Market Failure Running Page Government Term Paper

  • Length: 10 pages
  • Sources: 4
  • Subject: Economics
  • Type: Term Paper
  • Paper: #6310608

Excerpt from Term Paper :

They see alternatives and their consequences as costlier and pay very little attention to them. Rationality exists less in public than in private organizations. A public agency's ends often compromise incompatible interests and neither occasionally nor accidentally. Conflict becomes inevitable and the end-system goes haywire. And the end-systems of public organizations are much more complex than those of private ones. The more complex, the harder to institute courses of action, the more results to evaluate, and the greater the chance to sacrifice some ends for other ends. It would be most helpful to find detailed case studies of organizations sharing a common concept so that they can be compared. From the comparison may develop a plan and rational choice (Branfield).

Planning in the Public Domain

Friedmann (1987) introduced the three concepts of rationality as market rationality, social rationality and a combination of these two. Market rationality derives from a philosophy of possessive individual as pre-existing society. Society was formed only to serve as a mechanism for the individual's pursuit of his private interests. He uses reason to maximize his personal or private satisfactions. Social rationality assumes the opposite, whereby the social group or society grants the individual identity of its members. It uses reason to seek collective interest and serves as the means to communal satisfaction. And the third concept strikes a middle ground between the two. This balance entails restraint on the excesses of market rationality and provision for public good. It is called social or modern planning and focuses on social outcomes. The assumption draws from an objective view of the world, which uses rationality to create goal-fulfilling processes into which it is put. Rationality is not perceived as anything developing out local processes but as something equal to the act or knowledge. It treats rational knowledge as a source of certainty and truth (Friedmann).

It moves along the Enlightenment assumption that the world is objectively knowable through sense experience or empirically (Friedmann, 1987). It sees the knowledge of the truth as the validated product of scientific inquiries, working as the basis of the mastery over nature. It also views human affairs as susceptible to verifiable methods, just like the natural sciences. Verifiable empirical knowledge can, then, be subjected to manipulation. This is opposed to merely personal and appreciative, emotional, intuitive and imaginative types of knowledge, which are also valid but categorized as purely private (Friedmann).

Favor bestowed on rational knowledge evolved from the scientific and philosophic revolutions of the 16th and 17th centuries, as well as the social revolutions influenced by the Age of Enlightenment (Friedmann, 1987). The alignment between religion and philosophy about the final end of humanity and nature was dissolved. The roots of western civilization, Greek philosophy and revealed religion came to a common belief on final causality. What reason can grasp about the world of nature is coherent with the concept of a benevolent and reasonable creator or God. That shared view made religion a science and science a religion. Knowledge is deemed scientifically verifiable truth from evidence of experience and measurable data. It no longer needed purposes or goals or the basis of things in the absence of questions. Questions and issues on values and meanings ceased to exist in the true knowledge (Friedmann).

Rational Planning Model

The objective of this model is to reduce the excesses of industrial capitalism while managing conflict among capitalists, which result in production and reproduction inefficiency (Friedmann, 1987). Its beliefs about knowledge and society are linked to the rise of capitalism, the formation of the middle class, the rise of scientific legimation, the concept of an integrated and orderly society meant to meet the needs of its members and the provision for an interventionist state. It perceives technical rationality as a valid, appropriate and superior means of rendering public decisions. Scientific information is, therefore, seen as enlightening, convincing and engaging. This rational planning model is the operative mode of inquiry of policy analysis in societal guidance planning. It has been the singular approach to problem-solving through the systematic evaluation of alternative means to achieving a goal. The basic steps are: verifying, defining and detail the problem; establishing criteria of evaluation, identifying alternatives to attain the goal; evaluating alternative policies; implementing the preferred alternatives; and monitoring and evaluating outcomes and results (Friedmann).


Most of the problems this planning model aims at working on cannot be solved in the isolation of a laboratory (Friedmann, 1987). They cannot be manipulated by technical solutions in that setting. The planning model has also been criticized as attempting to describe and satisfy the demands of exhaustive alternative evaluations by securing complete information requirements beforehand. The rational technician performs his role at the expense of other roles, such as advisor, mediator and administrator, which are just as important. Moreover, the value-free evaluative criteria it proposes to use appear to depend on the choices of the scientist or researcher, which cannot be isolated from the beliefs in which they originate (Friedmann).

Policy Paradox

Equity and equality are to be understood differently. Complete equality is not really feasible or possible, in that everyone receives perfectly equal shares of everything (Stone, 2001). Equity, on the other hand, is the more preferable and reasonable way of distributing goods and services. It is considered fair and equitable although often not equal. The three important factors involved in distribution are who the recipients are, what is being distributed and the process of distribution (Stone).

Factors have to be considered in determining if distribution is, indeed, equitable.

Questions on who gets what, when and how must be answered. There are four major opinions on how things can be equitably distributed. The first says that it is fair if it proceeds from a voluntary and fair process. The second fixes the extent of acceptable interference as the price of redistributive justice. Third is concerned with whether property is to be considered an individual or collective creation. And the fourth determines whether work evolves from individual human need or natural drive and satisfaction (Stone).

Evaluating efficiency is difficult because people have individual and different perceptions of efficiency (Stone, 2001). The problem with using efficiency to measure quality lies in the difficulty with measuring inputs and outputs, comparing them, when to stop counting and when another person interprets it as waste. Efficiency should be measured, using a market-based model. But it confronts problems and challenges such as the formation of monopolies, the frequent want of complete information on alternatives and the polis. As regards problems from the polis, the distributions of wealth and income are vastly unequal. Hence, purely voluntary exchanges do not really work in actual situations. The availability of information and the interdependence of welfare within communities also matter (Stone).

One argument set up against affirmative action is a shift from group-based to rank-based distribution (Stone, 2001). Distribution according to race or gender is illegitimate and fair even if intended to be compensatory. Favoring disadvantaged minority groups or women necessarily discriminates against whites and men. Another argument accepts a compensatory slant but the criteria on which groups deserve compensation should be fairly determined. Public policy should compensate those who have been disadvantaged socially and economically. There should be clear criteria of "disadvantaged background," rather than merely belonging to a particular race or ethnic group or gender. On the other hand, advocates of affirmative action say that need and disadvantage are not only difficult to measure. A change in the basis of affirmative action will also nullify its very purpose and use in eliminating race and gender discrimination, which is the very aim of affirmative action. As it is, discrimination is already too prevalent to ignore and so pervasive that even the most privileged among them experience it (Stone). #


Banfield, E. C (1959). Ends and means in planning. Vol XI (3). International Social

Science Journal. UNESCO Social and Human Sciences.

Friedmann, J. (1987). Planning in the public domain: from knowledge to action.

Stone, D (2001). Policy paradox: the art of…

Cite This Term Paper:

"Market Failure Running Page Government" (2009, June 30) Retrieved January 20, 2017, from

"Market Failure Running Page Government" 30 June 2009. Web.20 January. 2017. <>

"Market Failure Running Page Government", 30 June 2009, Accessed.20 January. 2017,