On tragedy and hope: homo economicus, the invisible hand and reality

Rafael Correa Delgado

Revista CEPAL, 2024

Abstract: This article classifies goods according to their technical characteristics of rivalry and excludability, with the inclusion of new categories ranging from zero rivalry to infinite rivalry and from excludability to imposed access. The conceptual framework reveals concrete challenges in meeting the conditions of the first theorem of welfare economics, demonstrating that only private goods are the epitome of market theory, with an immense range of goods for which provision by means of free prices does not exist or is Pareto inefficient. A theoretical origin of externalities is proposed, as well as the technical or practical impossibility of completing markets and, through the price system, achieving their internalization. Lastly, the article demonstrates that many of the problems expected from market failures are fictitious because, rather than homo economicus, we are homo sapiens, the most cooperative beings in nature.

Date: 2024-08
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Persistent link: https://EconPapers.repec.org/RePEc:ecr:col070:81137

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