needs are met. However, it may be that the costs to the community of
some productive activities will not be reflected in the costs producers
(and ultimately consumers) pay. For instance, a factory may pollute
its environment or workers in distant markets may be exploited. This
may lead to a severe misallocation of resources, and often leads to
demands for government intervention, and/or for businesses to adopt
a socially responsible attitude towards all the ‘stakeholders’ affected
by them.
Voluntary organisation
So far, we have examined this question largely as if there were only
two alternative modes of social action – either decisions are taken by
individuals through the market mechanism or they are taken by ‘the
state’. This is, however, clearly an oversimplification.
In the first place it has to be emphasised that much ‘individual’
decision making is not market oriented, but reflects patterns of social
co-operation which are more altruistic than the sort of bargaining for
individual advantage which is normally associated with the market.
People not only seek their own satisfaction but that of their family,
their neighbours, various community groupings with which they
identify and they may sacrifice immediate self-interest to causes as
varied as vegetarianism, racial purity or world government.
The idea that market decision making is a form of individual choice
is also an oversimplification. Individuals are generally confronted
with alternatives that are the results of social processes over which
they have little control. Many consumers, unlike an affluent
minority in highly industrialised countries, have little ‘discretionary
income’ with which to exercise choice. ‘Consumer sovereignty’ may
seem like a shallow joke to many in Africa, India and China, and of
limited relevance to those living on social security benefits in more
affluent countries. Discretion on the supply side of the economy
seems still less real for the many individuals with limited marketable
skills, little or no capital and few employment opportunities.
Social co-operation on a voluntary basis, especially between
relatives and neighbours, is clearly an older and more basic form of
human behaviour than market behaviour. As we have seen there
have been, perhaps Utopian, attempts to set up local communities on
such a basis right up to the present day. In social policy, the
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