Marvel Universe

Systemic Causation v. Greed

"While causation can sometimes be explained by intentional actions and sometimes by systemic interactions, too often the results of systemic interactions are falsely explained by individual intentions. Just as primitive peoples tended to attribute such things as the swaying of trees in the wind to some intentional action by an invisible spirit, rather than to such systemic causes as variations in atmospheric pressure, so there is a tendency toward intentional explanations of systemic events in the economy, when people are unaware of basic economic principles. For example, while rising prices are likely to reflect changes in supply and demand, people ignorant of economics may attribute the rises to 'greed'...To say that prices are due to greed is to imply that sellers can set prices by an act of will. If so, no company would ever go bankrupt, since it could simply raise its prices to cover whatever its costs happened to be. But the systemic interactions of the marketplace through supply and demand force the high-cost company to keep its prices down to where their competitors' prices are, thereby leading to losses and bankruptcy. Charging higher prices would simply mean more losses of sales and faster bankruptcy."

emphasis mine, Thomas Sowell.

Something obviously went wrong. Prices were raised, companies did go bankrupt, greed is part of the explanation of the financial crisis. Yet, I am of the opinion that the general thrust of the free-market system is effective. The free-market system failed, not because the principles of economics are unsound, but because it left out the law. Regulation is needed to ensure people do not 'cheat' when they are greedy.