There is some relevant discussion of the issue of how our empathy/instinctive moral reactions conflict with efficient markets in this interview with Hayek. The whole thing is worth watching but the most relevant part of the interview to this discussion starts at 45:25. Unfortunately Vimeo does not support links directly to a timestamp so you have to wait for the video to load before jumping to the relevant point.
ETA a particularly relevant quote:
But we are up against this very strong, and in a sense justified resistance of our instincts and that’s our whole problem. A society which is efficient cannot be just. And unfortunately a society which is not efficient cannot maintain the present population of the world. So I think our instincts will have to learn. We shall perhaps for generations still be fighting the problem and fluctuating from one position to the other.
I know exactly why the majority of people do not like the kind of relative status which a free competitive society produces. But every time they try to correct this they start on a course where to apply the same principle universally destroys the whole system.
Now I think that perhaps for the next 200 years we will be fluctuating from the one direction to the other. Trying to satisfy our feeling of justice, and leading away from efficiency, finding out that in trying to cure poverty we really increase poverty, then returning to the other system, a more effective system to abolish poverty, but on a more unjust principle. And how long it will have to last before we learn to discipline our feelings I can’t predict.
There is some relevant discussion of the issue of how our empathy/instinctive moral reactions conflict with efficient markets in this interview with Hayek. The whole thing is worth watching but the most relevant part of the interview to this discussion starts at 45:25. Unfortunately Vimeo does not support links directly to a timestamp so you have to wait for the video to load before jumping to the relevant point.
ETA a particularly relevant quote: