Excellent explanation (and disclaimer). I might just add another 2 cents…
It’s not just that “the market fails” to account for many “externalities”, but also that the market is systemically incapable of ever accounting for very many, very important externalities.
IE. The space of externalities >>> the market space. For example if the market priced in the suffering of labor (by paying living wages+, etc), that alone might make the market unaffordable. Similarly with climate justice, etc. The exploitation of these externalities is largely the basis of “profit”.
You know, as time passes I get the feeling that this “space of externalities >>> the market space” might indeed be the case, or otherwise put that the free market fails to allocate resources efficiently more often than it succeeds. I just don’t know if there’s any empirical evidence for it and therefore I didn’t want to add much of my opinion. Just the mainstream economic view of externalities coupled with a few obvious and massive examples like climate change paints a decent picture.
Do you know of any analysis that tries to compare the space of externalities vs the space of the market?
