Perhaps Mr Lansley knows something the rest of us do not, but on past form I doubt it. Twenty years ago, when senior surgeon at the Royal Hampshire Hospital Paddy Ross inquired of Ken Clarke, then a Tory health secretary, how he anticipated the Health Service would function as an internal market, he replied candidly enough: “I don’t know – we will just have to see how the dust settles.” Not an encouraging precedent.
This is why we use markets. Because in large parts of life things are simply too complicated not to use markets.
That we don\’t know how to plan things, for there are too many interacting parts, too many possibly conflicting incentives, is exactly the reason why we don\’t try to plan things . Rather, we set up a simple set of rules…law of contract and so on….then throw it all up in the air and see what happens.
If we actually knew how to plan it…..say, like the making of a curry with all ingredients to hand…..then we could indeed use a planning system….with the curry a recipe. When it\’s all too complex to plan…..for example, the system of producing all of the ingredients and making sure that they are easy to get to hand…..then we not by choice but by necessity use markets.
Some 5% of the UK workforce, some 10 % of UK GDP, the NHS, this is too complex to plan. Thus, by necessity, we should use markets.
Perfect knowledge means we don\’t need markets: uncertainty means we have to use them.