Power without glory: George Stigler's market leviathan

All but the hopelessly naive or perennially romantic understand that Nobel prizes are not a simple recognition of merit. Often they reflect the result of intense lobbying campaigns (rent-seeking in economic terms) coupled with unstated political considerations (if not unsubtle and even blatant ideological concern). Yet few amongst the far-flung tribe of economists would be so petty as to begrudge George Stigler this particular award, even if the more cynical of them suspect that ideological considerations might have played a role in the actual choice. Stigler viewed markets as providing a Hobbesian bargain to protect individuals from the excesses of Society, namely a misuse of economic power. In this sense a compact is formed between the market as an institution and individuals that compose that market. Individuals cede all economic power to the market and respond passively to market signals. They do so to avoid becoming a victim of unjustly applied economic power. Distribution is then no longer based on degrees of economic power but rather on one's contribution to the economy.