As introduced by Munger, the market serves as a “benchmark” for measuring the performance of a policy. Munger also outlines intuitive preconditions for market existence, and more importantly three benefits of a market. Gains from trade inside a market will result in improved welfare for all participants. Markets also allow for “productive efficiency”, or specialization, resulting in economic growth. Lastly benefitting from the market system is the advantage of improved communication, resulting in cheaper transaction costs for material.
Along with introducing the definition of a market, Munger covers an area titled “Value Neutral” in his book. This concept was one that captured the key objective in policy analysis: efficiency. While advantages of a Value Neutral focus are produced, a value neutral focus fails to rationale on the premise of only focusing on a market efficient approach. Rather than considering areas outside the spectrum of economic interests, only market benefits are sought. Munger even