I read the D.M.Winch book I picked up, Analytical Welfare Economics, on the train yesterday.
“While perfect competition is sufficient for the achievement of a Pareto optimum, it is not necessary. It is quite possible theoretically to satisfy the necessary conditions in a controlled socialist state. ‘Perfect’ socialism is every bit as good as perfect competition when judged by this criterion. In te real world of course, socialism is far from perfect, but so is competition. Since bith systems are capable of achieving a Paretian optimum in their conceptually perfect forms, the proposition [the 1st welfare theorem] concerning perfect competition does not establish its superiority.”The Enlightened Economist
Actually existing capitalism
Diane Coyle | freelance economist and a former advisor to the UK Treasury. She is a member of the UK Competition Commission and is acting Chairman of the BBC Trust, the governing body of the British Broadcasting Corporation