Putting the Market in Its Place

Abstract

Abstract This chapter argues that many markets, in order to fulfill their epistemic function—which continues to provide one of their central justifications, and is the basis for their economic function—require more rather than less regulation: they require an “epistemic infrastructure” in which certain forms of knowledge are taken care of, so that the price mechanism can actually fulfill its epistemic function. Moreover, for price signals to point to the satisfaction of meaningful human preferences, the conditions under which these preferences are formed need to be taken into account, again leading to questions about regulation, for example, of advertising. Even the markets sometimes taken to be the paradigm of informational efficiency, financial markets, often fail to fulfill their epistemic function for lack of regulation. The chapter argues that properly understood, the epistemic argument about markets is one for careful market regulation through democratic politics, not one for abolishing all government intervention.