[tylerdurden]

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But there is no way you can argue that a capitalist economy takes into account each individuals preferences equally (obviously firms care more about satisfying demand of consumers who can pay more). And failing that it is not possible that the free marktet promotes the maximum social good.

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Free market capitalism meets a higher portion individuals' personal satisfaction goals (and does so more efficiently) than any other allocation system. No economic allocation system is magically going to create more resources. Resources are scarce, and have to be allocated somehow.


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We have poor people who dont have healthcare or enough food yet some resources in our economy are still devoted to the production of lawn ornaments (where they undoubtedly produce less utillity).

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Can you come up with a system that allocates resources in such a way that will fix this problem? Many busybody economic tinkerers have tried, and so far they've all failed. I won't even stipulate that your method preserve individual freedom. Let me know when you come up with something.

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There are also many other reasons that market efficiency is not equivalent to social good...and I am especialy curious how you would fit externalities (pollution, traffic, etc...) into that veiwpoint.

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"Externalities" is an arbitrary concept that is brought up to discredit free markets and support government intervention in all sorts of things. Pollution is just like any other liability - sue the pants off of the offenders, voila, it's instantly internalized. It becomes an "externality" when you have bogus corporate welfare scams that give "pollution credits" and other legalized free passes to polluters. Water pollution is only an externality because nobody owns rivers in the US (note that the biggest water polluters in the US are municipal water treatment systems).

Traffic is a *government-caused* problem, not an externality. If roads were privately owned (or even if the government ran its own road system but didn't artifically cripple private road projects), you'd see much, much smoother traffic flow. Government undersupplies road infrastructure, then you want to blame the market, in order to justify further government intervention?