Market Efficiency
Markets seeks to enhance one thing and one thing only, profitability. That this endless need for increasing profitability sometimes results in a secondary objective, decreasing costs, does not mean that it seeks to increase efficiency.
First of all this notion of efficiency is incredibly limited, as the drive for increasing costs efficiency does not account of costs external to the corporation, or account for resource or well-being efficiency. Thus a corporation can become more cost efficient if it manages to offload true-costs to society (pollution being an excellent example), while racking in the profits.
Second of all the increase in this limited idea of efficiency is only a secondary effect, an accidental by-product if you will. Markets and corporations do not care about efficiency inherently, they are only driven to increase profitability. The aforementioned increase in cost-efficiency does lead to an increase in profitability, disregarding to problems associated with that, but understand markets as maximizing efficiency is incompatible with the real world.
Take smartphone markers, primarily Apple and Samsung, which have come under increasing scrutiny for something called ’planned obsolescence, meaning designing phones that will die or become obsolete within a certain period of time in order to sell more phones. You must live in a fantasy world to be see this and still believe companies increase efficiency. The products modern-day companies produce are more and more built to break and fail, so that we are stuck buying a newer version every 1-2 years. This is the opposite of efficiency, but it’s mightily profitable.
At least if we had a holistic view of efficiency, being the efficiency of labour and resources of society as a whole.
Claiming markets increase efficiency is like saying a gas-stove functions to heat your home. Sure it does result in that, but it is neither is primary function, nor it is a reason to not transition to something like an space-heater.
With this limited way of thinking we are essentially giving carte-blanche to private institutions to act in whatever manner they please as it’s supposed to increase the efficiency of our society. Without ever fundamentally asking what that efficiency really means, or where it comes from. It’s imperative that we realise that corporations, as with any institution we delegate specific functions and roles to in society, only have a right to exist as far as they serve society. Why would we be so insane to let institutions function in ways that harm us and do us no good?
Corporations should serve society, and improve the quality of life and efficiency of society at large. Not protect their own interest.