves no less, and to have any chance to convince
>others.  But many people who hold sort-of-wishy-washy liberal-socialist
>views simply absorb them from the surrounding environment without much
>thought (not to say that there aren't many very well informed and well read
>liberals and socialists,too...)

Surely there are knee-jerk liberals and knee-jerk socialists, just as
there are knee-jerk free-marketeers.  All of these people are
attracted to their theories because of upbringing, or because the
theories are often over-simplified, making them easy to understand.
The interesting part is that there *are* intelligent and well-informed
people who adhere to all these positions.  This suggests (unless you
believe you hold a monopoly on truth) that the evidence supports
more than one interpretation, which suggests that different models
may be applicable in different circumstances.  The challenge then
is to characterize the situations in which a particular model offers
a useful approximation.

The free market is fine when it is easy to determine the quality of
a product (so the costs of that determination can be neglected), and
when there are enough suppliers and buyers that competition is
genuine, and the process of approaching the equilibrium point is
swift (and may be neglected).  It is much less useful as a model
when there is a significant time delay between the given transaction
and the determination of quality (e.g. in education, the effect
of a given teacher may not be apparent for up to 5 years), because
the feedback loop between product quality and reward is so attenuated.
It is much less useful when there is a systematic bias (e.g. for
historical reasons) that slows the approach to equilibrium (e.g.
the persistence of racism when it is not economically advantageous).
It is also less useful when dealing with the question of public
goods, such that the market leads to underproduction because of
the dreaded free riders.  Hence my reference to limited circumstances.

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 Chris.Holt@newcastle.ac.uk      Computing Lab, U of Newcastle upon Tyne, UK
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