(Self-plagiarised from a comment on this post at Bobvis.)

The notion that the case for liberalism rests on real markets acting like ideal markets is a strawman. Real markets don't have to be as good as ideal markets--they just have to be better than real governments.

To point out that real markets don't behave exactly like ideal markets, with the implicit assumption that an omniscient, omnipotent, and omnibenevolent government can make everything better, is not to make an effective case against liberalism. To do that, you must identify the specific problems caused by market imperfections and then make a convincing case that real--not ideal--governments can effect an improvement net of unintended consequences.

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