We Have No System for Distributing Wealth, and Cannot Admit It

Here is a claim I think is true and almost never stated plainly: humans do not know how to distribute property, goods, services, and money among themselves. We have arrangements. We do not have a system that anyone can defend from first principles.

The interesting part is not the claim. It is our inability to say it out loud.

Prices Do Not Rescue Us

The standard reply is that we do have a mechanism — the price system — and that it solves the allocation problem better than any designed alternative. Hayek's argument about distributed knowledge is genuinely powerful and I am not dismissing it.

But notice what prices do not do. A price does not represent objective value, because there is no such thing as objective value. There is supply and demand, and a price is the point where they currently meet. That is a fact about a market at a moment, not a measurement of worth.

And the rules of supply and demand are partly rules of chance. If a good is difficult to supply — because it requires a rare input, or an unrepeatable position, or simply because someone got there first — a single supplier may hold a monopoly for a very long time. The price then reflects that position rather than any scarcity or contribution.

We pass laws against monopoly. They are frequently unenforced, and the interesting monopolies are usually the ones the law does not recognise.

What I Am Not Saying

I want to head off the obvious misreading. This is not an argument for socialism. The planned alternatives were tried at enormous scale and failed at the specific task of allocating resources, for reasons Hayek identified before they failed.

The argument is narrower and, I think, harder to answer.

The Actual Complaint

Defenders of markets support them as the best system yet tried. That is a defensible claim and I am inclined to accept it.

But watch what happens next. Having established that it is the best available, they stop — and the enormous problems of the best available system go undiscussed. The concession that it allocates badly in identifiable ways, that it rewards position as readily as contribution, that it has no answer for someone born without saleable capacities, gets treated as an attack rather than as a description.

This is a general failure mode, not an economic one. Having settled on the best answer available, we systematically understate its defects and overstate the defects of the alternatives. The comparison was legitimate; the conclusion drawn from it — that the winner is therefore adequate — does not follow.

Best available and good enough are different claims. We prove the first and assert the second.

Why We Cannot Admit It

This connects to something that runs deeper than economics.

We are terrified of living in a world where basic questions have no settled answer handed down from somewhere. The meaning of a life, the right way to organise a society, what a person is owed — we want these to have answers that exist independently of us.

We hate uncertainty, and we hate admitting ignorance even more. That is why the scientific revolution took so long to arrive and spread so slowly, and arguably never took hold among the general public at all: science is fundamentally about uncertainty. It is a method for being wrong in a controlled fashion. Most people do not want that, in physics or anywhere else.

Economics is where this reluctance costs us most, because economic arrangements are the ones we could actually change if we admitted we did not know what we were doing.

What Admitting It Would Buy

We are still waiting for the scientific revolution to reach economics — not more mathematics, of which there is plenty, but the epistemic posture: this is our current best arrangement, here are its known failure modes, here is what we are trying next, and here is what would falsify our confidence.

That posture is available. It is how we handle medicine, which also deals with systems too complex to model fully and where being wrong kills people. Medicine manages to say "this is the best treatment we have and it fails in the following ways" without collapsing into nihilism.

Economics could say the same thing. We cannot fix a system we are not permitted to call broken.