>What do progressive economists think of how well speculative markets
>aggregate information, relative to feasible alternatives?
have you read Doug Henwood's book, WALL STREET? It's a good place to start
(and it's well written).
>One might
>reasonably complain that stock and other financial markets reflect an
>obscene concentration of wealth, work in the service of profits not people,
>and waste more in useless casino speculation than they help in allocating
>real capital.
right.
>Nonetheless, one might also grant that such markets seem to do a good job at
>aggregating information into prices. Yes, speculators suffer from herding,
>beauty contests, and bubbles, perhaps especially regarding long-term
>aggregate price movements.
right.
>But one might still be impressed by the accuracy and timeliness of, for
>example, the Iowa Electronic Markets
>(http://www.biz.uiowa.edu/iem/) at predicting election results.
Perhaps that says something about the ability of financial markets to
corrupt election results?
Does that market predict better than the polls? it seems to me that it
would reflect polling results to a large extent.
>Can progressive economists identify some other specific social institution
>that they believe does better at aggregating information, and which hence
>consistently makes more accurate timely estimates of things like who will
>win an election or a horse race? Or do most progressive economists grant
>that, whatever their other failings, such betting markets do reasonably
>well in terms of producing accurate timely estimates, at least if we set
>aside long-term aggregate price movements?
The problem, as Kenneth Arrow points out in his SOCIAL CHOICE AND
INDIVIDUAL VALUES is that markets reflect only individual self-interest,
making it very hard to express individuals' social values. They encourage
only the expression of greed, not individual's visions of what should be. A
system of political democracy would do much better, especially if it is no
longer dominated by moneyed interests (via campaign contributions,
lobbying, etc.)
Jim Devine [EMAIL PROTECTED] & http://bellarmine.lmu.edu/~jdevine
