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  • I agree with your main two points, as I understood them:

        1. The economist's theoretical "ideal market" does not reflect reality.
        2. Imbalances in knowledge can cause power imbalances which make markets less

    I think one can look further into this topic, however.

    1. Those with greater property are generally at an advantage in the
            "marketplace". For example, employers usually can go without a few workers
            more easily than a worker can go without a job. Similarly, consider a toll
            road: if you need to go somewhere, and the toll road is the only practical
            route, the owner of the toll road can charge whatever she likes. This
            becomes an even bigger problem because many forms of production are
            facilitated by various complicated machinery, etc., which individual workers
            cannot easily collect on their own. So the workers end up being coerced to
            sell their labor to owners of the productive equipment.

            The net effect of this positive feedback is that a market system tends to
            concentrate property. Without external levelling mechanisms (government
            services (e.g. roads, medicare), antitrust laws, etc.) this concetration
            rapidly reaches the point where the non-propertied people rise up and change
            things (note the number of revolutions in Europe between the French
            Revolution and WWII). This is why the US Libertarian Party is so
            ridiculous: the order that they advocate would quickly be overturned by all
            the people it was screwing. And there's no telling whether what would come
            next would be better than our current situation.

    2. A "market" implies private property, which requires a state to enforce it.
            But one can hardly expect that state to remain outside of the power
            structures it is enforcing. States have always been tangled up with
            property owners (whether those owners are government bureaucrats, or private
            bosses). And states have always pushed for two things:
                (a) to expand their own power
                (b) to generally defend the existing order, aside from (a). This defense
                        may involve populist concessions (e.g. free health care) that alter
                        the existing order to avoid losing it completely, especially when such
                        concessions align with (a).
            People who look to the government to protect them from the rich (in the US,
            "liberals") are just as mistaken as those who look to the rich to protect
            them from governments (e.g. Wired Magazine).

    The basic summary is "states suck, and markets suck." There's a great (short!)
    book by (capitalist!) economist Robert Bates about the failure of state
    agricultural policies in tropical Africa:

    His conclusion from the information he presents is that states intervening in
    markets cause all sorts of problems (corruption and patronage politics). Of
    course, he also describes how the governments need to intervene in markets to
    make sure that people in the city can afford food. If the people in the city
    are hungry, they back new government bosses to replace the current ones. If you
    look at this without the assumption that capitalism the only way to go, it's
    pretty damning.