We all know that the market system is an amazing decentralized social planning and allocation mechanism if externalities are small, if returns to scale are in general diminishing, if we are happy with the distribution of wealth and the concommitant distribution of economic power it gives rise to, and if Say’s Law holds–if supply does indeed create its own demand, and we don’t have to worry about large-scale unemployment and deep depressions.

more: Brad DeLong

Update: a second lession.