"But what the market deems valuable is not necessarily aligned with what is ultimately good for us as a society, or even what we want."
Negative externalities that harm the public good aren't factored into markets until a price is put on the value of public goods. When no enforcement mechanism is present, or at least decent incentives properly aligned, then the public good keeps getting screwed and we end up with climate change.
You're also using "public good" incorrectly. You mean "social utility", I think. But social utility is not quantifiable for the simple reason that it's not possible to perform interpersonal comparison of utility.
For the record, you can simultaneously be laissez-faire and an environmentalist. See the Property and Environment Research Center: http://www.perc.org/
That's generally true, but that doesn't mean it doesn't have a value. Social utility shouldn't be ignored simply because it cannot be assigned a convenient numeric value.
The trick is creating an arrangement such that people can settle grievances endogenously. An exogenous body can't determine social utility since its actions change the expectations of its constituents, perhaps creating perverse incentives. It has also no way of determining what constitutes a welfare gain or welfare loss. Actually the rather special role of the state in being the arbiter of law makes it rather biased towards generating welfare losses via cronyism.
Ok, if you're using such a broad definition of "market", then I probably agree with most of what you just said. The big problem I see is:
> creating an arrangement such that people can settle grievances endogenously
That is great if it actually happens. I personally believe a lot the current political situation was caused by a total lack of these endogenous corrective forces. When people observe that no such arrangement actually exists and grievances are not actually settled, operant conditioning takes over and we end up with people who think they are somehow smarter/better than other people.
Arranging everything so incentives are properly aligned would be great. In practice, we don't actually know how to make that happen reliably, so recognizing all of the needs and desires of society is important, even when we don't know how to evaluate something other than "we consider it good" or "I just want that my future". Yes, this could end up causing problems - humans are fallible and sometimes we don;'t know how to explain something other than "my intuition says so".
Note that I'm suggesting that non-quantifiable criteria should be considered, not that they should be given any special weight.
> It's actions change the expectations of its constituents, perhaps creating perverse incentives.
For this, I'm going with Mark Blyth's response[1] to a similar statement about modern economic thought.
It's not broad. It's that most people conflate various discrete ideas.
I personally believe a lot the current political situation was caused by a total lack of these endogenous corrective forces.
You're right, and my position is that much of this is because of exogenous interference. For example, people like to talk about the post-WWII "Golden Age of Capitalism" that involved Keynesian stimulus policies to one degree or another (though there were exceptions, like Eisenhower's response to the 1958 recession). What people often conveniently omit is that the Federal Register was only a seventh the size of what it is today: https://www.federalregister.gov/uploads/2015/05/Federal-Regi...
For this, I'm going with Mark Blyth's response to a similar statement about modern economic thought.
You seem to think I subscribe to rational expectations or something. No, it's a basic public choice and regime uncertainty point. If anything, Blyth's comment is overly myopic and his complete dismissal of "time inconsistencies" is unjustified. The Cantillon effects of monetary policy alone are well-acknowledged across the political spectrum, and that's a straightforward example of temporal disequilibrium.
EDIT: Another contradiction is the Greenspan put.
It doesn't matter if a theory is correct when "nobody knows what that sentence means!"
Blyth isn't dismissing the concept of time inconsistency - he's pointing out that models that rely on people making "rational" decisions are total junk if nobody actually understands the required concepts. Models that assume people would change their behavior because of time inconsistency should never have been considered in the first place because most people don't know what the term even means.
In a similar manner, I'm suggesting that while it would be nice if we could set up "markets" that self correct or allow problems to be handled locally, this might not be possible in practice.
Whether or not it's possible to set up markets that self-correct is a different matter. They already do to various degrees even in current hampered regimes, modulo business cycles. Though, we must extend the same skepticism towards state attempts at equilibration if we are to be consistent. But far too much doubt becomes an analytical nihilism.
This outfit is the environmental equivalent of those people who think they efficiently can haul freight in airships. It's quaint, and nobody is paying attention, for good reason.
So back around to social utility: You better figure it out, quantifiable or not, before you end up in an artisanal hand-sharpened guillotine. Disemployment is an externality as serious as dumping mercury in the lake.