The concept of the market mechanism emerged in the 1940s as a central feature in the thinking of the economics profession in the United States. With improved knowledge of the scientific laws of the market, economists argued that society could use the instrument of the market to achieve a wide range of social goals with maximal efficiency and effectiveness. For example, many economists have argued that the reduction of poverty is best accomplished by manipulating the labor market through the 'negative income tax' or other technical devices. Health care, other economists have more recently argued, should be provided through various forms of 'managed competition', based on market incentives. The concept of the market mechanism has also been applied widely to ecological matters. Economists have proposed that, if a given reduction in pollution emissions is the goal, this reduction is efficiently achieved by allocating rights to pollute and then allowing market trading in these rights (Dales, 1968; Pearce et al., 1989). A carbon tax is often advocated as an effective way of using market forces to achieve a desired reduction in carbon dioxide emissions for global warming purposes (OECD, 1992). Other economists have argued that conservation of water supplies and thus avoidance of the need to build environmentally harmful dams and other water facilities is efficiently achieved by creating a system of water rights and then allowing market trading in these rights (Anderson, 1983). Many other types of environmental objectives could in principle be achieved by setting a target and then using the market mechanism to realize this goal (Tietenberg, 1993; Zylicz, 1991 ). Economists have typically also argued that the market mechanism, like other tools of professional economics, is a value-neutral device. Its efficiency and effectiveness rest on technical grounds alone, economists assert, that are independent of any particular cultural or broader value circumstances. However, as this paper will argue, the economic case for the market mechanism is actually grounded in the existence of a particular set of social values. If these values were, in fact, commonly rejected in society, markets would lose the efficiency advantages that mainstream economics claims for them. To be sure, the values on which market efficiency depends have, in fact, been broadly accepted in American life. That is why the market mechanism has been as widely proposed and in a number of cases sometimes involving the environment used successfully. To be specific, the particular value-system that has supported the functioning of the market mechanism in the United States has been the belief in economic progress. The market is an engine of great social dislocation as well as economic advance. American society has been willing to tolerate the major dislocations because it has believed that they
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