One thing that holds society back from embracing more adaptive principles of operation is our tendency to hold on to erroneous myths that arose as past answers to questions of How the World Works. One such myth is that markets can exist in an undistorted state. The result of this myth is divisiveness within the political system, where one group (in the United States, generally conservatives or libertarians, but increasingly liberals as well) believes that if we reduced controls on markets--gave them greater "freedom"--we would eliminate distortions in the market and the resulting adjustments in price of goods and services would solve many social ills at a very low cost. The antithesis of this idea is that markets are already too free, and the presence of distortion isn't the problem but rather the types of distortions that we maintain with our current policy regime.

I believe that the "free, undistorted market" vs "distorted market" dichotomy is a false one. Markets have always been and will always be distorted, somehow. All markets require a unit of exchange, such as euros, dollars, yen, etc. The existence of a unit of exchange introduces a fundamental distortion that overwhelms any distortions that might be introduced via policy, as not all costs and benefits relevant to the functioning of a market can be translated into these units and valued within the market. There will always be value that is left out, thus there will always be distortion.

From a practical perspective, the goal of policy should not be to achieve a market devoid of distortion. The existence of such a market is a myth, and the potential for such a market is a mirage. Policy should instead focus on how to make markets behave in a way that best meets our needs, which implies eliminating those distortions that prove to be the greatest barriers to achieving an adaptable and desirable society--one that delivers the greatest level of well-being to the greatest number of market participants. Recognizing the myth of the undistorted market for the chimera it is would undermine the argument that "free", undistorted markets are the road to well-being not by offering evidence that free-market policies fail (which doesn't seem to convince many people due to the power of the word "free"), but rather by showing free-market policies for what they are--policies designed to chase a mirage. Perhaps by changing the strategy used to push for adaptive changes in economic policy, we can improve the effectiveness of these efforts.