Problems of market boundaries

It is now widely accepted that the market is superior to the state as a means of organising economic activity. But there remain a number of significant problems about the proper scope of the market domain, about the range of activities which are appropriately governed by market mechanisms and their associated forms of commercial organisation. Whilst many would agree that the market is an admirable device, provided it is ‘kept in its place’, there is much less agreement about the precise location of that place, about where and on what grounds the boundaries of the market should be established.

In Britain – though a similar story could be told elsewhere – two broad developments over the past 20 years or so have given rise to considerable debate about these issues. First, a politically-driven programme of reform has led to the introduction of market or quasi-market principles and forms of organisation into a wide range of institutions and social practices which had previously operated on quite different bases. I have in mind here not only the privatisation of publicly owned industries, but also the reconstruction of a wide range of other institutions which, whilst remaining within the public sector, have, increasingly been required or encouraged to operate in commercially-modelled ways. Amongst these have been local government, educational and health-care institutions, and also those which may be termed ‘cultural’ in character, namely broadcasting, the various arts, academic research and so on.